NMRC was officially launched by His Excellence Dr, Goodluck Ebele Jonathan on January 16th, 2014 in Abuja.

Thank you very much your Excellency Mr. President; your Excellency, Mr. Vice President; Excellency Executive Governors and deputy Governors, members of the National Assembly, members of the Federal Executive Council, general partners, members of the diplomatic corps, members of the professions that relate to housing, beneficiaries, distinguish ladies and gentlemen.

It is with great pleasure that I welcome you today to the presidential launch of the Nigerian Mortgage Refinancing Company plc [NMRC]. I would like to especially thank his Excellency Mr. President for setting in motion the processes that led to this day. I would also like to thank his Excellency Mr. Vice President, the Federal Ministry of Land, Housing and Urban Development especially the supervising minister and I also remember my Sister Ama Pepple who also worked on this. The Central Bank of Nigeria and the development partners of the housing finance program, The World Bank, The IFC and DFID for their contributions to the set up and take off of the Nigeria Mortgage Refinance Company.

I want to thank the Banking industry that has also supported this, both their intellectual input and some of them who are shareholders with their finance.

I remain positive and excited that the good work we run now will translate into the development of our economy and would provide affordable housing and jobs for millions of Nigerians.

Your Excellencies and distinguished ladies and gentlemen, owning home is a fundamental human need but for a majority of Nigerians this dream has for long gone unfulfilled. Nigeria’s deficit has been estimated at roughly 17 million units with an additional 2 million units added each year. Labor impact assessment studies in countries with similar demographics and economies 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 realize this potential; the contribution of mortgage financing in Nigeria’s GDP is close to a negligible 1% of GDP compared to 77% in the US, 80% in the UK, 32% in Malaysia and 50% in Hong Kong. Addressing the housing deficit will have a game changing impact on our society and our community.

There is a general consensus on the fact that development of the housing sector is important for stimulating economic growth and jobs creation in any economy. Indeed, housing construction is one of the most used indices for gauging economic growth in most developed countries. The Case Sheila Index; and I’m proud to say Case was my Professor when I was in school, who developed this index; is used to monitor housing stats in the US and this is a good example. Every single month this is one of the indices the US watches carefully in order to gauge the contribution of housing stats to the economy, likewise in Malaysia one of the main contributors to the country’s eight percent per annum, three decades long GDP growth was the housing and construction sector. New road construction is a major generator of jobs through direct employment in the construction industry with significant multiplier effects on all other sectors of the economy be it artisanal skills that will be needed, be it even architects, quantity surveyors, interior decorations etc.

Mr. President recognized all these and made housing a priority sector in the transformation agenda. In 2012 he directed the convening of two major presidential events on the housing sector, the first was the presidential retreat in May bringing all the stakeholders together in the sector to discuss issues of land titling, land administration, legal frame work for housing including foreclosure issues, access to affordable finance and cost of construction and so on. In addition in November he instructed me to convene a roundtable on housing finance to look at how to make finance affordable for housing in the country. These events brought together all these key stakeholders including the Federal Mortgage Bank and others to review the potential of the sector in the country and see how to use it to trigger economic growth and promote job creation.

A major outcome of the presidential retreat on housing finance was the setting up of a committee on housing finance 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 representatives from the states and 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 mortgages for the Nigerian people. Hence we have today what Mr. President would be launching the NMRC, The Nigerian Mortgage Refinance Corporation.

The Nigerian Mortgage Refinance Corporation is a public private sector lead initiative said to address the key barrier of finance to developing affordable and accessible housing for Nigerians. The NMRC is set up to help lower the funding cost of mortgages and promote the availability and affordability of good housing to working Nigerians by providing mortgage lending banks with increase access to liquidity and longer term funds in the mortgage market. To help kick start the funding support we successfully negotiated 300million USD financing agreement between the Federal Government and the international development association, the soft credit arm of the world bank. These facilities are zero interest, 40-year tenure with 10 years of grace.

250 million USD of this fund will be disbursed to the NMRC in installments as tier two capitals based on performance indicators. 25 million USD will be for the establishment of a mortgage guarantee for lower income borrowers. We accept that it may be difficult for lower income borrowers to access mortgages so in order to make this happen 25 million USD will be used to set up a facility to guarantee their own mortgages and make it possible for them. Another 25 million USD will be used to both support the Federal Mortgage Bank to restructure itself to be able to strengthen its program on mass housing and also to pass on some of it to micro finance housing finance institutions so that they now lend to lower income people who want to add a small room to their house, change the room or build a small home for themselves.

