During his campaigns, Ahmed Bola Tinubu promised that the housing deficit will be tackled through a mortgage system. Mortgaging is a system where the property is secured on loan by an individual, which is to be repaid in installments. The source of mortgage can vary in different places but in Nigeria, the major source of mortgage is the Federal Government. And it seems that the president is committed to fulfilling his campaign promises. As a first act of office, he oversaw the removal of fuel subsidy, which has now seen the price of premium motor spirit (PMS) rise to N617 per liter.
However, the chief executive officer (CEO) of a real estate company Pelican Valley Limited, Dr. Babatunde Adeyemo, has revealed that real estate financing and the mortgage system is not something that any government can eradicate overnight. According to the Federal Mortgage Bank, Nigeria’s housing deficit is currently pegged at 28 million units as of January 2023. This is a concerning issue, which should be a priority for the new administration. But the government has to mind the policies they put out in a bid to solve the problem.
Current economic realities make the system difficult to implement.
Dr. Adeyemo said that the housing deficit in the country is complicated and needs a lot of deep research and study to tackle. First, real estate financing is an integral part of the scheme, which is meant to provide housing for all. The government cannot address this without addressing the economic issues that the country is currently facing. He stated that no system can prosper with a bad economy, such as the one of Nigeria. Thus, the mortgage system will be extremely difficult to implement with the current economic situation. Nigeria has myriad economic challenges and the government cannot face real estate alone.
So, he said that he believed that the president’s campaign promise is a mere political statement for now. On how the mortgage system works, the major source of funding is the Federal Government. Also, it operates through agencies. Recently, the Nigeria Mortgage Refinance Company (NMRC) raised some funds from the capital market. This was the latest effort by the government to grow the system. Basically, after the funds are raised, the agency channels it through mortgage banks from where it flows down to the real estate companies. These companies, like Dr. Adeyemo’s, get to access the loans to build houses that way.
FG needs to set up monitoring committee for this project.
In the current system, Dr. Adeyemo said that he sees no difference from the previous one. He said, “This is still like the old system whereby after approving the release of money, these agencies have their people that they contract it to and before you know it, they start spending money ridiculously.” In other words, the nomenclature may have changed, but the procedure remains the same. The money still goes through the NMRC to mortgage banks, from where only connected real estate companies are awarded the contracts.
As a solution, he suggests that the president appoint a serious minister for housing who will assist in bringing together a team of experts that will look for individuals in the sector, who have the country at heart, to formulate policies that will disband the old system. Additionally, he believes that the government should seek genuine real estate investors out there who may not necessarily be the big names and work with them. In simple terms, the government will investigate the individuals whom they are contracting these houses to, discuss with them, and remove all bureaucratic bottlenecks that would hinder them from accessing the loans.
President’s system can work if the government is serious.
Finally, Adeyemo said that making housing available for everyone can be achieved through the system that Tinubu had proposed before he got into power. He said that when increased availability of housing units, it brings about a massive reduction in its price. However, there’s the need for an adequate monitoring system. “When these projects lack monitoring, someone somewhere will not allow it to trickle down to where it ought to go and we have a repeated cycle of what we have had before,” he noted.