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what a viable mortgage industry means to an economy

Most developing economies, including Africa’s biggest economy, aspires to have a viable mortgage industry in the understanding that it means so much for the growth of their economy. In the advanced economies of the world, the industry has made and continues to make significant contribution to economic development.

In Nigeria, the story is different. The industry is still struggling to find its feet and this why mortgage finance as a percentage of Gross Domestic Product (GDP) is as low as 0.5 percent which is several steps behind other economies including Mexico, Malaysia and South Africa where mortgage contributions to GDP are as high as 10 percent, 25 percent and 29 percent respectively.

However, notwithstanding the industry’s low contribution to GDP coupled with the economic challenges arising from low oil revenue, industry operators are saying that mortgage has all the potential to stimulate the economy when all the obstacles inhibiting its growth are removed.

The relative newness of the mortgage industry, lack of understanding of its dynamics and operational models by many Nigerians, and poor appreciation of the need and the ultimate benefits of keeping money in a mortgage bank are some of the militating factors.

But an economy like Nigeria’s can benefit a lot from a flourishing mortgage industry as it will help in directing the economy in the desired direction. As part of efforts at stimulating the economy, government can make the necessary investment aimed to grow the industry. Enabling policies should also be put in place, leading to reducing high interest rate in order to encourage more people to embrace mortgage loans.

On account of the identified obstacles, many primary mortgage Banks (PMBs) are going through very difficult times, such that some are not able to meet loan applications from home seekers.

“If government pays closer attention to the PMBs by removing some of the obstacles on their way such as the drawbacks of the Land Use Act of 1978 which rests land ownership rights on the state governors, the right to easily foreclose on delinquent borrowers, ease of creating a legal mortgage and perfecting titles and the ease of falling back on one’s collateral to recover bad loan etc, the industry will surely improve tremendously”, a mortgage operator argues.

The operator, who does not want to be named, insists that until all these issues are resolved in a way that encourages the provider of capital, in this case, the mortgage bank, to give out loans, the sector will not grow as desired.

He hopes that when these obstacles are removed, the supplier effect of mortgage will allocate more funds towards the provision of home loans while home buyers will better appreciate the implication of prompt interest and capital repayments as well as ensure discipline on the part of the people.

Some finance experts argue that limiting a mortgage institution to a fixed capital base of, say N10 billion, is wrong because that amount is too meager; even N100 billion is also meager given the kind of projects they are to finance.

For this reason, the federal government needs to come in, look at what is happening in other civilized world and copy because, these days, “copying is no longer an act of deception but actually something that is done even in the civilized world”, says Okika Ekwem, a US-based realtor.

In such economies as US and UK, Ekwem says there is a secondary market for real estate financing where commercial banks or individual brokerage banks lend money to people and thereafter sell the securitized certificate to the secondary market and come back again to lend to individuals.

Mortgage industry growth that can impact the economy, according to Meckson Innocent Okoro, is possible if the Federal Mortgage Bank of Nigeria (FMBN) plays the role of a regulator while the federal government, through the CBN, should empower the PMBs.

To have a viable mortgage industry that can have significant impact on the economy, more PMBs have to be licensed such that there could be as many as 40 PMBs in each of the big cities, while each of the smaller cities could get as many as 10.

This is to discourage the concentration of these banks in urban centres and when this is done, access to housing finance will be increased. The PMBs must be positioned to champion the whole issue of affordable or social housing for the low income earners in the country.

Mortgage finance as it is today, is not particularly established as a structure and as it exists in developed economies. The culture of mortgage finance is just gradually catching on with Nigerians and mortgage is financed the same way as every other commercial financing.

It is curious that after the recapitalisation and consolidation of the PMBs, Nigerians are yet to feel the impact in the economy. As at today, the interest rate as it is cannot mobilise the industry and the situation is such that even at 10 percent, the level of income in the country cannot still support mortgage growth.

At a time in this country when the economy and the financial system were highly regulated, there was different interest rates structure for different sectors of the economy and within that period, lending to the housing sector was as low as 7-8 percent which underscored the importance attached to the sector and the government needs to look into this.

Source: Chuka Uroko


CCECC commence work on Lagos-Ibadan rail project

The China Civil Engineering Construction Corporation handling the new Lagos-Ibadan rail line has commenced overnight work on the project in order to fast-track its construction and make the standard gauge line available for use early next year.

