NCRIB Urges Govt To Be Proactive In Implementation Of Building Laws

Worried by the spate of building collapses in Lagos and Oyo States, the Nigerian Council of Registered Insurance Brokers (NCRIB), has urged the three tiers of government to be proactive in the implementation of building laws. The President of the council, Mr Shola Tinubu, made the call on Tuesday at the quarterly media parley in Lagos.

The two states had earlier witnesses building collapse in March. A building, which housed a school, collapsed at Massey Street, Ita-Faji, on Lagos Island, with no fewer than 20 deaths recorded. Barely 72 hours after that tragic incident, another building collapsed in Ibadan. According to Tinubu, the council is well touched by the incessant collapsed of buildings. He called on the governments to give more impetus to the enforcement of compulsory building insurance as enshrined in Section 64 and Section 65 of Insurance Act 2003.

Tinubu said the council believed that the unfortunate incidences were actually accentuated by the lax of regulatory enforcement agency in the construction environment. He urged governments to continually engage the stakeholders in the construction environment, while related institutions should elicit their inputs for a long lasting solution to the malaise.

The council president, while commiserating with the victims of the building collapses, advised Nigerians, on their own, to insure their personal assets. “The insurance will mitigate the losses when losses of this dimension do occur. “Every individual should ideally live up to his responsibility of care by protecting whatever is valuable to him or her, both life and property “Our slogan has been: “Whatever is Worth Having, is Worth Insuring,” he said. (NAN)

Worried by the spate of building collapses in Lagos and Oyo States, the Nigerian Council of Registered Insurance Brokers (NCRIB), has urged the three tiers of government to be proactive in the implementation of building laws. The President of the council, Mr Shola Tinubu, made the call on Tuesday at the quarterly media parley in Lagos.

The two states had earlier witnesses building collapse in March. A building, which housed a school, collapsed at Massey Street, Ita-Faji, on Lagos Island, with no fewer than 20 deaths recorded. Barely 72 hours after that tragic incident, another building collapsed in Ibadan.

According to Tinubu, the council is well touched by the incessant collapsed of buildings. He called on the governments to give more impetus to the enforcement of compulsory building insurance as enshrined in Section 64 and Section 65 of Insurance Act 2003.

Tinubu said the council believed that the unfortunate incidences were actually accentuated by the lax of regulatory enforcement agency in the construction environment.

He urged governments to continually engage the stakeholders in the construction environment, while related institutions should elicit their inputs for a long lasting solution to the malaise.

The council president, while commiserating with the victims of the building collapses, advised Nigerians, on their own, to insure their personal assets.

“The insurance will mitigate the losses when losses of this dimension do occur. “Every individual should ideally live up to his responsibility of care by protecting whatever is valuable to him or her, both life and property “Our slogan has been: “Whatever is Worth Having, is Worth Insuring,” he said.

Source: News Agency of Nigeria

Family Homes Fund’s Delta Housing Project Ready In December

Family Homes Fund is set to make dreams come true for many Nigerians, especially low income earners who are going to benefit from its various housing projects across the country, some of which will be ready soon. The project which is expected to help the Federal and state governments provide over 17 million new homes needed by the country over the next 15 years is already yielding great results.

According to Family Homes Funds, many brand new homes will be ready in December this year in various states across the country’s six geopolitical zones. The categories of the homes ranges from one bedroom to three bedroom bungalows with complete facilities needed in any functional home.

The current stage of work in Delta according to the project leaders is at 70%, which proves that the December projection is very feasible and anticipated.

 

About Family Homes Fund

The Family Homes Fund Limited is a partnership between the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority as founding shareholders with aim to address the country’s housing deficit.

family homes

The initiative is aimed at facilitating affordable housing delivery by entering into specific partnerships with supportive State Governments, developers and International partners/agencies that can provide technical support and financing for project implementation.

The Fund is structured as a Real Estate Investment Trust and will be professionally managed to catalyse funds from the private sector, pension funds, insurance funds, multilateral agencies and impact investors.

Family Homes Fund has voted N1 trillion for affordable housing for Nigerians by 2023. The scheme also targets 1.5 million new jobs to boost families’ well-being. It will be the largest affordable housing-focused fund in Sub-Sahara Africa, according to report from the fund managers.

The scheme will be leveraging its capital to facilitate access to affordable housing for millions of Nigerians on low-to-medium income levels.

Through strategic partnerships with various players in the sector and some of the world’s main Development Finance Institutions it has an ambitious commitment to facilitate the building of 500,000 new homes by 2023.

According to the scheme promoters, the fund places priority on how it can take advantage of the opportunity a large- scale house building programme offers to create jobs for the people with low income, to bring about sustainability, improved quality of life, security and hope for beneficiary families.

READ ALSO: FG SEEKS ALTERNATIVE REVENUE SOURCES TO FUND 2019 BUDGET

“With a projected cumulative spend of up to N1 trillion by 2023 into various inputs into the house building process including doors, windows, tiles, roofing materials, blocks, paving stones, paint among others there is opportunity to incubate large numbers of SME small scale industries creating significant employment,” it said.

“The Family Homes Fund aims to catalyse the creation of new jobs through the investments we make. Alongside investment by other players in the housing sector, we have a real opportunity to achieve impact. Real positive impact on families, women who often carry the biggest burden in poor households and young people. At a national level, this potential effectively harnessed could generate up to 1.5 per cent increase to the Gross Domestic Product (GDP) by 2023,” it said.

