66, 402 Nigerians apply for 10,000 FG housing

Project to create 81, 000 jobs as govt say oversubscription is good

 Early this year, the Federal Government announced its plan to make available to Nigerians 10,000 housing units, as its first phase in tackling the staggering housing deficit. And by the time subscriptions closed early September, the call had generated more than six times the required number. In place of 10, 000-housing units, the government announced available for grabs, 66, 402 persons had indicated interests in writing to the agents. Although that is a sign that housing problem is really a big issue and that the announced housing deficit of about 17million by the government was true and real, the managers say that is no big deal.

From a different positive perspective, the FG and the agencies in charge, especially the Federal Ministry of Finance that anchors the project say the over subscription is good sign that the citizens have faith in the government and process that would lead to the housing provision. And because the housing scheme comes in phases until the 17million deficit is addressed, the Minister for Finance, Mrs. Ngozi Okonjo-Iweala early this year had estimated that another very important benefit of the mass housing the government has embarked upon after the launch of the Mortgage Refinancing Scheme by President Goodluck Jonathan last year is the assurance that the scheme would spawn new jobs for the nation.She noted then that every new home generates about 5.62 direct jobs from start to completion and 2.48 other direct jobs openings. That gives a total of 8.10 direct and indirect job opportunities for every home completed. And for the 10,000 units of housing in the first phase, the FG expects to create at least 81,000 jobs. That implies that if the tempo of sustained housing development is adhered, by the time, in the coming years, the FG develops housing with the partnership of private investors, it would be the sector with the highest possibility of job opportunities in the country.

Ministry breakdown

The Finance Ministry statement recently indicated: “As at September 5, the initial closing date of the registration, we had received 66, 402 valid applications, with more still calling.  That is more than six times oversubscription to our initial 10,000 pilot. We are extremely pleased with this outcome.” Giving a breakdown of the applications, it stated that they were spread across the 36 states including the FCT. While 63 per cent of applicants were male, 37 per cent female of them are female; 89 per cent of applications applied for themselves, even our women. Everybody seems to want to own his/her own home. “Only 11 per cent were joint applications, whereas almost 60 per cent of applicants were in the 31-40-year age bracket, 15 per cent in the 21-30-year bracket, a healthy development that 75 per cent of young people willing to buy homes and can easily have tenors of up to 20 years for their mortgages. Nigerians showed that majority of the people prefer three-bedroom flats or homes, with 62.7 per cent of applicants applying to acquire this property type. The next in reference is the two-bedroom home or apartment with 32 per cent applicants, and a small percentage applied for one-bedroom flats and one-bedroom self-contained flats.”

The breakdown also showed that most of Nigerians that have no homes of their own in the city dream to have such, and therefore, “96 per cent of all applicants are currently living in rented accommodation, 51 per cent of all applicants want to live in Abuja and 18 per cent in Lagos. This shows that almost 70 per cent percent of applicants want to live in the two main urban areas and there is a strong belief in Nigeria.” More than nine of every 10 applicants for the houses are in stable employed positions, a development the ministry noted that the lenders would be very happy with this, as only eight per cent were self-employed.

Managing over subscription

Due to the over subscription, a decision has been taken to give all applicants to the lending members of NMRC to share on a pro-rata basis. Lending members of NMRC are expected to have the refinancing window of up to 20 years.

It said: “They will sift then analyse and pre-qualify all applicants culminating in the amounts each lender is willing to advance to the applicant. This lets the applicant know value of property he/she can afford.

“Lending members of NMRC have promised to complete this exercise within six and eight weeks from receipt of the list.”

Following this exercise, the first completed 10,000 mortgages will be published in the dailies, while subsequent qualified applicants will be notified

Once qualified or notified, each applicant can then begin to look for a home that is within their borrowing range.”

When it began

In January this year, Okonjo-Iweala had recalled that the launch of the Nigeria Mortgage Refinance Company (NMRC): “It is not only individual Nigerians that will benefit from the establishment of the NMRC and the Jonathan administration’s stronger focus on mass housing. The country as a whole will also gain significantly from the unleashing of a sector, which has the capacity to transform the entire economy through millions of direct and indirect jobs as well many other ancillary benefits. To appreciate the significance of this, let us consider a few facts.

