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Only 1% of Nigerians contribute to housing fund

By BusinessNews Staff on March 2, 2015

Less than one per cent of Nigerians are currently contributing to the National Housing Fund, the Managing Director, Federal Mortgage Bank of Nigeria, Mr. Gimba Kumo, has said.

The NHF is a Federal Government’s scheme, which entitles all Nigerians above the age of 21 in paid employment to a low interest government-funded loan. Members of the scheme are expected to contribute 2.5 per cent of their monthly salary to the fund through the FMBN.

The amount obtainable under the NHF has recently been increased from N5m to N15m and the borrowed capital is repayable over a maximum period of 30 years at six per cent interest rate.

But Kumo, in an interview with our correspondent, said, “If you look at the National Housing Fund, out of about 170 million people in Nigeria, less than one per cent are contributing. So, we said this is not good enough.”

He also put the contribution of the mortgage industry to the nation’s Gross Domestic Product at less than one per cent.

He said, “The mortgage industry in Nigeria is just starting; and if you look at the size of our contribution to the Gross Domestic Product, it’s less than one per cent. But my target before I leave office is that we should be able to contribute at least 15 per cent (to the GDP). That is why we are putting a lot of issues on the ground to be able to drive this process.”

Kumo also said about 30 states had so far joined the NHF, adding that most of remaining six states, particularly Lagos, had formed co-operative societies.

“On their own, they (the six states) have registered with us; so they are contributing indirectly to the NHF. This is what we are trying to do in all the 36 states, to be able to build houses, create the mortgages and at the end of the day, we will be able to convince them. I can assure you that in the next 10 to 11 months, all the states will be in,” he said.

According to him, the NHF is targeting the creation of four million mortgages in the next four years.

He said already, the bank had signed a Memorandum of Understanding with the organised labour groups such as the Nigeria Labour Congress, the Trade Union Congress and the Nigerian Employers Consultative Forum towards actualising the four million mortgages target.

The need to create these mortgages, he noted, was borne out of the FMBN’s desire to assist in reducing the high cost of houses in the country.

He said. “It depends on the availability of funds, but we hope to create mortgages. Based on the Memorandum of Understanding with the NLC, TUC and NECA, we should be able to do at least four million. The houses are expensive in the sense that cost of materials for constructing these houses is also high.

“So, there is a need for a reduction in the cost of cement. There is a need for a reduction in the cost of iron rod and other accessories that will make up the houses. Once that is done, I think it will go a long way in reducing the cost of the houses.”

On the move to recapitalise the bank, he said discussions had reached an advanced stage, noting that this would be done within the next few months.

A new capital base about N250bn, he said, would place the FMBN in a better position to refinance mortgages, as it could not meet the larger part of demands for mortgage loans from its various stakeholders at the moment.

President Goodluck Jonathan had recently reaffirmed the commitment of his administration to ensure all Nigerians had access to quality and affordable housing in the country.

The President, while speaking at the foundation laying ceremony of the Para-military villages housing scheme of the Ministry of Interior in Abuja, said, “We are determined to recapitalise the FMBN; we will strengthen the Federal Ministry of Land, Housing and Urban Development, the FHA and all other institutions considering their roles in realisation of our objectives.”

[Punch]

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