As more developers, embrace the Federal Government initiative of providing affordable housing to low-income earners through the Family Homes Funds, the question on the lips of developers is how can they access financing from Family Homes Funds.
To answer the question, the Managing Director of Family Homes Funds, Mr Femi Adewole,in a chat with Housing News,shed more light on how financing can be assessed.
He said, ‘’we are currently providing capital for developers, whether private or public, but the key requirements are these; we only finance developers, who are building homes that fall within our target cost indicators, and they are challenging, that means that more slots exist for the one bedroom houses.
In terms of transfer cost; transfer cost been the price to the occupier, of no more than N2.5 to 3million . The two-bed being 4, to N4.5million, and the three-bed being N5.5 to N6million’’.
Speaking further he said ‘’we are basically financing 100% of the construction cost, and 15% advance payment to get you started, and in some cases we are also giving you an off take guarantee to de-risk the project for you. So it’s an extremely attractive package, because the intent is to bring supply at the level of the market for mortgage origination’’.
On the documents required by Family Homes Fund, he said,
‘’at this stage we are only looking for 3 or 4 sets of documents, number one, we need a very brief information on who you are, because you need to know who you are giving money to, how they are organized and how they handle money. And of course their experience and track record.
The second set is about the technical information, obviously your typical drawings, architecture, civil and all of that.
The third information that we need is the financial appraisal and assessment, and to make that easy for you, we have developed a fairly simple template, which we will e-mail to you and you can fill, and it basically tells you what is happening with regards to the cash flow and the viability of the project.
The fourth document is some statements around your marketing strategy, we want to understand what your strategy and your plan is for linking the production of the houses, to the buyers, that is an area that is of interest to us. So it’s basically as simple as that’’.
He added that interested developers can check the Family Homes Fund website to see the guidelines to developers for accessing financing from the Family Homes Funds.
Despite currently facing Brexit woes and a slumping market, London ranks as the most lucrative investment hotspot in the U.K. over the past decade, according to a report today from Benham and Reeves.
Since the end of the recession in 2009, house prices in London have increased 86%, to an average of £472,901 (US$627,144) in November 2018 from £253,596 in June 2009, the sale and lettings agents said.
London’s inner boroughs are driving the growth, with prices up 94% in the same time, compared to 88% across outer London.
Across the U.K., average prices have seen bumps of 45%, from £230,630 to £159,561.
“Much has been made about the demise of London since the EU Referendum and the resulting slowdown in house price growth, attributed largely to a withdrawal of foreign interest and investment,” Marc von Grundherr, director of Benham and Reeves, said in the report. “However, London remains the pillar of the U.K. property market and the ultimate jewel in the crown for both native and foreign investors. In fact, the number of EU residents buying in London alone is up from 10% in 2015 to 14% in 2018.”
“Those finding themselves in a Brexit-based limbo with regards to buying should rest assured that when the capital does resume business after a brief political respite, its market pedigree will help ensure continued price growth,” Mr. von Grundherr said.
In fact, Benham and Reeves predicts that future home buyers in London could be paying over £4 million for their first homes by 2052, Mansion Global previously reported.
Outside of London, the popular commuter regions of the East of England and the South East have logged the highest price growth of the past decade, up 69% and 62%, respectively.
Only in Northern Ireland have prices yet to recover, still down 5% on pre-recession levels, the report said.
Property prices in Paris reached record highs at the end of 2018. And the bad news for anyone hoping to find a pied a terre in Paris is that this price escalation is expected to continue this year.
2018 was another historic year in Paris property sales – great news for sellers, financially crippling news for buyers. This was according to results unveiled in the Chamber of Notaries of Greater Paris.
Purchase price per square metre continued to rise to record heights and the sales volume continues to grow (though it did dip slightly from 2017 peaks).
There are obviously huge differences between prices for Paris and its suburbs. The average price per metre in the Île-de-France region is 5,970 euros (4.5 percent more than in 2017). But you need an average of 9,750 euros if you dream of living in the heart of Paris, up 5.7 percent in one year.
The cheapest area to buy in the city centre is La Chapelle in the 18th arrondissement at 7,460 euros per square metre, which is still an increase of 11.3 percent since last year.