Besides, the Fund aims to support ongoing dialogue around development of a local contents framework for inputs into the house building process. A long-term objective is to ensure that up to 80 per cent of manufactured inputs are locally produced.

Cheap and Invaluable Asset for Beneficiaries

Beneficiaries of the project will enjoy a deferred loan for up to 40% of the cost of their home. For the first 5 years of the loan, no payments need to be made. From the 6th year, monthly payments will be made to start repaying both interest and capital to assist the purchaser. The amount paid starts low and increases each year in gradual steps (average 6.5% per annum) in order for the HTB loan to be fully repaid by the 20th year, the same year the mortgage is expected to be fully repaid.

Creating New Jobs

Ongoing investments are already making a real difference with over 13,000 jobs created and about 360,000 to be created from current development pipeline. The Grand Luvu Project alone in  Nasarawa State created about 8000 jobs.

Many young people, especially those who were previously unemployed have been able to obtain training on the Funds Grand Luvu project, acquire valuable skills with guaranteed long-term employment and income to support their families. Same goes for the unskilled unemployed youths who depend on their family until they were employed as masons or carpenters on the project sites.

family homes

In Kaduna, the Millennium City project has directly engaged slightly over 200 persons which includes local artisans including carpenters and brick layers. The construction need for accountants, surveyors, engineers, etc. has created a lot of jobs since commencement.

According to officials of the fund “Our focus is to create homes that people, particularly those on low income can afford but beyond that, ensure that we provide opportunity for them to earn decent wages consistently through our investment in these projects.

“We have spent the last year building very strong foundations for a major take off and now we should start seeing the results in affordable homes and jobs for local people.”

On partnerships, the scheme is building strong partnerships with broad institutions and agencies to maximise this opportunity. The fund is equipping a new generation of young Nigerians with high-level skills in modern methods of construction and technologies.

Through a combination of these activities, the Family Homes Fund aims to create or support up to 1.5million jobs by 2023 making a real difference to the quality of life of their families and the economy.

By Felix Ojonugwa

5 million Housing Scheme to be Launched by Pakistan

Dubai: Prime Minister Imran Khan is set to launch on Wednesday his dream project of building 5 million low cost houses for the less-fortunate people in the country.

Minister for Information Fawad Chaudhry told reporters in Islamabad on Tuesday that Prime Minister Imran would launch the first phase of Apna Ghar (our home) Housing Scheme on Wednesday in Islamabad.

“The first phase will see the construction of 135,000 houses across the country,” he said.

A dedicated authority called the Naya Pakistan Housing Programme (NPHP) has already been created to manage the project under direct supervision of the Prime Minister.

The first phase will include launching of construction work for houses in Islamabad and Balochistan.

During his election campaign, Imran had promised to build five million housing units to overcome the shortage of affordable housing in the country. The housing scheme will largely be involving the private sector.

“There are 40 industries directly involved with housing. By inviting the private sector into this project we are opening the doors of entrepreneurship for young people,” said Imran.

He said that though constructing five million houses is an enormous task but once initiated, the number of houses being constructed will be increased with each passing year. The project will be carried out in phases.

Housing Finance

The Pakistan government will provide 90 per cent housing finance to deserving people as part of Imran’s flagship project of five million houses in the country.

Last month, Imran already launched a low-cost finance scheme to kick-start the housing project for the poor.

The project, he said, would also help boost economic activities through the creation of jobs and promote 40 industries connected to construction sector.

Imran said earlier that a huge segment of Pakistan’s population is cash-starved and could not afford to build houses, and that’s why the government is stepping in to help.

Housing units costing less than Rs3 million (Dh80,000) would be funded under the scheme. The banks would provide loan up to Rs2.7 million — 90 per cent of the total amount — under the scheme.

The banks and other financial institutions are being incentivised to extend loans for the scheme.

Special segments

Special segments, including widows, orphans, transgenders, martyrs’ families and people living in war-against-terror hit areas would be given priority under the house financing scheme.

The new housing units could neither be rented out nor sold by the owners. The low-cost financing would be made available to at least 100,000 housing units at the mark-up rate of 5 per cent for 12.5 years.

Currently, Pakistan has a backlog of 10 million housing units and bank financing is a must to achieve the target of constructing five-million low-cost houses.

Ashfaq Ahmed

Kenya’s 1.5% Housing Levy Sparks Anger

There has been an angry response in Kenya to a decision by the authorities to introduce a new salary levy to help build low-cost homes.

From next month, employees will pay 1.5% of their pay to the housing fund and that amount will be matched by the employer.

The anger stems from suspicion that the extra money could be lost through corruption, correspondents say.

The government aims to build 500,000 affordable homes by 2022.

The total monthly payment per person will not exceed $50 (£38), but it is hoped that $500m will be raised every year.

The Federation of Kenya Employers (FKE) says the move to introduce the levy is against a court order, which suspended its introduction pending a hearing on the FKE’s objection.

A trade union umbrella body has also opposed the money-raising move.

Is it a tax?

President Uhuru Kenyatta wants his second term in office, which began in November 2017, to be defined by what he has called the big four: universal healthcare, improving food security, boosting manufacturing and building affordable housing,

The housing levy has been called a tax but at the end of last year Mr Kenyatta said “this is not about tax as it has been made to look, but a saving and a contribution towards owning a house”, the Star newspaper quoted him as saying.

