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Mortgage Refinance Company targets N100bn capital

By on January 27, 2014

Facts emerged yesterday that the Nigeria Mortgage Refinance Company (NMRC) plans to capitalise its operation to about N100 billion by the end of the second half of this year, when it is expected to have commenced its operations.

THISDAY learnt that N40 billion ($250 million) would be obtained from the International Development Association (IDA) window of the World Bank under concessionary terms.
Explaining the terms of the loan, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, said the $250 million loan has been given under a 40-year tenure with a moratorium of 10 years and would attract zero per cent interest. However, a commitment fee of 0.7 per cent will be paid on the facility.

In addition to the take off grant from the World Bank, other investors that are raising the initial equity of another N10 billion include the Ministry of Finance Incorporated (MOFI), Nigeria Sovereign Investment Authority (NSIA), commercial banks, mortgage finance institutions and the International Finance Corporation, among others.

The N40 billion and N10 billion put together by the World Bank and other investors would be supported by Tier 2 capital raised by NMRC through the issuance of a N50 billion bond in the capital market by July this year to increase its total capital base to N100 billion and enhance the ability of the institution to buy and securitise the mortgages created by primary mortgage lenders, the minister explained.

Already, as a show of confidence in the mortgage refinance company and commitment towards reducing housing deficit to the barest minimum, the Nigeria Sovereign Investment Authority (NSIA) has approved an equity commitment of N1.6 billion through its Nigeria Infrastructure Fund (NIF) in the company. This is however subject to applicable regulatory clearance by the SEC.

Owing to the strategic role of the NSIA in infrastructure development in Nigeria and being a major investor in the NMRC, its Managing Director & Chief Executive Officer, Mr. Uche Orji, will join the company’s board of directors.

NMRC was initiated by the Federal Ministry of Finance in collaboration with the Central Bank of Nigeria (CBN), Federal Ministry of Lands & Urban Development and Housing and the World Bank/IFC, with the principal objective of addressing the long-term funding constraints hindering the growth of the primary mortgage market, and reducing the funding cost of residential mortgages and availability of housing to working Nigerians.
The NMRC is a private sector-driven company with the public purpose of improving the critical housing sector in the Nigerian economy by bridging the funding cost of residential mortgages and promoting the availability and affordability of housing to Nigerians by increasing liquidity in the mortgage market; NMRC was incorporated on June 24, June 2013.

NMRC is strongly identified as a company with national coverage, and already has an initial rollout support from 14 pilot states in Nigeria and the federal capital territory.
Commenting on NSIA’s commitment to NMRC, Orji said: “Our investment in NMRC is one of the pillars of our investment strategy in the housing and real estate sector, which also includes investment in affordable and mass housing and other commercial real estate. This investment will provide a significant catalyst to expand access to financing for homeownership to Nigerians. We believe this is one of the fastest growing and profitable segments of the economy and will deliver tangible value to the Nigerian people.”

Also remarking, the interim Managing Director for the mortgage refinance company, Mr. Sonnie Ayere, noted: “NMRC intends to strengthen its Tier 1 Capital base to efficiently leverage the credit support of the $250 Subordinated Tier 2 Capital from the World Bank, and NSIA’s firm equity commitment of N1.6 billion, is a strong demonstration of investor confidence in NMRC and its mission of providing access to affordable mortgage finance in the Nigerian housing market”.

 

 

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