Vice President Yemi Osinbajo is expected to inspect the project from Lagos to Abeokuta in the first week of January, according to the Minister of Transportation, Rotimi Amaechi.

About two weeks ago, the minister, who bemoaned attacks by hoodlums and armed robbers on the CCECC’s workers among other factors slowing down the construction, said the December 2018 deadline initially set for the completion of the standard project was no longer feasible. He gave February 2019 as the new date.

In order to meet up with the new date, the contractor said it had stepped up efforts to mobilise more workers and equipment to the site.

The Public Relations Consultant to the CCECC, Abdurraof Akinwoye, said that the Chinese contractor commenced overnight work on the rail project about three weeks ago.

He specifically said more men and materials were drafted to the Iju, Agbado and Ijoko areas of the railway corridor for the overnight work.

He said, “This is to make it possible to move the new train from Iju to Abeokuta by January 5 as requested by the Minister of Transportation, Mr Rotimi Amaechi.”

Akinwoye said maximum security had been put in place for the workers working day and night at different project locations between Lagos and Ibadan, adding, “The Federal Government has approved the deployment of armed security men in the various locations.

“At night, we have soldiers, police, OPC and other private security agencies involved in the combined security force on regular patrol of the corridor, especially the construction sites.”

He added that since work started on the project, they had not recorded a single case of kidnapping, attributing this to the efforts of the security agencies and excellent community relations which the contractor had established with residents along the railway corridor.

He said the construction of the standard gauge rail line meant to take three years was being done under two years.

 Meanwhile, Amaechi said on Tuesday during the monthly inspection of the rail project at Odeda in Ogun State, “We are gradually coming to the end of the project. Today, we are 6km from Abeokuta. I have been assured that we will be able to ride from Iju to Abeokuta by the first week of January.

“The idea is to bring the Vice-President and some ministers to join us in the ride. And so far, we have installed anti-theft track to guard again theft. I will tell the CCECC to concentrate on the track for now by focusing on one rail track to the end because work will be faster that way while they can continue with the other lane.”

The minister also said one of the gains of the project was that no fewer than 9,000 Nigerians were on the payroll of the counterpart funding of the Lagos-Ibadan rail project of the Federal Government and the CCECC.

The Chairman, House Committee on Lands and Transportation, Jibril Abdulmumuni, said he had to join in the inspection with his committee members to inspect the project so as to be able to give firsthand information to the House about the level of work done.

“I just told my colleagues that I will personally go and see Mr President and tell him what we have witnessed and Nigerians should know that a lot of work is going on here,” he said.


Govt To Bridge Road Infrastructure Deficit With N100bn Sukuk Fund

The Federal Government has pledged to boost infrastructure provision with the N100billion Sukuk Bond.

Speaking at the sovereign Sukuk public offer-investor forum at the weekend in Lagos, Patience Oniha, Director General of DMO, said the success of the first N100bn Sukuk Bond launched in 2017 was down to the fact that the Nigerian financial market, as well as investors, were getting more refined and therefore arousing the interest of many.

According to Oniha the 2017 N100bn Sukuk, which was 5.8 per cent over-subscribed, ensured execution of road projects across all regions of the country.

She further said the main objective of the second Sukuk issue was to sustain the rehabilitation and construction work on 25 key economic roads in the six-geopolitical zones with the roads now added for more reach.

‘‘We are happy to be participating in this initiative, which will contribute to narrowing the country’s infrastructure deficit.”

Subscribers can purchase N1,000 per unit subject to a minimum subscription of N10,000 and in multiple of N1,000 with FBNQuest and Islamic Wealth Manager, Lotus Capital, managing the sales.

Just as the Sukuk II Bond was launched, the House Committee on Works also revealed that the bond had assisted in mobilising a lot of contractors handling various Federal Governments’ projects back to site.

Alhaji Ali Wudil, Chairman of the committee, disclosed this when he led the committee members on an oversight visit to some projects in Kano State, most of which were executed under the Sukuk Bond.

Wudil said most of the projects had been abandoned for years, but that the Sukuk Bond had mobilised the contractors back to site.

“As you can see, works are on-going in most of the areas we visited and this is possible because of the Sukuk Bond. Some of these projects were started since 2006 and are not yet completed due to unavailability of funds, which has resulted to review upon review of the projects and you know what that entails. Nevertheless, at committee level, we are satisfied with the level attained and the quality of the jobs being executed.”

