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Implementation: Bane Of Mortgage Policies

Posted: Jun 29, 2015 at 12:00 am   /   by   /   comments (0)

By Nkasiobi Oluikpe, LAGOS

Nigeria has been described by many as a country not lacking in policy formulation, but on implementation. Once a need is said to be detected, the governments swoop into action by constituting a committee to look into the situation. The committee begins to sit, formulates and presents a policy to the government who in turn gives assent to it.

President Muhammadu Buhari  and Ya’u Kumo

President Muhammadu Buhari and Ya’u Kumo

But the problem begins between the point of establishing the policy and translating it into an ongoing, operating programme or rule, for a direct positive consequence on the people for whom it is made.

The policy will remain there in the cooler, until another government takes over, observes something wrong with the policy and sees a need for an amendment or total repeal, and on and on, the circle goes.

This tradition is not peculiar to the mortgage and housing policies alone, but it has contributed in no small measure, to the failure of the housing programmes in the country.

Despite the formulation of brilliant policies capable of transforming the housing programmes in the country, yet no significant improvement in the availability of affordable houses in Nigeria.

There was the 1991 National Housing Policy which reeled out so many rules and programmes, that will change the lives of the average Nigeria for the better in terms of home ownership. The policy in and of its own, was supposed to ensure that the average Nigerian has access to decent housing and accommodation at affordable cost by the year 2000, through the provision of long term loans at an interest rate of not more than four per cent per annum ; there was also the 2006 National Housing Policy which went the extra mile of partially disengaging the government from involvement in housing programme and including private investors and real estate developers into the national housing programmes, by the end of the day, it all appeared like moving round a vicious circle, as those policy were only good on paper and not in implementation.

Mortgage banking in Nigeria is said to have started in 1956 with the establishment of the Nigeria Building Society. According to Dr. Leke Oduwaye of the Faculty of Environmental Sciences, Department of Urban and Regional Planning, the society collapsed in the early 70s due to its inability to perform its statutory functions.

This he said, led to government injecting N20m and changing its name to Federal Mortgage Bank of Nigeria (FMBN). The FMBN took off in 1977, with a takeoff capital of N20 million from the federal government. The FMBN was said to be unable to meet up with the pressure of demand. According to statistics, in 1970, outstanding application were N223.8 million and available funds equaled N127.0 million, meaning that demand and supply was in the ratio of 2:1. This degenerated to ratio 4:1 in 1986 when the outstanding application increased to N465.8 million and only N105.3 million was available. The bank has never been able to meet up with demand. The failure of the FMBN over the years and acute shortage of housing led to the promulgation of the National Housing Policy of 1991.

As can be deduced from the above, since government was never able to address each of the problems at their various stages, they kept degenerating from bad to worse, until the present situation, (17million housing deficit), which indirectly appears insurmountable, that the country is facing.

According to experts, governments have never been serious in implementing those policies and they have never made adequate budget for mortgage financing that will give those policies a human face.

In the words of Thomas Audu, the Registrar of the Nigerian Institute of Estate Surveyors and Valuers (NIESV), mortgage policies implementation are very poor because the issue of housing is highly capital intensive, government, both state and federal, do not make adequate budget for housing.

He said: “Another issue is that if government acquires land to build houses, it takes so many years for the compensation accruing to the land owners to be paid. This, as well is not helping matters as they can make construction on those lands a nightmare for the developers.

“Even the Land Use Act itself, is strangulating investment which is why the NIESV has been advocating for it to be removed from the Constitution, added to which it should either be out-rightly repealed or amended, this will go a long way in helping both the government and the masses, as well.”

Corroborating Audu’s stance is the Public Relations Officer of the Nigeria Institute of Architects, Samson Akinyosoye. In his opinion, he stated that everything about government look beautiful on paper. “We make noise and so much razzmatazz but when it comes to actual implementation, we shy away from it.

“If government can actually provide and get serious about this refinancing thing that they are trying to do, it will go a long way in providing long term funding. There is no economy that will actually do well with anything that is less than single digit interest rate for mortgage. If we have to go by what we have now, it will not help anybody.

“The Nigeria Mortgage Refinance Company (NMRC) is supposed to be the one that will give backup to all the mortgage finance banks, so that when sell mortgage, NMRC will be able to buy up from them so that they can free more funds to give to as many other people as possible, but has it really taken off.”

Akinyosoye did not forget to also bring up the much touted land reform issue, stating that government must do something about land ownership; developers he remarked, pay exorbitantly to get the governor’s consent of Certificate of Occupancy. This, he stressed, drives high the cost of development, making it difficult for the low and middle income group to be able to buy real estate ventures of developers.

Above all, he said, Nigeria does not have a sustainable financing system, as all mortgages are still being financed with short term loans, which are recalled every five years at between 20 and 25 per cent interest rates.

“Nobody has the opportunity of taking long term financing which is typical of Nigeria. Even the so called banks that give loans, they give at 20 to 25 per cent interest rates and give you just about five to 10 years to pay back. You use long time funds to actually finance mortgage development”, he said.

An angry tenant, desirous of owning his own house, anonymously stated that the only obstacle he sees as inhibiting the implementation of the housing and mortgage policies in the country is nothing but the corruption and insincerity of successive governments. If they actually want to enforce those policies, he emphasised, “they will enforce them. But they lack the political will to do so due to corruption”