FMDQ to kick-start mortgages to boost trading

0
344

FMDQ Securities Exchange Plc is working on plans to kick-start mortgages to boost trading on the nation’s capital markets.

“The lack of housing finance is one of the reasons why our capital market has not grown as it should,” Chief Executive Officer, FMDQ, Bola “Koko” Onadele, said in an interview.

“We should be talking of 30-year mortgages for Nigerians. If you want 70 per cent of the people to own their own houses, they can’t borrow at 20 per cent,” he added.

According to Bloomberg, most people save all their working lives to be able to buy or build a home, leaving them with little savings to invest in financial markets. On the other side of the spectrum, lenders in the country rely on short-term deposits when mortgages require long-term financing.

There are only about 50,000 home loans in Africa’s most populous country of 200 million where poverty and the lack of a formalised title-deeds registry has led to a shortage of at least 17 million houses.

Rapid urbanisation is also causing proliferation of slums and shanty towns, while most homes consist of informal structures on land passed down through generations.

FMDQ is now working on a blueprint it is developing with the support of other financial institutions, including International Finance Corp., Central Bank of Nigeria, Nigeria’s Securities and Exchange Commission and the National Pension Commission, that the entities will present to President Muhammadu Buhari within the next year, Onadale said

The proposals will identify policy measures through which the government can “provide an enabling environment and facilitate single-digit interest rates,” Onadele said, adding that the right policies will trigger the inflow of private capital from foreign and local investors into the country. For instance, rather than subsidise gasoline, FMDQ’s CEO wants the government to channel the fund into cheap housing loans.

Separately, the Lagos-based FMDQ is also planning to attract more foreign capital into the country by playing the role of a central counterparty clearing house to reduce risk for investors, Onadele said.

Its FMDQ Clear unit is expected to employ at least 20 people within three months of operating, he said, and is just waiting for legislation to be signed into effect by the president.

“When we go on international road shows, foreign investors tell us they can bring significant amount of capital to Nigeria but only if there is a CCP to guarantee transactions,” Onadele said, adding “a CCP puts in place a default fund to ensure that any settlement failures in the market are covered accordingly.”

SHARE
Previous articleOPEC secretary general says no alternative plans for OPEC+ agreement – WAM
Next articleNigeria’s Interswitch in talks with Anchor Investors Ahead of IPO
Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.