If you’re feeling a little flush, the most expensive area in Paris now is Odeon in the 6th at an incredible 17,410 euros per metre, a whopping rise of 28.3 percent in just one year.
One of the key causes of this continuing rise is the shortage of new houses being built.
Notaries now estimate that the symbolic bar of 10,000 euros per metre squared on average in Paris (long presented as an impassable “glass ceiling”) will probably be reached as early as this summer.
The Real Estate Developers Association of Nigeria (REDAN), is set to hold its 3rd annual exhibition popularly known as REDAN Build Expo.
The 2019 REDAN Build Expo will hold at Musa Yaradua Centre from 7th – 8th of May 2019. Speaking to Housing News in Abuja on Friday, the Program Consultant, Festus Adebayo said,
‘’this year’s event will parade an array of dignitaries and professionals from all areas of housing,construction, real estate and mortgage from all over the world”.
According to him the REDAN Build 2019, is now open for expression of interest for partnership,participation and sponsorship from organizations who may be interested to work with REDAN for the development of Nigeria’s housing sector.
This year’s event will be unique, because of the determination of REDAN to engage and partner with government agencies in promoting economic development through the creation of jobs.
The Real Estate Developers Association of Nigeria (REDAN) is the principal agency and umbrella body of the organized private sector (public and private) responsible for housing development in Nigeria, having been conferred with official recognition by the Federal Government of Nigeria since November 2002.
Membership of REDAN is open to: Limited Liability Companies, Registered (Co-operative) Societies, partnerships, and parastatals of State or Federal Government who engage in real estate development.
The Green Climate Fund (GCF) has approved the Solar IPP Support Programme for Nigeria, which is expected to benefit no less than one million households in the country.
The $100 million project forms part of the nine new climate resilience and low emission projects totaling $440 million that were endorsed at the 22nd meeting of the GCF Board that ended in Songdo, South Korea.
According to sources, the Nigerian project will “reduce or avoid 476,487t CO2 eq on an annual basis, and 9,529,739 t CO2 eq. over the life of the programme”. The programme is also expected to reduce the perceived risks of investing in the Nigerian renewable energy sector and catalyse private sector investment in the area, through a commercial tranche, on a best effort basis.
At the meeting that saw the selection of Yannick Glemarec as ts new Executive Director, the GCF took steps to strengthen operations, reinforce standards and close policy gaps. The meeting also approved the selection of nine new project partners to become Accredited Entities to GCF.
Co-Chair, Nagmeldin Goutbi Elhassan Mahmoud, said: “We have taken a series of positive decisions at this Board meeting that set us on a path for a successful and ambitious replenishment of GCF, in particular the selection of Yannick Glemarec as our new Executive Director.”
Co-Chair, Josceline Wheatley, stated: “The Board has worked together in a positive spirit this week to expand our portfolio, improve our governance, and strengthen GCF’s operations.”
Javier Manzanares, Executive Director ad interim, noted: “GCF now has a $5 billion portfolio in 97 countries supporting low-emission, climate-resilient development. With decisions to ensure better governance, new project approvals, and a reinforced readiness programme, this Board meeting has left us in great shape for our first replenishment.”
The nine new project approvals bring GCF’s portfolio to a total of 102 projects and programmes, committing $5 billion of GCF resources for climate action in 97 developing countries. Including co-financing, the portfolio channels $17.7 billion in climate finance through its network of 84 Accredited Entities. The new approvals include the first REDD+ results-based payments to be financed, relating to the Brazilian Amazon.
Providing readiness support to build the capacity of developing countries is a key part of GCF’s activities. The Board took note of the evaluation of the Readiness and Preparatory Support Programme by the Independent Evaluation Unit and adopted a work programme and budget that builds upon the evaluation findings and recommendations and provides $122.5 million for 2019 for a new phase of readiness support to developing countries.
Ahead of a pledging conference for the first replenishment of GCF later this year, the Board meeting also moved to complete the policies and standards that guide GCF’s climate activities. New investment criteria indicators will strengthen the implementation of the investment framework, whilst a policy on cancellation and restructuring of projects will further reinforce the good management of its portfolio of projects.
