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Increased housing affordability coming on CBN’s mortgage guarantee initiative

In no distant future, increased affordability will be coming into the Nigerian housing market on the back of Central Bank of Nigeria’s (CBN’s) new mortgage initiative known as mortgage guarantee programme which seeks to bring more home seekers into the mortgage net.

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Affordability has always been a big issue in the Nigerian housing market because most of the people who need houses cannot afford them because Nigeria has one of the most expensive housing markets in the world. This is also a country where it is believed that mortgage is non-existent because what is available as mortgage is neither accessible nor affordable to over 70 percent of the population.

But a guaranteed mortgage is here. It is a mortgage given to a borrower by a lender where an identified third party will take responsibility for the loan if the borrower defaults. Expectation is that this will push up housing affordability because, with the new programme, once a borrower defaults, the third party receives a claim from the lender, pays the lender off, and assumes responsibility for the mortgage.

“A quality mortgage guarantee programme is used to provide credit loss protection to lenders in case of borrower default”, explained Tokunbo Martins, Director, Other Financial Institutions Supervision Department (OFISD) at CBN, who spoke at the on-going Abuja International Housing Show in Abuja.

“Mortgage guarantee products incentivize lenders to accept loans with lower down-payments, thus increasing affordability”, she added. The implication of this is that borrowers who, ordinarily, would not have qualified for mortgage loan by reason of their low income, can now obtain loans which enhances their affordability.

In most cases, the national government is the driver of any successful mortgage guarantee programme which they administer through either a government agency, a private entity or a hybrid encompassing both types of entities.

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The programme comes with a lot of benefits and, according to Martins, its importance in Nigeria cannot be over-emphasized given that this is a country where typical down-payment is over 20 percent with extremely high additional costs for regularization, titling and other home buyer responsibilities.

“Mortgage guarantee in our market will also be used as a valuable tool to regularize and standardize the market in every area from documentation to underwriting to collateralization and mortgage dispute resolution. These are major issues we need to resolve”, she advised.

Essentially, mortgage guarantee is a product of great value to any housing market because it is a tool of opportunity for both the supply and the demand sides of the mortgage market and Martins notes that it provides potential opportunity of lower down-payment for borrowers, while opening up a larger market for lenders who make the decision to finance the target population for the programme.

Martins highlighted the main benefits of the programme as increased access to housing finance, access to higher amount mortgages, better loan terms (rate, term etc), market standardization and increased consumer literacy, more stable property values, and more stable and improved national housing sector leading to better economy.

She stressed that a major benefit of the programme is its capacity to encourage the influx of investor funds – both local and international, explaining that a well-executed mortgage guarantee programme provides comfort to intending investors by signaling the presence of standards in the industry that could reduce the risk of losing their invested funds.

The good news on this programme is the role being played by the Nigeria Housing Finance Programme (NHFP). This is a programme daily implemented by a Project Administration Team (PAT), domiciled in thde OFISD at CBN.

NHFP, which is the result of a PPP between the Federal Government, CBN and World Bank, is working in collaboration with its stakeholder partners currently in the feasibility study stage of establishing a pilot company, to be known as The Nigeria Mortgage Guarantee Company (NMGC). “This effort is meant to offer Mortgage Guarantee in Nigeria”, Martins revealed.

Experts advocate tax reduction on building materials to check housing deficit

Task govt on funding, infrastructure development

To address the housing deficit in Nigeria, there is need for government to provide proper infrastructure, finance, creative and workable policies, experts have said.
The experts, who gathered at the breakfast meeting organized by Nigerian-American Chamber of Commerce (NACC) in Lagos, want government to be more involved and deliberate in building mass houses for its citizenry.

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Managing Director, TAF Africa Homes, Mustapha Njie, said government should reduce or remove taxes on building materials for construction of houses providing tax incentives for companies involved in producing local materials.

He said federal government should also declare a state of emergency with a certain percentage of the yearly budget dedicated to the housing sector.

