By Bennett Oghifo
The federal government would have involved foreign companies in housing development in the country, but for their insistence on being granted Sovereign Guarantee, the Minister of State for Power, Works and Housing, Mr. Suleiman Zarma Hassan, has said.
Hassan, a Surveyor, said this at the first Session of the 8thÂ Global Housing Finance Conference, held at the World Bank Headquarters, Washington D. C. U.S.A, recently.
Niche PR facilitated on behalf of the Nigerian delegation. Over 50 Nigerians will attend this programme including the Managing Director Federal Mortgage Bank of Nigeria, the team from Federal Ministry of Power, Works and Housing, Federal Staff Housing Loans Board, Office of the Head of Civil Service of NigeriaÂ among other relevant governmental and non-governmental agencies and the Private Sector.
Sovereign GuaranteeÂ is a promise by theÂ GovernmentÂ to discharge the liability of a third person in case of his default.Â Sovereign GuaranteesÂ are contingent liabilities of the Central and State Governments that come into play on the occurrence of an event covered by theÂ guarantee.
According to the minister, â€œOne of the challenges we have been encountering with investors in the housing sector, especially those from abroad is their insistence on being granted Sovereign Guarantee for investment. It is important to disclose that it is not an easy task obtaining Sovereign Guarantee. This always stalls project negotiations as Government fears it could worsen the nationâ€™s debt profile with its attendant economic and political implications. If the housing finance challenge is to be addressed, investors must look beyond Sovereign Guarantees from Developing nations and concentrate on the larger picture using variables such as general investment climate, political stability, ready market, industrial trends, etc., to gauge the security of their investment.â€
He said theÂ theme of the 8thÂ Global Housing Finance Conference, â€œBreaking the Mold-New Ideas for Financing Affordable Housingâ€ was quite apt, considering that existing approaches seem to have not sufficiently addressed the housing finance challenge in most developing countries, especially in Africa.
The minister discussed Global Trends, Opportunities and Innovations in Affordable Housing Finance, as well as outline my countryâ€™s housing financing challenges and steps being taken to address them.
He said the need to explore innovative ideas on housing finance to ensure access to adequate, safe and affordable housing cannot be over emphasised, and that the federal government was mindful of this reality and has accordingly initiated several sectoral approaches to bridge the housing deficit.
On this account, the government is attracting finance from local and foreign investors through the Public Private Partnerships (PPP) arrangements, Budgetary Appropriations, granting of Estate Development Loans, Bankable Off-Takers Guarantee and Cooperative Housing Finance initiative amongst others by mandating its various Agencies such as the Federal Ministry of Power, Works & Housing (FMPW&H), Federal Mortgage Bank of Nigeria (FMBN) and Federal Housing Authority (FHA).
recommend that we reinforce the following existing finance strategies, that have been time tested and blend same with new approaches for optimal performance: Public funding, especially through budgetary provisions; Public-Private Partnerships; Private sector funding. This requires the financing of affordable housing by private institutions such as Banks, Insurance Companies, Pension institutions, housing development companies, philanthropic organisationsÂ Â etc; Off-shore financing; recapitalisation of existing housing financing agencies for better performance.
â€œWhile reflecting on financing options, we should endeavour to give consideration to affordability and acceptability of the houses being built. The personal income of the off-taker is the determinant factor of affordability for him/her. As a Government, we have factored this reality alongside cultural/religious peculiarities in our housing design to ensure acceptability.â€