Mortgage penetration in Africa: Nigeria ranks low

 

Nigeria has been ranked low among countries in the area of mortgage penetration and depth for home-ownership in Africa.

According to a report by Senior Advisor, UN-Habitat, Dr. Xing Guan Zhang, out of 31 countries ranked for the exercise, Nigeria took 27 position, scoring 0.3 per cent in mortgage penetration ahead of Guinea, Senegal and Burundi.

In the report, Malawi, Djibouti, Chad, Mauritania, Mauritius, Tanzania, South Africa, Angola, Liberia, Ghana, Togo, Rwanda, Botswana, Zambia and Cameroun took first to fifteen positions.

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In the area of mortgage depth, Nigeria was also scored low, ranking 10 with 0.4 per cent among 17 Africa nations considered for the exercise.

Countries such as South Africa, Namibia, Kenya, Botswana, Senegal, Rwanda, Algeria, Uganda and Cameroun were ranked 30 per cent, 20 per cent, 2.5 per cent, 2.3 per cent,2.0 per cent, 1.2 per cent, 1.2 per cent, 1.0 per cent and 0.5 per cent respectively ahead Nigeria.

In his report on “Financing and Developing Affordable Housing in Africa: What We Have Learned and How We Can Do Better,” Zhang noted that mortgage penetration and depth were much higher in wealthy countries.

He said: “When inflation is high, the interest payment is high in real values in the beginning, but this declines over years, if it is a fixed-rate mortgage.”

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Nigeria’s mortgage market has remained in slow growth due to plethora of reasons, some of which are now being addressed by major stakeholders in the mortgage industry.

The Nigeria Mortgage Guarantee Company (NMGC), Model Mortgage Foreclosure Bill and the Uniform Mortgage Underwriting Standards for both the formal and informal sectors of the economy are the most outstanding of the new initiatives in the industry.

Also, partnership among the Central Bank of Nigeria (CBN), the Nigerian Mortgage Refinance Company (NMRC) and the Mortgage Banking Association of Nigeria (MBAN) is more than enough comfort for both investors and home seekers.

To address the problems associated with land processes, the CBN is partnering with NMRC, which spear-headed the drafting of a Model Mortgage Foreclosure Bill, as well as MBAN and other strategic partners, to encourage the passage of a model mortgage foreclosure law in every state of the nation.

The apex bank has also provided states with the draft MMFL, and has held an MMFL workshop with their key representatives to ease their task to passage of the law.

Meanwhile, the nation has a housing deficit of about 17 million units and its mortgage rates ranging between 7-10 per cent for the National Housing Fund (NHF) and between 15-25 per cent for commercial mortgage institutions, which is considered by industry experts as one of the highest in the world.

According to the National Bureau of Statistics, real growth rate of the real estate sector, real GDP growth recorded in the sector in first quarter (Q1) 2018 stood at -9.40 per cent, lower than growth recorded in Q1 2017 by 6.30 percentage points and lower by 3.48 percentage points relative to Q4 2017.

Quarter-on-quarter, the sector grew by -30.57 per cent in the Q1 2018.

It contributed 5.63 per cent to real GDP in Q1 2018, lower than the 6.34 per cent it recorded in the corresponding quarter of 2017 and lower than the 7.03 per cent in the preceding quarter.

 

Dayo Ayeyemi

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