9 January 2013

Nigeria: Developers Worry Over Mortgage Recapitalisation Deadline

Real estate developers are jittery over the approaching deadline for the recapitalisation of primary mortgage institutions, PMIs, in April.

At an emergency meeting in Abuja yesterday, the President of the Real Estate Developers Association of Nigeria, REDAN, Chief Olabode Afolayan, lamented that many PMI's were not likely to meet the target of N2.5 billion as against the current N100 million for those operating within states and N5 billion for those with nationwide licences.

He said most of them were sure to go down because they did not have the funds and that it was now too late to go into mergers.

Afolayan pointed out that 75 per cent of the primary mortgage institutions had virtually nothing since nearly everything they owned was on lease, adding that some are working with contract staff.

He therefore appealed to developers with investments in such banks to think deeply about the wisdom of continuing to retain them even though the Central Bank of Nigeria (CBN) had announced that no depositor would lose their money.

Afolayan disclosed that by February, REDAN would introduce two new products that will put interest rates on borrowing to fund building projects at between 12 and 15 per cent.

He said it was for people with projects whose transaction cycle could be completed in a short time of 24 months.

The REDAN boss said another arrangement with Infrastructure Bank could bring lending rate to developers to a single digit if all their conditions were met.

He also announced that Kenya-based Shelter Afrique would open shop in Abuja early next year and would make funds available for capacity training among developers.

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