One consumer rights organisation questioned whether people should be forced to pay the levy, adding in a tweet that the “government has no history of successfully managing any ‘fund'”.

Many on Twitter questioned where the money would go, with the suggestion that the government tackle corruption first.

Others questioned how they could afford the levy while also facing a rise in the cost of living

Source: BBC

Exploring Ways to End Homelessness

Maybe it was the rash of recent news on people becoming homeless, or maybe it was seeing people obviously homeless and camping in their cars or drifting around town that got to me. Maybe it was seeing that worn, young bag lady walking to nowhere special, a droopy bag of belongings tossed over her shoulder.

Or maybe it was the TV spot of a father moved to tears as he expressed his gratitude to the Office of Hawaiian Affairs for getting his family into an affordable small home, something he never thought would happen.

Not one, but the combination of triggers worked on me along with the emotionally-charged fact that I, myself, had faced the fact of becoming homeless not once, but twice. I lay sleepless.

Homeless

Images played unbidden on the inner screen of my mind — not only of the various types of dwellings human beings have developed in various cultures around the world and through time, but the humans that developed and built those differing habitats themselves.

READ ALSO: BUY TO LET MORTGAGES

• Caves: The first safe dwellings, to be sure. I recalled reading “Clan of the Cave Bear” and suffering along with Ayla, who didn’t fit with her rescuers in the monkey-like tribe. Also, my first visit walking into the gaping maw of the Ha‘ena dry cave, which I later learned sheltered the first Kauai fishermen who came from other parts of the island to camp in now-hidden upper chambers within it. My mind skipped on to the Maha‘ulepu “cave” when I first saw it after ducking through a dark entry tunnel with a skull-bonking protrusion to be avoided at all costs, and before the special archaeological digs and protections now in place. There were my more recent memories of the amazing, ancient sandstone clefts of Jordan’s Petra, both manmade and naturally formed.

• Castles: These are part of every person’s inner kid imaginings, whether “fairy” or Disney-style imaginings, or defined by ramparts and knights of old, such as my oldest son played with (a Sears Christmas gift) for countless hours.

• Sumptuous tents of Araby: Inner visions bloomed of sumptuous Persian carpets, skinny minarets and silken draperies — Ali Baba-type settings.

• Indian “daks” or godowns: Small, roughly constructed dwellings to which servants retired to eat and sleep from the bungalows of my youth.

• Igloos: I wondered as a school kid how anyone slept on an ice-shelf bed, furry robes or not. And how did the Eskimos cut those great blocks of ice and manage to sculpt them to fit into a curved shape?

• Stilt homes: All through Asia, these protect from flooding, insects and wild animals. Their sloped roofs channel off the rain.

• Yurts: My fifth-grade Junior Scholastic implied that the lives of Mongolian nomads centered around a home fashioned of hides and poles. How did the mothers feel about pulling up stakes to move so often, and how did they find time to embroider and fashion the prayer cloth hangings?

• Teepees, wigwams, hogans: I held the same questions for the North American tribes, and when did their girls and women get any privacy, and how did they store their beading and hide-sewing supplies without plastic boxes and compartmental “keepers”?

• Hale: Visualizing the thatched dwellings of Polynesian cultures. I once said such would be my dream house — if it were situated with a view of the ocean on golden sand under coconut palms (AND allowed me to hook up to a modem and Wi-Fi!). Now, after experiencing recent heavy, driving rains in “paradise” and remembering Hurricane ‘Iniki, I’ve rethought that idea.

The house a human calls home becomes part of that individual’s foundation, leading to the impact of the phrase “home, sweet home.” There comes a point in a life when backpacking and caravanning end, where one decides to plant one’s self and perhaps some trees and vegetables, and create a safe haven in which to raise a family.

Homeless

Toddlers show the importance of home in some of their first drawings when, in our culture, the stick figures identified as mommy and daddy and self are shown with a dominant house. Sometimes this house has a door and windows; sometimes, a chimney and/or flowers. No matter the variations, the house looms, showing its importance as “home.” To be homeless erodes this foundational feeling of stability.

So, whether it’s an igloo, hut, hovel or mansion, or underground “oasis” house of Coober Pedy, Australia, or a rondavel of Lesotho, South Africa, what matters is that one may call it home.

Homelessness on our island is not just about people who are down and out, people who may or may not choose to enter another level of society. Responsible people who do work hard and earn decent wages are going homeless.

The crisis at hand centers on not having enough truly affordable home properties and rentals available to our full-time residents. It’s a fact that Kauai people cannot easily find affordable housing, that the inflated housing costs and jacked-up rents are causing even good earners to join the ranks of the homeless.

It’s dishonest to permit and label dwellings “affordable” that are, in fact, not so, or fall out of that category back to market price within 10 years. It’s not enough to discount permitting costs for home additions.

Dawn Fraser Kawahara

homes

Why Low Income Earners Miss Out on Mortgages and Home Ownership

A major requirement for getting a mortgage loan facility that will enable the borrower to own a home is having a good job with regular income. But it becomes very challenging when the earning is low.

At N18,000 per month minimum wage, public sector workers cannot afford mortgage loan. Even with the yet to be implemented new minimum wage of N30,000, this class of people will not still be able to afford mortgage loan.

