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THE LIMITING EFFECT OF THE NIGERIAN MORTGAGE SYSTEM

Posted by on November 2, 2016
| 6 Comments

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During my reflection time last night, I couldn’t control the numerous ‘what ifs’ that kept gushing through my mind about the real estate situation in my country (Nigeria) and how things would have been different if our leaders both past and present had only created the required enabling factors that make real estate thrive in other parts of the world.

For a country that has over 17 million housing deficit and numerous developers constantly seeking affordable construction finance, I just wonder what would happen if the government made it possible for the banks (either by way of policy implementation or partnerships in whatever forms necessary) to lend funds to these developers at affordable interest rates. The market for housing at all levels is so large that (with the right enabling factors in place) the real estate sector has the potential to move from its current state of below 10% contribution to the country’s GDP to over 40% if only the right policies are put in place and enforced.

It has been said, that to bridge the deficit an average of 1 million houses have to be built consistently every year for the next 17 – 20 years. How do you achieve that when the cost of getting construction finance is in the region of 28% interest and mortgage for off-takers is non-existent?

It is clear, that the need is real and (if I might add) urgent. Developers are constantly tormented with the potential that lies in housing for between the upper lower income earners to the upper middle class but the more they look, the more frustrated they get because of the constraints in our finance structures and policies in this nation.

I mean, imagine if all working class citizens of this country with good credit history have access to mortgage to purchase affordable houses and pay back at below 10% interest rate over a period of between 15 – 20 years. Can imagine the economic explosion that will come with this?

What if processing and obtaining either a Governor’s Consent or Certificate of Occupancy became easier and faster? Right now, it takes forever (about 3 years) to process a certificate of occupancy here (crazy right?).

Extension of land leases and regularization of title also takes similar processing time, thereby slowing down the number of transactions you can carry out with your property. What if this changed from the 3 years to within a month? Wouldn’t that help a lot of people financially?

The government is complaining that they have no money to work when as a matter of fact; they are the ones stopping the flow of money in the country because they want to control the flow of wealth. Their wickedness and ignorance in this regard is the cause of our preventable hardship.

This is an attempt to challenge our minds point our leaders to another area (real estate) they can critically look at if they are indeed sincere about the diversification of the nation’s economy they’ve been screaming since May 2015.

Feel free to add in your opinions in the comment area.

I remain yours,

Ayo.

6 thoughts on “THE LIMITING EFFECT OF THE NIGERIAN MORTGAGE SYSTEM

  • Omoniyi
    on November 5, 2016

    Nice one. Our problems we know, the solutions we also know, but to proffer the known solutions is even a greater problem. May God help us.

    • Sircasio
      on November 7, 2016

      Hi Omoniyi, you are very correct, we know them. it is the willingness to do the needful that plagues us. That is why we must keep putting the issues in perspective till we get the results we all desire. Thanks for your comment.

  • Ajibade
    on November 6, 2016

    Yorubas say what you are looking for in Sokoto (the state) is inside the Sokoto (the trouser). This write up is so true and everyone benefits. The banks grow their asset base and profits, people own homes that can serve as an asset, more job are created, the government gets more income from fees and taxes…… The list is endless….

    • Sircasio
      on November 7, 2016

      Mr. Ajibade, I believe a govt that is loosing billions of money everyday because of its ignorance has not earned the rite to borrow more money from IMF or anyone else for that matter until it has exhausted its options locally. like you rightly said, everyone gains. tnx for your comments guys hope to see more of them on subsequent publications

  • Oyeneye Adebowale Oyejola
    on November 12, 2016

    Good job, Ayo. The concerns you raised are very crucial. However, I see fundamental problem in all these. We’re being led by illiterates. Illiterates economically, who get to leadership positions based on their political affiliation and only think politically. They can not see and understand the ‘economics of things’ or allow their shallow minds to be shaped by the opinions of those who know what they don’t know.

    Today, we all felt jolted by the victory of Donald Trump because we felt also that his campaign had no substance. But his campaign had economic substance that some Americans like to hear. He said repeatedly that Mexicans, Nigerians and others were taking jobs meant for Americans and he was going to reverse that. That’s ‘economics of things’.

    I believe your write is opening up the economics of exploring the real estate subsector of the Nigerian economy. The earlier we look in this direction proffer by you the better for us. This economic diversification is long overdue.

    Thank you, Ayo.

    • Sircasio
      on November 24, 2016

      Hello Uncle Jola, I’m so sorry for my late response. You are right about the level of understanding of our leaders sir. Even worse though is the hypocrisy of their so called advisers. I guess the Americans like us, will soon understand why sentiments must never be mixed with politics.

      I have looked critically into the issues in the real estate sector (which is my field) and have seen that without the proper mortgage/lending structure we’re going nowhere. The second part of this article will be published very soon. It’s more figure based so we can all see the damage we’re causing ourselves and hopefully act before it’s too late.

      I trust you’ll keep reading and sharing our articles with your friends on social media platforms.

      Thank you sir.

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