Bottleneck associated with mortgage financing have been described as one of the critical issues militating against affordable housing delivery in Nigeria.
This is because, many developers access mortgage loans from commercial banks at about 15 to 20 per cent interest rate against the official interest rate of 6 percent approved by Federal Mortgage Bank of Nigeria (FMBN).
For the approved 6% interest rate, two percent goes to FMBN, another two per cent to the contributors of National Housing Fund while the remaining two per cent goes to Primary Mortgage Bank (PMB) that facilitate the mortgage.
Given the high interest rate, there are indications that provision of affordable housing which is geared towards the reduction of over 17 million housing deficit in Nigeria may not be feasible.
To this end, experts in the built sector have suggested that unclaimed dividends should be channeled to mortgage financing to boost activities and possibly eliminate the pitfalls associated with housing delivery.
In an interview with LEADERSHIP, the acting managing director of Federal Mortgage Bank of Nigeria (FMBN), Mr Richard Esin enjoined the Securities and Exchange Commission (SEC) as well as Central Bank of Nigeria (CBN) to develop a framework for channeling unclaimed dividends into the building and construction sector to facilitate mortgage financing.
This he said was necessary given that real estate development could be a platform for the positive transformation of Nigerian economy saying that deployment of new construction technology and alternative building materials would reduce the cost of construction and delivery.
According to him, “Nigeria has a huge deficit, so any area we can get legitimate funds to drive the housing sector will be welcomed.
He noted that the idea behind utilising unclaimed dividends was to halt the housing deficit from further slide.
“Whether the money is coming from CBN as intervention fund, unclaimed dividends or dormant account but as long as we are able to use the money in a transparent way and pay back the right number of returns; I think it will make a lot of sense.
He noted that FMBN is currently carrying out assessment on its 109 estates which would be completed by third quarter of this year adding that Rent-to-Own scheme intended to bring down huge non- performing loan portfolio would also be launched by second quarter.
On corporate governance, he added, “We are trying to live by example by aligning with the policies of the institution and we are making some level of progress.
Also, the President of Nigeria Institute of Quantity Surveyors (NIQS), Mrs Mercy Torkwase Iyortyer suggested that idle funds should be utilised by investing in areas where it can yield benefits and there would be return on investment.
“We have been talking about Pension and Dividend fund monies, so as long as we use it to invest, we can always pay back.
“I don’t see anything wrong with that because it will be a good policy if fully implemented”, she added.
She said though the Mortgage Finance Company was established to assist the Primary Mortgage Banks but doubted their vibrancy insisting that the interest rate is too high.
“If you go to developed countries, they operate single digit interest rate. I am one of those who will advocate for a construction bank where they can focus on the construction industry to provide loans at single digit interest rate for a long term repayment period.
On his part, a senior lecturer with University of Ilorin, Kwara State, Dr Ganiyu Yusuf confirmed that channelling unclaimed dividends to mortgage financing would reawaken activities in the sector.
“Unclaimed dividends are funds lying idle in the bank, so when you channel such monies into construction, it will be a great idea that would boost activities in the industry.
He added, “As property keeps appreciating , the exchange rate is going higher while the naira is going down, so if we have invested the dividends on landed property, the value will be rising because it’s value is relative to functions and activities around the location.
Also speaking, the immediate past President of NIQS, Mallam Murtala Aliyu maintained that instead of keeping unclaimed dividends less dormant that it would be good to channel them into mortgage financing.
“Unclaimed dividends are savings of sorts until they are claimed and there are quite a number of such funds that should be deployed to the construction sector.
Aliyu insisted that reawakening the construction sector would instigate the economy since the developers would procure equipments while experts, labourers and food vendors would also be employed in the sector.
“With the small kick on the construction sector, the economy will wake up again since our present situation makes it mandatory to take a critical look at the construction sector and the catalysts that will kick start the economy.
Also, the President of Real Estate Development Association (REDAN) , Rev Ugochukwu Chime was optimistic that real estate sector offered the fastest means of resolving the current economic problems especially youth employment which currently stands at over 60 per cent.