Mr. Roy Hungushi, Project Manager, Dantata and Sawoe, handling the Kano Western By-pass, told the committee that the 26.6km road awarded since 2007 at the cost of N13.2bn had now escalated to N22bn due to lack of funds that warranted for series of review.

Mr. Hungushi added that with the Sukuk, the company was able return to site and that with adequate funding the project would be completed in good time.

The committee visited about eight sites, most of which were funded with the Sukuk bond, including the multi-billion naira Abuja-Kano Road.

Earlier, Kemi Adeosun, former Minister of Finance while presenting the N100 billion Sukuk bond proceeds to Babatunde Fashola, Minister of Power, Works and Housing had said that the 25 roads would be fixed with this fund.

According to her, the proceeds would be used to support the federal government’s capital spending for 2017.

She said: “The proceeds will be used to further support government capital spending for 2017 – the construction and rehabilitation of 25 key economic roads across the six geo-political zones of the country. “The roads will ease commuting, spur economic activities across the country and further close our infrastructural gap. Each of the six geo-political zones is expected to receive the sum of N16.67 billion for road projects in their respective zones.

In southwest, the bond is to be used for the reconstruction of Benin-Ofosu-Ore-Ajebandele-Shagamu dual carriageway (Phase 3 and the dualization of Ibadan-Ilorin road (Section 2). Three roads were identified in south south.  They include rehabilitation of Enugu-Port Harcourt road (Section, dualization of Yenagwa road junction- kolo-Otuoke Bayelsa Palm and dualization of Lokoja-Benin road (Section 2-4).

In southeast, rehabilitation of Onitsha-Enugu expressway and rehabilitation of Enugu-Port Harcourt road (Section 1-3) are to be done. While in North Central there would be construction of Loko Oweto Bridge, dualization of Abuja-Lokoja road (Section 1 and 4), dualization of Suleja –Minna road (Phase 2) and dualization of Lokoja-Benin road (Section 1).

Northeast will have dualization of Kano-Maiduguri road (Section 2-5), northwest will have dualization of Kano-Maiduguri road (Section), dualization of Kano-Kastina road (Phase 1) and Construction of Kano Western bypass and Kaduna Eastern bypass.

Source: Emmanuel Badejo

Aviation and infrastructure development are catalyst for economic growth , FG

President Mohammadu Buhari on Thursday said his administration before now has recognised aviation industry and building of infrastructure, as a catalyst for economic growth thereby hinges on proper plan to harvest the benefits for a better Nigerian economy.

President Buhari states this in Abuja yesterday while commission ultra morder international aviation terminal at the Dr. Nnamdi Azikiwe International Airport Abuja. The president while delivering his keynote address said that the gesture has yet represented another significant milestone for International air travellers in and out of the Federal Capital Territory. “You will recall that on the 25th October, 2018, I commissioned Port Harcourt International Airport Terminal.

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During the event, the Honourable Minister of State (Aviation) stated that the Nnamdi Azikiwe International Airport Terminal, Abuja would be completed and ready for commissioning before the end of the year. Today, that promise has been kept. I wish to commend the Honourable Minister and his team for a job well done. “With the commissioning of this Terminal, Nigeria is moving towards achieving and meeting global aviation standards in facilitation, passenger processing and service delivery in tandem with international best practices”, he said.

The President notes that his Administration recognises aviation as a catalyst for economic growth and as such will continue to encourage and support the actualization of projects that will place Nigerian Airports amongst the best in the world, observing that the occasion reflects Government’s deliberate policy to sustain the development of Nigeria’s infrastructure. We are gradually closing the infrastructural deficit bedevilling our country. “I am happy to note the progress being made in both the airports and sea ports on the implementation of the Executive Order on the Ease of Doing Business.

Government officials manning these gateways are to sustain the momentum and ensure travellers in and out of the country have the best of experience as a necessary complement to the ultra-modern terminal. Nnamdi Azikiwe International Airport Terminal is the first airport terminal to be connected to rail transport system in the Country and indeed in the region. This has provided passengers and other airport users with a choice in the mode of transport to and from the city centre.

