CBN to de-risk housing finance under ‘My Own Home’

“A scheme aimed at inspiring  the younger generation of Nigerians to key into mortgage process, immediately after  they begin work or business, has been initiated. The scheme will also give fresh hope to more Nigerians for housing.”- The Nation

This is coming with the commencement of the Federal Government’s housing initiative tagged: ‘My Own Home.’

The scheme is an offshoot of the Nigeria Housing Finance Programme (NHFP) being implemented by the Central Bank of Nigeria (CBN), with the support of World Bank’s $300 million loan, on behalf of the Federal Government.

It is hinged on the government’s plans to introduce a public-private partnership (PPP) initiative aimed at increasing access to housing finance through mortgage guarantee insurance and microfinance scheme.

Explaining the modus operandi of the scheme, CBN’s Head, Project Administration Team of the NHFP, Mr. Adedeji Adesemoye, said the objective of the scheme is to catalyse the growth of the housing sector through de-risking the housing finance value chain and improving access to finance.

“We need to educate our people that owning a home with a mixture of equity and debt is not a negative thing; having a home that you will live in the next 50 years does not require you to spend all your life savings,” explained Adesemoye.

To this end, eight micro finance banks (MFB) have been selected to mobilise housing finance for low-income earners in the formal and informal sectors of the economy. The eight MFB are expected to facilitate access to flexible housing finance for low-income earners for incremental construction or home improvement. This, Adesemoye further explained, could either be financing to buy a piece of land for building or laying foundation on an existing land and commencement of building stage by stage.

“After every stage of building, and with a good history of repayment, the microfinance bank keeps financing the customer until the building is completed. This housing microfinance is not for the purchase of homes. This scheme is similar to our traditional sense of incremental construction. This initiative will make it possible for a homeowner to stretch his building plan in such a way that he takes different tranches of loan as he builds,” Adesemoye explained.

To execute this task, the selected MFB will benefit from a $15 million technical assistance from the World Bank’s $300 million housing loan. LAPO Microfinance Bank is already being used as a pilot for the scheme based on its antecedent in the mortgage sector.

Adesemoye, who spoke with The Nation Property in Lagos, disclosed that the CBN is already in partnership with the Frankfurt School of Management and AFC Consultants International, Germany for technical assistance.

Through NHFP, government is creating the enabling environment for strengthening the nation’s housing sector by setting up sustainable framework by mortgage originators to access long-term refinancing. The new scheme is expected to scale up mortgage and housing finance awareness.

Source: The Nation