Njie who was represented by his Legal Adviser, Lucky Kawekwune, listed some of the challenges bedevilling the sector to include lack of creativity in the architectural design of affordable housing, access to land inadequate financing both in construction and off take finance.

He noted that government needs to review the Land Use Act of 1978 to make land acquisition and transfer easier thereby encouraging use of local building materials for construction.

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Acting Head, Real Estate Finance, Stanbic IBTC Plc, West Africa, Tola Akinhanmi, said finance plays a vital role in unlocking the potential and assets in the sector, stating that more needs to be to allow exchange and transfers of titles creating developers with mortgage facilitates.

Chairman, Knightstone Properties, Adeniyi Jones, said government must have a creative way of planning to address the housing deficit in the country.

He said the real estate sector is one of the contributors to the Nigeria economy.

Earlier in his remarks, National President, NACC, Oluwatoyin Akomolafe, realizing the importance of secured access to land as a fundamental challenge to housing delivery in the country, successive governments have developed and created government residential layouts in the several locations within the country.

Some of these residential layouts, he said were fully and partly developed with housing units and sold to the public while the rest were developed and created as site and services schemes and allocated to members of the public.

Akomolafe said it is regrettable that despite policies, institutions and regulations which various Nigerian Governments including the State Government have put in place since independence, the task of instituting efficient, effective, affordable and sustainable housing delivery processes continues to challenge policy makers even as the problems of the housing sector worsens.

Don urges FG, states to replicate Jakande housing scheme to bridge deficit

Prof. Gbenga Nubi, Director, Centre for Housing Studies, University of
Lagos, has urged the Federal and state Governments to replicate the
then Jakande Mass Housing Scheme to bridge housing deficit in Nigeria.

Nubi made the call on Wednesday in Abuja at the ongoing 12th Abuja
International Housing Show organised by FESADEB Communications Ltd.

The Housing News reports that Nubi was speaking at the
stakeholders’ session on the theme “Addressing Knotty Issues in
Housing Delivery’’.

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Nubi wondered why the country could not make things right in housing
delivery after the pacesetting and impactful mass housing scheme of
Alhaji Lateef Jakande, former governor of Lagos state in 1978.

“It is the responsibility of the government to provide housing for its
citizens, make infrastructure worthwhile and building materials
possible to access.

“Every responsible government can follow employee housing scheme of
Jakande, the government can replicate Jakande housing scheme to bridge
deficit and achieve affordable housing.

“Land Use Act is not the problem hindering housing delivery in the
country, rather how the government interprets it and go about it is
the problem,’’ the expert noted.

He noted that the Jakande housing scheme sold two bedrooms flat for
N2, 500 as against N50, 000 being obtainable in the market then.

According to him, if the government can emulate such feat, it will
assist the civil servants and other Nigerians to own affordable

Also speaking, Dr Chi Akporji, Executive Director, Nigeria Mortgage
Refinance Company (NMRC), endorsed the replication of the Jakande
housing scheme of in the states.

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According to her, the states can make concerted effort in replicating
the scheme because it was highly regarded and commended all over the

Akporji noted that the NMRC has evolved a technology platform which
allowed the stakeholders and key players in the industry to come
together with the goal of reducing housing cost and increase housing

She decried cases of unoccupied houses in Abuja and other places in
the country, adding that studies have revealed that the houses where
used by corrupt people to dumb stolen money.

“Houses are the easiest place to hide stolen fund, the owners do not
care about how long they stay redundant but just to hide ill gotten
wealth there.

“Government can prevent such things from happening, some states are
now forcing people to occupy such houses or lose them,’’ she said.

Rev. Chime Ugochukwu, National President of Real Estate Development
Association of Nigeria (REDAN) noted that one of the knotty issues in
housing delivering was land administration issues.

Chime stated that land has a lot of characters including land
registration, titling issues and restiveness in some communities.

He expressed regret that in some places housing developer could not
have access to the land due to some spiritual issues and other issues.

He hoped that the show would come up with recommendations which would
enhance housing development in the country.