I recall taking a ride from the City Metro station to the Airport on the day the rail line was commissioned. I wish to assure you therefore, that Government remains committed to developing Nigeria into Regional air transportation hub and thereby assuming its leadership in the aviation sub sector in Africa.” President Buhari, appreciated the efforts of the Federal Ministry of Transportation (Aviation), the Government of the Peoples Republic of China and the China Exim Bank for their financial support and the various roles they played leading to the successful completion of this project. Let me also commend the contractor Messrs CCECC for delivering this project on time. Speaking in collaboration, Senator Ibn La Ala, representing the Senate President Bukola Saraki, stated that Nigeria presently at the fore front of championing the aviation transportation in Africa and should recieves quicker legislative attention. He said that in the recent times, Nigerians effort had gained international recognised so like ICAO certification and lots. He revealed that that the Senate committee on aviation has been mandated to ensure that proper and timely legislative intervention is given to the industry.

Meanwhile Minister of State for Aviation Senator Hadi Sirika, has said that Dr. Namdi Asikiwe International airport new terminal commissioning, is the second in the series of Airport terminals to be commissioned from the projects funded by the China-Exim bank loan of $500m with a counterpart funding of $100m from the debt management office. Sirika, however, observed that from political and economic perspectives, the airport is very strategic to Nigeria not only because it is the gateway to the nations capital but also because it the second busiest airport in the country and the fastest growing in passenger traffic in West and Central Africa, with an average growth rate of 8 per cent, where the world average growth is 5.8 per cent.

The airport according to him, processed 5,709,012 passengers in 2017. This volume equals to about 13 times the total number of passengers recorded by Ghana as a country. “The terminal building you are about to commission Mr President, has annual passenger capacity of 15m covering a space of approximately 56,000m2. It also has the following facilities as well as capabilities; 72 check-in counters. “The new terminal has 5 baggage collection carousels 28 immigration desks at arrival and 16 at departure 8 security screening points 8 passenger boarding bridges.” By Idu Jude, Abuja

2019 Real Estate Investment Preview

2019 will be much like 2018 – but with a bit more anxiety.

The fundamental forces that have driven rents and home prices higher – more demand for housing than supply – will continue unabated. There just hasn’t been enough construction over the last years to keep up with the demand that is increasingly concentrated in big cities (but not all of them). And – good news – in these big cities the demand is mainly for rentals.

The anxiety comes from two possibilities – that a slower economy will erode the demand for more housing – and that prices are already so high that investors won’t get enough of a return to justify new investments. In short, maybe all the good deals are gone?

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My own view is that investors do indeed have to approach some markets with more caution in the new year, but that there are still plenty of opportunities available.  It is important in 2019 to pay closer attention to the stats in local markets.

Are prices too high? See how much home prices are above the ‘income’ price, a calculated value. And look at the ‘target rent range’ – if the monthly rent you’ll need to charge is well above that range, you’ll find fewer renters who can afford it.

The Markets

Las Vegas – Not only is job growth high, it’s better than it was six months ago. But this is still a one-industry town and it was hit hard during the last recession, so caution is already in order. Furthermore, the 18 percent jump in home prices in the last year is too high for comfort. Although prices are only 13 percent above the ‘income’ price, at this rate they’ll soon be above the 25 percent level where a market becomes over-priced. Then we could easily see a bubble. For that reason, investors should stick with apartments – which are not as volatile – or properties with rents not much higher than the ‘target rent range’ – if prices eventually do bust, you want to be sure you’ll find renters.

San Francisco – The situation is similar in the Bay Area, except that prices are already off the charts – 38 percent above the ‘income’ price. And the economy is bigger but growing at a slower pace. I doubt that investors can rent out single-family properties anywhere near the ‘target rent range’. Apartments are a better idea, as is splitting homes into multiple rental units. The high concentration of tech workers is a liability if the national economy sours.

Atlanta – The local economy is growing well, demand for housing is up, and home prices are just about at the ‘income’ level. A good opportunity for investors. Apartments, single-family rentals, and splits into multiple units are all good options.

Seattle – As in San Francisco, the large number of tech workers is a liability if a recession happens; they’ll move elsewhere. Right now the local economy is very strong, demand for housing is high, and home prices are already very high. Apartments are the best bet, or single-family splits.

Orlando – The strongest local economy in this group. Most new jobs go to workers who rent (because their pay is modest). The tourism industry in this area had a quick recovery from the last recession. Demand for housing is strong but home prices are still moderate. This is a good opportunity for all types of investments.