Therefore, for many years to come, unless a drastic change occurs, homeownership through mortgage loan, will continue to elude workers who earn the national minimum wage.

This is because, based on the terms of mortgage structuring which requires not less than one third or 33.3 percent of this N30,000 per month, the borrower has to deduct approximately N10,000  for loan repayment,  and a monthly payment of this sum for 30 years as required by the mortgage law, will mean that the prospective home owner will contribute the sum of N3 million for the 30-year period.

However, apart from the fact that there is no decent accommodation for N3 million in a good location, there is no 30-year mortgage available for loan applicants.  Besides, at the current minimum wage, 33.3 percent of N18, 000 will be N5, 994 and a monthly payment of this sum over a 30-year period will amount to N2.15 million.

Taking it further, Adeniyi Akinlusi, CEO, Trustbond Mortgages, emphasises that many households cannot own homes through mortgage because, given their low per capita income, they won’t qualify for mortgages.

Mortgage deficit, he noted, stands at N49.05 trillion and out of a population of 180 million people, 30 percent representing the 44.4 million working class, the mortgage-able adults are only 19.9 million, representing 45 percent of the total population.

This is why mortgage experts insist that job creation is critical to ease homeownership They maintain that government and private sector developers could build all the affordable or social housing they want to, but people have to have jobs to be able to buy either cash or through mortgage.

Nigeria is one the world’s most expensive housing markets where the cost of renting a three-bedroom apartment ranges from N15 million to N20  million per annum in highbrow areas like Victoria Island and Ikoyi in Lagos; Asokoro, Maitama in Abuja; GRA phase 2 in Port Harcourt or Trans Amadi also in Port Harcourt, among other areas in Nigeria.

The country’s  latest effort at improving access to housing finance was the establishment of the Nigerian Mortgage Refinance Company (NMRC) which is aimed to provide liquidity in the mortgage system by raising money from the capital market and using same to refinance primary mortgage banks for on-lending to loan applicants. But, four years down the line, the company is still struggling.

A report on The Lagos Housing Market notes that a mortgage period of 30 years and a housing unit of N2.15 million are hardly available, and this amount excludes interest rate on the mortgage facility. Consequently, even the middle income earners struggle to have access to affordable housing.

The report notes further that Nigeria is faced with a multi-dimensional housing problems stemming from poor planning. It recalls that many initiatives have been launched in the past which did not translate to visible results.

“The country is fraught with abandoned low cost housing projects, inadequate funding, regulatory bottlenecks, lack of focus on residential housing development and unsupportive finance mechanisms,” the report says, pointing out that in most developed countries, affordable housing at different income levels is achieved through assistance from government through planning incentives, tax credit, land provision, infrastructural support and required building approval concessions.

The bane of mortgage access in Nigeria is high interest rate which hovers between 20 percent and 30 percent and this is one of the major reasons for the low homeownership level in the country whose housing deficit is in excess of 20 million units.

Roland Igbinoba, vice chairman, Roland Igbinoba Real Foundation for Housing and Urban Development (RIRFHUD), publishers of the report, laments that, though Lagos currently has the most vibrant property market in Nigeria, home ownership is still at less than 20 percent.

“With a daily intake of 3,000 immigrants, the housing supply has failed to keep up with rapid urbanization and population expansion, especially in the low income market. The housing demand estimate is roughly 4.4 million units while the estimated current supply of housing in the state is 1,417,588 units”, he reveals, adding that “this leaves a gap between housing demand and supply at roughly 3 million units; output is relatively low although there has been increased participation in housing projects from both the government and private sector,” he noted

The extent of housing shortage in Lagos is enormous and the deficit is both quantitative and qualitative, such that 72 percent of Lagos residents are tenants paying rent as high as 50 percent of their monthly income while most of the existing accommodations are provided by private landlords.

On the qualitative housing deficit side, most low income earners live in congested settlements usually characterized by buildings with structural defects, bad roads, poor drainages and pollution, posing health hazards for the inhabitants.

Kenya Invites Private Land Owners for Affordable Housing Program

Kenya will partner private landowners to implement a development blueprint on affordable housing, Charles Mwaura, Principal Secretary of the State Department for Housing and Urban Development, said on Friday.

Mwaura said that individuals, who own huge tracts of land have been invited to become partners in the implementation of the mass housing programme.

“We are interested in getting private landowners into the affordable housing programme provided they will comply with the stipulated guidelines,” Mwaura said.

Mwaura added that a legislative framework had been in place to facilitate private investments in low-cost shelter.

Kenya aims to develop 500,000 housing units annually as part of the Big Four Agenda outlined by President Uhuru Kenyatta to transform the country.

Government statistics indicated that Kenya has an annual housing deficit of 200,000 units thanks to bottlenecks linked to high cost of land, archaic regulations and volatility in the real estate sector.

Mwaura said that availability of land is key to bridging housing deficit in the rapidly growing urban centres.

“Private landowners will help us develop projects that would be added to the affordable housing programme pipeline. The government will facilitate strategic partners to deliver low-cost shelter to citizens,” Mwaura said.

The state will invest in supportive infrastructure such as access roads, clean water, sewerage and power to pave way for construction of affordable shelter in major cities and towns, he said

Private landowners will be lumped together with financiers and contractors, who have already been roped in to help implement the affordable housing programme, the official said.

“Currently, we are receiving applications from partners with technical and financial capabilities to develop housing units for the low-to middle-income groups,” Mwaura said.

