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Delta outlaws ‘deve’ to protect property developers, investment

 

Governor Ifeanyi Okowa of Delta State has taken a bold step to sign a bill outlawing ‘deve’ in the state, in an effort aimed at stopping the harassment of property developers by the youths and to ensure the state witness speedy development.

‘Deve’ as it is popularly called in local parlance, is ‘illegal and forceful entry into development sites.’ Youths are seen to be more into this negative act that is believed to be scaring investors away from the state thereby slowing pace of development.

Okowa, while signing the Delta State Public and Private Properties Protection Bill 2018 into law, weekend, lamented that harassment of property developers in the name of “deve” had chased away a lot of developers.

He expressed confidence that with the signing into law of the bill prohibiting illegal and forceful entry into development sites, the state would witness speedy development. “We will collaborate with the Delta State House of Assembly to ensure that laws are passed to impact positively on the lives of our people,” he assured.

He went on to express, “I am glad that this bill to prohibit the forcefully entry into public and private properties has been passed into law as it will stop youths from trespassing into property development sites in the state and make investment to thrive.”

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He said the prohibition would impact on the lives of Deltans and bring investment sanity into the state.

Speaker of the state’s house of assembly, Sheriff Oborevwori, presented the bill to the governor at Government House, Asaba. He was in the company of the clerk of the assembly, Lyna Ocholor, and other principal officers.

The governor also assented to a bill to amend the Delta State Oil Producing Area Developmental Commission (DESOPADEC) law just as he promised to assent to other bills that have been passed by the Delta State House of Assembly.

Speaking on the DESOPADEC amendment bill, the governor explained that the amendment was meant to ensure that no vacuum was created in the leadership of the commission as government can now extend the tenure of the board under given circumstances.

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He commended the speaker and members of the house of assembly for their cordial relationship with the executive arm in bringing development to the people and impacting on the lives of Deltans.

Oborevwori had while presenting the bills for assent, told the Governor that the bills passed through all the processes required for them to be passed, stating that the bills were meant to impact on Deltans, create peace, boost the economy and bring development to the state.

Mercy Enoch

2019: Politicians Sell, Lease Mansions To Raise Campaign Funds

In a desperate bid to actualise their political ambitions in the current electioneering season, some politicians with choice properties in the Federal Capital Territory (FCT) have started selling and leasing such assets, including their mansions, in order to raise funds for their campaign ahead of the 2019 general election.

investigations revealed that because most channels hitherto used as conduits to embezzle monies for campaign financing have been blocked by the current administration, these set of politicians are left with no option than to give out large number of such choice properties said to be acquired from proceeds of corruption.

Some of the mansions, which had been under lock and key and remained unoccupied for several years, are located in highbrow areas of Asokoro, Maitama and some parts of Wuse II.

The realty sector had boomed during some past administrations, with many public servants, including former governors and legislators, investing heavily on choice properties in Abuja, using illegally acquired tax payers wealth.

It was further revealed that apart from security guards living in the gatehouse who were employed to safeguard the properties from vandals, the owners rarely visit such homes.

Nigeria is currently battling to address the over 17 to 20 million housing deficit despite the large number of completed and unoccupied houses dotting the landscape of major cities of Lagos, Portharcourt and Abuja among others.

Findings by this paper revealed that houses at Emmanuel Mbaka drive, by TY Danjuma Street and similar others at the Asokoro district are put up for sale.

The asking price for a 4 bedroom terraced duplex, 6 bedroom terraced duplex and 4 bedroom semi-detached goes for N700m, N620m and N650m respectively.

Parts of Maitaima district are not left out of the bargain, as houses at Volta close, Thames street, off Alvan Ikoku, Gana street and Mambilla street by Aso drive are also put up for sale.

A 5 bedroom detached duplex and 8 bedroom-detached duplex in this areas are pegged at N300million, N5billion, N130million and N1billion depending on the size of the buildings.

Wuse II is another highbrow area in the Federal Capital City (FCC) taunted by high cost of rental fees.

A 3 bedroom flat for rent at Aminu Kano crescent goes for N2.5million per annum, while a 5 bedroom detached duplex for sale at Nairobi Street is put at N650million.

Some experts believe that the development might cripple economic growth by the time more accommodation are made available for lease.

A real estate developer, Arc Adewunmi Towolawi Okupe, said that since most of the houses are expensive for Nigerians in dire need of accommodation, the impact on the real estate sector might not be significant.

Okupe noted that houses should be designed to be flexible enough to accommodate changes in family size, income, status, among others.

On whether it might hike rental fees, he said, “No, it will rather stabilise or lower it a bit, following the law of demand and supply”.

The expert disclosed that a 5-bedroom duplex with a boys’ quarter is leased for N10million, while a 4-bed terrace is given out for N7.5m.

Lending his voice, the chairman, Nigerian Institution of Civil Engineers (NICE), Abuja chapter, Engr Ben-Osy Okoh, described the trend as a threat to Nigeria’s economy.

He said the implication is that when these politicians are re-elected into power, they would loot the economy to repurchase the sold properties.

Okoh maintained that it poses no danger to the real estate sector but the economy.

Another developer, who also spoke on condition of anonymity to avoid jeopardising the interest of his client, asked if it was an aberration for any serving politician to put up his properties either for sell or lease.

He said some civil servants are wealthier than politicians, adding that majority of them disguise as very low-income earners while amassing wealth.

Stakeholders Urge Electorate To Fund Political Parties, Campaigns

Meanwhile, in a bid to ensure that elected political office holders feel a sense of indebtedness to the people, some stakeholders have urged Nigerians to donate generously towards the electioneering campaigns of candidates and political parties of their choice.

This demand is similar to the grassroots fundraising practice in the United States, which was instrumental to the election success of former US President Barack Obama who funded his campaign as candidate of the Democratic Party in the 2008 presidential campaigns from the general public.