The show is a unique one for construction industry stakeholders
presenting new products, innovation services and technology to proffer
solution to housing problems.

The show, scheduled to hold from July 16 to July 19, has its theme as
“Driving Growth and Sustainability in Nigeria’s Housing and Mortgage
Markets-Improving Structures and Policies for Impact.”

Housing Show: NGO seeks partnership with FG to shelter indigent women

The Women in Housing Sector Initiative (WIHSI), a housing NGO, has
appealed for Federal Government’s partnership, to achieve its
objective of providing affordable housing for indigent women.

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Mrs Adenike Fasanya-Osilaja, Founder of the NGO, made the appeal
during the convention of the NGO on the sideline of the ongoing 12th
Abuja International Housing Show, organised by FESADEB Communications

WIHSI Promotes the visibility, advancement and well-being of women in
the housing sector and advocates increased empowerment of women
through housing stability and home ownership.

Fasanya-Osilaja, an International Housing Finance Consultant noted
that the NGO, was focused to ease the plight of indigent women, who
were victims of catastrophic circumstances.

Fasanya-Osilaja said that the NGO was interested in working with the
government at all levels, to identify and prepare women for duties and
privileges of home ownership.

According to her, women have typically been the silent unseen partners
in housing arrangements since the olden days, even though in several
cultures women could still not own land or property in their names.

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“This has created a position of great vulnerability for women, who
literally have a roof over their heads at the mercy of one man or the
other in their lives.

“The woman’s capacity to have enjoyment in her residence is also
directly affected by her relationship with the benefactor, who it is
his cultural right to evict her from the property for any reason at
any time.

The consultant stated that in Nigeria the cultural norm was for a
husband to evict a spouse in case of divorce or separation.

She noted the death of a spouse as another prevalent cause of
eviction for women in many Nigerian cultures, noting that the eviction
typically involves the children too.

“This is why the WIHSI, an NGO formed by women professionals in the
housing sector, has created a highly specialised platform to assist
our sisters with this type of need.

“The platform, aptly named `Housing Women, Housing our Future’ is
created out of the recognition that those of us with expertise in the
sector must pool talents together to support women.

She said “Operation Earn Your Own Home’’ was the pilot programme of
the NGO, to ensure that every displaced woman, who achieved home
ownership through grant passed it on through specific steps.

According to Fasanya-Osilaja, WIHSI is interested in working with the National Assembly. She said “We are aware that the National Assembly of Nigeria for instance is building about 6,000 property units in the very near future.  We would be very privileged to be assigned a number of units, precisely 500 units for a start, for the afore-mentioned pilot project. ”

She added that “Our capacity to effectively administer the proposed pilot project is not in doubt, and our integrity is indisputable.  We would, of course, be happy to have the project monitored by agreed an agreed third party”

Also speaking, Dr Chi Akporji, Nigeria Mortgage and Refinancing
Company (NMRC), advised the NGO to key into its Corporate Social
Responsibility Programme, which had empowered many artisans.

Akporji said that NMRC was planning to wrap up the programme by
involving many women to enhance the sector skill.

Why mortgage business risks need to be insured

Like many other business enterprises, mortgage is also risky venture and the need to insure the risks associated with transactions is as important as the business itself.

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Apart from the high incidence of poverty, income sources, especially paid employments, have no security guarantee.

In an environment where the mortgage industry is functional and effective, insurance is a must because it serves as a lubricant on the engine of growth. This is why mortgage and insurance must go together because while mortgage is risk-prone, insurance is a hedge against risks.

Mortgage insurance is one policy that protects a mortgage lender or title holder in the event that the borrower defaults on payments, dies, or is otherwise unable to meet the contractual obligations of the mortgage.

Investopedia identifies three aspects of mortgage insurance, including private mortgage insurance (PMI), mortgage life insurance, and mortgage title insurance. What these have in common is an obligation to make the lender or property holder whole in the event of specific cases of loss. Private mortgage insurance may be called ‘lender’s mortgage insurance’ (LMI) if the premium on a PMI policy is paid by the lender and not the borrower.

