The president of Mortgage Bankers Association of Nigeria (MBAN), Mr Adeniyi Akinlusi has disclosed that each mortgage collected to build a house would create 35 direct and 35 indirect jobs. Akinlusi who stated this in an interview with LEADERSHIP Newspaper in Abuja described the mortgage system as a major hub for job creation.
Giving a breakdown on how the jobs would be created, he said, “Right from the man that worked on the construction site; when he leaves his house, he goes to site with a bike and when he pays the okada rider, he is creating a job for the biker”.
He continued, “At the site, he will buy a recharge card so that he can talk to his family that he arrived safely at the construction site, he created a job for the recharge card seller, telecommunications company and its staff; before he starts work, he may decide to eat noodles and by doing so, he created a job for the food seller before he begins his work at the site”.
The president said that many professionals are involved in building a house like the electrical engineers, lawyers likewise titling and documentation in the government and among others.
“Indirectly, when the same person gets home, maybe he will pay medical bills for his children who may fall sick and in doing so, he’s creating jobs for the nurse, hospital, pharmaceutical companies and from the same money he earned, he will pay school fees for his children and create jobs for the teachers, educational system and among others”. He noted that the housing sector is a major job creating avenue for both the private and public sectors.
“It’s like the Economic Growth and Recovery Plan (EGRP) and for a country that has 2.6 percent population growth rate because our population is almost 200m which means that there will be need for more jobs for the upcoming ones”.
He revealed that 75 percent of Nigeria’s population account for people of 35 years and below saying that there are no jobs for the young ones since Nigeria is not a fully industrialised nation and there is a need to provide them with shelter.
“We can do two things at the same time through the housing and mortgage sector; we can house them which is a fundamental issue because sheltering your people is important and also create jobs while doing so and with that, we can have less people who are unemployed”.
Akinlusi who is the Chief Executive of Trust Bond Mortgage Bank Plc confirmed that unemployment and under employment figure has risen to 30 to 40 percent.
Appraising the National Housing Programme (NHP), he said, “I think it can significantly reduce the housing deficit with participation from the public and private sectors.
The MD emphasised that there has been lot of initiatives from Federal Mortgage Bank of Nigeria (FMBN) in terms of access to loans given that is the only institution that provides mortgage at 6 percent rate which is a single digit.
“To make accessibility easier, FMBN came up with a policy that allows people who are low income earners to access loans and houses worth N5m and below without equity”.
He noted that mortgagors seeking mortgages between N5m to N10m would pay equity of 20 percent while mortgages between N10m to N20m would attract 30 percent equity.
“To further ensure that people have access, Federal Mortgage Bank of Nigeria (FMBN) and Real Estate Development Association of Nigeria (REDAN) who are in charge of housing supply meet monthly while MBAN who will provide mortgages meet monthly to review how we can expand ownership among Nigerians and review existing policies to make it easier for people to own homes so as to reduce the housing deficit which is presently at 20m”.
Akinlusi said since housing is a big investment that neither the public sector nor government could finance it without the support of private sector.
“Even if you look at the deficit of 20m and you are looking at an average of N3m for each house; that will cost about N60trillion, where will the money come from when our annual budget is about N8 trillion with just about 10 percent in terms of revenue, so you can see that the money to bridge the housing gap cannot come from government and this economy”.
He stated that the capital needed to bridge the deficit would be sourced from the private sector through external borrowing which is obtainable in other countries.
“For instance, if you look at the US economy and the housing system, most of the investments in housing were generated from China”.
The MD was hopeful that if government could fix issues militating against housing supply and effective housing demand in terms of mortgage, foreclosure, titling and transfer, cost and among others that foreign investors would be attracted to Nigeria.
“The only secondary mortgage operator apart from FMBN which is a public sector is the Nigerian Mortgage Refinancing Company (NMRC) that has raised about N80bn and are in the market trying to raise more money for the bonds”.
He recalled that the Central Bank of Nigeria (CBN) unveiled Uniformed Mortgage Underwriting Standards (UMUS) weeks back to enable the informal sector and self-employed access mortgage.
“Knowing fully well that this informal sector contributes between 15 to 60 percent of the country’s Gross Domestic Product (GDP), they were left behind in housing because before now, it was difficult for them to access money for mortgage because the tools for evaluation were not there”.
Akinlusi said that since self -employed persons had no stable income that no commercial or mortgage bank provide them access to loans.
“With the unveiling of UMUS, there is a tool now available in the market for evaluating people who are self-employed in the informal sector and the mortgage banks can lend to them using that tool”. While describing housing as the single largest investment adventure by any family, he pointed out that it’s an expenditure that required huge loans since the benefit cuts across generations.
“This is why connecting them (informal sector) to the mortgage sector is necessary because the mortgage sub-sector is a bridge to connecting the informal sector to the housing market through access to mortgages”.
The president further revealed that CBN also unveiled UMUS for non- interest housing finance. He said that if the underwriting standards for mortgage was initially launched that the Internally Displaced Person’s (IDPs) would have collected loans from non- interest financial institutions to rebuild their homes instead of living in camps.
“If we had underwriting standards for mortgages, we will have increasing number of non- interest financial institutions who can provide loans to Internally Displaced Person’s (IDPs) in the North East to rebuild their homes rather than living in camps, this is the face of reconstruction and rehabilitation”, he concluded.