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Nigeria needs N2tn to address mortgage problems – Chike-Obi

By on March 4, 2014

The Federal Government may not achieve much with its N100bn initial capital for the Nigeria Mortgage Refinance Company, which was inaugurated by President Goodluck Jonathan last year.

The Managing Director, Asset Management Corporation of Nigeria, Mr. Mustafa Chike-Obi, said the government needed a minimum of N2tn to solve the mortgage problems confronting the nation.

He spoke while delivering a lecture, ‘Emerging market challenges and the imperatives of economic reforms’, at the Hallmark Public Policy Forum.

Chike-Obi said, “The Nigerian economy suffers from a tremendous lack of capital. We do things in incremental fashion because we do not have enough capital to do the big things. We are a very big country and we must start thinking about big things.

“We cannot, for example, think we can address our mortgage problems with N100bn capital. We should find a way and the ingenuity to have a mortgage refinance company that has over N2tn in capital; that is the minimum amount.

“We must build a functioning railway system in Nigeria; we must build a minimum of 4,000km new railways and the cost of that is in the region of $20bn, and we must find it and build it. And we must find at least $10bn immediately to fix our transmission lines. The power problem will not be solved until we get a modern transmission grid. We can do things to make us feel good, but I can assure you until we do it, the problem will not be solved. Again capital is an issue.”

Aside solving its housing problems, Chike-Obi said the nation needed to borrow massively to build infrastructure, noting that the country would become the largest economy in Africa as soon as the Gross Domestic Product rebasing was achieved.

According to the AMCON boss, a functional railway system will help to solve the transportation problem in the country.

He said, “I think the best investment Nigeria has ever made is the Third Mainland Bridge. It allows Lagos to grow, including its GDP. And I think that we should build more of such bridges in the state.  In London or New York, we have about 20 bridges across the place. I think we can have six bridges in Lagos. If we can build the fourth and the fifth mainland bridges, we will see the whole of Epe and Ondo axis opening up.”

He added, “I think that we should focus on Infrastructure, we should borrow massively to do it, but we should do it project by project basis so that as Nigerians see the result, they will get more comfortable. Third Mainland Bridge is a good investment and example of saving for the future.”

The AMCON boss also advised that the private sector Cash Reserve Ratio needed to be slashed from 12 per cent to six per cent to encourage banks to lend to the real sector.

“I think the private sector CRR is too high, in my own opinion. I think we should focus on growth more than inflation. I don’t have a position on public sector CRR. I am more interested in private sector CRR, which is more.”

Chike-Obi equally stressed the need to discourage the consumption of foreign goods, saying such culture was capable of wreaking havoc on the economy.

He said the introduction of luxury tax on such foreign luxury goods would not work because “our borders are not well secure,” and people would ship things to other countries and bring them across the porous border.

He said, “I did not say corruption because corruption is the outcome of some of these cultures. In our culture, people don’t ask you where you got your money from. We have a culture of consumption of foreign goods.

“The only way to deal with foreign goods is to have two exchange rates. An exchange for essential goods which is controlled by the government; and if you want to send your children abroad, go and get is anywhere you want to. All public office holders of certain level should not be allowed to send them abroad or access medical services abroad.”

While stressing on the importance of capital and culture, Chike-Obi said there was need for competence if the nation is to be moved forward.

“Competence is not just having the skills to do something; but the commitment and the hard work and the humility to reject an appointment you cannot do. Nigerians take job because it is a higher prestige and higher protocol. We must make sure people who start certain projects are competent and committed to do them.”

 

 

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