For these reasons and more, an active insurance industry is needed for the growth and development of a functional mortgage industry. The mortgage industry in Nigeria is still a fledgling and fingers are frequently pointed to an insurance industry that is not an active participant as it should be.

For some reasons, in this country too, in spite of everything the people have learnt, policy is still shaping the industry whereas, in advanced economies, it is the other way round- industry shapes policy because people in the industry are the ones implementing the policy every day.

The mortgage industry in United States, for instance, has been robust for decades and it is with continued activity. One is not however, saying Nigeria should replicate what happens in the US here, because Nigeria has its own unique characteristics which must be recognised and respected.

What the mortgage players in Nigeria should do, however, is to make the US system a base-line because this system represents the global standard. Adenike Fasanya-Osilaja, a mortgage and finance consultant, advises that “we have to start learning that system and adapt it to meet our own unique cultural system and unique needs”.

Nigeria needs to lay a very good foundation for mortgage industry growth to ensure that what happened in America in 2006 with sub-prime mortgage crisis does not repeat itself here. The Nigerian Mortgage Refinance Company (NMRC) is a big possibility that can change and shape the mortgage system in this country and could also be an umbrella for the industry.

One of the high points of NMRC, as a secondary mortgage institution, is its long term, low rate global funds and, because the mortgage industry here is not yet buoyant, NMRC, whether it is succeeding now or not, can be a significant tool in achieving these attributes of a working mortgage industry.


Fasanya-Osilaja believes that the mortgage industry should be shaping NMRC and not NMRC shaping the industry, advising that the Central Bank of Nigeria (CBN), through the NMRC, should be listening to the voice of the industry. “Experience has proved to me that the CBN is quite ready to listen and learn. The problem here however, is that the industry has been rather passive,” she noted.

The advisor who is also a Housing/Mortgage Finance Consultant to the CBN on the Nigeria Housing Finance Programme (NHFP) noted recently that NHFP is creating the enabling environment for strengthening the Nigerian housing sector by setting up sustainable framework for mortgage originators, which include financial institutions that provide housing finance, to access long-term refinancing. She added that the framework is setting up mortgage guarantee/insurance as well as a housing microfinance scheme for strengthening Nigeria’s housing microfinance sector.

She revealed that the NHFP intervention included a mass literacy campaign on consumer education, protection and responsibility with regards to housing finance in Nigeria. “The campaign is aimed at educating every Nigerian on the right to own a home, the cost implications, advantages of taking loans to finance a home and to ultimately serve as a catalytic programme to jumpstart the housing market in Nigeria,” she said.


But the mortgage industry has to be standardized so that global players, from global perspectives, could view the local industry from the perspective of NMRC and mortgage banking association of Nigeria (MBAN) and see something to hold on to in their investment decisions. Despite the current challenges, the Nigerian economy could conveniently support the growth of the mortgage industry as the country is one of the fastest growing economies in the world where talent resource is amazing.

The mortgage consultant advised that Nigeria needs to understand there is time for competition and also time for association and each is as critical as the other. “The only thing that will stop this industry from growing is over-regulation by people who are not in the industry and therefore, will not understand the effect of their policy on the actual market”, she said, emphasizing the urgency of an active insurance industry to drive the needed growth in the mortgage industry.

As a step forward, mortgage insurance could come with a typical ‘pay-as-you-go’ premium payment, or may be capitalised into a lump sum payment at the time the mortgage is originated. For homeowners who are required to have PMI because of the 80 percent loan-to-value ratio rule, they can request that the insurance policy be canceled once 20 percent of the principal balance has been paid off.

Abuja international housing show to promote made in Nigeria materials

The Convener of the forthcoming 12th edition of the Abuja International Housing Show has said that it would promote made in Nigeria building materials to boost affordable housing in the country.


Mr Festus Adebayo, Managing Director, FESADEB Communications Ltd. and the convener stated this in an interview with Housing News on Tuesday in Abuja.