The stakeholders condemned the trend whereby politicians offer properties for sale in choice areas within Abuja, Lagos and other major cities in the country in order to finance their campaigns.

They advised that Nigerians should identify and adopt a suitable model of funding political campaigns in the country.

The Inter-Party Advisory Council (IPAC), the umbrella body of registered Political Parties in Nigeria decried self-funded political campaign, describing it as anti-democratic.

The council also bemoaned the huge cost of political campaign, which it said is now a burden on politicians seeking elective positions.

Newly elected chairman of the council and national chairman of the Progressive People’s Alliance (PPA), Chief Peter Ameh, who spoke exclusively, urged Nigerians to donate to political campaigns so as to ensure inclusiveness and sense of participation in the political process.

On the sources of campaign funds, Ameh explained that the use of huge funds sourced by an individual aspirant in the campaign processes is counter-productive, saying politicians who personally bear huge costs of campaign funds will treat governance as a business venture.

Condemning the trend whereby politicians offer properties for sale in choice areas within Abuja, Lagos and other major cities in the country in order to finance their campaigns, Ameh noted that such politicians would be more interested in acquisition of bigger properties in Nigeria and abroad by the time they are elected into public office.

“I am aware of the trend, and I condemn it totally. How do we open-up the political space for the young people if we keep yielding the floor to moneybags? How can young people come into government?” Ameh queried.

IPAC also described the exorbitant rate charged by some political parties for nomination and expression of interest forms as outrageous.

He noted that the cost of running elections must be moderated so as to open-up the political space for young Nigerians.

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“If we must expand the democratic space, nomination forms should even be free because it is part of fundamental rights of citizens. In civilised climes, people donate money for those seeking elective offices,” he stated.

He assured that IPAC would consider necessary actions to ensure that funding of political campaign is moderated.

He said, “It is part of my agenda to moderate the political temperature to make it inclusive and accessible for every eligible Nigerian. We should learn how to conduct political activities at moderate costs.

“We must create a model that works for us; the people must donate to candidates so that they can own the process. You cannot own somebody who has spent about N600 million to N1 billion to win an election. It is not possible.

“So, it makes it look like an investment that has to be recouped. In our society where poverty has cremated everywhere, it makes more people vulnerable to the money for vote syndrome”.

Also speaking, national chairman of the United People’s Party (UPC), Dr Kenneth Ibe-Kalu, observed because the cost of running election in Nigeria is huge, political parties are justified to charge huge funds as fee for nomination forms.

He however noted that the funds should not be raised solely by an individual aspirant or candidate.

Ibe-Kalu said, “Conducting election is a serious endeavour and it is capital intensive. A lot of processes are involved, which includes but not limited to campaigns, media engagements and so on. These things cost money.

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“You should also remember that along the line there could be legal issues that has to be promptly responded to, and the political party takes care of all these.

“Therefore, the nomination fee, in my own view, is not outrageous. Rather, Nigerians should shift attention from a self-financed electoral processes and raise funds for the candidate they believe in. This is the only way to help the process”.

12m Rice Farmers Mobilise For PMB’s Reelection

Meanwhile, over 12 million rice farmers in the country have pledged to mobilise their family members to cast their votes for president Muhammadu Buhari in the 2019 general election.

The farmers under the auspices of Rice Farmers Association of Nigeria (RIFAN) also promised to contribute money to buy APC presidential nomination form for President Buhari to enable him contest the 2019 presidential poll.

National president of the association, Alhaji Aminu Goronyo, disclosed this yesterday when he led state and zonal members of the association on a courtesy call to Kebbi State, Abubakar Atiku Bagudu, at Government House, Birnin Kebbi.

He noted that the association has 12.2 million members across the country who are ready to support the president in his quest to make Nigeria self sufficient in food production.

”When we met Mr President in Abuja, we told him that small farmers of this county who are 12.2 million in number have directed us to inform him that they have started putting their money together as a contribution so that when the time comes they will be able to purchase nomination form for him to contest the 2019 election”, he said.

Goronyo commended Governor Bagudu for the tremendous support he is giving RIFAN and the role he is playing in improving rice production in Nigeria as chairman of the presidential committee on Rice and Wheat farming.

In his remarks, Governor Bagudu praised the association for recording remarkable success in rice production within a short period of time.

He also acknowledged the support of President Buhari to farmers in the country, saying he has done things that are unprecedented to farmers in Nigeria.

Group To Raise N1bn For PMB’s Primary Reelection

Meanwhile, a political group, Buhari 2019 Door-to-Door Ambassadors, has set up a crowd fundraising platform to raise N1billion to fund President Muhammadu Buhari’s primary election in the All Progressives Congress (APC).

The group’s target of N1 billion is tagged “Nigerians Fund PMB 2019 Primary”.

This comes just days after some Nigerians and groups jostled to obtain the president’s nomination and expression of interest forms, with NCAN eventually outsmarting them.

The director general of the coordinating organisation, Chris Kohol, in a statement issued in Abuja, said the crowd funding campaign was initiated by patriotic Nigerians to appreciate President Buhari’s sterling leadership achievements.

He stated that the crowd fundraising will start from today, Monday September 10, 2018 by 10am and end Monday, September 17, 2018 by 7pm.

He added that channels of the crowd funding include online payment, bank transfers/deposits and short code SMS.

He explained that the crowd fundraising exercise will be highly transparent, as the Economic and Financial Crimes Commission (EFFC), the Department of State Services (DSS), the Central Bank of Nigeria (CBN), the Independent Corrupt Practices Commission (ICPC), Buhari Presidential Campaign Organisation 2019 and Buhari Support Organisations (BSOs) had all been notified of the funding exercise and have been invited to monitor and audit the project.

Kohol said, “President Muhammadu Buhari, as a man of integrity and honour, has said several times and demonstrated many times that he will not touch any Kobo of the public funds, unlike some past leaders, to facilitate his re-election bid.

