CBN Advocates Investment in Housing Sector to Mitigate Recession

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Dele Ogbodo in Abuja
The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emiefele, has advocated for sustainable investment in housing development to help mitigate the economic challenges the country is presently facing.

Fielding questions at the recent Africa’s Housing Agenda, jointly organised by the African Union for Housing Finance (AUHF) and the Nigerian Mortgage Refinance Company (NMRC), in Abuja, weekend, Emefiele suggested sustainable investment into the housing sector to grow it from its dismal one per cent contribution to the Gross Domestic Product (GDP).

The CBN governor, who was represented by Mr. Ahmed Abdullahi, a Director in the bank, said if the housing sector can contribute over 80 per cent to GDP in the United States of America (USA), it can also be used to improve the economy significantly.
He said: “If you look at the housing market in Nigeria and in Africa, compared to the more developed economies, you will find that the housing markets in Africa are indeed largely underdeveloped.

“The contribution of the housing market to the GDP in Nigeria is less than 1 per cent, compared to that of the U.S, which accounts for over 80 per cent.

According to him, the housing sector in US represents the highest financial assets class in the world as it is the highest contributor to its capital market combined, adding that it represents a higher subsection of that country’s economy.

He advised African governments to use the housing sector as stimulant to grow the economy thereby increasing its contribution to GDP. “If you look at Nigeria’s 1 per cent contribution if housing to GDP, imagine what the economy will look like when it is grown to 80 per cent,’ the CBN governor said.

However, to attain this, he said the daunting challenges and barriers facing the sector must be removed, adding “The first of these challenges is the absence of long term loan capital, which can be used to create mortgages.”

According to him, most of the liabilities in the banking sector are short-term liabilities, which often times are not used to finance mortgages.

Another impediment to housing development, he said, is the high cost of procuring basic building raw materials, adding that housing becomes inaccessible to the average Nigerian because of the cost of building materials.

Also in a remark, the Director the Public Private Partnership (PPP), Mrs. Eucharia Alozie, who stood in on behalf of the Minister of Power, Works and Housing, Mr. Babatunde Fashola, said from inception of government initiative in organised housing finance system till date, only a merger sum has so far been injected into the system.

He said: “This accounts for less than 0.5 per cent of the GDP as compared to other clines like the United Kingdom and South Africa, due to the inability of the financial system in providing low cost finance that meets the need of low and medium income earners.”

While pledging the commitment of NMRC, to meeting its obligation in housing delivery, its Managing Director, Prof. Charles Inyangete, noted that telex tent of inequality created by the crisis of affordable housing on the continent is too high a price to pay, adding that the meeting of representatives of housing development across the continent must find solutions to providing access to sustainable housing finance.
He said: “The NMRC is responding to its vision to be the dominant housing partner in Nigeria, by providing liquidity and access to affordable housing finance in the country.”