The Board also welcomed recommendations from the Independent Evaluation Unit on how to improve the Results Management Framework, as well as a management response and action plan. The adoption of a policy on protection from sexual exploitation, sexual abuse and sexual harassment, together with guidelines and procedures for the Independent Redress Mechanism ensures that GCF remains at the forefront of international efforts on safeguards and standards.
If not re-appointed, the Governor of the Central Bank of Nigeria, Godwin Emefiele, might vacate his position for one of his deputies, Aishah Ahmad, a top banker in the country’s financial institution.
Ahmad is among eight likely candidates on queue to take over the apex bank’s top job from Emefiele. The other eminent Nigerians being thought fit for the job include Professor Soji Adelaja, Mohammed Dikwa, Bismarck Rewane, Umaru Abdul Mutallab, Obadiah Mailafia, Bello Maccido, Adesola Adeduntan and Herbert Wigwe.
Recall that Emefiele’s job came under threat when the then-presidential candidate, Atiku Abubakar faulted him for the slow growth of Nigeria’s economy, stating he’s not the man to lead Nigeria’s highest financial institution.
The probability of Emefiele returning is also low since no CBN Governor has served two terms since Joseph Sanusi.
Role of CBN Governor in the economy
The CBN Governor is expected to advise the president on both fiscal and monetary policies from time to time. Aside from this, the CBN Act, 2007, states that the Governor is expected to formulate, for the approval of the Board, general rules and any subsequent amendments thereto, providing for:
The safekeeping of the common seal of the bank
The safekeeping of the assets of the bank and of valuables entrusted to the bank
The safekeeping of stocks of unissued or redeemed currency and the preparation, safe custody and destruction of plates and paper for the printing of currency notes and disc for the minting of coins
The protection of banknotes and coins in transit
The conditions under which any Zonal Controller, Branch Controller or Currency Officer may be appointed; and
The conditions governing discounts and advances
The exercise of dual control and general security throughout the bank; and
Such additional arrangement which may be made to ensure the efficient working of the bank, through proper observance of security and the accuracy of the accounts of the bank.
Not far from the basics; to occupy the apex seat, professional background, regional consideration, and international exposure are considered in the selection of the Central Bank job.
The market always reacts to the final selection, which makes the background and track record of the appointed individual significant. Also, the appointee is expected to be globally respected by the International markets with foreign educational background.
Meanwhile, in the case of Nigeria, the position of the Central Bank governor has always been zoned between the North and South.
President Buhari’s radar
Aishah Ahmad’s name is reportedly on President Buhari’s table, with reasons not disclosed, but according to Newsonbanks, an online medium, the President is considering Ahmad for the CBN job as Emefiele’s term expires in June.
“it is not yet clear if there are strong economic reasons for this, considering emefiele’s sterling performance in stabilising the naira in the winds of the economic turbulence, hellish recession and sluggish recovery that have plagued president buhari’s years in office.”
In the report, it was stated that a source in the Presidency said
“the president is being pressured to submit her name to the senate immediately before or after the election and ensure that it is considered and approved before the end of may.”
Aishah Ahmad, 42, is the youngest member of the CBN Board and oversees the Financial Systems Stability Directorate of the apex bank. She replaced Dr Sarah Alade who retired in March 2017. If the Senate approves her nomination, she will be the youngest and the first female CBN Governor in Nigeria and the first female to hold the position in Africa.
Other eligible candidates
Aside Ahmad, eight others are currently being scrutinised and assessed for the job. These include Professor Soji Adelaja, an economist and Distinguished Professor at Michigan State University (MSU), USA; Mohammed Kyari Dikwa, a PhD holder in Accounting and Finance, whose success in coordinating the TSA and the blockage of billions for the government through PICA was said to have endeared him to the President.
Bismarck Rewane, a financial analyst and the Managing Director of Financial Derivatives Company; Umaru Abdul Mutallab, former CEO of UBA and ex-Chairman of First Bank of Nigeria and Obadiah Mailafia, a former CBN deputy governor in charge of monetary policy, foreign exchange operations, investment management, research, statistics, and cooperation with international institutions.