“Hence, Nigerians are keen to crowd-fund N1billion for his presidential primary to enable him apply the funds for campaign transportation/logistics, campaign materials, non-volunteers salaries, media, advertisement and other key expenses during the presidential primary and convention.

“Now, as President Buhari prepares for party primaries, many Nigerians and groups have indicated interest and aligned to fund President Muhammadu Buhari’s primary with a crowd fundraising target of N1 billion”.

Kohol further said the Buhari 2019 Door-To-Door Ambassadors was a voluntary socio-political organisation that is birthed chiefly to promote and propagate President Muhammadu Buhari’s sterling administrative achievements through door-to-door outreach, campaigns and other innovative and strategic means towards ensuring his victory in the 2019 election.

He said the organisation currently has over four million PVC-carrying members across the country in just five months of it establishment and targets 37 million members across 36 states of the federation and the Federal Capital Territory,  adding that the organisation plans to embark on full membership mobilisation early next month.

Aspirants In Last-minute Rush For Forms

Meanwhile, stalwarts of the APC were at the weekend engaged in a frenzy of purchasing expression of interest and nomination forms ahead of Tuesday’s deadline for the closing of sales.

It was observed that the national secretariat of the APC in Abuja was a beehive of activities on Saturday and Sunday as political bigwigs seeking re-election or new offices thronged the party with their supporters.

Among those who came to obtain their nomination forms was the Senator representing Kaduna Central, Shehu Sani, who was accompanied by his supporters from the seven local government areas of Kaduna State under his constituency.

Addressing his supporters prior to picking the form, Senator Sani urged them to sustain the momentum as they had always done, especially with the 2019 general election around the corner.

Also, the people of Borno North senatorial district have purchased the N22.5m expression of interest and the nomination forms for an aspirant from Borno South senatorial district, Alhaji Idris Mohammed.

The leader of the Northern delegation, Alhaji Umar Lawan, said the idea is to deepen the process of democracy in the state.

It was learnt that a major issue in the build-up to the 2019 governorship election in the state has been power rotation.

Of the six governors that have ruled the state since 1979, none has been from the Southern part.

Speaking on why some people from the Northern part opted to take the initiative, Lawan said, “There have been a lot of complaints that the people of Southern Borno are marginalised. Nobody has marginalised anybody because nobody has come out to say he is looking for governorship until today. So, it is a matter of reaching out to the people.

“Power is not served à la carte. You have to reach out for it. You have to earn it. We wish him a very good term and we pray that the people will accept him with open arms.”

ADEBIYI ADEDAPO, ANDREW ESSIEN, CHIKA OKEKE, Tarkaa David, YAHYA SARKi

“Artisans can now have pride in their skills”– Bldr. Opaluwah

The Vice Chairman, Council of Registered Builders of Nigeria (CORBON), Bldr. Samson Ameh Opaluwah has said that with the collaboration of N-Power, C-STEmp, CORBON and the Federal Government, artisans are now going to enjoy their pride of place in the society with the upcoming Construction Artisans Award.

Bldr Samson Opaluwah made this statement during a chat with HousingNews Correspondent earlier today.

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“from now henceforth skills of artisans will be rewarded and their importance in running the engine of the Nigerian economy will be identified.” He said.

The Construction Artisans Awards which is slated for the first quarter of 2019, he said, is platform aimed at showcasing and rewarding excellence and competence of artisans all across the federation.

“It is not a competition; however we want to see who is competent and who is skilled in a particular area and begin to reward them.” He said.

He added that the Construction Artisans Award was birthed due to the little importance given to technical education, in the area of acquisition of adequate requisite skills of artisans in the construction sector and the need to ginger youths to know that competence has value and acquiring skills is rewarded in the society.

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“No matter how educated, knowledgeable or proficient the engineer, architect, quantity surveyor and builders are, the person who translates the idea into reality is the artisan and if the artisan is not properly trained in his skill it becomes a major challenge because all the intellectual inputs cannot actually benefit the eventual development that is intended.

Bldr. Samson charged all artisans to raise their tools and utilize them maximally as the upcoming Construction Artisans Awards is aimed at showcasing their worth to the society and rewarding them for their enormous efforts in the physical actualization of ideas of professionals in the construction sector.

 

Wilson Ifeoma Nonye – HousingNews, Abuja

POSSIBLE SOLUTIONS TO UTILIZING CAPITAL MARKET DERIVATIVES IN HOUSING DELIVERY OF NIGERIA EMERGING MARKET

 

It is no doubt that capital market and it derivatives in housing delivery is still at its early stage of development in Nigeria and the current situation of the market is not encouraging to make it a favorable finance source for housing development at a scale and affordable rate.

It won’t be farfetched to note that so many challenges are hindering capital market derivatives from been used for housing finance and delivery in Nigeria ranging from policies to others factors and that awareness of the imperativeness and benefits of financing through the capital market is lacking even as this seem to be one of the major way to liberate people from their shackle of financial difficulty for real estate development, a synergetic effort between the market and developers is missing.

Housing supply in response to its demand remains a daunting challenge in Nigeria especially and finance has long been identified as one of the major issue hindering stocks delivery. Effective sources of housing finance are the only way to walk out of the cogwheel of this problem which the capital market seem to be a way out.

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WHAT IS THE WAY OUT?

(i) The capital market option should be considered by developers and investors in the housing market and be adequately explored since this can contribute over fifty percent of the required funds needed for housing delivery in any economy.

(ii) The capital market operators should channel funds into real estate development and investment to aid housing delivery in Nigeria.

(iii) A synergetic effort should be created between the capital market and real estate developers this will enhance effective housing delivery in Nigeria.

(iv) The policies of government on investment of capital market products and the condition required for borrowing should be made flexible and a bit liberal for real estate firms.

(v) An enabling environment also needs to be created for both the operators in the capitals market and the real estate developers to ensure optimum service delivery.

