CBN’s N5bn benchmark will boost mortgage sector – Mbaka



Sir Emmanuel Mbaka is the CEO of Platinum Mortgage Bank, one of the seven privately owned mortgage institutions which recently met the N5 billion recapitalization benchmark of the Central Bank of Nigeria (CBN). In this interview with FRANCIS KADIRI, he discusses the prospects of the housing sector given that only seven out of 89 mortgage institutions were able to meet the N5 billion recapitalization benchmark

Why do you think the Central Bank of Nigeria (CBN) came up with the N5 billion recapitalization benchmark for the mortgage sector, and what does that portend for the Nigerian housing sector?

The issue of recapitalization is a very simple and straight forward issue. Those who are very conversant with the mortgage industry will readily agree that the issue of mortgage is capital intensive especially in the area of housing and housing construction. It requires a lot of capital to be a successful player in the industry.

Prior to recapitalization, the capital requirement for operating a mortgage bank was one hundred million naira, an amount that was just a token compared to what is really needed. So when the Central Bank of Nigeria realised the need to reinvigorate the sector, it was a welcome development even though it came with a lot of challenges. The CBN tasked the each primary mortgage institutions to recapitalize to the tune of five billion naira.

The primary mortgage institution in Nigeria is still in the process of developing, it is relatively new, and people are beginning to key into the dividends of mortgages. On the other hand, mortgage bankers are also beginning to come to terms with what it takes to run a mortgage.  As a matter of fact, it has been quite hectic trying to sell mortgage products in Nigeria. Let me tell you again that trying to sell the concept of mortgage in Nigeria has been very challenging, but we thank God for making us successful.
Seven out of 89 primary mortgage institutions (PMIs) scaled through the hurdle, how did Platinum make it?

First I give glory to God. I wouldn’t say it is the exclusive result of hard work, because some others probably worked harder than we did if not the same quantum of hard work. Of course hard work was there in addition to the blessing from God. So that is how best I believe we scaled through.

Less than 10% of PMIs scaled through the standardization process. Do you think they should be given more time? We hear that some of them may have met up to 4, 3 or even N2 billion recapitalization?

Housing is one of the four cardinal human needs in life. For every life, the ambition to own a home comes along. In Nigeria, the quest for this need has not been fulfilled. For your information, in the western world, it is the mortgage banks that own the commercial banks because of their equity and the total capital outlay of the mortgage banks. So they have the capacity to buy the commercial banks.

From my own perspective, the reason why most of our members did not recapitalize is because of inadequate information. They were not properly informed about what the mortgage banking industry is all about. There a lot of apathy. So I believe that by educating people appropriately, there will be more influx.

In fact, if appropriate education and sensitization was done, there would have been over subscription because the mortgage sub sector is a sector that if you invest, the probability that you will lose is very slim; I mean it is very unlikely that you will lose. This good hope for profit in mortgage sector is because the products are very feasible. It’s not like the insurance business where you buy abstract products.

In the mortgage sector, you are buying into physical products like houses. It is usually the case that that the houses you buy will appreciate over time. Moreso, you will always have something left to enjoy even if there are consequences of losses. For example if you buy a house and it happens to get burnt down by fire, the owner will still have the land. So the property will not be entirely lost. On the other hand, if it is in insurance business, you lose everything.

So I see this as a window for people to have hope and faith in the mortgage industry, and they should invest into it. So people should buy into the various mortgage companies that could not meet the five billion naira recapitalization requirement. If they invest into the companies, they stand to gain.

So I think improper information and education made people not to buy into the shares of the companies. This is an area that those of us who have now been fully incorporated into the Nigeria’s banking sector will have to do something about.

We will take it upon ourselves to make people understand that investing in the mortgage sector is a lot safer than any other investment you can think of.

Now that Platinum has become a nationally licensed and recapitalised bank, what should Nigerians expect?
While we were in our humble status as a bank that was capitalised with just one hundred million naira, we were able to do so much within the six years of our existence. We bought this license from the former operators, and from then till now, we have done so much. I’m not boasting, but we have actually done so much.
What is it that you have done?

Platinum alone has infused into Nigeria not less than 10, 000 housing units which I can enumerate. In Abuja, we financed the trade more estate which has over 3,000 housing units. We also have in Minfa Estate, Lokongoma consisting of over 250 housing units. Then we have Minfa estate-two which has 150, 000 housing units, and we have trade more in Apo consisting of over 250, 000 housing units.

Away from Abuja, we have presence in Badagary where we financed the development of Minanuel Estate. Although the estate in Lagos is not so large as a result of land constraints, but we are able to provide housing for 80 families.
In Markudi, Benue state, we were able to finance the development Apa Aku Housing Estate consisting of 500 housing units. We are currently in the process of developing Ochendo Estate in Abia state which is designed to have 5,000 housing units. Already, over 1,000 houses have been built as part of the proposed 4, 000 units proposed.

All these we did with a meager N100 million capital base. Now that we have been recapitalized to the tune of N5 billion, you can imagine the extent to which we will churn out houses for all categories of Nigerians. With our new status, we will turn the industry around.

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