The rest are Bello Maccido, the Chairman of FBN Merchant Bank; Adesola Adeduntan, Managing Director/CEO, First Bank of Nigeria Limited and Herbert Wigwe, Group Managing Director/CEO, Access Bank Plc.
“At the same time, we must work towards creating affordable and inclusionary housing on well-located land close to public transport and job opportunities, as is the case with this new project.
“In addition, we must plan and cater for a wide range of income groupings to respond to the increased demands of urbanisation.”
Commenting on the Goodwood train station site development, Booi said: “It demonstrates social housing in action and what is possible when partners in government and the private sector work together.
“Social housing, which offers affordable rental units for families with a combined monthly income of between R1 500 and R15 000, is one delivery model that we are driving hard as a City.
“This is a partnership between the City, the Western Cape Government’s Department of Human Settlements, the social housing institution DCI Community Housing Services, the Passenger Rail Agency of South Africa, Intersite Asset Investments and the National Housing Finance Corporation, among others. The government subsidy contribution to this social housing project is approximately R280 million.
“The City has provided development facilitation support and various incentives to contribute to the financial viability and operational sustainability of this social housing development.”
“It is quite symbolic that the site for this development is on the Goodwood train station site. This is fully in line with our strategy of positioning housing developments and social housing opportunities closer to smaller city centres and transport hubs.
Booi added: “We continue to assess City-owned land, including in and near the Cape Town CBD, among others, to determine whether some of these properties could be developed for housing opportunities – be it for transitional, affordable, social housing, or State-subsidised BNG housing.
“There are no quick fixes but we are absolutely committed to building integrated communities with different types of residential developments based on a mix of income groups and circumstances.
“The development and availability of affordable rental accommodation in central areas of the city is pivotal to the future development of Cape Town.”
Africa is a diverse continent, with roughly 1bn people, 54 countries and thousands of languages. Additionally, many of its economies are facing similar challenges. One of the most common obstacles African markets face is a shortage of affordable housing. Kenya has a housing gap of approximately 2m homes, for example, while more than 12m people in Egypt live in informal buildings. This is hardly unique to the continent, but with high GDP expansion, limited job creation, strong population growth and rapid urbanisation, its acuity in African economies is more pronounced.
There are upsides to these drivers, of course. By the year 2040, for example, the continent is expected to have the largest workforce in the world, and African cities and towns will see consumer spending exceed $2trn. But to foster and sustain high economic growth – and the positive factors that come with it – African markets will need to improve the fundamentals of their housing sectors. While the specific features of local real estate markets and regulatory regimes vary significantly across the continent, from Egypt to South Africa, chronic housing deficits, a lack of funding and an affordability gap are common throughout the region.
Nonetheless, the situation is beginning to change. Policymakers are turning their attention to the problem and are developing both supply- and demand-side interventions to tackle one of the continent’s most pressing social and economic issues. Demand Pressures
Demographic trends alone point to the pressing challenge of housing provision. While much of the world is experiencing a slowdown, or even a decrease, in population growth, the rate of demographic expansion in Africa continues to rise.
By 2050 the population of the continent will have doubled, meaning that the region will have added 3.5m people per month. Indeed, Africa will contribute more than half of the world’s total population growth through to 2050 and more than three-quarters of that growth up to 2100. The situation is not uniform across the continent. Some countries will see even greater population burdens. Nigeria, for example, which currently has roughly 180m people, could have the greatest population increase of any nation in the world through to 2050, according to some projections.
The sheer numbers alone illustrate the challenges of housing provision. And given that Africa already has the youngest population in the world, countries within the region are in for a prolonged period of demand for housing as graduates and young professionals contemplate getting married and starting families. This is already evident in a market such as Egypt, where there are almost 900,000 marriages per year, and as such the large pool of first-time home seekers are increasing the demand for residential units. Urbanisation
The demographic factors only partly explain the acuity of the housing deficit in Africa. Another, and perhaps more salient, factor is the high level of urbanisation — something that has put an immense amount of pressure on existing infrastructure and housing stock. By the midpoint of this century Africa will be home to almost 25% of the world’s urban population. Yet, as of 2015, a third of sub-Saharan Africans living in towns and cities did not have access to electricity. The situation is particularly pressing in Nigeria, where 80% of the population uses kerosene, charcoal or wood for cooking. As this suggests, informality abounds, and almost 50% of the continent’s urban dwellers live in slums or informal housing.