(vi) The real estate developers firms should also see it as a matter of importance to create or form alliance for them to be effective in their operation and to gain more recognition and trust as well as access to the capital market funds instead of the present finance sources.

(vii) An enlightenment programme is also required from the government and the capital market regulators on the available products/derivatives for housing finance in the market.

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CONCLUSION

The housing industry and the capital market should accept the reality that there exists symbiotic relationship between available finance for housing and housing stocks. Events over the years have shown significant positive relationship between capital market derivatives and housing delivery in Nigeria. It has also been a recognized fact that developers of real estate are not adequately exploring the capital market using their derivatives for effective, adequate and affordable housing delivery and it has been perceived that the Nigerian capital market seems to be losing out since the capital that is supposed to be invested in this laudable venture (real estate) is been tied down and used for other ventures that are not as profitable and secure as the housing project.

However, if the above suggestions are been headed to and proper ways of actualization are carefully mapped out, capital market derivatives will be an effective tool in housing delivery of Nigeria’s emerging market

EFFECTIVENESS OF CAPITAL MARKET DERIVATIVES IN HOUSING DELIVERY OF NIGERIA EMERGING MARKET

 

Housing and its finance are issues that are of great interest/concern in any nation- developed, developing or emerging market. The financing of housing is a key element of any housing policy. In general, two objectives should be taken into account in order to make financing options viable and sustainable.

Thus, the options should offer profitability to market participants, otherwise, it will not be feasible to attract investment, particularly private investment to the housing sector; and secondly, they should be adapted to the potential borrowers’ ability to pay, otherwise, the low-income population will be marginalized from market operations.

Housing is essentially necessary to the extent that in some countries is equated with human right. This is because habitable housing discourage anti-social behavior, promotes healthy living, efficiency, and general well-being of the populace. Housing does not only serve as an asset to individual and Nation, it also provides man with cover and security.

Therefore, the provision of affordable housing at scale remains a challenge to most countries particularly those in developing country like Nigeria. It has become increasingly glaring that most urban population live in dehumanizing housing environment, while those that have access to average housing do so at abnormal cost.

The capital market is unarguably the most robust institution in any economy notable for mobilizing the necessary fund for financing long-term productive project. It controls relatively large amounts of capital and represent the largest institutional providing long-term credits for capital project like real estate that requires huge capital outlay.

The money market however, only provides support to the capital market in the provision of the necessary liquid capital to compliment the total fixed capital. Therefore, the capital market is a good avenue for mobilizing huge and long-term capital required for funding housing development and investments. There exist various vehicles/devices available in the capital market for funding real estate projects which include but not limited to Property bonds, Real estate investment trust (REIT), property unit trusts, loan stock and debenture stocks

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Property bond is an available device for small investors that cannot achieve their dream of investing in prime properties due to inadequate fund. Such investor will only purchase few units in a fund and invest in prime properties in prime location and cities that have the capacity and potential to grow capital.

The global universe of real estate companies has expanded dramatically over the past decade due to the very strong performance of the sector, ongoing equity issuance and a proliferation of REIT vehicles across the globe, which has attracted capital into the sector. REITs generally allow participants to invest in a professionally-managed portfolio of real estate properties and their business activities are usually restricted to generation of property rental income. The introduction of REITs in the US and other developed economies has created a remarkable positive change in real estate finance. This is not yet the case in Nigeria, and other emerging nations with REITs.

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There is no doubt that finance is an important factor in real estate development. Lack of long-term finance to develop mass housing is a major hindrance to housing for all. After 54 years of Nigeria independence, a vibrant mortgage market is yet to be developed. The existing mortgage scheme that should provide cheaper housing development loan is grossly incapable of satisfying the needs of the populace. Where there is no virile financing structure for housing, a market-based housing delivery system will persist.

These aforementioned devices, if tapped into will help Nigeria in threading the part towards an efficient and continuous housing finance system as there are enormous benefits and opportunities to developed economies from them

Housing Delivery Funding – Which way out?

 

HOUSING is fundamental to the socio-economic development of any society. Indeed, economic benefits derived from well-coordinated investments in housing are numerous. Experience from the developed world has shown that the problem of adequate housing, to a large extent, has been solved through the effective deployment of mortgage schemes in the system. Such mortgage schemes are fortified by capital market products that mobilise long-term funds.

 

The Nigerian mortgage market is characterised by excess demand due to lack of appropriate funds in terms of volume, tenor and rate. The type of funds required by the mortgage market is long-term, relatively cheap, affordable and in huge tranches. The only platform to source such compatible funds is the capital market. The interesting aspect is that it will also provide the much-needed derivatives for the capital market, drawing in the excess liquidity which is inefficiently held outside the formal financial system. This supports the main argument for the immediate introduction of Real Estate Investment Trusts, Mortgage Backed Securities and the re-activation of the bond market.

we shall attempt to discuss the major ways of sourcing funds for housing finance, from the capital market, the instruments traded in the market that can be used in the effective mobilisation of long-term funds for housing finance and real estate development. Thereafter, we shall examine how far Nigeria has fared in the utilisation of capital market instruments and lastly, the way forward in meeting the challenges of real estate development.


Ways of sourcing funds for housing finance and real estate development

Funds for housing finance and real estate development are currently sourced through borrowings from the money market and the capital market. Commercial banks lend short-term loans for housing finance and the prospective borrowers are expected to liquidate the principal and interest within the time frame as agreed, which is usually not more than 12 months.

The majority of housing corporations and agencies source their funds from commercial banks at high prevailing interest rates. The consequence of this is the high cost of housing and the substantial reliance on short-term credit to fund projects with long gestation periods. Specifically, both commercial and mass housing development, for instance, have till date been dependent on short-term debt financing, with such attendant problems as high interest rates, high default risk and threats/risks of foreclosure following non-repayment or servicing of debt facilities.

