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13th AIHS: How CBN is providing Ease to Housing, Mortgages

Central Bank of Nigeria (CBN) Deputy Director and Head of Nigeria Housing Finance Program, Adedeji Adesemoye has revealed the several interventions by the apex financial institution in increasing home ownership in Nigeria through regulations, funding, mortgages, policy frameworks, partnerships and many more initiatives.

While speaking with Housing News at the 13th Abuja International Housing Show which took place from 23rd to 26th July 2019, Adesemoye said that the awareness about the importance of housing finance in Nigeria is growing and that there is an acknowledgement of what housing finance can do in changing the landscape of access to home ownership in Nigeria.

He said that the financial challenges that have hindered the progress of affordable housing in Nigeria are now being tackled effectively. The mitigating risks are now being reduced he said.

‘’The issues are being addressed in order for finance to flow into that aspect of our need as human beings and grow the market because after the need for food, the next most important need for man is shelter. And this is not just a social need, it is also an economic need. And when you look at it in a value chain approach, it creates jobs, it provides opportunities for the youths, it provides opportunities for the agent, and provide opportunity to measure whether you are succeeding in life.

‘’So everything about housing has a very high coefficient of economic growth and development in the real sector. It’s a whole environment itself that guarantees sustainability if it’s properly captured and the market is allowed to do its work, and if public sector funds can go into it to further expand its reach for those who needs to make effective demands,’’ he said.

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On the contributions of CBN to ensuring affordable housing in Nigeria, he said that the contribution of the apex bank has been growing over the years. ‘’For the past five years, CBN accepted the responsibility of driving reforms at many levels of housing finance and was giving similar opportunity to manage an IVA facility that is aimed to catalyse the growth of housing sector in Nigeria.

‘’To bring it closer home, CBN supervises commercial and primary mortgage microfinance banks that have had various intervention in provision of housing funds across the landscape. So they need a supervisory framework that is robust to be able to do this. We need to have institutions that are well capitalised and well managed and supervised to be there tomorrow and give back the right confidence to the member of the public that they can satisfy their finance needs.

‘’CBN has moved further from being a regulator to implementing catalytic projects that have opened up the financial landscape. CBN managed the Nigeria Housing Finance project that just closed. It led to the birth of NMRC which is an opportunity of connecting this particular sector to the capital market where you have sustainable finance. It’s a refinancing company that refinances mortgages that have been created by the commercial and primary mortgage lenders.

‘’CBN have also taken the risk to be able to pay back to the world bank, to the IDA in putting together microfinance banks that are robust and give them opportunity to have international institution that build their capacity and create what we call housing microfinance which deals with incremental construction. 7 micro finance banks participated in this. They have gotten the seeds fund and the market has been opened. They are also being connected to another funding through the family homes funds.

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‘’The second component of this is the fact that CBN is partnering with key partners in the industry like NMRC for the creation of Nigeria Mortgage Guarantee Company, which is addressing the creditor.

‘’In that particular program, also as part of the advocacy, CBN collaborated with the industry players including NMRC in developing the mortgage model and foreclosure act that focuses 0n providing enabling legal framework for states to be able to use the opportunity given to them in the constitution as trustees of the lands in the states.

‘’This is also to enable developers to have access to land. That enables mortgages that have been created to be foreclosed if it is not performing. That provides title to people who wants to build their home and use this particular land as a security to get mortgage in the financial institutions.

‘’We want the mortgage model and foreclosure act to go through legislative processes in the states to be passed into law. Today, they are active in states like Lagos, Kaduna, and Ogun, while it is on the way in many other states including Cross-River and Plateau.

‘’We will be working with the Nigeria Governors’ forum to see this is scaled up because for mortgage to thrive we need enabling legal framework that everybody will recognise. It will enable states to have electronic lands registry system and a working mortgage system, so that it will be easy to conduct searches and then when there is need for banks to realise the collateral for non-performing loans, it will be timely.

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‘’We need to streamline all these approval processes. And the fee that is being spent needs to be at the rate than you can do business with,’’ he said.

The latest CBN intervention according to him is the mortgage interest drawback scheme which the CBN governor introduced to bring the current double digit interest rate on mortgages to a single digit. This, he said, is in collaboration with the bankers committee.

By Ojonugwa Felix Ugboja

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