The much idolized Mortgage Refinance Corporation, MRC, has come under serious scrutiny as the Managing Director, Asset Management Corporation of Nigeria, AMCON; Mr. Mustapha Chike Obi has described the approach as “using a pen knife to cut an Iroko tree”.

Mr. Chike Obi was the keynote speaker at the second edition of Real Estate Unite Conference; an annual think tank summit organized by 3Invest Limited. The AMCON boss who crooned that Real Estate should be one of Nigeria’s major economic drivers, said the housing problem in Nigeria requires serious attention to tame the humongous population explosion of the nation, which he put at 2.5% annually.

Meanwhile, Managing Director of Dunn Loren Merrifield and one time principal adviser to Nigeria’s Debt Management Office, Mr. Sonnie Ayere said the misconception about the MRC is that it is a finance mechanism designed to ‘dole out money’. Speaking on the Real Estate Finance and Investment panel at the conference, Mr. Sonnie explained that the structure of the MRC is to ensure that there is liquidity of funds as well as a strengthened secondary market. He furthered that in spite of the MRC, financial institutions will still have to bear the brunt of either profit or loss in the event of providing mortgage financing.

It will be recalled that the World Bank recently funded the MRC with a N300 billion loan at zero interest rate. This effort was described by Mr. Chike Obi as “laudable but inadequate”, giving the current housing need of the nation. He argued that there is annual 2.5% growth in Nigeria’s population which currently suffers about 17 million housing deficit. He said to stem this tide, Nigeria needs one million housing units for 17 years to meet this need. Mr. Obi informed the conference that both government and private initiatives in housing delivery in Nigeria is put an average of 30, 000 units annually, leaving a huge gap between supply and demand. 

“To meet the need of Nigeria’s housing market requires an annual 10trn for the next five years. But the total balance sheet of banks in Nigeria annually is 20trn. Nigeria’s annual budget stands at an approximated 5trn annually; so where is the money for housing going to come from?” he queried.

He added that funds such as the MRC will remain inadequate until government creates a balance sheet for the sector where banks contribute 10%, insurance sector, 10% and government 80%. While he stated that AMCON would not have survived but for government guarantee; he advised experts in Real Estate to create demand for housing to put pressure on the government to relax the Land Use Act, which he identified as one of the major challenges of the Real Estate sector. “Government has a role. It must not be afraid to use its balance sheet to guarantee the economy”, he submitted.

Mr. Chike wondered why government has not taken housing as priority, giving it social and economic benefits. He informed that it takes about 10 direct and 20 indirect persons to build a house in Nigeria, thus an annual 1 million housing units will create 30 million jobs.

Having advised that government guarantee funds for the housing market, the AMCON MD suggested that the funding facilities should be handed to private sector to militate against corruption and inefficiency.

In her welcome address, Managing Director of 3Invest Limited, and convener of the Real Estate Unite Summit, MS. Ruth Obih, said the company opted to the theme “Advancing Nigeria’s Real Estate for Economic Growth” having recognized that Nigeria’s real estate is yet to produce commensurate value to the economy, in spite of its huge investment potential. She said “we opted for this theme having recognized that Nigeria’s Real Estate which is becoming viable with huge opportunities has not yielded commensurate results. To this end, we find an international business-to-business event such as this a viable instrument that can birth the needed revolution in the market”.

Real Estate Unite 2013 is the second edition of what is fast becoming one of Africa’s largest and strategic Real Estate events which focus on the rapidly maturing the Real Estate sector as one of Nigeria’s major economic drivers. It is organized by 3Invest Limited, a Real Estate Advisory Service Company with track record of advocating for Nigeria’s Real Estate development.

2013-10-20