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Expectedly, unsold housing stocks and exorbitant purchase prices of completed housing units, which are directly attributed to the high cost incurred in the construction of these houses, become common features of housing delivery, particularly in urban centers.

Related to the problem of housing delivery is also the issue of infrastructure provision in estate development, which has become another major challenge facing estate developers. While efforts are being made to provide roads, water and electricity to the estates, the practice has been to build such costs into serviced thereby making the houses so highly priced and unaffordable. In spite of this challenge, estate developers can only achieve meaningful housing delivery with the provision of these essential infrastructure facilities. As we all known, the provision of roads, water and electricity require huge capital outlays that are long-term in nature. Again, as with housing, the provision of these infrastructures within the housing estates is usually financed through short-term borrowings, mostly from banks, which is a funding mismatch and also further increases the purchase prices of the houses.

Financing real estate development, therefore, is clearly a long-term investment, with appreciation in property value and stream of rental income earned, increasing with the passage of time. Accordingly, the proper match for the finance of real estate development should be long term capital market funds, which provide good fit for the financing demands of housing development in the long-term, and more importantly, at low cost to ensure the affordability of the finished houses.

The capital market and the instruments for mobilising funds for housing scheme

The capital markets is that segment of the financial market where medium and long-term funds can be sourced by institutions, government and corporate entities to finance projects, such as housing. It has instruments traded in the market that can be used in the mobilisation of long-term funds for housing finance. These instruments are:

Bonds: This comes in form of long-term debt finance through the issuance of long-term bonds;

Real Estate Investment Trusts (REITs): This is by provision of cheap equity funds for housing and real estate development by pooling of investors monies through a trust administered fund;

Mutual Funds: This comes in form of unit trust schemes;

Mortgage-Backed-Securities: These are securities which are pooled and guaranteed through existing mortgage loans and re-issued to potential investors by financial/mortgage intermediaries.


It is necessary to discuss in details the ways in which the aforementioned instruments can be used in mobilising the required funds for funding of housing and real estate development in Nigeria.

REITs. A REITs is established as a vehicle for the investment of investors\’ monies, which have been collectively pooled into a fund to be managed by a professional fund manager registered with the Securities and Exchange Commission (SEC). It is administered on behalf of the investors by Corporate Trustees who are also registered with SEC.

REITs are specialised forms of investment trusts, which are invested mainly in the real estate sector and real estate related areas. They provide a platform whereby interested investors can subscribe to the fund and its portfolio of investment, thereby providing the investor with an opportunity to earn returns from investments in real estate and at the same time provide cheap equity funds, through the mass pooling of investors funds, for housing finance and real estate development.

Generally, when a fund is offered, a prospectus for a fund must include a statement about the investment objectives that the manager of the fund seeks to accomplish and the policies that the manager will follow to meet the investment objectives.

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It is worthy to note that the investment objectives can only be changed by vote of the majority of the unit holders of the fund. The statement about investment policies indicates, in broad terms, the outlets in which the fund manager must invest.

The benefits of real estate investment trust include the following:

It reduces investment risk through diversification;

It creates avenue for maturing intermediation;

It accelerates property development through pool of funds;

It provides hedge for inflation.

In accessing the investment value of RIETs, various criteria are used, which include but not limited to anticipated total return from the stocks estimated from the expected price changes and the prevailing dividend yield; management quality and corporate structure; anticipated growth in earnings per share and underlining asset values of the real estate and/or mortgages and other assets. The potential investors in REITs are individuals, pension funds, endowment funds, foundations, insurance companies, mutual funds etc.

Unit trust scheme

Investment in Unit Trust Scheme, otherwise known as mutual funds, is another veritable and potential source of housing finance. It is an open-end fund, which continually stands ready to sell new units to the public and to redeem its outstanding shares on demand at a price equal to an appropriate unity of the values of its portfolio, which is computed daily at the close of the market by the fund managerr. he unit price is actually based on its net asset value per unit, which is found by subtracting from market value of the portfolios the mutual funds liabilities and dividing by number of initial funds units outstanding. Unlike REITs, which solely invests in real estate, Unit Trust Schemes diversify investments in accordance with the provisions of the trust deed.

Bonds

Another means of resolving the problem of housing finance, resulting from the problem of using short-term debt financing for long-term capital intensive housing development, is the use of long-term debt financing through the issuance of bonds in the capital market.

Such long-term mortgage bonds can be issued by mortgage or other corporate financing institutions and are usually backed by well-executed trust deed, usually registered with SEC.

In Nigeria, the bond market over the year has remained inactive, due to some identified market problems such as:

  • lack of strong secondary market;
  • unattractive coupon rate;
  • poor government patronage; and,
  • rating agencies.

With the recent efforts by SEC and Federal Government reforms, the Nigerian Bond market is picking up. Availability of large amounts of investible funds from the pensions sector and other financial sectors, which can be channeled into housing finance through the purchase of long-term bond, is expected to encourage further growth of the bond market.

Mortgage-Backed-Securities (MBS)

MBS are special bonds in which interest and principal sums received from pooled mortgage loans are passed through to bond holders. They are created through the aggregation of mortgage loans with similar features (as to tenor, pricing, etc), into pools of securities for issuance to investors through the capital market. These certificates are available for trading in the capital market. In other words, MBS is a securitisation of existing mortgages as the underlying mortgage loans are repaid by the borrower, while the investors receive payments of interest and principal when due. In essence, what is traded is the right to receive the repayments on the mortgages without a transfer or assignment of title thereof. However, holders of the instruments expect periodic payments from the issuer of the MBS in spite of the status of repayment from the underlying mortgage loans.

In developed economies, there are three types of conventional Mortgage-Backed-Securities i.e.

  • collateralised debt which is similar to conventional borrowing where real assets are pledged as collateral for debt;
  • pass through obligations comprising direct equity interest in the underlying asset pool; and
  • pay-through type which allows the reconfiguration of the payment stream of the underlying assets to appeal to a wider range of investors. Assets are conveyed to a special purpose vehicle which issues debt securities collateralised with the assets.

