Loopholes in mass housing policy

In a recent publication, Finance Minister, Dr. (Mrs.) Okonjo-Iweal, espoused the impact of Nigeria Mortgage Refinance Company and related initiatives to unlock Nigeria’s economy. While we share the same sentiment with the minister, we have a duty to provide some level of insight on areas that require adjustment or refocus in order to achieve the objective of the low-income housing scheme. It is expedient that we highlight the lapses in the execution of the Malaysian experience in order to correct the anomalies and avoid the pitfalls in our journey to achieving mass housing for our masses and learn the lessons that will enhance our ability to move away from the failures of the past.

For example, the Malaysian government at first instance targeted the construction of 350,000 units for low income earners with a monthly income of N78, 872.55, and a fixed price for the building at N2, 039, 100.00. Taking the case of the Federal Territory of Kuala Lumpur with about 52% of the population into trading and small businesses, it was discovered that achievement of the low income housing in Kuala Lumpur was the lowest with 27.3% compared to the medium (233.7%) and the high cost (749.6%).

Analyzing the issues that necessitated the low performance of the low cost housing revealed that incentives given to medium cost developers was not available to the low cost builders, and most importantly, the lack of proper regulation, control and monitoring by the local authorities for the construction and completion of the low cost housing.

In their attempt to resolve these imbalances, the Malaysian government created a new categorization called the low medium cost housing in 1998 which recorded a tremendous success taken the above negating factors into consideration.

It is equally argued that one of the fundamental causes of the low performance of Malaysian government low income housing was the challenge of access to financial services at the rural areas. However, I am pleased to inform the minister that the Nigeria financial inclusive structure which has the Association of Non-Bank Microfinance Institutions of Nigeria (ANMFIN) is capable of addressing most of the challenges faced by the Malaysian government, particularly in the area of regulation, control and monitoring of the low income housing deliverables.

Otherwise how else do they hope to address the huge financial gap with previous stats indicating that adult financial exclusion in Nigeria is estimated at 46.3%?

Currently, Nigeria is projected to be having about 84.7million adults’ population out of which about 40million is financially excluded. More so, affordability for formally constructed housing purchased with a mortgage is limited to less than 15% of the adult population due to their inability to access mortgage finance, either because it did not exist or because it was inaccessible.
For the avoidance of doubt, understanding the importance of a large, vibrant and sustainable microfinance industry as an indicator of sound micro and macroeconomic management and potential for successful housing microfinance lending was core in the formation and implementation of the financial inclusion strategy by the Central Bank of Nigeria. Suffice to say that the introduction of the financial inclusion strategy, an off shoot of the microfinance policy was actually answering the right question with the right answer.

The microfinance policy provides for a regulatory framework which takes into account the special role and characteristics of this class of institutions. The microfinance institutions as currently coordinated and regulated by the ANMFIN are committed to promoting financial inclusion in alignment with policy agenda of the Federal Government. With a strong focus and capability of reaching those at the bottom of the pyramid, ANMFIN has positioned itself as an integral part of Nigeria’s financial architecture and a strong player in the delivery of financial products and services to the un-served and un-banked members of the society by utilizing its large membership network.

Operating across Nigeria, providing key financial link to the masses, ANMFIN in December 2013 alone, registered over 2, 500 institutions and guided them into opening account with commercial banks as well as building their capacity to begin the process of providing loans, savings, and other ancillary services. It is therefore troubling to hear the Minister revealed that “an important component to the launch of the NMRC is the development of mass housing scheme by private developers working with the Federal Mortgage Bank of Nigeria … some of the mass housing will be done on a rent to own model…”

This approach might not yield the desired result, at the same time, permit me to restate that the microfinance industry has weathered the storm and is now poised for the next phase of growth and the mass housing project as amplified by the NMRC will be a veritable ground for the microfinance subsector to contribute as usual to the growth of Nigeria’s economy.

Hon. Afolabi is National President, ANMFIN

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