Nigeria’s government plans to inject 500 billion naira ($1.4 billion) into its low-cost mortgage lender over the next five years in an effort to spur home ownership that has failed to take off in most- populous Africa’s nation.
Faced with a housing deficit of 17 million units, Nigeria is seeking to improve access to home loans in an economy that vies with South Africa as the continent’s biggest. A lack of proper land deeds, poverty and record high interest rates means there are only an estimated 50,000 registered mortgages, of which state-ownedFederal Mortgage Bank of Nigeriaaccounts for 18,200, according to Chief Executive Officer Ahmed Musa Dangiwa.
The lender is seeking to boost its capital from 5 billion naira at a rate of 100 billion naira a year, he said in an interview on June 21 in the capital, Abuja. FMBN is expecting proposals on its recapitalization, as well as a reorganization of its business, to be approved by all arms of government by the end of 2018, Dangiwa said.
The company’s current capital base is “grossly inadequate,” he said. “That’s why we’re in the process of ensuring that the capital base be increased.”
Armed with the extra cash, the lender can go from the 2,500 new mortgages it plans to sign up this year to 100,000 over the next two years, Dangiwa said. The extra capital will also encourage other investors to provide additional funding, he said.
In August, the FMBN will flag off a 1,500 housing project it is providing funding for under a new “rent-to-own” program that Dangiwa says will help creating more mortgages and access to housing.
In South Africa, the continent’s most-industrialized economy with a population of about 55 million, mortgages account for almost 30 percent of total credit, the largest component of banks’ assets, which amounted to about 5.14 trillion rand ($382 billion) at the end of January, according to central bankdata. Nigeria has apopulation of about 200 million.
Nigeria Mortgage Refinance Co., the nation’s state-backed mortgage guarantor, which provides loans to banks, plans to issue 11 billion naira worth of 15-year bonds through multiple sales as part of a five-year 440 billion naira program, NMRC Chief Executive Officer Charles Inyangete said in a March interview. Bloomberg