The benefits of MBS in the housing sector and the capital market include the following:

* provides more affordable housing to home buyers/builders because the volume, tenor, rates and payment, schedules are constant and with requirements of the mortgage market;

  • it makes more capital available to low income home owners at competitive rates;
  • it provides good liquidity and efficiency to mortgage loan funding;
  • steady high return to investments;
  • minimum risk, as risks associated with MBS is manageable via hedging
  • offers wide range of options.

How far has Nigeria fared in the utilisation of these instruments in the capital market?

The Investments and Securities Act (ISA) No. 45 was enacted in 1999 and it charged SEC with enormous responsibilities of regulating and developing the capital market. Since the enactment of the Act, SEC has positioned itself to take up the challenges through sensitisation and creation of awareness to relevant stakeholders.

By the powers conferred on SEC in sections 8q and 125 of the ISA and Rules 240 of – 248 SEC Rules and Regulation, SEC has made tremendous efforts in the development and regulation of Unit Trust Schemes. As at date, SEC has registered 31 Unit Trust Schemes, which indeed have made positive impact on the market.

Moreover, SEC is not resting on its oars as currently, the existing rules on Unit Trust Schemes are being reviewed and fine-tuned in order to bring them in conformity with global standards.

On the other hand, REITs are yet to commence, in spite of the fact that the legal framework is in place i.e. Section 123(1) and Section 147 of the ISA. The Commission has made efforts in this area by holding several consultations, workshops and seminars with the relevant stakeholders of which this forum is one of them, for the take-off of REITs in our market. It is important to note that only operators can introduce new products as the commission restricts itself to ensuring that the conducive environment exists for the product. Interestingly, the commission is currently processing one application on REITs.

On the issue of Mortgage-Backed Securities (MBS), the enabling law (i.e. ISA 1999 – sections 32,204 264(2) and Rules 40(2) of SEC Rules and Regulations) and institutions are in place. While there is need for the fine-tuning of some legal provisions that will affect the issuance of MBS, the market is called upon to be aggressive in introducing MBS.

The Bond Market in Nigeria, especially the Federal Government Bond segment, has experienced ups and downs over the years. The Federal Government pioneered issuance in the bond sector in the 1940s and became even more active in the period between 1961 and the middle 80s, being responsible for the bulk of issues raised up to 1986. However, the Federal Government backed out of the market between 1987 and 2002. Similarly, states and local governments patronage of the bond market was not encouraging before 1999 as the sector was completely inactive for about seven years. Interestingly, between 1999 and 2005, the bond market picked up to an appreciable level.

On the other hand, corporate bodies started raising funds through the corporate bond sector of the market 1981. Unfortunately, the amount raised has not been encouraging when compared to other instruments like equity. Indeed, in contrast to recent increase in the government segment of the Nigerian Bond Market, corporate bodies have virtually avoided the bond market in recent times with only 11 corporate debts issued since 1999.

Given the following situation, SEC has piloted the constitution of several committees like the committee on the Reactivation of Bond Market. There is also Bond Market Steering Committee chaired by the Minister of Finance. The Committee on Reactivation of Bond Market has since submitted its recommendations to various stakeholders and SEC is considering the recommendations.

What next?

The foregoing discussions and suggestions have indeed been proffered by experts at different fora for the development of a strong secondary mortgage market for housing finance/real estate development through the capital market. However, the following steps would be required to foster the growth of trust-administered schemes and consequently the successful implementation of the programme of mass housing delivery in Nigeria.

Review and amendment of statutes and laws governing property rights, foreclosures, sales, assignment and conveyance of properties

The existing laws in Nigeria in these areas should be fine-tuned to meet current realities and for easy implementation of the mortgage system.

Surveys conducted in India, Malaysia, Pakistan and Indonesia confirmed that this problem constrained mortgage finance in the region. Nigeria should therefore learn from this experience and provide adequate legislation to solve the problem.

The bottleneck associated with obtaining governors consent in assignment of land is a huge problem to our mortgage industry. It is suggested that the requirement of state governor\’s consent under the Land Use Act before a mortgage can be created, assigned or foreclosed should be dispensed with, at least when these arise from secrutisation of mortgages. The only official control recommended here in respect of mortgages should be in the form of registration of such mortgage whenever they are created, transferred or foreclosed. This can be done either in the state high courts or special Land Registry.

Foreclosure laws must be simplified to make recovery of foreclosed assets easy, as this will enhance the supply of housing investments and the demand for these instruments. It should be noted, however, that the relevant laws to look at with respect to streamlining/ assignment/ conveyance/sale of mortgages are the Land Use Act and the Conveyance Act.

Reduction of transaction costs

Transaction costs i.e. stamp duties, transfer/mortgage registration fees, taxes and fees to regulatory authorities should be minimal. This will, in the long run, help in reducing the cost of processing and in securing affordable housing.

Introduction of adequate mortgage underwriting system

Currently, there is non-existence or inadequate mortgage underwriting system in Nigeria. The nation\’s financial system must have a formalised mechanism for distinguishing poor credit risks from good credit risks through borrower screening.

Mortgage quality is greatly enhanced through sound mortgage underwriting. In the equity market, underwriting generates investors\’ confidence in the quality of the stock. The Insurance Act should, therefore, provide adequately for this sector. It is encouraging that the SEC now requires the rating of all debt instruments by Rating Agencies registered by it.

Strengthening of regulations through capacity building.

Regulators should strive to strengthen their technical capacity to supervise and regulate the mortgage and capital markets. In this respect, the Federal Mortgage Bank of Nigeria (FMBN), SEC, the NSE, and the Central Bank of Nigeria (CBN), should harmonise actions and programmes along this line. This will reduce systemic risk in the market.

