Why Nigeria’s mortgage doesn’t work

Discussions at the 9th Abuja Housing Show held July 6-8, 2015 centred on modalities to enhance housing finance and training of artisans for better performance Mortgage failure in Nigeria  It was gathering of who is who in the construction sector and the key question was housing affordability. All this centered on failure of the mortgage […]

Discussions at the 9th Abuja Housing Show held July 6-8, 2015 centred on modalities to enhance housing finance and training of artisans for better performance

Mortgage failure in Nigeria 

It was gathering of who is who in the construction sector and the key question was housing affordability. All this centered on failure of the mortgage system in the country. Mortgage fails because salaries do not match cost of houses, it was said.
It was observed that developers build houses that workers can hardly afford. Income of those who really need the houses does not match the value of the houses. Housing experts noted that 40 percent of workers are people only starting life so they cannot afford the multimillion naira duplexes and bungalows in the market. “We build mainly for politicians and privileged civil servants who constitute only three percent of the population,” a discussant observed during a discussion session during the housing show.
It was suggested that there should be a mix in estate development so as to have one-bedroom, two-bedroom and three-bedroom flats to accommodate all classes of people.
Nigeria has no mortgage in the real sense of it, it was observed. This is caused mainly by the banks’ high interest rates. Potential off-takers do not even have the down payment demanded by the mortgage banks.
Experts maintained that there are not many workers who take their legitimate earnings can conveniently pay for mortgage in Nigeria. According to them, equity demanded by mortgage institutions can be used to build one’s house which then renders mortgage taking useless.
 It was said that Nigeria builds not up to a million housing units a year. They said housing development in Nigeria cannot lend itself to housing solution because scarce land is allotted for building of duplexes, making vast expanse of land to accommodate few people even as infrastructure is provided to support just few. Reference was made to China where a small piece of land is used to accommodate up to 100 families unlike here where vast hectares of land are used for few.  
Developers were urged to embrace alternative building solutions and take advantage of economy of scale to tackle the housing shortage problem. Nigeria should be producing houses, not building any more, it was suggested.
Financial experts were of opinion that workers’ salaries should be accepted as collateral for mortgage.

Artisans’ compromise 
Dogote Cement was not only an exhibitor but a participant as well. The cement firm came to the show with concern about building collapse incidence in the country. The Regional Sales Director, Dangote Cement, Mr Johnson Olaniyi identified inadequate knowledge and cutting of corners by artisans as cause of building collapse. He said to tackle these, Dangote Cement has set up Industrial Training Fund for the training of artisans.
But he harped on need for attitudinal change. “We need to talk to ourselves. Shortchanging clients is attitude of our people. Before commissioning, the house has started cracking because everything was compromised. Sixty-two blocks to one bag of cement is recipe for building collapse,” he stated. He blamed part of the attitudinal problem on parents: “Nobody wants their children to be artisan.” He lamented that artisans still use archaic tools like wheelbarrow noting that there is collaboration with Standards Organization of Nigeria (SON) to maintain standards.
He advised artisans to always endeavour to do the job in the most professional way.  He recommended 30 to 35 blocks per bag of cement. A participant suggested use of clay technique as panacea but Olaniyi maintained that clay technique is unsustainable because of lack of energy to dry the earth. It was said that Nigeria has 337,000 registered block makers.

Exhibitors impressed
Sellers and promoters of building materials had opportunity to showcase and sell their products. Materials on display were: paint, cement, marbles, roofing tiles, doors, water cisterns and home accessories generally.
Marketing Manager of Elevators and Escalators Nig. Ltd. a company that deals in elevators, Diyaun J., said over 200 clients visited his stand during last year’s show but he recorded less traffic this year. “Last year was better than this year. Maybe [bad] economy, maybe people didn’t know,” he told Daily Trust. He was however happy that organizers did better this year by making the place spacious – no congestion like in the previous year.
Mary Prince of Financial Marketing Group (FMG) said she was encouraged by her experiences in her stand. “We’re encouraged by our interactions with stakeholders in the real estate,” she told our reporter.
Abuja Investments Company Limited (AICL) was also visible at the show. Marketing and Communications Officer, AICL Mr Segun Ogunsola said a lot of people were encouraged. “It was good. A lot of people came from Lagos. People from other parts of Nigeria came – it’s like from east to south,” he observed.
Key speakers at the show were: MD Nigeria Mortgage Refinance Company (NMRC) Plc Prof. Charles Inyagete; MD Federal Mortgage Bank of Nigeria (FMBN) Gimba Kumo Ya’u; MD UPDC Hakeem Oguniran;  Director Fuller Foundation Sam Odia; former MD, Abuja Property Development Company (APDC) Bashiru Haiba; Director Shelter Afrique, Kenya Oumar Diop and others.
The event which attracted 150 exhibitors brought together professional groups like NIA, NIOB, COREN, APBN, NITP, NSE and FMBN. According to the Managing Director of Fesadeb Communications, organizer of the show, 500 stakeholders from financial institutions and housing sector attended the event.
The gathering which harped on the question of home ownership appraised existing policies and made suggestions toward remoulding and developing new policies to build enduring structures to enable faster and better housing delivery.
Abuja Housing Show is avenue for real estate stakeholders to present new products, services and technology. It affords practitioners in housing and construction industry opportunity to exchange ideas and proffer solutions to housing problems.
Vice President Yemi Osinbajo represented by Senator Osita Izunazo, declared the event open while the Permanent Secretary, Federal Ministry of Lands, Housing and Urban Development, George Ossi gave a goodwill message.
Permanent Secretary, Federal Capital Territory Administration (FCTA)John Chukwu, was chief host. Theme was Delivery of Affordable Housing: Financing, Building Technology and Land Issues in Nigeria.