With a struggling mortgage finance system, former civil servant and CEO, NISH Affordable Housing Limited, Yemi Adelakun has stated that Nigeria should begin to consider other sources of financing affordable housing in the country.
While speaking with Housing News, he said that since the existence of mortgage banking in Nigeria, it has only been able to initiate and finalise about 100, 000 mortgages. This he said is a far cry for a country of over 180 million people with a housing deficit of about 17 million.
‘’Mortgage finance is good, but it is not the only way,’’ he said.
According to him, other countries have used social capital to finance affordable housing through cooperative systems. ‘’In Zimbabwe and Kenya, they have done very well using social capital to support of affordable housing,’’ he said.
He also mentioned that another way of funding affordable housing is for the federal government to come out strongly with intervention funds like it is done in other countries.
‘’They have done it before in this country, especially in Abuja when federal government was selling houses. You can go to any bank at that time and obtain loan for 7%.’’
Another measure according to him is to also empower commercial banks to give preferential rates to off-takers to fund housing just like the farmers’ incentive.
‘’Any rate beyond 10% is not favourable for housing. We need a realistic method of financing affordable housing. And that’s why NISH Housing has been engaging with experts in this area. We have been holding Nigerian housing finance conference for two years now,’’ he said.
Equity financing, he said, is also one of the options, because the contractors themselves can finance.
‘’Presently most of our developers either depend on contracts to build or depend on off-takers’ advance payment to build the houses. They should consolidate their efforts and fashion a way to fund houses based on guarantees. That’s another way – bankable off-takers guarantee. Once you guarantee that, any developer should be able to go to site, build the houses with the hope and knowledge that as soon as he finishes the job, there is an exit strategy. The off-takers already have the fund waiting for him to purchase the house.
‘’So, for me, mortgage is very good, but it is not the only way. In fact if you look at it, only about 30% of off-takers can qualify for mortgages. So what happens to the rest? What happens to those who are in the informal sector who do not have regular income? For you to qualify for mortgage, there are certain regulations like collateral, evidence of income.
‘’We must find a solution to this housing finance problem. We are proposing that it must be a demand driven housing policy in Nigeria. We no longer want situations where developers go to site, build what they want to build in whatever location, and at the end of the day nobody wants to buy them; and even if they want to, they cannot afford them. So let’s figure out what people like and can pay for. So that at the time of constructing the houses you already know that you have buyers for those houses. I think this is the way, and it is possible through collaboration,’’ he advised
By Ojonugbwa Felix Ugboja