Cairo is a good case in point. The Egyptian capital, which has an estimated population of 12m and as many as 20.5m people in the wider metropolitan area, has been struggling with a lack of affordable housing for several years. Across the country as a whole, the housing deficit stands at approximately 3m units, with the capital responsible for the largest share of this shortfall. “Private developers collectively provide about 20,000 units per year, but this barely scratches the surface in the housing gap,” Magued Sherif, managing director of Sixth of October Development and Investment Company, told OBG. Indeed, according to research by Colliers, a real estate services firm, Egypt will need as many as 100,000 units per year through to 2020 to meet demand. According to Colliers, more than half of Cairenes can afford a property in the $26,000-to-estate market tends to offer units starting from approximately $60,000, affordable only to 13% of Cairenes.
As a result, property and construction in Cairo is dominated by the informal sector. Informal housing in unplanned areas, known as ashwa’iyyat, increased by 2m units across the country between 2012 and 2014. During the same time period, the social housing project of the Ministry of Housing produced just 50,000 affordable units. The vast number of units being churned out by the informal sector illustrates the scope and scale of the potential housing market.
Without decisive intervention, this situation is not going to improve. By 2050 African countries will have had to find accommodation in urban settlements for 900m new home seekers. The scale of this demand is unprecedented, the developed world having had over two and a half centuries to construct the same amount of accommodation. Given the dizzying pace of change, it is perhaps unsurprising that this urban transformation poses challenges to stability and growth across the continent. African urban centres have the second-highest inequality measurements in the world and are often home to unemployed youth. Indeed, some 75% of Africa’s urban population is under 35, yet youth unemployment is six times higher in the continent’s cities and towns than in rural areas. Current Limitations
Clearly then, the need for housing in the continent’s major markets is only likely to expand further. Addressing that, however, will require rethinking how affordable units are delivered, given that the current pipeline – whether for public or private projects – fails to keep up with demand.
The majority of developers and investors across Africa are focused on the top end of the market, for example. Private capital and investment funds are rarely directed towards the mass housing market and usually focus on the commercial real estate segment. Residential holdings comprise just 2.5% of listed property funds on the continent, compared to 25% in other developing markets and 15% in developed countries. Yet the need for capital is significant. Nigeria, for example, has a housing shortage estimated at 17m units, with a funding requirement of $363bn. This is perhaps unsurprising given that net annual returns in commercial and industrial real estate in Africa can reach around 20%, according to PwC.
The issue of incentivising private sector involvement in mass housing provision is not confined to Africa; across the globe, large-scale volume business is often shunned in favour of high-margin, luxury residential and commercial property. In the UK, for example, developers have made the point that they are unable to deliver affordable units while satisfying their desire for industry standard profit margins of 17% to 20%. In Africa, beyond the question of margins, there are impediments to building on the scale required to make low-income housing efficient and profitable for developers. From registration to pricing, land is a pressing challenge in many markets. Indeed, the ability to acquire on a scale that would make an affordable housing project viable is often constrained. According to a report by Resilient Africa, a Nigerian developer, South Africa accounted for almost 93% of large lot property transactions in 2014. Complex ownership patterns, such as traditional land ownership rights in countries like Côte d’Ivoire, which do not always reflect formal land registry rolls, and inadequate local management of land, are key factors in the ability to obtain and build on sizeable plots in many jurisdictions. Administrative Reforms
To address this, a number of African markets have launched reforms looking to alleviate the bottleneck, incentivise private sector participation and simplify land registration. In Côte d’Ivoire, for example, the government has moved aggressively to clarify ownership of land, particularly in peri-urban and rural areas. In 2013 the legislature extended a grace period for the codification of land transactions in rural areas until 2023 in a bid to encourage registration of land ownership outside of major urban areas. Similar efforts include a push to register tens of thousands of immigrants, who were previously undocumented and often settled in slums, giving them the ability to own land, as well as a move to survey and register all land that lacks a current title, which by some estimates account for upward of 90% of the country.