Adebayo said that there would be a session and pavilion which would focus on made in Nigeria houses to be championed by the Nigeria Building and Research Institute (NIBRI).

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“This would help in achieving affordable housing by promoting made in Nigeria houses to change the orientation which Nigerians have on imported goods’’.

He emphasised that Nigerians should change the orientation of always patronising and clamouring for imported building materials.

For an affordable housing to be achieved, he noted that the show would be looking into partnering with public and private organisations on locally made building materials.

According to him, the show was looking forward to partner with both government and private organisations in boosting locally made materials.

He urged the Federal Government to boost patronage on locally made houses to achieve affordable houses.

“Recently the National Assemblies patronised Innoson Ltd. and bought some made in Nigeria cars, the government can as well see how we can partner to promote made in Nigeria houses together.

“The government will not only promote it rather it will lead by patronising by giving incentives to those who are interested in building houses with locally sourced materials.

“The show must also address the issue of regulation of cement price because the price is too high in the country.

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The convener noted that it was also partnering with some companies into alternative housing construction like the Earth Bricks houses.

He listed the companies to include Hydraform Ltd., Ireclay in Akure, Ipile Earth Brick in Kuje, Abuja and Shelter Clay in Minna.

Adebayo further said that it would also promote house ownership through “Not Too Young to Own a Home’’ session.

“The whole idea is to address the attitude by some of our adults who do not develop the interest of owning a home until they are 45 or 50 years.

“We want to champion an idea where the youths are being caught very young; by the age of 33 they are already receiving lectures on how to own a home even one or two bedroom.

Today a lot of adults do not even know what is mortgage and we have the National Housing Fund (NHF) which has been operating for many years which a lot of civil servants do not even know how to access it.

“We are introducing “Not Too Young to Own a Home’’ to re-orientate our youths so that the problem of housing deficit will be addressed on time,’’ he added.

By Ella Anokam

Lagos demolishes shanties at abattoir

Over 500 shanties and illegal structures within and outside the Oko-Oba Abattoir and Lairage Complex, at Agege, Lagos, were yesterday demolished by the Lagos State Government. Agriculture Commissioner, Oluwatoyin Suara, described the demolition as part of efforts to ensure adequate upgrading and transformation of the complex for improved operations.

Suarau who was reviewing the report of the demolition carried out by his ministry in collaboration with the Ministry of Environment, the State Environment and Special Offences Enforcement Unit, Department of State Security and Operation MESA, said government owes it a duty to improve the hygienic condition of the complex and ensure best practices in the red meat value chain. “Rehabilitation of the facilities at the Oko-oba abattoir is to ensure that operations at the complex meets international standard,” Suarau stressed.

He explained that completion of projects at the Oko-Oba abattoir complex will result in an upgraded abattoir equipped with a standard clinic to take care of people and other emergencies in the complex.

He stated that apart from upgrade of facilities and infrastructure of abattoirs and slaughter slabs, the state government has also trained butchers and live cattle dealers drawn from various abattoirs and slaughter slabs in the state on current trends in abattoir management.

Aregbesola lauds Omoluabi Mortgage Bank’s prowess

Osun State Governor, Ogbeni Rauf Aregbesola has lauded the managerial prowess of the Board and Management of Omoluabi Mortgage Bank Plc., for recording astronomical growth across all lines in the 2017 financial year.

The governor described the performance in the year under review as heroic, noting that the bank has made tremendous progress, resulting in payment of dividends to shareholders for the first time.

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Aregbesola, who gave the commendation, when Chairman of the bank, Alhaji Adebayo Jimoh led the Board and Management team on a courtesy visit to Government House, Osogbo, urged the management to create more awareness through publicity and advertisements on different media platforms.

The bank posted an impressive balance sheet for Q1 2018 bouncing from a loss position in 2015 to record N187m in profit before tax for 2017, thereby declaring dividend for the first time in its history. The bank’s total revenue also grew by 170 per cent from N305m in 2016 to N518m in 2017.