Nigeria’s significant housing demand has been estimated at 17 million, with an additional two million units needed every year. Labour impact assessment studies in countries with similar demographics and economies as Nigeria, estimate that at least 5.62 direct jobs can be generated with every new home, and 2.48 indirect jobs in housing related expenditure.  So far, our country is yet to realise this potential. In 2012, housing, construction, and real estate accounted for only 5.54% of our GDP. This figure is low in comparison to many other developing countries. Addressing the housing deficit will have a game-changing impact on our society and our communities.

Global job source 

She explained further: “Globally, there is a strong consensus that the development of the housing sector is important for stimulating economic growth and job creation in any economy. Indeed, housing construction is one of the most used indices for gauging the economic situation in most developed countries. The Case-Schiller index used to monitor housing starts in the US is a good example. Likewise, in Malaysia, one of the main contributors to the country’s eight per cent per annum 3 decade long GDP growth was the housing and construction sectors. New home construction is a major generator of jobs through direct employment in the construction industry with significant multiplier effects on other sectors of the economy. This is the kind of potential that the launch of the NMRC and related initiatives is set to unlock.

This explains why Mr. President made housing a priority sector in the Transformation Agenda. As a practical expression of this focus, he directed, in May 2012, the convening of a major Presidential retreat on the housing sector that brought all stakeholders together to discuss issues of land titling and land administration foreclosure policies, access to affordable housing finance and cost of construction materials among others.  The second event was a Roundtable on Housing Finance, which Mr. President instructed me to convene in November 2013.    This was attended by banks, development finance institutions, private sector players, and public sector partners, like the Ministry of Lands, Housing and Urban Development, and the Federal Mortgage Bank – to review and analyse the potential for housing finance in Nigeria, and see how to overcome trenchant obstacles.

A major outcome of the Roundtable was the setting up of a Housing Finance Committee chaired by the Federal Ministry of Finance, and comprising the Federal Ministry of Lands Housing and Urban Development, the Central Bank, Nigerian mortgage and commercial Banks, supported by the World Bank and the IFC. The committee was mandated to take forward the work of developing a facility that would significantly scale-up access to affordable mortgages for the Nigerian people.

The outcome of the committee’s work was the recommendation to set up the Nigeria Mortgage Refinancing Company to significantly increase the liquidity available to Mortgage Organizations such as Primary Mortgage Institutions (PMIs), Banks, Housing Microfinance Institutions and other financial actors.

Presidential assurance

On the day the NMRC was birthed, President Goodluck Jonathan, who personally performed the function to underscore the importance the government attaches to the project outlined some measures in place to make the it work. In his address, he has extracted a commitment: “The first step we have taken to make this work is the creation of a solid macro-economic policy environment that lowers inflation. Recognising that high inflation is a major impediment to the creation of a sustainable and dynamic housing market, we have, over the past two years, improved the indices of our macro-economic environment with the objective of reducing inflation across the country.

“The next major step we have taken is to create the enabling environment for primary and mortgage banks and institutions to conveniently offer 20 year mortgages to the market. This is the mandate we have given the NMRC. Since the ability of banks to deliver mortgage services is limited by the fact that 80 per cent of all banks’ deposits are for 30 days, the NMRC, in ensuring greater access to finance for longer tenors, will be key to accelerating the growth of the market for all income levels.

By assuring access to long-term finance for Financial and Mortgage Institutions and enabling mortgages issued over 15 to 20 years, the NMRC will be a reliable and sustainable instrument for the mortgage institutions to penetrate the largely virgin mortgage market, while simultaneously advancing the cost efficiency and effectiveness of the market in general.  It will indeed, provide the capital market with a more transparently effective method, of investing at minimal risk in the mortgage market.

Land is another important issue we have re-examined and re-evaluated. Indeed land is the basis for all human activity including Housing. People can only invest in their homes, if they can be assured of security of tenure, and that their investments will be available as savings when required by themselves and their loved ones. Providing access to certificates of ownership or C of O, easily and speedily, is absolutely important for the housing market. To achieve this, we set up a Presidential Task Force on Land Regulation, which reviewed our Land Use Act and came up with recommendations on realistic revisions, to better serve the people and expand the housing market.”