Côte d’Ivoire has also managed to bring down the length of time it takes to register land to roughly 30 days, about half the length of time required on average in sub-Saharan Africa. “The government has taken a step towards improving transparency by mapping the entire country and assigning price structures per sq metre of land, which is CFA2000 ($3.33) in urban centres, CFA1500 ($2.50) in the regions and CFA700 ($1.17) in rural areas,” Siriki Sangaré, CEO of Ivorian housing firm, OPES Holding, and president of the National Chamber of Builders and Developers of Côte d’ Ivoire, told OBG. “However, a change in the institutional framework that governs land acquisition is needed, since it has remained unchanged since 1960,” he added. Mortgages
In 2007 Egypt was the first country in the region to establish a mortgage refinancing company. This brings liquidity to the mortgage sector through a secondary market, and thus allows originators to produce more mortgages. The establishment of a refinancing company also reduces the cost of capital and allows mortgage firms to extend loan tenors, making mortgages more affordable to the end consumer. Following Egypt’s lead, countries such as Tanzania in 2010 and Nigeria in 2014 also developed their own mortgage refinancing companies.
Indeed, greater volumes and more affordable mortgages will be essential in meeting the continent’s housing needs. Marja Hoek-Smit, director of the International Housing Finance Programme at the Wharton School, University of Pennsylvania, told OBG in 2014 that Egypt’s large-scale home building targets “can only happen when we have mass mortgage finance”.
In general terms, mortgage penetration rates in Africa have some way to go to reach global averages. Mortgage values to GDP range from 28% in Angola to 0.07% in Senegal. However, only five countries on the continent (Angola, South Africa, Cape Verde, Namibia and Mauritius) have a rate exceeding 10%. This compares to rates of 80% in the UK and 77% in the US. Solutions
However, while the scale of mortgage roll-out remains a challenge, things are starting to change, and financing is beginning to become more accessible and compelling in certain markets. For example, in Morocco, Egypt, Algeria, Ghana and South Africa the average mortgage interest rate is below 10%, while in all of those countries, with the exception of Ghana, the average loan tenor is at 20 years or above. As mortgages become more affordable and accessible across the continent, uptake will grow.
The Nigerian government has also made efforts to address financing concerns and the affordability conundrum via a public route. The National Housing Fund (NHF), managed by the Federal Mortgage Bank of Nigeria, issues subsidised loans of up to N15m ($75,400) with an interest rate of 2%. Contributions to the fund are made at 2.5% of salary for workers earning N3000 ($15.10) and above per month. As of March 2016 the NHF had raised N191.9bn ($964.6m) from 4.1m contributors and disbursed N5.9bn ($29.7m) to 118,284 borrowers. While this mechanism provides a start for improving the financing environment, it does not completely address the affordability issue.
The NHF’s minimum loan of N5m ($25,100) requires a 10% equity payment of N500,000 ($2513) and monthly repayments of N12,500 ($62). This is out of reach for most home seekers across the country. More than half of Nigerians live on less than $1 a day, while a significant amount receive the minimum wage of N18,000 ($90.50) per month. For such potential borrowers in Nigeria the down payment alone would take almost nine years of salary savings. Direct Intervention
The Nigerian government is taking a more direct approach, with an emphasis on supply-side interventions. The government set a target of building 1m homes per year. In 2016 it aimed to construct 250,000 housing units at a cost of N40bn ($201m). State governments were tasked with building an additional 250,000 units, while the private sector was expected to construct a further 500,000. Regional efforts are also afoot to expand affordable housing stock. For example, in May 2015 the International Finance Corporation announced the launch of a new project to support home building in multiple African countries. Developed in conjunction with CITIC Construction, a Chinese firm, the project will provide long-term funding to local developers. The goal of the $300m project, which is being rolled out through an investment vehicle called CITICC (Africa), is to support the development of 30,000 homes by 2020. Cooperatives
Kenya faces many of the same challenges as Nigeria, only on a smaller scale. Land registration and titling, high financing costs – ranging from 11.9% to 23%, and limited supply all constrain affordability in the market. However, the country has seen the emergence of a number of developers focusing on affordable housing. Jamii Bora and Karibu Homes-Parktel offer units with prices as low as KSH1.6m ($15,600).
