The ineffective mortgage system to support purchasing power of low-income earners is a big threat to effective housing development, says AHCN President, Dr. Ifenna E. Chukwujekwu. He concludes that the current cash and carry system for acquisition of property needs to be addressed to assist the people in home acquisition.
IT is obvious that the housing sector requires urgent restructuring to be able to contribute to national development. Since housing corporations remained a phenomenon in housing policy, it is imperative that the required restructuring has to start with the state housing agencies.
One factor that is crystal clear in provision of mass housing is that the private developers are high profit driven and would only be willing to invest where they would be able to recoup their investment in a short while, which will invariably not favour the low income group. The truth is that affordable housing using civil servants remuneration as yardstick would be difficult to achieve with private developers who are profit driven and motivated.
Government intervention in provision of low cost mass housing scheme therefore is inevitable; and this is where Housing Corporation readily comes in to the picture. There is no doubt that if the resources of the housing corporations are properly harnessed, they will become the engine room of economic development. As government of the people that has the interest of the people in mind, provision of affordable housing is inevitable; and if the incoming administration (federal and state) will be sensitive about the housing needs of the people, the need for the restructuring of the housing corporations is paramount. This restructuring are in two folds namely organizational structural change and financial structural change.
For the organizational structural change, the following restructures are required:
•Appointment of Chief Executives should strictly be based on experience and from within the system of the housing corporation to ensure continuity of housing programmes. A situation where politicians are appointed as CEOs of housing corporations should be discouraged and politic should be separated from posterity.
•Level of authority of the CEOs of housing corporations should be clearly defined. Housing corporations should not be seen or run as a department in the ministry. CEOs of some housing corporations do not even have any authority over expenditure and they have to seek approval from the supervising ministry even before spending imprest.
This is the reason why some of these corporations are redundant today.
Virtually all the edict that established most of the housing corporations are outdated and this explains why ministries are dealing with them as if they are department in the ministry. What is more worrisome is that some CEOs of these corporations do not even know the content of the edict and the laws governing their organization. For these corporations to be effective, these outdated laws and edicts require urgent and immediate amendments.
•Provision should be made to commercialize these housing corporations with full autonomy to make them more dynamic and productive. Their outdated non-menclature and organogram should be restructured to reflect current dictates of administrative vibrancy.
For the Housing Corporations to live to its expectation, it is important that every form of political interference with activities of the housing agency be discouraged. The State Governments should grant total autonomy and independence to their Corporations to enable them execute their statutory roles and projects professionally. There is therefore a need for total commitment and discipline on the part of government in realizing its objective of taking care of the housing needs of the people and governments should support and back housing Corporations to enable them weather the storm of commercial ventures.
To survive the competitive economy therefore, it is important for state governments to support the housing Corporation with a seed fund with which to embark on estate development for outright sales to NHF contributors who would access NHF loans from the FMBN. With this seed funds, the Corporations can stabilize and turn around such seed funds for further development of other estates.
Governments should patronize Housing Corporations through the award of building contracts and renovation jobs, allocation of lands for sites and services schemes, and management of government properties within and outside the state, which will no doubt improve the agency’s revenue base.
With this kind of activities, the housing Corporations would help to generate employment by involvement of labour in direct construction and boost related services, which would be to the advantage of the government through gains from land fees, development charges, sales of the houses, indirect employment and other support services.
Scrapping and merging the housing corporations with State Ministries of Work, Housing and Transport will make housing provision cumbersome and slow. State Ministries are principally created to formulate policy and monitor its parastatals to ensure policy compliance and accomplishment.
Therefore, state governments that have merged their housing corporations with the ministries should rescind such decisions and grant autonomy to such corporations.
The Ministry should concentrate on providing the enabling environment and supervision for the corporation to fulfill its statutory mandates rather than become a player and at the same a referee in the housing provision business. Restricting housing ministry activities to policy formulation and supervision will help check delay in project execution, guide against fraudulent practices in project execution and help massively in policy compliance and accomplishment of mass housing provision for the people.
To be more effective in project execution, there is a need for new orientation of the housing corporations’ staffers to imbibe forward looking business approach as seen in the private sector with total dismantling of the civil servant method of doing things. Adequate training of staff should be embarked upon to position the Corporations as a viable mass housing provider. This will no doubt help in providing quality houses for the people and enhance total independence to execute projects professionally thus avoiding incidences of poor quality housing, housing failures and collapse of buildings in the state.
To achieve desirable restructuring that will position housing corporations as agent of change and as tool of mass housing for economic recovery and development, state housing agencies should be repositioned and considered as a major driver of housing development across Nigeria and they be saddled with the responsibility of entering into any public private partnership arrangement for housing construction and development.
For these housing agencies to be effective in the proposed restructuring, The Estate Development Loans (EDL) being managed by FMBN should be restructured and expanded to make more and adequate funds available for mass housing provision.