Denver – Very similar to Seattle, with a large number of tech workers and home prices that are already high. The local economy is still strong but could be slowing this year. Single-family rentals are probably not a good option, their rents to far above the ‘target rent range’. Single-family splits are a possibility, but they could hit the market just as it peaks, so I think apartments are a better option.

Nashville – The local economy is growing at a slower pace, but demand for housing is still strong and home prices very reasonable. Single-family rentals are a better choice than splits because of the flexibility if the economy slows.

Phoenix – A very strong local economy, good demand for housing, but the market is slightly over-priced. Apartments and single-family splits are the best bets, but some single-family rentals could work if the price is right.

Miami – The local economy is strong right now, but can be volatile, so I’m not sure the strength will continue. Demand for housing is good but home prices have been driven too high by foreign investors, creating an unstable market. Apartments are the best choice; upgrades of low-cost homes are also a possibility but difficult to manage unless you live there.

Detroit – The long bust and recovery seem to be nearing a balance point, with demand for housing now good but the economy growing at a slow pace. In this type of uncertain situation, single-family rentals give the most flexibility and apartments are a good option if rents can fall within the ‘target rent range’.

Los Angeles – Uncertainty is also the situation in LA, with a slower local economy but housing demand still strong. With prices high, apartments or single-family splits are the best bet.

Charlotte – Even though the local economy is still very good, the concentration of jobs in banking is a liability in a recession. Single-family rentals are a good option because of the flexibility. Apartments are also a good bet.

Dallas – The local economy is strong, demand for housing is good, but home prices are getting on the high side. Single-family splits or apartments are therefore the best bets, but other options are also good for the long term. With a mixture of finance, tech, and business jobs, the local economy has very shallow recessions.

Minneapolis – The local economy has been running at a modest level but demand for housing has been good. With home prices close to the income price, all investment options are open.

Philadelphia – The same is true in Philly, where the local economy is a bit more volatile. In markets like this, where job growth is running parallel to the national average and is now on the slower side, investors should be careful to find investments with rents in the ‘target rent range’. These markets will easily be pulled down if a recession happens and high-rent properties will be especially vulnerable.

New York and Washington – In these large markets, demand for housing is moderate and recovery from recession is always prompt, so they’re good long-term bets for investment – but returns will also be moderate. Apartments are probably the best investment option because of the large workforce with moderate income.

Cleveland, St. Louis and Chicago – With moderate demand for housing and slow or volatile job growth, these markets have still not recovered from the last recession and home prices are well below the ‘income’ price. This means that single-family rentals are a good bet but the short-term returns will be modest. Downtown apartments are the safest investment.

Summing it Up

A recession is not on the horizon yet, but investors have to prepare for an economic slowdown in the next few years. That means avoiding properties with rents well above what we determined as the ‘target rent range’ and – in the over-priced markets – to either favor apartments or properties that can most easily be resold. I expect home prices to keep rising this year, but at a slower rate after that.

All of these markets still provide good investment opportunities – although Las Vegas is best left to speculators with a strong stomach – but investors have to pay greater attention to the risks than they did in 2018.


We are committed to production of quality Ceramic tiles says CDK boss

CDK Integrated Industries Limited, producers o[ authentic porcelain tiles and ceramic sanitary ware has restated its commitment to production of export quality.

Speaking during the pre- AGM dinner of Association of Consulting Architects Nigeria. ACAN in Lagos, Chief Executive Officer of CDK, Bernard Longe, said that it has always been the specific objective of the promoters from conception that the company differentiates itself from the competition by producing porcelain tiles and sanitary ware of export quality.

According to him, “CDK is aware that a few unscrupulous local producers are producing ceramic white body tiles but am mislabelling same on their packaging and passing them off as ‘Porcelain’. Although there are commonalities in the body materials and manufacturing process of ceramic and porcelain tiles, porcelain tiles are more expensive to manufacture than ceramic tiles and are therefore priced much higher than ceramic tiles”. He enumerated some of the advantages of porcelain tiles over ceramic tiles to include suitable for external use and high traffic areas, more resistant to cracks or failure when not installed over solid concrete floor.

