29 June 2014

Nigeria Needs Comprehensive Mortgage System - Akomolede

A renowned estate surveyor and valuer in Nigeria has said that any attempt or proposal to solve our housing problem of a deficit of about 17 million housing units must contain a comprehensive system of mortgage finance.

Chief Kola Akomolede, a fellow of the Nigerian Institution for Estate Surveyors and Valuers, said housing provision without a sound mortgage system cannot work because there is no place in the civilized world where people buy houses on "cash and carry "basis.

He said government needs to look at the mortgage provision in this country. "There is need to revive and implement the housing finance laws which made provision for the deduction of 5per cent of all workers salary as savings for mortgage finance. Government on its part must make budgetary allocations every year to the Federal Mortgage Bank of Nigeria FMBN for on - lending to the public at affordable interest rates like 5-6 per cent.

"If the Federal Government can give N100 million to the FMBN every year for just 10 years, it will form enough base for a sound mortgage finance for the nation. People will pay back and it will continue to revolve and the capital base will increase every year. If President Olusegun Obasanjo had started this in 1999 when he took over, today there probably would have been no need to add more. This could have been done from the excess crude oil money which has now been frittered away!

Akomolede said there is no need to shy away from the fact that the mortgage banks cannot attract savings from the economy because of our high rate of inflation and competition from commercial banks for fund and also there is need for special funds at no or very low interest rates to be made available to the mortgage institutions as this will enable them to lend to the public at reasonably low interest rates.

"It is a wrong way to address the housing problem by leaving it to the private sector alone. The private sector is not a charity organization. They are in business to make profit as much as it is possible. Provision of housing, especially for the low income is not a profitable business and therefore cannot attract the private sector. There is the need for government to fill that gap."

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