Chineme Okafor in Abuja
The Minister of Power, Works and Housing, Mr. Babatunde Fashola, on Wednesday said most Nigerians see government-backed housing loans as their share of the country’s financial resources, fondly referred to as ‘national cake’.
Fashola stated that it was for this reason that the national housing loan administered by the Federal Mortgage Bank of Nigeria (FMBN) has not yielded results over the years. He alleged that the bank has a lot of defaulters from this practice and cannot go on to support housing acquisition on this structure.
He spoke at the 32nd Annual Conference and General Meeting of the African Union for Housing Finance (AUHF) in Abuja. He was represented by the ministry’s head of public private partnership, Eucharia Alozie, at the meeting.
“The National Housing Fund of 1992 is a collating reservoir of long term funds in terms of monthly contributions from workers in the public and private sectors. Unfortunately, most Nigerians see mortgage loans from government as part of their share of the “national cake” leading to high default rates,” said Fashola in his remarks.
He stated: “This has forced the government to encourage prospective home owners to approach commercial banks who regrettably have high interest rates. Thus, the government who is supposed to be a major player in the provision of homes is now seemingly not on the frontline.
Fashola also said that it was because of this reasons that the government established the Nigerian Mortgage Refinancing Company (NMRC) to help reduce the cost of mortgage loan by improving market efficiency.
According to him: “From the inception of government initiative in organised housing finance system to date, only a meager sum have so far been injected to the system. This accounts for less than 0.5 per cent of the Gross Domestic Product (GDP) as compared to other climes like United Kingdom and South Africa due to the inability of financial systems in providing low cost finance that meets the need of low and medium income earners.”