The N1.3bn Mortgage Loan For Civil Servants

The recent launch by the Federal Government of a N1.3 billion refinancing loan to meet civil servants’ housing needs is a welcome development. It is a laudable step towards bridging the nation’s huge housing deficit.

Though far short of the estimated 17 million housing units required, the announcement that 5,635 civil servants will be in the first batch of beneficiaries of the scheme indicates that the first few steps are being taken towards bridging the housing gap.

Unveiling details of the scheme in Abuja last week, Minister of Finance, Mrs. Kemi Adeosun, explained that the refinancing loan is in collaboration with the Nigerian Mortgage Refinancing Company (NMRC). The scheme, she said, will be open to local and foreign investors through the Public Private Partnership (PPP) arrangement under the Federal Integrated Staff Housing (FISH) programme of the Head of Civil Service of the Federation.

She added that the scheme would be partly financed through the N40 billion earmarked by the Federal Government in the 2016 Appropriation Act to address housing challenges. She described the scheme as a “financing solution that will bring money from the private sector, pension and insurance funds, multilateral and international agencies to drive an intervention in the areas of development finance and mortgage provision.”

While we consider this scheme a step in the right direction, government must demonstrate utmost sincerity of purpose in driving it, for it to have a beneficial impact on the target group. Considering the importance attached to housing globally, it is sad that Nigeria’s housing profile since independence, and indeed, since the present democratic dispensation, leaves much to be desired. Successive governments, at the states and the centre, have failed to attend to this basic need of our people, despite their many promises during political campaigns.

Shelter is not only a basic need of life,  housing is codified as a human right in the Universal Declaration of Human Rights. Yet, according to World Bank statistics, Nigeria is in deficit of 17 million housing units.

The bigger problem is the political will and funding to close the 17m housing gap. According to the World Bank, the Federal Government will need about N59.5 trillion to bridge this gap. Therefore, in order to avoid the problems of previous housing intervention schemes, it is necessary to make funding more accessible to civil servants at low interest rates. All impediments to the construction of houses in Nigeria, including high cost of land, should be removed. This will require a comprehensive review of the Land Use Act.

We remind all the partners in the refinancing loan, especially the FMBN, of their critical roles in making cheap loan windows available to drive the scheme to success. We say this because affordable housing means housing with associated financial costs that do not threaten other basic human needs.

In that regard, the government should take appropriate steps to ensure that housing costs are proportionate to overall income levels. They should set up subsidies for workers who are unable to acquire affordable housing and protect tenants against unreasonable rent increases as is currently the case in many states.

We advise the National Assembly to review the nation’s mortgage financing system. At present, Nigeria’s mortgage finance (as a share of the Gross Domestic Product) is very low. It is an abysmal 0.5 percent, compared with 80 percent in the United Kingdom, 77 percent in the USA, 31 percent in South Africa and two percent in Ghana. Nigeria’s housing and construction sector accounts for only 3.1 percent of the nation’s GDP. Statistics show that housing production is at 100,000 units per year, while 800,000 units are needed annually.  Besides these obstacles to home ownership, Nigerians face a daily struggle with poverty, unemployment, lack of access to potable water and Low Human Development Index (HDI).

Altogether, we reiterate that overcoming the nation’s housing deficit needs a comprehensive approach that must be in line with best practices. The citizens must, of necessity, have easy access to affordable housing that they can pay for over a reasonable length of time.  Although section 14(2) of the National Housing Fund (NHF) Act of 1992 stipulates that a contributor to the NHF can access a loan from the fund for the purpose of building, purchasing or renovating existing homes/houses, the processes for taking advantage of this loan window is tedious.

With interest rates charged by banks as high as 30 percent, and that by mortgage banks between 20 and 28 percent, it will be difficult for most Nigerians to build their own houses. We hope these high rates will not frustrate the present efforts to deliver affordable housing to civil servants and millions of other Nigerians.
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