The affordable housing programme is expected to promote social equity, stimulate economic growth and create an estimated 350,000 direct and indirect jobs by 2022, he said.

Skidlab Ventures rolls out 50,000 affordable housing units

Government must create an enabling environment to attract the private sector to the housing sector, that’s according to the Chairman of Financial, infrastructure and technological development firm, Skidlab Ventures Ghana Ltd.

Sean Ekow Brown said his outfit is ready to support government significantly reduce the cost of operations in the housing sector

Speaking to Joy Business after a signing agreement with Construction firm, AAK & Associates, Mr Ekow Brown said, “As long as government is providing an enabling environment there will be nothing to worry about. It will be difficult if the private sector does this alone.”

He believes the contract, which was awarded by the Housing Ministry will see the construction of 50,000 affordable housing units nationwide and it will be overseen by the Ministry of Works and Housing.

“It’s an arrangement between Skidlab and AAK & Associates. We’ve had series of interactions on best ways to partner us in the construction of affordable housing, We’ve got a contract from the ministry and we want the right partnership to hit the ground for 50,000 affordable housing units,” he stated.

Speaking at the signing in, CEO of Haswwani & Sons Inc, Abdul Hashwani, urged the Chinese company to prioiritze best standards to make this contract materialize.

Housing and mortgage finance have experienced several difficulties in Ghana. Limited mortgages have been attributed to inadequate capital allocated to long-term financing, persistent gaps in borrower credit appraisals, and difficult macroeconomic conditions resulting in high interest rates. Similarly, housing microfinance has also encountered challenges in its consolidation, perhaps worse than mortgagees.

As such, many housing is out of the reach of many households in Ghana since the least expensive house would still be unaffordable to over 95 percent of Ghana’s urban population considering monthly mortgage repayments relative to household income of urban residents estimated at $4 735 (GH¢20 930).

The majority of housing, about 90 percent of the total, is delivered by individuals and the most common method the building is incremental construction, where owners self-manage, relying on craftsmen and tradesmen to build progressively, dictated by the availability of funds.

This trend has implications on the quantity and quality of the dwellings. The result has been overcrowding, particularly in urban areas, evidenced in the Greater Accra Region.

Source: By  Charles Ayitey

Problems with the National Housing Fund and the Way Forward

On 2 April 2019, the Senate, during its plenary, announced that President Muhammadu Buhari declined assent to the National Housing Fund (Establishment) Bill 2018 (“The NHF Bill”).

The NHF Bill, which was recently passed by the National Assembly, sought to provide for additional sources of funding for financing housing development in Nigeria. However, the President rejected the Bill for legal and economic reasons.

The President equally declined assent to seven other bills which were passed recently by the National Assembly.

Buhari, according to the letters, cited several grounds, ranging from infractions on extant laws, duplication of responsibilities of existing agencies, to financial constraints for refusing assent to the bills.

The National Assembly had transmitted the NHF Bill to the president for signing into law after passing it in February 2019.

 

Character of the NHF Bill

The NHF Bill sought to replace the current National Housing Fund (NHF) Act and introduce a number of changes to the NHF Scheme. These changes include the imposition of a compulsory 2.5% deduction on the monthly income of Nigerian workers, a 2.5% levy payable by manufacturers and importers of cement and a compulsory investment of 10% of profits before tax on banks, Pension Fund Administrators (PFA) and Insurance companies.

Under the extant NHF law (NHF 1992), every Nigerian earning N3, 000 or more per annum is required to contribute 2.5% of their monthly basic salary to the NHF. The funds mobilised will be made available to contributors at affordable interest rates to build homes.

Just like the pension and personal income tax contributions, the NHF is compulsory for a public worker, a private worker or self-employed individuals earning pay from the range of minimum wage and above.

                          

Key elements of the proposed fund

  • Mandatory 2.5% contribution of monthly income by employees earning minimum wage and above in public and private sectors as well as self-employed individuals.
  • 5% on locally produced or imported cement.
  • Employers are to deduct and remit the contributions monthly
  • Penalty for non-compliance of up to N100 million for corporates and N10m for individuals while sanctions include cancellation of operating licence of banks, insurance companies and PFAs for violations.
  • Withdrawal by contributors who have attained the age of 60 years or 35 years of service to be an interest rate of 2% per annum. The Fund and any refund of contributions are exempted from payment of taxes.

 

Presidential Rejection

However, the President declined assent to the NHF Bill. According to the President, the various levies and obligations imposed by the NHF Bill would be disruptive and punitive to the Nigerian worker and to sectors such as cement manufacturing, banking, insurance and pension. The President also stated that the provisions of the Bill directing PFAs to invest in the NHF undermines the powers of the National Pension Commission and adversely affects the safeguards that protect the pension industry from unreasonable investment risks.

 

Public Sentiment against the NHF Bill

Checks have revealed that there is a teeming public sentiment against the bill, just in line with that of the president. Although the Fund is not new, many have faulted it on so many grounds.

One of the major reasons for public sentiment against the bill is because it is very much shrouded in secrecy, with little or no consultation whatsoever from the relevant stakeholders in the housing and finance sectors.

The revised bill is being presented for passage without the input of various stakeholders. The same factor that affected the NHF Act of 1992 which failed because many organisations including those of the government didn’t make contributions to the poll.