Yet the main forces connecting demand and supply in the market are cooperatives. Under the auspices of the National Cooperative Housing Union, which has 800 member cooperatives, several local cooperatives are offering their members affordable housing units, housing microfinance and attractive payment plans. Private Equity
Such projects point to the viability of housing provision for low-income earners through a number of supply- and demand-side interventions. However, it is South Africa that really illustrates the possibilities for affordable housing once the regulation is in place, and the will of the public and private sector is present. Almost a fifth of households in the country are located in informal settlements, while the housing deficit nationwide could be as high as 2.5m units. This has prompted private equity investors to explore potential opportunities in the segment.
International Housing Solutions, a private equity investor, launched their first fund for the affordable housing segment in 2007. This fund financed over 28,000 units in South Africa and achieved returns totalling R1.8bn ($127.1m). Consequently, the investor launched its second fund targeting affordable housing in 2014. Phatisa, a Mauritius-base fund manager, launched its 10-year Pan-Africa Housing Fund in 2013, raising $41m. The fund targets affordable and middle-class housing in markets in Eastern and Southern Africa by providing risk capital for developers with land on a joint-venture basis. Solutions
Such endeavours should provide a boost for affordable housing across the continent and could set a benchmark for funds looking to enter the affordable housing segment in other markets in Africa. The introduction of private capital in the affordable housing market on a bigger scale will be critical in meeting demand over the coming years.
However, it will not be the only solution. Given the current housing deficits across the continent, and the rapid pace of demographic and urban growth, markets will require multiple innovative interventions to meet housing requirements. These will include government-supported home-building programmes, better regulatory environments related to land registration and credit information, and improved access to finance and microfinance.
If the continent is going to meet the challenges of housing provision in the coming decades, it will require a concerted and sustained effort from both the public and private sectors.
The key elements for the growth of a national mortgage finance market are gradually taking shape. Major housing industry players including mortgage banks, financing institutions, and developers are working together in a more structured fashion.
The country’s mortgage market, which has for several decades, depended on bank deposits now raises longer-term funds from the Capital Market to make mortgages of up to 20 years possible and the regulatory framework for conducting mortgage transactions is being strengthened to reduce investment risk. Also, technology is now playing a central role in streamlining and integrating mortgage transaction processes.
This creates a pool of reliable industry data that will support strategic policy formulation to drive housing development. Overall, in terms in market depth, liquidity and structure, availability and affordability of residential mortgages, it is evident that the housing and mortgage industry has recorded significant progress in the last three years.
This turnaround is thanks in large part to the strategic interventions of the Nigeria Mortgage Refinance Company (NMRC), a private sector-driven mortgage facility that started operations in 2015 with the mandate to develop the country’s primary and secondary markets.
To put things in perspective, consider the state of the industry before the NMRC was established in 2013 as a component of the Nigeria Housing Finance Programme – a program initiated by the Federal Ministry of Finance in collaboration with the Central Bank of Nigeria (CBN), Federal Ministry of Lands, Housing & Urban Development (FMLHUD) and the World Bank/IFC. The country’s 60-year old mortgage industry was in a dire state: loose and without financial depth.
A combination of liquidity shortages, systemic and structural challenges made the growth of the sector difficult. Mortgage loans were hard to access. Even when available, they were provided at premium interest rates of upwards of 28 percent per annum. Payback periods were short with the longest being around five years.
The lack of a robust secondary mortgage market with access to long-term finance and a pro-active institution to implement structural reforms stunted growth had created an inefficient system where players in the sector operated as disparate entities.
Tapping Long-Term Mortgage Finance
In the past four years, NMRC has in pursuit of its mandate to break down barriers that hinder affordable housing delivery taken several impactful actions to reset the country’s housing market on the path of sustainable growth and impact. The most notable feat is successfully linking the mortgage market to the capital market and deepening liquidity in the system.
What is innovative about the NMRC is the catalytic way it deploys its funds through mortgage and commercial banks that give housing loans. NMRC uses the long-term funds that it raises from its bond issues to purchase loans that mortgage and commercial banks give to working Nigerians. The implication is that, instead of waiting to recoup the loans through monthly payments over periods that may range from ten to 15 years, NMRC ensures they get the full value of the loans after six months. NMRC’s capacity to make this quick liquidity conversion has boosted the financial standing of its partner mortgage banks, empowering them to process even more mortgages to other potential homeowners.