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While attributing its success to technological innovations, the bank stated that it has been able to build capacity by deploying new and more robust banking software, which helped to improve its services to customers.

“We have set up data centre to drive the bank’s information technology, Internet banking and e-business functions. We have also deployed e-banking platforms integrated with Interswitch and NIBBS.”


Aligning with local interests, the bank said it has created other product lines like ‘karakata’ and ‘sowojere’ to support local communities.

Foreclosure and Action for Foreclosure

When a house is in foreclosure then all doesn’t seem well. Foreclosure is something every real estate investor naturally tries to avoid especially when the investor’s real estate acquisition thrives on mortgage. In this article we explain what foreclosure means and how it is effected.
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

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Formally, a mortgage lender (mortgagee), or other lien-holder, obtains a termination of a mortgage borrower (mortgagor)’s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).

Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt.

While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can successfully repossess the property.

Therefore, through the process of foreclosure, the lender seeks to foreclose (in plain English, immediately terminate) the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes or unpaid contractors’ bills and other fees

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The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property after the owner has failed to comply with an agreement between the lender and borrower called a “mortgage” or “deed of trust.”

Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that “the lender has foreclosed its mortgage or lien.”

If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principal and fees the mortgagee can file a claim for a deficiency judgment.

Comparatively, an action for foreclosure is a judicial procedure by which the mortgagee acquires the mortgaged property for himself free from the mortgagor’s equity of redemption. It is a more effective remedy available to the mortgagee in urgent need of his capital which he cannot realize from the rents and profits accruing from the mortgaged property, or which in fact, is non – existent.

As a result of the foregoing constraints, the courts which jealously protect the equity of redemption, allow a mortgagee to destroy the equitable right to redeem with its own assistance.

A foreclosure order will not be made until the contractual date has passed with the principal and / or interest remaining unpaid after a demand and a reasonable time allowed to lapse without compliance.

However, suffice to say that an action for foreclosure should not be granted by the courts where the interest of the mortgagee is the only outstanding money that has remained unpaid. If the principal money has already been paid, the mortgagor should be allowed to redeem his property provided he devises no other means to pay the mortgagee his interest.

But the only problem here is that at times, the accrued interest ends up being higher than even the principal sum itself, in which case, the mortgagee many indeed have to end up succeeding in a foreclosure action against the mortgagor.

A notice of foreclosure once given and received, remains valid and in force until the exercise of the mortgagee’s power of sale; and the mortgagee is not bound to make any concession or to suspend the exercise of his power of sale. An action for foreclosure being an action to recovery accrued, i.e the date fixed for payment of the principal, otherwise, it becomes statute barred.

A legal mortgage created in the East, North or in Lagos State (as examples) already conveys a legal estate to the mortgagee subject to cessar on redemption by the mortgagor.

As such, an order of foreclosure upon default by the mortgagor makes absolute the title initially vested in the mortgagee subject to cessar on redemption.

There is no transfer in any form and Governor’s consent is not required since the mortgagee by the initial conveyance has the property vested in him, and what happens is that upon the destruction of the mortgagor’s right in the property consequent upon the order of foreclosure absolute, the mortgagee takes free of it.

Nigeria: An Analysis Of Nigerian Law On Procedure For Recovery Of Debt From An Insolvent Company And Fraudulent Directors

Many contracts today are negotiated, agreed upon and executed through the internet. The increase of international trade and investment has led to a rise in business relationships between foreign businesses and their Nigerian counterpart. The element of trust and confidence that parties across borders will be bound by the terms of their agreement is important to the implementation of the contract.

Therefore, where a Nigerian party enters into an internet transaction with a foreign party for the purpose of reaping benefits for himself and disregarding his obligations under the contract, the foreign party not only loses confidence in the Nigerian party, but in some instance, also losses the principal sum and anticipated profit under the contract.