“CDK tile and sanitary ware manufacturing processes are fully automated using state of art machinery  complemented by highly experienced and committed production team. The company has fully digital printers, which means that in addition to CDK’s own regular models and designs, it can produce any customized designs of customer’s choice as well as modifying tile attributes to address specific needs.

“The CDK factory is located on 50 hectares of land in Sagamu. Ogun State just after the Lagos-Ibadan Expressway Interchange and that the size of the property acquired is a pointer to the future aspirations of CDK not only to expand production of Its present t product lines but to also venture into local production of related products such as bathroom and kitchen faucets all of which are presently I imported.

In his response, President of ACAN, Air Mansur Ahmadu. commended CDK Integrated Industries Limited for their investment in the tile and sanitary wares industry in Nigeria: “As architects, it is always good that we are furnished with relevant information that enables us make the best decision as protect managers and the information that CDK is sharing about the world class quality of their “Made-in- Nigeria’ porcelain tiles and sanitary wares.

Source:  Gabriel Olawale


Rise in the cost of construction of Lagos- Ibadan expressway

The construction cost for the section one of the Lagos-Ibadan Expressway, stretching from Lagos to Sagamu Interchange has risen to N134bn, the Federal Controller of Works, Lagos, Mr Adedamola Kuti, has said.

Kuti stated this at the opening of barricaded construction zones at Asese and Mowe sections of the road to motorists on Tuesday morning.

He said the costs rose due to the additional works expected to be carried out on section one of the road that were not in the original plan.

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Kuti said, “The initial contract sum of this project was N70bn but with additional work introduced, the figure rose to N134bn for the section one which is the Lagos-Sagamu axis. There has also been an increase in the time the project will be completed

“It was supposed to be completed in 2017 but we now have to incorporate underpasses, flyovers and toll plazas and with additional work, the date has shifted to about 2021. But what we are saying is that what we experienced in the past due to funding will not happen again.”

He explained that the Federal Government had set aside funds for the road which he said it considered a priority.

“I’m aware the Federal Government set aside about $650m to complete Lagos-Ibadan Expressway; Abuja-Kaduna-Kano Expressway; parts of East-West Road; Mambilla Plateau; and the Second Niger Bridge. The figure is growing, it may have risen to $1bn,” he said.

According to Kuti, with the funds in place, there will be no form of slow down on the Lagos-Ibadan Expressway, outside weather.

He said the parts of the road would be closed for construction again in January, adding that the parts of the road, which were closed for several weeks, were opened to ease travellers’ movements during the Christmas and New Year holidays.

The controller said motorists should obey traffic rules and regulations as would be given by officials of the Federal Road Safety Corps.

Kuti also stated that palliative works had commenced on the Lagos-Badagry Road to ease movement during the festive period.

The Project Manager, Julius Berger, Thomas Christl, said the Lagos-Ibadan Expressway project was suspended due to funding and restarted in June.

He said two sections were opened for construction with a promise to make those parts available for use during Christmas and New Year.

“We are aware of the concerns of motorists and we are doing everything we can to minimise it. At the completion of the road, the gridlock would be addressed,” Christl said.


TrustBond Mortgage beats analysts’ expectations amid economic headwinds

TrustBond Mortgage Bank, one of Nigeria’s few primary mortgage banks (PMBs) operating with national licence, has beaten analysts expectations with its 2017 financial year results which, in the estimation of  its shareholders, is a good and commendable outing.

Though there was relative stability in 2017 compared to the year before it in terms of the impact of recession on macro-economic environment, analysts’ expectation was a dismal performance by the organised private sector operators, especially those in the financial system for whom hyper inflation and volatile exchange rate regime meant so much.

Again, a pervading perception is that the mortgage industry in Nigeria is under-performing. To some people, Nigeria has no mortgage industry at all and so they do not expect anything wonderful from that industry  in terms of performance, more so in a recessing economy.

But  at their 9th Annual General Meeting in Lagos recently, TrustBond excited its shareholders, disclosing that during their financial year that ended December 31, 2017, their profit after tax from continuing operation rose about 13 percent to N23,443 million, up from N18,016 million in the previous year.

Adeniyi Akinlusi, the bank’s CEO, who gave this hint, added that despite the economic headwinds that characterized the year under review, particularly the high inflationary environment,  the bank was able to reduce its cost-to-income ratio to 0.64, down from 0.89 in 2016. It also recorded total assets of N13, 593 billion in December 2017, representing 9 percent increase over the previous year’s figure of N12,411 billion.