For this initiative to be successful we have to work with the state, many of the states have initiated strong housing programs themselves and they have done very good work. But the advent of the Nigerian Mortgage Refinance Company will enable them to scale up their efforts in a way they’ve not been able to before. To this end we are grateful to the Governors of Abia state, Anambra, Bauchi, Bayelsa, Delta, Gombe, Kano, Kaduna, Lagos, Edo, Ondo and Ogun who have participated with us and of course the Minister of the Federal Capital Territory my colleague who has been most enthuastic on this front. The Governors and the Minister have committed to supporting the Nigerian Mortgage Refinance Company initiative and collaborating with us towards creating an enabling environment for mortgage origination to be refinanced by the NMRC in key areas under their jurisdiction, looking at issues of property registration, enforcement of foreclosure laws or other types of mediations like arbitration, access to service lands etc. many of them have met a set of criteria which we have articulated that we have to meet in order to remove the constraints that are not making the housing sector move and many of them, access to service land is one of them, foreclosure policies and laws that are not enforced previously to make sure that these are enforced and other obstacles in the way of unleashing the housing sector such as the speed at which you obtain Governors consent and titling for your property. They also agreed to work with us. We have some examples of far stifling processes, we have FCT, we have Lagos, we have Ogun, we have a few other states that have really moved on this end and we are going to look to them to set the example for the others and for all of us to follow.

The Federal Government, sorry let me also mention something on interest rates as his Excellency the President is very interested in it. With the full operation of NMRC a substantial building block will be put in place to help get interest rates to come down. From the current spread of 20 to 23% that people have to take with 12 months or three years tenure to the low double digits or high single digits, this is what we are hoping to achieve. The mechanism will be market driven but with the things we put in place such as this zero interest loan behind it and so on, we hope to be able to drive the cost down. It will also depend on maintaining macroeconomic stability so that inflation can continue to be held down in concert with responsible behavior of other agencies of government and the private sector to drive down the cost of housing. But we are very hopeful that we can make this work at the low double digits and high single digits in some cases for access to mortgage. Land registries have to provide quick and easy access to certificate of occupancy and court justice. We know that when the mortgage finance corporation is set up, we hope that after it sets up its operations it will quickly be able to float another 50 billion Naira in bonds to finance its operations and there on will continue to add so that institutional investors pension funds and so on can invest and provide a sound basis which can make this work. I know that people like Aliko Dangote who is in the room has said we must get to a Billion Dollars. We are at about 600 million Dollars now and would be working towards that.

In addition to this, the Federal Government is also working in partnership with real estate developers and international institutions like the IFC to try working on mass housing. Mass housing rent-to-own scheme which enables Nigerians to own the homes they rent, lower income Nigerians will ultimately own the houses they live in after 15 to 20 years of paying rent. We therefore recognize the fact that the mortgage program may not work for everybody. So for lower income and poor people we want to develop this mass housing building on what the ministry of housing has already done, what the mortgage banks has been doing to round this up by having these to own scheme where after many years of renting the owner can now own the home and this would be done in a way that this is a legally documented transaction under the which the house is leased in exchange for annual rent with the option to own at the end of the period.

Distinguished ladies and gentlemen let me now concluded by saying and underlining one or two things. The first is that this initiative which Mr. President will launch today is a project aimed at assisting not only the lower middle and middle income earners getting access to mortgaging and to housing but also to the lower income, because there’s a mass housing because there’s a mass housing component that I just explained about and there also a guarantee scheme for lower income to access mortgages if they want there also the micro finance banks that would get some of this resources so that they can enable poorer people to add a toilet in their house, change the roof if they want, add a roof and so on.

Let me also say that this is the first step in the process that would lead to affordable housing for many Nigerians and would create jobs, we have talked at length about job creation. We are very grateful to Mr. President for signing some of the concessions that made the project possible today. It would be towards the end of June 2014 which is around the corner that we believe Nigerians can now walk into Primary Mortgage Institution’s and be able to apply and access mortgages. Before then the mass housing component will be kicking off with the federal mortgage bank and other institutions and I hope this would lead us into a future in which working together, the private sector, public sector, Ngos, civil service; all of us working together can deliver an exciting new future in this endeavour for housing.

Thank you so much ladies and gentlemen.

 

 

 

 

 

 

 

 

 

 

 

 

2014-01-18