THE LIMITING EFFECT OF THE NIGERIAN MORTGAGE SYSTEM
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.
I remain yours,
Ayo.