Akinlusi told the bank’s shareholders that besides some business restructuring and the adoption of a new one  that they did which yielded these results, they also undertook what he called ‘Share Reconstruction’, leading to the reduction of an accumulated loss to N886 million in their balance sheet, down from N2,177 billion.

The shareholders were excited by this performance and, according to Sunny Nwosu, a shareholder and member of the audit committee, “this shows that the management worked very hard and followed our advice.   They were advised not to do certain things and they followed the advice. That caught shareholders’ admiration and they were happy”.

Though there was no dividend pay-out, the shareholders were happy and optimistic. Binuyo Sharafa Teju, another shareholder, reasoned that for the management to have been able to reduce the bank’s debt burden to N886 million from N2,177 billion, in the next three years, they would wiped it out and be able to pay dividend.

“From what we have seen today, I want to believe that by the time we will be doing 2018 account, they shall  have wiped off the debt, creating avenue for dividend payment”, he said, adding that compared to other mortgage banks in the same market, Trustbond had done pretty well and was well ahead.

Akinlusi  assured of a better performance in their 2018 results, saying, “in 2018, we will place greater emphasis on growing our mortgage business volume, while impacting positively on our environment by working with other stakeholders to improve home ownership for Nigerians”.

Etigwe Uwa, the chairman of the bank, shared this optimism even though he acknowledged that mortgage sector’s 1 percent contribution to GDP remained dismal considering its huge prospects.

He noted that there have been interventions by the government, through programmes and policies, to increase mortgage finance and promote home ownership in Nigeria, citing the ‘My Own Home Scheme’ which is a public private partnership that seeks to increase access to housing finance in Nigeria through mortgages, mortgage guarantee/insurance and housing micro-finance.

He recalled that in 2017, the federal ministry of finance and the Nigerian Sovereign Investment Authority (NSIA) also created the Family  Homes Fund (FHF)and voted N1 trillion for affordable housing for Nigerians with potential capacity to generate up to 1.5 percent increase in GDP by 2023.

Uwa declared that the outlook for the bank for 2018 financial year was positive, considering the relative stability experienced in the last quarter of 2017, the improved macro-economic indices, improving business climate and economic growth.

“With government’s renewed interest in prioritizing affordable housing, particularly for the low-income earners, the potentials in the mortgage market continue to increase while we are positioned to impact positively on the mortgage space; we will continue to seek and implement systems and processes to enhance efficient service delivery, achieve cost optimization and strengthen risk management system”, he assured.

Source: Chuka Uroko

Fragile economy, low income, credit keep real estate sector in recession

Nigerian real estate  sector has yet again contracted in Q3 2018, in what is the 11th consecutive quarter in recession since the first quarter of 2016, figures available on the sector on the National Bureau of Statistics (NBS) website reveal.

At the end of the 9th month of 2018, the real estate sector reported growth of -2.68 percent as against the -3.88 percent growth rate recorded for Q2. The sector performance in the review period was linked by economists to Nigeria’s fragile economy, low credit and insufficient income.

Although the Q3 figure released by NBS was better than Q2 figures by 1.21 percentage points.

Responding to the report, Rafiq Raji, chief economist at Macroafricaintel said real estate prices were previously driven by a booming economy fuelled by higher oil prices.

“A loose public purse was also a catalyst. The current depression in the sector is symptomatic of the slow pace of the economy and perhaps the anti-corruption efforts of the current government,” Raji told BusinessDay.

The sector growth rate in the review quarter was, however, higher than the growth recorded in Q3 2017 by 1.44 percentage points.  It contributed 6.50 percent to real GDP in Q3 2018, which is 0.30 percent lower than the 6.80percent it recorded in the corresponding quarter of 2017 and 6.83 percent in the preceding quarter.

Nigeria with the highest population in Africa has about 20 million housing deficit and BusinessDay survey has revealed that about 90 percent of house acquisition in the country is funded by individual savings, owing to the funding challenges in the country’s property industry.

Again, the country has one of the highest mortgage rates in Africa. Its mortgage to GDP ratio is less than 1 percent, as against 2 percent in Ghana and over 30 percent in the more developed countries.