Immediate passage of the amendment bill on the ISA 1999

The Amendment Bill on the ISA of 1999 is before the National Assembly and it is my suggestion that the National Assembly should act swiftly in passing the bill into law with all the amendments as recommended. From that point, a road map would have been drawn toward finding a lasting solution to the housing finance problems in Nigeria through the capital market.

Conclusion

There is an urgent demand for all stakeholders in the real estate and finance sectors to come together and take concerted effort to work out modalities that will position the capital market as a strong and viable channel for housing finance. That will ensure the delivery of decent and affordable housing to all Nigerians. The capital market still remains the most option in resolving the funding challenges that threaten housing delivery in the country. A number of lessons need to be learnt from the Asian financial crisis of the late 80s i.e.

  • the need to develop the long-term domestic debt market;
  • avoidance of instability in the market as consequences of financing long term projects with short-term borrowing;
  • mortgage securitisation as one of the most conducive strategy that the secondary mortgage market could use to fund affordable housing through primary mortgage market.

All stakeholders in the housing and real estate related sectors are enjoined to explore the capital market option in financing and fast-tracking housing development/delivery in Nigeria, as the capital market remains the most viable option.

19 Global Cities Commit to Making New Buildings Net Zero Carbon by 2030

 

Today, 19 pioneering mayors, representing 130 million urban citizens, committed to significantly cut greenhouse gas emissions from their cities by ensuring that new buildings operate at net zero carbon by 2030. By joining WorldGBC’s Net Zero Carbon Buildings Commitment, the leaders of Copenhagen, Johannesburg, London, Los Angeles, Montreal, New York City, Newburyport, Paris, Portland, San Francisco, San Jose, Santa Monica, Stockholm, Sydney, Tokyo, Toronto, Tshwane, Vancouver and Washington D.C. also pledged to ensure all buildings in the cities, old or new, will meet net zero carbon standards by 2050.

The WorldGBC definition of a net zero carbon building is a building that is highly energy efficient and fully powered from on-site and / or off site renewable energy sources. Such bold commitments, made ahead of the Global Climate Action Summit in San Francisco, are essential steps in delivering on the highest goals of the Paris Agreement and keeping global temperature rise below 1.5℃.

Buildings in urban areas are one of the largest sources of greenhouse gas emissions, and typically account for over half of a total city’s emissions on average. In London, Los Angeles and Paris, buildings account for well over 70% of the cities’ overall emissions, creating an enormous opportunity for progress on bringing emissions down. Currently, half a million people die prematurely each year due to outdoor air pollution caused by energy used in buildings.

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Delivering on the commitments made today will require a united effort, as city governments do not have direct control over all the buildings in a city. This commitment includes a pledge to work together with state and regional governments and the private sector to drive this transformation, and calls on national governments for equal action.

The commitment has been orchestrated by C40 cities, a global group of major cities committed to delivering on the most ambitious goals of the Paris Agreement at the local level. This pledge from cities is part of the World Green Building Council’s Net Zero Carbon Buildings Commitment for businesses, cities, states and regions, which opened for recruitment in June.

Specifically, cities making this commitment will: Establish a roadmap for our commitment to reach net zero carbon buildings; develop a suite of supporting incentives and programmes; report annually on progress towards meeting our targets, and evaluate the feasibility of reporting on emissions beyond operational carbon (such as refrigerants).

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Furthermore, 13 cities, including Copenhagen, Johannesburg, Montreal, Newburyport, Paris, Portland, San Jose, Santa Monica, Stockholm, Sydney, Toronto, Tshwane and Vancouver commit to owning, occupying and developing only assets that are net-zero carbon by 2030. To achieve this, cities will: Evaluate the current energy demand and carbon emissions from their municipal buildings, and identify opportunities for reduction. They will establish a roadmap for their commitment to reach net zero carbon municipal buildings, and report annually on progress towards meeting their targets, and evaluate the feasibility of including emissions beyond operational carbon (such as refrigerants).

The Net Zero Carbon Buildings Commitment will officially launch at the Global Climate Action Summit in San Francisco, California, US on 13 September 2018.

FG says Abuja earth tremor situation highly under control

 

The Nigerian Geological Survey Agency has assured that it is in control of the earth tremor that rocked Mpape, located outskirts of Nigeria’s capital city, Abuja on the 5th of September.

Speaking to newsmen on Friday in Abuja,‎ Alex Nwaegbu, director general of the Nigerian Geological Survey Agency, said the agency has since dispatched a team of geologists and geophysicist on a fact finding mission.

Giving further insight on the preliminary findings, the director general said,”analysis of regional airborne geophysical data has identified the area to have undergone series of tectonic activities leading to structural emplacement.

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“Some of these structures are deeply seated,broad and extensive and could serve as good channels for stress dissipation,” he noted.

The preliminary investigations, the director general therefore associated the tremor to quarrying in the area which involve intense blasting that led to stress accumulation.
“The accumulated stress was then released as seismic energy triggering the ground shake,”‎ The Geological Survey Agency’s helmsman said.

He noted further that the stress may have travelled through secondary fractures to other areas where the intensity of the tremore is estimated to be between 3 and 3.5 on the Modified Mercalli Scale since the investigating team did not observe any visible damage such as cracks,shuttering on windows or colouration in ground water.

The Nigerian Geological Survey Agency said it’s team of Engineers should keep a close monitoring team within the next 48 hours within which arrangement ought to have been concluded in the area involving reflection seismic and gravity measurement to fully unravel immediate and remote causes of the tremor.

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It would be recalled that from the account of the preliminary findings by the Nigeria Geological Survey Agency team,”The vibration s‎tarted around 2:30pm on 5th September,2018 which lasted about a second but reoccurred 3 hours later around 5:30pm. The vibration was again felt around 8.00pm which lasted for about 10 seconds.

The Federal government as a result of this development rolled out emergency numbers for calls in case of any tremor anywhere across the country to include:08035956056,08023154825,08037000623.