In a conversation with Housing News, Gbenga Orile, a housing finance and mortgage consultant revealed that there wasn’t any critical business analysis or due consultation on the part of the Federal Mortgage Bank of Nigeria – the authority charged with the sole responsibility and cumbersome bureaucratic bottleneck of administering and getting loan(s) from the fund – before presenting the proposal to the National Assembly.

‘’Everyone can agree that there is a huge housing deficit in Nigeria, and it is high time this age long problem is addressed. The National Housing Fund is a plausible idea because it symbolises a social contract – a situation where those with delegated authority can on behalf of the people fashion out a suitable plan that will bring good to the highest number of people. But it becomes problematic when the relevant stakeholders are not even consulted or a critical business analysis is done. A thorough look at the bill will easily reveal these obvious errors,’’ he said.

The Federal Mortgage Bank of Nigeria (FMBN), has also been accused of having a poor record keeping data base like the one existing in PENCON.

According to Mr. Orile, the amount of contribution(s) to the national pension fund is public knowledge because of the need for transparency and accountability. If the NHF bill should become law, then it must place value on transparency and accountability, he said.

As mentioned earlier, there is a public recognition of the fact that the cost might be too much for the beneficiaries.

Putting it in clearer perspective, the cost implication for income earners is that it will take 2.5% from their income every month which is the equivalent of 250% from the PAYE contribution. This means that a N30, 000 earner will pay 2.5% (N750) every month to a poll account on the provision of affordable housing for the population.

It will increase the price of cement as the revised bill introduced a 2.5% tax on a bag of cement.

It will also take 10% away from commercial or merchant bank profit before tax (PBT) in every accounting year.

The Lagos Chamber of Commerce and Industry (LCCI) also feel that the President did the right thing by declining assent to the Bill. According to Mr Muda Yusuf, the Director-General of LCCI, the bill would have caused more problems for citizens.

Yusuf said that the bill would have increased cost of building materials and widen the country’s infrastructural deficit, leading to increase in cost of doing business and inflict hardship on workers.

What government should do, according to him, was to evolve a mechanism that would reduce the cost of building materials to enable more Nigerians become empowered to construct buildings.

Another shortcoming of the revised bill was its inadequacies to touch on the shortcomings of the 1992 Act on the issue of land ownership and titles as well as the current Land Use Act. The NHF loan is merely for the construction of the building without the acquisition of the landed properties.

 

NHF Bill: The way forward          

While the National Housing Fund has obviously become a raging controversy, the national problem of housing deficit remain unsolved. A lot of industry stakeholders, including the President of Housing Development Advocacy Network, Bar. Festus Adebayo, believes that Nigeria cannot afford to throw away the baby with the bad water – which in essence means that the NHF remains a critical part of the housing crisis solution in Nigeria if the problematic issues around it can be resolved.

In doing so, he believes that relevant stakeholders including the Real Estate Developers Association of Nigeria, Mortgage banks, Mortgage finance experts, financial market analysts, tax consultants, lawyers and many more professionals that will ensure an inclusive consultation panel be formed in order to look into the contentious issues that prevented the President from assenting the bill.

This he believes will enable a popular representation of views, a review of the pros and cons, and a conclusion that will be based on facts and evidence.

Stakeholders have been admonished not to fold their arms, in order to ensure that the extant issues, including the foreclosure act and the land use act are also reviewed.

As earlier echoed, the opinion of many is that the NHF be open, accessible to all, transparent and accountable. According to Mr Orile, if this is done, it will even bolster the confidence of more fund investors, which will ultimately reduce the cost for the people.

The National Assembly has also been encouraged by stakeholders to act in a manner that is beneficial to national interest. According to Mr Adebayo, once the 9th National Assembly has been sworn in, stakeholders should quickly begin an engagement with them on how to review the issues that have been mentioned so far, as well as to see to the amendment of pending laws.

Furthermore, the government is advised to open up the industry by way of policy to encourage the participation of the private sector, by first creating access to affordable land for investors. Through the Homestead Act of 1862, the American government made available 300 million acres of public property to the private sector to ensure massive development. Nigeria can borrow a leaf from this to attract the interest of major investors in affordable mass housing.

The government, according to Tosin Ashafa, a real estate analyst, can also look into reducing or eliminating the payment of duty, over a certain period of time, on imported building materials that are targeted for use in mass housing projects within the country.

There is no doubt that the cost of borrowing funds from financial institutions is a macro-economic issue that affects several other industries. It has become necessary, for the sake of progress, that special interventions (e.g. tax breaks) be made to encourage banks to lend to investors in mass housing projects at lower interest rates, over longer periods.

It is time for the government to look at mass housing or the real estate sector as an economic imperative. Only recently, the real estate sector contributed 1.1 trillion dollars to the American economy, creating millions of jobs in construction, brokerage, and so on.

At a time when Nigerians are in desperate need of jobs, this industry has the potential to create opportunities for millions if the right policy framework is put in place. Nigerians deserve the dignity of owning a house of their own and having access to real estate jobs. This will happen only with the stakeholders’ review of the National Housing Fund Bill.

By Ojonugwa Felix Ugboja

Housing Crisis and the Need to Review National Housing Fund Bill

The National Housing Fund (Establishment Act) 2018 is a bill to repeal the NHF Act 1992 (now NHF Act Cap N45, LFN 2004).

The bill, sponsored by Senator Ahmed Lawan, has the primary aim of mobilizing additional funding for the financing of housing projects in Nigeria just as is the case with the NHF Act 1992.