The EDL fund should be expanded such that it will be able by laws to mobilize funds from various sources such as Pensions fund, unclaimed shares dividends, and other related idle funds sources as well as from corporate bodies and international organizations; and grant same as loans to developers at low interest rates.
The fund should be restructured such that it will be able to create mortgages and trade in mortgage transactions at capital market. All funds so mobilized should be treated as investment to encourage people and organizations to invest in the fund and at the same time provide capital for property investment.
The restructuring should reduce and relax the protocol and some stringent conditions for accessing the EDL so that it will be easier for developers to build with the fund and use NHF contributors to offset the loans.
Sources of funds to the proposed new face of the EDL should be created through legislative power that would make it mandatory for
Federal government to have an annual grant to the fund at an interest rates that is not more than two percent.
State governments to contribute at least N100 million at source from their monthly allocation at an interest rate that is not more than two per cent.
Bank, insurance, pension administration companies to contribute at least five per cent of their annual profit after tax as social contribution. Such contribution should be treated as investment on behalf of the contributory organizations at an interest rate that should not be more than 2per cent or 3per cent
Quoted and unquoted companies to contribute at least two per cent of their annual profit to the fund as their social responsibility and such contribution should be treated as investment at an interest rate that is not more than two per cent or three per cent.
The new proposed expanded EDL fund should only be made available and accessible for low cost housing scheme development especially by housing corporations and while the state governments should provide landed property and the infrastructural facilities for such construction as their social responsibility to the people
To enhance and promote probity and sanity which would discourage mismanagement and undue political interference in project execution, a central controlling body should be set up to assess, appraise, manage, execute and supervise project execution to be financed by the proposed fund.
To enhance and assist the housing corporations and property developers to dispose off completed housing units developed from the fund, there is urgent need to sanitize the primary mortgage market with enabling laws that would prevent Primary Mortgage Institutions from trading with the deposits of potential buyers. Laws need to be enacted that will make it:
An offence subject to prosecution for any PMI to collect deposit from prospective mortgage seeker for more than three months without prospect of getting a mortgage.
Possible for depositor to sue any PMI that collect deposit from prospective mortgage seeker for more than four months without any prospect of getting loans and such deposit should be returned with prevailing interest rates on default
Mandatory for a PMI to be sanctioned by the apex body after six months of default to depositors.
A new structure that would hasten and reduce to not more than two to three months the processing of NHF loans from application to release of funds to potential contributors seeking loans for purchase of completed housing units should be put in place by FMBN to assist disposal of completed housing units thereby providing for the recycling of EDL funds use for the development by property developers.
Arrangement should be made to provide tax incentive/rebate for manufacturers of local building materials to encourage adequate production of such materials at affordable prices to flood the market.
Aggressive publicity and promotion in the use of locally sourced building materials should be embarked upon to encourage greater and high patronage and acceptance and will eventually reduce costs.
The Passive disposition and commitment of government to the contribution of the NHF as stipulated in the NHF acts should be condemned, discouraged and restructured. During Obasanjo regime, there were influxes of contributions to the National Housing Fund coffers because the government was committed and was ready to deal with any defaulting organization that failed to remit NHF contribution to the fund.
Therefore, government should be ready to lead by example and remit all outstanding contributions to the NHF fund, which will invariably create adequate financial base for the fund to execute Estate Development Fund for mass housing provision. Many organizations especially banks and insurance companies are owing NHF billions of naira of unremitted contributions and deductions from their staffers. Unfortunately, FMBN is helpless in recovering these debts because the principal organ that will assist in the recovery – the government – is equally owing the funds. Therefore, the stipulated sanctions against every defaulting organization as stipulated in the National Housing Policy should be executed as a major restructuring project of the new administration if adequate funds are to be channeled into the housing sector. Until government leads by example with payment of all her outstanding contribution and remittance, government will not be in position to prosecute effectively any defaulters to the fund.
With the above restructuring, the sector will be left with the challenges of demand and supply and the exit point of recoupment of investment, which of course has its solution in the newly created Nigerian Mortgage Refinance Company (NMRC). The NMRC needs to be empowered for effectiveness so as to be able to meet the needs of potential mortgage seekers.
gages for potential buyers who will in-turn utilize the mortgage to buy completed houses by the housing corporations.
With readily available houses by housing corporations in place and financial empowerment to enable the citizen’s buy through mortgage facility, the major issue becomes how to sustain the process, i.e. to make it continuous. This would be through the interplay of ensuring that the government would not tamper with.
The seed funding arrangement – the seed fund is recycled to provide more houses. Rather than being withdrawn, it could be increased to take care of inflation and thus ensure a steady source of housing finance
In order to ensure effectiveness of the above circle, political interference with activities of the housing agencies, which grossly affect on-going projects and operations of state housing corporations, should be discouraged. Government should grant total autonomy and independence to these agencies to enable them execute their projects professionally without any fear of losing their jobs.
Adequate moral support and backing in terms of loan guarantee for state housing agencies when seeking housing loan should be out-rightly encouraged