The current management of NMRC, under the leadership of Mr. Kehinde Ogundimu, plans to increase the frequency and size of the company’s bond issuance program in order to rev up refinancing activities for greater impact going forward.
Driving Standards NMRC has also led efforts to promote the creation of a strong legal framework and standards to support the activities of key players in the mortgage market. This includes the development of uniform underwriting standards for both the formal and informal sectors of the economy. The standards set clear industry guidelines that mortgage banks are expected to comply with in originating and processing mortgages that can be refinanced by NMRC. They serve the strategic purpose of creating a strong system for mitigating risks associated with mortgage financing. Currently, all NMRC’s participating mortgage and commercial banks used these standards to process mortgage applications. The adoption of these standards by the banks and the strict application has helped NMRC to achieve zero default rate on the loans that it has refinanced so far.
NMRC has also developed a model mortgage foreclosure law for adoption by state governments. The Kaduna State government last year made history as the first state to adopt the law. The law is critical to creating legal mortgages across the country and ensuring the timely resolution of disputes. It is also necessary as a strong legal basis that empowers mortgage institutions to recover the balance of loans from defaulting borrowers by forcing the sale of the asset used as the collateral for the loan. Fixing Structural Gaps
NMRC has also done a remarkable job of leveraging the power of technology to close structural market gaps and introduce efficiencies in the operations of the country’s mortgage market.
At the heart of this focus is the Mortgage Market System (MMS) which is currently in use by all key players use for their mortgage transactions. The system links important aspects of the housing value chain from construction finance to primary mortgage origination and administration to secondary market refinancing. The successful adoption of this system by all key stakeholders in the housing finance market is helping to forge integration of business systems and processes as well as enhance efficiency and transaction turnaround times.
Partnerships NMRC is also building strategic partnerships with key stakeholders to push the frontiers of affordable home ownership across the country. First is the collaboration with the Kaduna state government which amongst other things would help deliver the State’s Millennium City Project.
The second example is the strategic partnership with the Ogun State Government to deliver quality and affordable houses to public servants in the state. Key parties to the agreement include the Ogun State Property Investment Corporation (OPIC) and Imperial Homes, TrustBond and Homebase mortgage banks. The three mortgage lenders have committed funds that would boost the capacity of OPIC to develop more properties for uptake by civil servants while NMRC will provide refinancing for the mortgages that would be provided.
Another good example is NMRC’s affordable housing partnership with Echostone Housing System, a United States-based global leader in smart housing solutions to provide innovative housing technology solutions to improve cost-effective housing delivery and increase housing stock in the country.
All these developments are exciting and hold great promise for the industry. A robust housing finance market is essential to achieving the country’s drive to provide affordable housing for the working population. NMRC has done a commendable job in collaboration with key industry stakeholders such as the Central Bank of Nigeria (CBN), Mortgage Bankers’ Association of Nigeria (MBAN), and the Nigerian Deposit Insurance Corporation (NDIC) amongst others. Sustaining the momentum of reform and market development activities is critical.
The statement, disclosed that the resignation would take effect on Thursday. According to the company, Egan’s resignation was voluntarily and without pressure.
Reason for his resignation was based on family matter, as Egan seek to return to Ireland to spend more time with his family.
Meanwhile, the company lauded him for his contribution to Dangote Cement’s growth.
Brian joined Dangote Cement as Group Chief Financial Officer on 20th April 2014 and was elevated to the Board as Executive Director, Finance, in July 2017. He has previously been an Executive Director and Chief Financial Officer of Petropavlovsk Plc and of Aricom Plc, both of which were listed on the London Stock Exchange.
Before joining Aricom he was Chief Financial Officer of Gloria-Jeans Corporation, a leading Russian apparel manufacturer and retailer. He has more than 20 years’ international experience in senior financial roles with Associated British Foods Plc, Georgia-Pacific Ireland Limited and Coca-Cola HBC.
He trained as an accountant with KPMG and is a member of The Institute of Chartered Accountants in Ireland.