Mortgage is Critical to Housing Policy, Says Alufohai
igeria’s mortgage as it stands today is incapable of supporting a housing policy that will deliver houses for all Nigerians.
This was the conclusion of an address delivered at the National Built Environment Conference (NABECON) 2017, which began on November 8 at the Ahmadu Bello University, Zaria.
In a speech titled “Housing for all Nigerians: The Big Vision Test”, Agele Alufohai, Managing Partner Costec Consultants, one of the keynote speakers, suggested Nigeria imitate other countries with mortgage systems that have delivered housing for both the rich and poor.
According to Alufohai: “The most efficient aim of housing policy is for the government to assist millions of Nigerians obtain lower-interest mortgages; this is how most citizens are helped to acquire houses in many countries with successful housing policy such as Singapore, South Africa and Malaysia.”
The theme of the conference was “Positioning the Construction Industry in Nigeria for National Economic Growth”. Professor Mike Kwanashie, Vice Chancellor, Veritas University Abuja was the second keynote speaker.
High mortgage rates at short tenures, a difficult business environment, high inflation, and unstable policies have hampered the growth of the housing sector in Nigeria. As a result, there is an estimated deficit of 18m housing units. The country needs to build 720,00 units per year at an annual cost of N56 trillion to bridge this gap, according to the Federal Mortgage Bank of Nigeria.
Explaining the link between what he called a “transformational” housing policy and the economy, he noted that a “housing policy that works for all Nige- country’s first Prime Minister, the government transformed huge swathes of urban sprawls and slums into well-planned cities that spurred economic dynamism and growth.
Nigeria’s NHF attempted the Singapore model, but it failed. “One of the key reasons for the failure is contributors couldn’t access the loans because they couldn’t afford the deposit for the houses,” said Alufohai.
The NHF also failed because one effect of inflationary policies is high interest rates charged on mortgage loans. A non-inflationary fiscal policy, flexible, sustainable exchange rates and hence, low interest rates are important to attaining a mortgage system that will also attract foreign investment into mortgage market.
On the role of government in the remodeled system he said, “it could provide a subsidy on the interest on mortgage loans by investing or contributing funds into this pool of ‘forced savings’ – this would have been an excellent use of the petrol subsidy.”
According Prof Ikem Mbamali, chairman of the organizing committee, the aim of conference was “to bring together scholars, industry professionals/practitioners and senior public service officials/ administrators, to explore current developments and advances in the reorganisation of the construction industry for effective contribution to national economic growth.”
Since Nigeria exited the recession, the construction industry is expected to spur the economy to recovery. Power, housing and infrastructure have been allocated the lion’s share in the last two national budgets. Construction is critical to bridging the infrastructure gap which in turn generates employment.
Sub-themes included: Policy and regulatory framework, Economic Growth Metrics, Housing and Economic Growth, The Manufacturing Sector, Education and Training.