 

The major highlights of the bill are as follows:

  1. A levy of 2.5% (ex-factory price) on each bag of locally produced and imported cement.
  2. Contribution of 2.5% of monthly income on all employees (Public and Private Sector) at an interest rate of 2% p.a.
  3. Contribution of 2.5% of self-employed earning the equivalent of minimum wage and above at an interest rate of 2% p.a.
  4. Investment of 10% of Profit before Tax (PBT) of every commercial bank, merchant bank, insurance company and PFA in the fund at the rate of 1% above interest rate payable on current accounts by banks.
  5. The FGN shall make “adequate financial contribution and grants” to the fund as it deem fit. No amount was specified.
  6. An employer (public and private) is expected to make the monthly deductions and remit to the fund through the Federal Mortgage Bank (FMBN).
  7. The Central Bank of Nigeria (CBN) shall collect the investment amounts from Commercial and Merchant banks at the end of each year, the National Insurance Commission (NAICOM) shall collect for insurance companies, the National Pension Commission (PENCOM) has the responsibility to collect for PFA’s; while the Federal Inland Revenue Service (FIRS) will collect from manufacturers and importers the 2.5% levy on cement.
  8. There are sanctions for individuals or body corporate who fails to collect and remit contribution & levies ranging from losing operating licenses to fines up to N100 million for corporates and N10 million for individuals.
  9. Any contributor who does not have any outstanding loans and has attained 60 years of age or 35 years of service is entitled to a refund of contribution at an interest rate of 2% p.a. with 3 months of application.

Who manages the fund?

The Federal Mortgage Bank of Nigeria

How?

Through lending to Primary Mortgage banks (PMBs)

Who can access the loan?

Individual Contributors and Developers

How do contributors access the fund and is it limited to contribution?

A contributor interested in obtaining the NHF loan applies through a registered and duly accredited Mortgage Loan Originator (PMB), who packages and forwards the application to the FMBN. The loan amount is determined by the applicant’s affordability and not the 2.5% of income contributed.

Is participation Compulsory?

Yes it is mandatory for everybody earning any amount from minimum wage and above. Whether you are a public worker, a private worker or self-employed; as long as you are earning any amount from minimum wage, you’re mandated to contribute.

What is the difference between the NHF Act 2004 and the NHF Bill 2018?

 What is the difference between the NHF Act 2004 and the NHF Bill 2018?
The  NHF scheme was set up by the NHF Act No.3 of 1992, to provide a pool of fund that will cater to the housing needs of the low and medium income earners, and it was mandatory for employees to contribute 2.5% of their monthly income to benefit from it.

 

NHF 1992

NHF 2018

Contribution
by Nigerian workers

An employee or self-employed earning an income of N3,000 and
above per annum in both the public and the private sectors shall contribute
2.5% of his basic monthly salary to the Fund at an interest rate of 4% on
contributions

An employee or self-employed earning minimum wage and above per
annum in both the public and the private sectors of the economy shall
contribute 2.5% of monthly income to the Fund. At an interest of 2% on
contributions

Contribution
by Body corporate

Every commercial or merchant bank shall invest in the Fund 10%
of its loans and advances at an interest rate of 1% above the interest rate
payable on current accounts by banks.

Every commercial or merchant bank shall invest in the Fund 10%
of PBT at an interest rate of 1% above the interest rate payable on current
accounts by banks.

Every registered insurance company shall invest a minimum of 20%
of its non-life funds and 40% of its life funds in real property development
of which not less than 50% shall be paid into the Fund at the rate of 4% p.a.

Every Insurance Company, shall invest in the Fund 10% of PBT at
an interest rate of 1% above the interest rate payable on current accounts by
banks.

No Investment from PFAs (Note: There was no PFA
then
)

Every PFA shall invest in the Fund, 10% of PBT at an interest
rate of 1% above the interest rate payable on current accounts by banks.

No Levy for any manufacturer or importer of cement

Every manufacturer or importer of cement shall remit 2.5% o
cement price.

Refund to
a contributor

Any contributor who does not have any outstanding loans and has
attained 60 years of age is entitled to a refund of contribution.

Any contributor who does not have any outstanding loans and has
attained 60 years of age or 35 years of service is entitled to a refund of
contribution at an interest rate of 2% p.a. with 3 months of application.

Penalty

Sanctions for individuals or body corporate who fails to collect
and remit contribution and levies ranging from fines up to N50,000 for
corporates and N5,000 for individuals.

Sanctions for individuals or body corporate who fails to collect
and remit contribution and levies ranging from losing operating licenses to
fines up to N100m for corporates and N10m for individuals.

Source: Yinka Ogunnubi Research / #NHF2018

 

If the NHF Act has been in existence since 1992 and the provisions of the law was mandatory how come it was not fully implemented?

 

The NHF scheme was set up by the NHF Act No.3 of 1992, to provide a pool of fund that will cater to the housing needs of the low and medium income earners, and it was mandatory for employees to contribute 2.5% of their monthly income to benefit from it.

However, there were several reasons why the scheme was never fully implemented, viz:

 

1. Stakeholders did not meet up to their obligations. As recent as 2013, the CBN had not even paid up its 30% equity stake in FMBN. Banks and insurance companies that were required to be investing in the scheme were also defaulting. Even the CBN and the insurance commission that was required by law to remit investments of these financial institutions couldn’t be bothered about implementing the law.

