As mortgage loans to homeowners under the National Housing Fund scheme rise, experts are of the opinion that a lot more needs to be done, MAUREEN IHUA-MADUENYI writes
Loan disbursement to homeowners under the National Housing Fund being administered by the Federal Mortgage Bank of Nigeria has risen to N72.47bn.
According to findings by The PUNCH, the sum, recorded in July 2017, is the total loan given to about 17,260 individual contributors since the NHF scheme commenced in 1992.
Findings also indicate that about 20,435 housing units have been funded under the NHF scheme to date.
The NHF is a scheme established by the Federal Government to support Nigerians in all sectors of the economy, particularly those in the low and medium income levels who cannot afford commercial housing loans, in their quest to own their houses.
The fund, which was established by the NHF Act No.3 of 1992, was created to mobilise funds for the provision of affordable residential houses for employed Nigerians who are above the age of 18 for the purpose of erecting, purchasing or renovating houses, and also provide long-term loans to mortgage institutions for lending to contributors, among other benefits.
The scheme is funded through a mandatory contribution of 2.5 per cent of monthly incomes of Nigerians earning N3,000 and above; 10 per cent of loans and advances portfolio of commercial and merchant banks; and insurance companies are mandated to invest 20 per cent of their non-life and 40 per cent of life funds in the housing sector, with 50 per cent of these directly in the NHF; while the Federal Government is also to make financial contributions.
Contributions to the scheme had grown from N13bn to N43bn early this year, with total mortgages created rising to 17,000 from less than 16,000 previously.
Experts are, however, of the opinion that all the efforts made towards providing housing finance so far, have barely scratched the surface.
The Chairman, Sparklight Property Development Company, Chief Toyin Adeyinka, said the N72bn so far given as loans to homeowners was too little compared to the actual housing finance need of Nigerians.
He stated, “It is like a drop in the ocean compared to what we need. The housing deficit in the country is so huge that we need a lot of resources. If we divide N72bn by the number of states we have in the country, that is nothing.
“Apart from the NHF, there is a need to create other funding windows at single-digit interest rates, especially for real estate developers to build more houses like the Estate Developers Loan scheme also administered by the FMBN.
“On the other hand, the awareness of the NHF is very low; a lot of people do not know how to access the fund. There is a need for the FMBN to also streamline the process so that within a space of six to nine months, people can access loans. That will also help in this period of recession, because jobs will be created.”
Following calls by housing finance professionals, the FMBN was recently recapitalised to the tune of N500bn, which according to the Minister of Power, Works and Housing, Mr. Babatunde Fashola, will reposition it to efficiently carry out its mandate under the Federal Government’s National Housing Programme, widen the country’s mortgage space and also deepen the housing finance market through mortgage creation.
The FMBN had in a document obtained by our correspondent stated that the country needed over N40tn in mortgage finance to address the present housing shortage, adding that while the housing deficit had been put in the region of 14 million to 17 million units, with 72 million to 102 million Nigerians without access to decent housing, mortgage loans and advances by banks were still insignificant due to their long-term nature compared to the short-term nature of the banks’ liabilities.
The immediate past Managing Director of the FMBN, Dr. Richard Esin, sometime ago, noted that the country’s mortgage system was still underdeveloped and could not effectively drive homeownership, as more than 90 per cent of new homes were still being built with funds from personal savings.
The Second Vice-President, Nigerian Institute of Building, Mr. Kunle Awobodu, said the NHF had not made the required impact in the housing sector due to difficulties in accessing the fund, adding that a lot of people did not know about its existence.
“It is not easy to access mortgage for those who aspire to build with it. Many people make contributions to the NHF but are not even aware of it. It is also near impossible to get the loan,” he said.
The President, Mortgage Banking Association of Nigeria and Managing Director, TrustBond Mortgage Bank Plc, Mr. Niyi Akinlusi, however, noted that the solution to the challenges of the NHF would be to widen collection like the pension fund.
He said, “If you compare the NHF with the pension fund, which is in excess of N6tn, you will find that the contribution to the housing fund is low and so is compliance. Under the pension fund, it is eight per cent contribution by employee and 10 per cent by the employer, and almost all organisations comply.
“But under the NHF, only 2.5 per cent of the basic salary is contributed by the employer only. The total collection so far is less than N100bn. There is also more effective compliance to pension fund; meanwhile, the value chain for the NHF is better for the economy with its multiplier effect. For each house that is constructed, at least 35 people are employed.”
Akinlusi suggested that the FMBN should improve on awareness and compliance, and also consider reviewing the percentage of contribution to the NHF.
“There are a lot of states and companies that are not complying with the NHF contribution, but pension fund is obligatory; so beyond education, compliance should be made obligatory, because the NHF is important for economic empowerment,” he added.