Federal Government unveils plan to stimulate housing sector
• To provide credit enhancement for developers
The Federal Government will de-risk lending to developers and provide guarantees and credit enhancement to stimulate growth in the housing sector.
The Minister of Power, Works and Housing, Babatunde Fashola, made the disclosure yesterday at the 32nd Annual Conference and General Meeting of the African Union for Housing Finance (AUHF) in Abuja.
Also unveiled was plan to deploy modern technology for mass production of housing, using traditional procurement and Contractor Finance Initiative Model to reduce housing deficit.
The minister, who urged the AUHF to support innovative housing finance in Nigeria, regretted that years of inadequate investment and poor maintenance culture have left the country with a huge housing deficit, slowing development and economic growth.
Fashola also blamed lack of housing finance in public and corporate institutions, lack of access to land, double digit housing loans, high cost of building materials, inflation and population explosion as reasons many Nigerians do not own houses.
Represented by Eucharia Alozie, Director, Public Private Partnership (PPP) in the ministry, Fashola said government recognises that provision of leverage and guarantees are critical to attracting private sector funds to the industry, thereby creating thousands of affordable houses yearly and generating employment and commercial activities.
“From the inception of government’s initiative in organised housing finance system to date, only meagre sum have so far been injected into the system. This accounts for less than 0.5 per cent of the GDP compared to other climes, like the United Kingdom and South Africa. This is due to the inability of financial systems to provide low cost finance that meets the need of low and medium income earners,” he added.
Also speaking, the Central Bank’s Director of Other Financial Institutions, Ahmed Abdullahi, noted that the housing market in Africa and in Nigeria is underdeveloped, and that the contribution of the market to the GDP in the country is less than one per cent, compared to the United States, which is about 80 per cent.
Abdullahi therefore stressed the need to address absence of long-term capital that could be used to create mortgages, high cost of building materials, and problems of registering and enforcing property rights.