“Mass housing, for which there is huge demand, is probably not attractive because incomes are low and credit is dear. More high-end property, plenty of which are empty in places like Abuja, have not enjoyed much customer-patronage because the rent economy, fuelled by political patronage, has been in dire straits for the past 3 or more years. That is good for Nigeria but bad for the real estate economy, Raji explained.

Nigeria’s real estate industry was also among the least attractive sectors to the country’s commercial banks as it got one of the smallest portions of loan in the 3rd quarter of 2018.

The figures compiled from the state stats showed that Nigeria’s property sector was only able to attract N710.2 billion in the third quarter of 2018 as against the N744.56 billion and N784.2 billion it got in Q2 and Q1 2018 respectively.

“For the banks, before they were saying let’s take a bit of risk by investing in the real estate sector but now what you hear is let’s not even take any risk at all,” Olurogba Orimalade, the current chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State Branch,  told BusinessDay.

Meanwhile, Nigeria’s GDP in the third quarter of 2018 grew by 1.81 percent (year-on-year) in real terms, driven by non-oil sector. The growth rate report in the review quarter represents an increase of 0.64 percentage points when compared to the 1.17 percent rate recorded in the third quarter of 2017.

Q3 GDP figures was 0.31 percentage points better than Q2 2018 figures of 1.50 percent. The non-oil sector grew by 2.32 percent in real terms in Q3. This is higher by 3.08 percentage points compared to the rate recorded same quarter of 2017 and 0.28 percentage point higher than the second quarter of 2018.

The -2.68 percent contraction figures reported by the real estate sector in the quarter under review is the fourth lowest negative growth of the real estate sector after Q2 2018, Q1 and Q2 figures of 2017, as they reported -3.88 percent, -3.10 percent and -3.53percent respectively.

BusinessDay analysis of the  real estate sector revealed that the contraction recorded for the first quarter of 2018 is so far the worst contraction the property market has reported since BusinessDay started tracking it in Q1 of 2016.

The worst quarter contraction of the sector that follows after the Q1 2018 figures was in the fourth quarter of 2017 when the sector expanded negatively by -9.27 which was 0.13 percent points better than the 2018 Q1 figures.

Source: Endurance Okafor

Minister: only 35% of infrastructure developed in Abuja

The Minister of the Federal Capital Territory (FCT), Mallam Muhammed Bello has revealed that only 35% of Abuja’s infrastructure has been developed.

Bello said that the FCT was projected with a 3.1 million population when fully built within a projected 25-year-period.

He added that the capital city is the fourth largest in the country and one of the fastest growing in Africa with over 2.75 million population squeezed within just two phases of the planned five phases.

Speaking at the commemoration of the movement of seat of government from Lagos to Abuja, he said that it has been 42 years since its creation and 27 years after the movement from Lagos.

The Minister who was represented by Executive Secretary, FCDA, Mr Umar Gambo Jibrin, urged everyone to see Abuja as a national heritage.

He said, “42 years since its creation and 27 years after the movement from Lagos, Abuja indeed, has come of age. It has surpassed Logos as the destination for foreign direct investments. It has become a major aviation and conference hub for West Africa. We have also inaugurated a modern light rail transport system that is the first of its kind in the sub-region and FCT, indeed, has become the melting pot of Nigeria that it was conceived to be.

“However, the city’s demographic expansion has proceeded beyond the protected growth plan when the city was founded. FCT was projected for 3.1 million population when fully built within a projected 25 years period.

“I urge all of us to see Abuja as our national heritage and join hands to protect it. This is because so much hes been invested in the building of the new capital -infrastructure, public utilities, institutions etc. Today, however, we are confronted with a new set of challenges, namely; vandalism of public utilities like manhole covers, bridge railings, transformers and streetlight poles and components, transformers as well as plain acts of sabotage and disobedience to rules that make for orderly living.”

Executive Head, Editorial Board, The Guardian newspaper, Mr Martins Oloja who was the keynote speaker of the occasion, stated that Abuja has been an orphan of some sort.

He said, “Abuja has been an orphan of some sort perhaps because of near absence of democracy in its governance processes. All the 36 states’ governors are elected but the ‘militicians’ who gave us this constitution made Abuja just a part of the Office of the President, no thanks to Sections 299-302 of the 1999 Constitution as amended. Even the original inhabitants, who have been agonising without organising well about unfulfilled promises since 1976, could not remember Abuja @ 40 and I said so in February 2016.”

Source: Grace Obike

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