HARRISON EDEH

FCTA inaugurates panel of inquiry on Building Collapse

 

The Minister of the Federal Capital Territory Administration, FCTA, Malam Muhammad Musa Bello, has inaugurated a panel of inquiry to unravel the immediate and remote causes of the unfortunate building collapse at Plot 711, Cadastral Zone B04, Jabi District, Abuja.

The FCT Minister, who was represented at the occasion by the Permanent Secretary, Mr Chinyeaka Ohaa, said the FCT Administration, as a responsible and responsive administration, was committed to unraveling the causes of the unfortunate incident with a view to stemming future occurrence.

He said that some officers directly in charge of monitoring the project site have been suspended pending the completion of investigations.

The Minister also disclosed that the committee, which has three weeks to complete its assignment, has been charged with the responsibility of assessing the quality of the subsoil, foundations and designs that were available for the structure, establish the quality of supervision and nature of construction materials used as well as the experience of the technical personnel at the site.

Malam Bello also revealed that the Committee is also expected to assess the level of regulation at the site and recommend appropriate sanction against any person found wanting.

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The Panel which is Chaired by the Director General and Chief Executive officer of the Nigeria Building and Road Research Institute, Prof. Danladi S. Matawal, has retired Director of Engineering Services, FCDA, Engr. S. O Ugonabo; the MD, Fola Consult – a Planning Firm; Tpl S.A. Olajide, MD, 2-Habit Concept – Architectural Firm and Arch Philip Z. Iortyer as members.

Also included in the panel are representatives of Council for the Regulation of Engineering in Nigeria, (COREN), Architects Registration Council of Nigeria (ARCON), Town Planners Registration Council of Nigeria (TOPREC) and Council of Registered Builders of Nigeria (CORBON), as well as the FCTA General Counsel, Barr. Mohammed Babangida Umar, among others.

Speaking after the inauguration ceremony, the Chairman of the Panel, Prof. Matawal, stressed that the frequency of building collapse in Nigeria was unacceptable given the level of professionalism in the industry in the country.

Prof. Matawal commended the present FCT Administration for the reduction of the incidence of building collapse in the Territory, noting that the last time this happened was in August 2016.

He recalled that in 2012 alone, there were over 20 recorded cases, adding that the incident has so far reduced as a result of the efforts of the present Administration to tame the tide.

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Prof. Matawal appreciated the confidence reposed in the Committee members and assured that the Panel will give the assignment the seriousness it deserves and perform its work with decorum, sincerity and attention to details.

He said the committee will also work with a vision for the future to ensure that occurrences of this nature which were very much avoidable would be addressed by its report.

It would be recalled that a three floor structure under construction in Jabi District collapsed on Friday, August 17, 2018 leaving three persons dead while six others sustained various degrees of injuries.

Nnenna.O

FIRS to sell tax evaders’ property, freeze 6,772 accounts

 

The agency said it will also sell property belonging to tax defaulters and freeze over 6,000 account – According to FIRS, the nationwide audit would ensure increased tax revenue collection, improved service delivery to taxpayers and enhanced voluntary compliance.

Tunde Fowler, the executive chairman, Federal Inland Revenue Service (FIRS), recently said that the Service would soon commence the audit of taxpayers across 36 states of the country. Fowler stated this in Lagos while delivering a keynote address at a stakeholders meeting on “Tax Administration and National Revenue’’.

The News Agency of Nigeria (NAN) reports that the stakeholders’ meeting was aimed at charting the way forward in the country’s tax administration and the challenges hindering a robust tax regime. Fowler said that the nationwide audit would ensure increased tax revenue collection, improved service delivery to taxpayers and enhanced voluntary compliance.

He called on stakeholders to support efforts at re-positioning the nation’s tax administration system. Nothing that the government would sell properties built and developed in corporate names across the country on which taxes were not being paid, Fowler said Nigeria still had one of the lowest tax revenue to Gross Domestic Product ratios in the world.

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He said the FIRS generated a total of N3.5 trillion from taxes between January and August this year, more than N1 trillion higher than the revenue for the same period of 2017.

He added that the board was determined to improve services to taxpayers at all levels. According to him, a consolidated Taxpayer Identification Number (TIN) data base was already in place under the JTB. The FIRS chief said that all tax laws that were not in the interest of the taxpayers were already undergoing a review process. He added that taxpayers and stakeholders should support tax authorities in the interest of national development.
“The greatest challenge for any tax administration is achieving and maintaining a high degree of self-assessment and voluntary compliance by taxpayers.”

“Studies, however, show that the extent to which an economy is able to grow sustainably and develop depends to a large extent on its ability to generate tax revenue to finance its expenditure and the efficiency of its tax system. “The questions that arise from these simple statements include how to identify areas of non-compliance; how to measure the level of non-compliance; and how to address non-compliance,’’ Fowler said.

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The tax expert explained that FIRS had put in place various strategies to curtail non-compliance to improve tax revenue collection on a sustainable basis.

“Well-designed taxpayer services, education programmes, and creative measures can facilitate self-assessment and compliance,’’ Fowler said. He noted that the major determinant of tax compliance included changes in law, taxpayers’ attitudes to payment of right taxes and tax consultants’ offering the right advice to the taxpaying public.

While reacting to the chairman’s speech, some of the stakeholders raised concerns regarding the number of taxes and levies being collected and levied by different government agencies, which were mostly not remitted completely. They commended FIRS for its effort towards deepening tax administration, but stressed the need for regular interaction among stakeholders so as to improve voluntary tax compliance. Stakeholders at the event included officials from Ministries, Departments and Agencies (MDAs), Labour Unions, Tax Consultants and the Organised Private Sector across the nation.

Meanwhile, it was previously reported that the FIRS said said it achieved N4 trillion as tax revenue collection in 2017.

Fowler said the agency recorded N3.3 trillion as revenue collection in 2016.

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