Development of housing market key to economic growth —CBN
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The development of Nigeria’s housing market is key to growing the economy and the Gross Domestic Product (GDP), Mr. Godwin Emefiele, Governor of Central Bank of Nigeria (CBN), has declared.
Emefiele stated this at the opening ceremony of the 32nd Annual Conference and General Meeting of the African Union for Housing Finance (AUHF) in Abuja.
He identified non-availability of long term capital to boost mortgages as a major challenge crippling the country’s housing market, adding that the housing sector currently contributes less than one percent to the nation’s GDP while the housing market in the United States represents 80 per cent of the country’s GDP.
AUHF is a 55-member association of mortgage banks, building societies, housing corporations and similar organisations working on the mobilisation of funds for shelter and housing on the African continent.
The CBN governor, who was represented by CBN’s Director, Other Financial Institutions Department, Dr Ahmed Abdullahi, lamented that Nigeria was lagging behind in comparism with other African housing markets. His word: “You will find out that the market is less developed because the contribution of housing market to the GDP is less than one per cent,” he said.
The CBN governor revealed that the single largest financial asset class worldwide is in the United States’ housing market, noting that it’s more than the country’s capital market. Meanwhile, the federal government has unveiled plan to de-risk lending to property developers and provide guarantees and credit enhancement to stimulate growth in the housing sector.
Minister of Power, Works and Housing, Mr. Babatunde Fashola, revealed the plan at the start of the three-day AUHF conference. Fashola who was represented by Mrs. Eucharia Alozie, Director, Public Private Partnership (PPP) in the ministry, said government recognises that provision of leverage and guarantees are critical to attracting private sector funds to the industry, thereby creating thousands of affordable houses yearly and generating employment and commercial activities.
“From the inception of government’s initiative in organised housing finance system (in Nigeria) to date, only meagre sum have so far been injected into the system. This accounts for less than 0.5 per cent of the GDP compared to other climes, like the United Kingdom and South Africa. This is due to the inability of financial systems to provide low cost finance that meets the need of low and medium income earners,” he stated.
Fashola also revealed plan to deploy modern technology for mass production of houses, using traditional procurement and Contractor Finance Initiative Model to reduce housing deficit.
The minister lamented that years of inadequate investment and poor maintenance culture have left the country with a huge housing deficit, slowing development and economic growth. He also identified the lack of housing finance in public and private sectors, lack of access to land, double digit housing loans, high cost of building materials, inflation and population explosion as major factors that must be addressed for Africans to access affordable housing.
In the meantime, Nigeria Mortgage Refinance Company (NMRC) has expressed its readiness to refinance affordable houses for Nigerians at N1.5 million with appropriate technology to drive the process of delivering affordable housing through practical solution in Nigeria. NMRC’s Managing Director, Prof. Charles Inyangete, who disclosed this, said: “We are ready to refinance houses as cheap as N1.5 million, we are not looking at the money market but hope that technology will allow us to actually build houses at that price. “It will first of all drive down the affordability because the prices of houses in Nigeria are particularly very high.”
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