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VENTURES AFRICA – Housing developers in Nigeria will have access to enough funds to address the problem of inadequate housing in the country if the Federal Mortgage Bank of Nigeria (FMBN) can amass ample resources to provide sufficient credit facilities.
This is the position of the President, Association of Professional Bodies of Nigeria (APBN), Mr Bala Ka’Oje, who Tuesday called for the recapitalisation of the FMBN to N200 billion ($1.2bn), noting that real estate growth in Nigeria has been due to FMBN’s low interest rates.
“Commercial banks extension of credit facilities to housing developers at interest rate of between 20 and 22 per cent has been very cumbersome, especially in 2013.
“The FMBN Estate Development Loans has been the saving grace and it is always available at 10 per cent interest rate.
“However, the problem is that FMBN is not having enough funding to be able to provide loans to all housing developers who need it.
“And all calls for FMBN to be recapitalised to the tune of N200 billion to enable it do more has not yielded result,” said Ka’Oje.
According to him, commercial banks also give loans to developers, but the “interest rate of between 20 and 22 percent has been very cumbersome, especially in 2013”.
FMBN’s capital stands at N5 billion ($30.5m), an amount the APBN president said could only cover overhead cost and pay salaries, hence the group’s call for the N200 billion recapitalisation.
Ka’Oje put Nigeria’s housing deficit at 17 million; expressing belief that recapitalisation of the FMBN will reduce this to the barest minimum.
Nigeria which has favoured private-public partnership over the years might have found an alternative to FMBN with the recent inauguration of the Nigerian Mortgage Refinance Company (NMRC) which is private-driven.
“We can see foreign interest in the corporation, like the World Bank which has given concessionary loan of $300 million for its operation.
“Apart from this, some local interests including the pension commission, some primary mortgage banks (PMBs), National Sovereign Wealth among others, have also shown interest in the corporation,” said Omorinsola Ipaye, an investor in commercial real estate, who noted that foreign and local interests abound in the NMRC as against the FMBN because it is a private sector initiative.
Real estate developers may have to turn to NMRC, which will likely provide a better alternative to funds-strapped FMBN with indications that the interest rate on borrowing may match the rate that once made the mortgage bank the preferred choice to commercial banks.
With sufficient funds from massive foreign and local investments, NMRC will hopefully provide answers to Nigeria’s housing needs.