2. Many States didn’t start remitting until many years after the law came into effect. Even when they started remitting, they were defaulting. Some States have huge gaps as in number of years when they stopped and started remitting again. As at 2009, only twenty-four (24) States were contributing to the fund. It is difficult to enforce a law which even the drafters (government) were not obeying.

3. Many employees through their Labour unions opted out of the scheme due largely to complaints regarding alleged poor record keeping by the Federal Mortgage Bank of Nigeria (FMBN) and cumbersome bureaucratic bottlenecks.

4. The cost of construction and real estate development kept increasing beyond what the capacity of workers could afford. The maximum loan amount collectable on the NHF presently is N15 Million with equity contribution ranging from 10% – 30% depending on the amount applied for.

5. Challenges in enforcement of the law. For instance, the law hasn’t been able to figure out how to get the self-employed to contribute. The law expects them to voluntarily contribute. Never going to happen in a million years. Besides, it’s difficult to enforce a law that the enforcers themselves are breaking.

6. Finance. The pool of funds was insufficient to make any significant impact. Between 1992 – 2009 (a period of 17 years), the fund was only able to mobilize about N70 Billion of which it was able to loan out about N20 Billion mostly to developers.

7.The Land Use Act made the process of perfecting title to landed property burdensome, slow and costly. The NHF does not fund purchase of land. It only funds construction and renovation of buildings of which you MUST have title documents proving ownership to be qualified for the loan. This was a cul-de-sac scenario – a route or course leading nowhere.

8.Political considerations: The States were more inclined to implement their housing projects rather than contribute to the NHF because such projects had greater political gain to them than the NHF which is seen as a Federal Government institution and the means/arm through which the Federal government executes its own housing projects (political mandates/promises). Any accomplishment of the FMBN was therefore seen as a certain credit to the Federal Government rather than the State Government or Governor’s achievement.

“Without abrogating the land use act, housing can never become affordable in a million years in Nigeria. Freehold property rights is a pre requisite for accessing affordable 30yr mortgages which is necessary for cheap housing” – Kola Ibrahim‏ @alpontif

 

What has the NHF achieved since inception?

According to the Federal Mortgage Bank of Nigeria (FMBN) Managing Director, Ahmed Dangiwa, the NHF since inception (i.e. 27 years ago), has disbursed a total of N193.4 Billion in loans to about 23,000 beneficiaries and made refunds to about 230,000 retirees.

While a significant part of the fund has been accessed by developers resulting in thousands of housing units constructed, it must also be noted that the fund has been most active in recent years due to increased collaborations with Labour, States and the Organised Private Sector (OPS).

Challenges of the NHF 2018 Recently Passed by NASS

PriceWaterhouseCoopers (PwC) recently posted ten (10) reasons why the bill in its present form is a bad idea. Permit me to highlight seven (7) of them for specific reference.

  1. The contribution is regressive as it taxes the poor more than the rich. For instance, minimum wage earners will pay about 250% of their personal income tax (PAYE) to the NHF monthly.
  2.  Making all employers liable to deduct and remit the contributions monthly (without a threshold) will worsen the ease of doing business and Nigeria’s paying taxes ranking;
  3. Cost of borrowing will increase as banks are required to invest a minimum of 10% of their profits at 1% above current deposit rates;
  4. Increasing the tax burden without addressing other fundamental issues like land regulation, REITS framework etc is not consistent with the 2017 National Tax Policy;
  5. Imposition of the 2.5% levy on cement is a tax on property development which will make housing even less affordable;
  6. The requirement for PFAs to invest pension funds in the scheme means less returns for pension contributors which will erode value for pensioners; and
  7. The return of 2% per annum for contributors withdrawing after attaining 60 years of age or 35 years of service is far below inflation rate and grossly insufficient to compensate for time value of money.

Conclusion

This bill (as is) is clearly an attempt by the National Assembly to mobilize more funding for the NHF which in 27 years has not been able to mobilize much in terms of finance. That is clearly understood.

However, the challenges of housing, goes beyond just funding. First, there are systemic challenges around property rights for example that needs to be resolved. If this is not fixed, contributors cannot access loans and the funds will just be another big government effort to trap people’s money until they retire or worse die.

Secondly, I am of the opinion that perhaps the emphasis should be more about ensuring that banks and insurance companies comply with the law as it currently is rather than enacting another law that will most likely be defaulted. For instance, the Central Bank of Nigeria (CBN), and the NAICOM statistics indicated that between 2008 and 2017, total loans and advances by deposit money banks and non-life and life funds from insurance companies amounted to over N100 trillion.

At 10% investment of their loan advances and non-life and life insurance with the NHF, about N10 trillion should have been invested in the fund by the banks and insurance companies over the period. Can we strive to achieve this first before increasing the burden of contribution on workers?

It is telling that the fund has refunded more to retirees than it has actually granted loans to contributors.

Without an integrated solution, plan and strategy in place, (which must also include increased funding), we would simply be increasingly the burden on workers.

In trying to solve one problem (the lack of adequate funding), we should not in the process create additional problems for the Nigeria worker and corporate entities (the cobra effect).

This bill, in my opinion, should not be signed into law in its present form. The President should send it back to the NASS for further review and more stakeholders input to deliver on the practical objective

By Yinka Ogunnubi

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