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This experience may prevent the foreign party from entering into contracts with genuine businesses in Nigeria. This is indeed a loss for both the foreign party and the Nigerian market and economy. Hence, it is important to know the provisions of Nigerian Law on Recovery of Debts from an Insolvent Company and Fraudulent Directors.

Provision of the Federal High Court Rules on Recover of a Liquidated Sum
Order 12 of the Federal High Court Rules provides that a claimant may apply summarily to Court for issuance of a writ of summons to recover a liquidated sum and the application will be accompanied with an affidavit stating the grounds upon which the claim is based and that the defendant has no defence on the merit to the claim. The Court would enter the claim in the “undefended list” if it is satisfied that the defendant has no defence to the claim.

Order 30 of the Federal High Court Rules provides that where the claimant feels that the defendant have the intention to obstruct or delay the execution of any order that may be passed against him by disposing or removing his property from the jurisdiction of the Court, the claimant may apply to the Court at the time of instituting the suit to make the defendant to deposit sufficient security to fulfill the order or for his moveable or immovable property within jurisdiction to be attached until the order of Court is delivered.

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Provisions of Companies and Allied Matters Act on Liability of Companies and their Directors
Section 290 of the Companies and Allied Matters Act provides that where a company receives property by way of advance payment for execution of a contract or project and the company with intent to defraud, fails to apply the property for the purpose for which it was received, every director and officer of the company who is in default shall be personally liable to the party from which the property was received and a refund of the property so received and not used for the purpose for which it was received. This does not affect the liability of the company itself.

Provision of Companies and Allied Matters Act on Winding Up of Companies
Section 408 (d) of the Companies and Allied Matters Act provides that a creditor may commence winding up proceedings against a company if it is unable to pay its debts. Section 409 of the Companies and Allied Matters Act provides that a company shall be deemed to be unable to pay its debts if it is indebted to a creditor in a sum exceeding N2, 000 (about $ 8) and same remain unpaid after 3 weeks of service of a statutory letter of demand delivered at the registered place of business of the company.

Provision of Nigerian Law on Obtaining By False Pretense and Economic Crime
Section 419 of the Criminal Code Act provides that a person who by false pretense and with intent to defraud obtains from another person anything capable of being stolen and induces the person to deliver anything capable of being stolen is guilty of a felony and is liable to imprisonment for 3 years and 7 years if the thing is of a value of N1, 000 (about $ 4) and above. It is immaterial that the thing obtained or its delivery was induced through the medium of a contract induced by false pretense.

Section 40 of the EFCC Act defines economic crime as an illicit activity committed with the objectives of earning wealth illegally either individually or in a group or organized manner thereby violating existing legislation and includes any form of fraud and corrupt practices.

Procedure for Recovery of Debt from an Insolvent Company and Fraudulent Directors
The Company and its Directors will be served with a letter of demand demanding full payment of the debt within 7 days of receipt of the letter failing which an action will be commenced against the Company and its Directors to recover the debt, including damages for breach of contract and winding up proceedings against the company for inability to pay its debts.

If the debtor does not pay the debt within 7 days as provided in the letter of demand, a summary judgment proceeding is commenced against the debtor and its Company to recover the debt and an application for security or attachment of the moveable and immoveable property of the debtor pending the determination of the proceeding is brought before the Court.

A statutory letter of demand for winding up of the Company for inability to pay its debts may also be served on the Company and upon expiration of the statutory period of 3 weeks, a winding up proceedings commenced against the Company to liquidate and sell its assets.

If the Company or its Directors obtained services or products from a foreign party with intent to defraud or induced the contract by false pretense, this constitutes an economic crime for which the foreign party may petition the Economic and Financial Commission (“EFCC”) and cause criminal investigation to be conducted against the Company and its Directors for their assets to be frozen towards payment of the debt and criminal prosecution.

Though there is a need to quickly pass the bills on internet transactions pending before the National Assembly in order to adequately protect the interest of foreign parties, the current laws on contract and crime may be applied to protect the interest of foreign parties who enters into internet transaction with an insolvent Company or fraudulent Directors of a Company.

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