'We'll Restore People's Confidence in Mortgage Banking'
Are you implying that the loans so giver' for mortgage are converted into materials fmancing?
Not in that sense. We still disburse cash, but give materials still. Since we are part of the government housing development programme, we try as much as possible to be involved in a way that will not leave any gap in the fund delivery process. And you know the essence of universal banking' which of course allows even mortgage institutions to offer banking services that are relevant to them.
But again so many banks are now i''to mortgage financing. What is your impression of the rash of investme/it in mortgage by so many banks?
I feel it is a good thing to liberalise the banking sector. But what you have to note is that the banks have their segments. What the banks do essentially is to provide housing for the wealthy. They build houses for the upper class essentially. Now, you tell me,how many Nigerians can afford that type of houses you find in high brow areas where the banks concentrate their investments. Their priority is too exorbitant. Our niche is to reach out to medium and lowincome earners. And the emphasis is reaching out to them and convincing them to invest in their future by owning houses.
How do you intend to do this, how do you create this awareness in, a culture that emphasises house construction by individuals.
You know the system is not yet monitised. It is a rather virgin sector. And as you have pointed out, our culture has a lot of reason for this, people want to build houses by themselves unlike what obtains in Europe and America where once you are in employment, you take mortgage and save money to build your house. But having said that, Trinity now comes in and we are set to encourage people to save and run such account for at least 6 months or 1 year. We thereafter monitor their saving habits. We monitor their discipline after which we now provide loans for them. If they are able to save 20 to 30 per cent of the mortgage, we provide loans up to N3 million or five million Naira and stagger the payment of the balance.
The Federal Mortgage Bank appears to have failed in its duty as the umbrella for mortgage institutions. Why are mortgage institutions like your own not takinadva'tage of the complacency of that organisation?
Let us get the issues involved straightened out. The role of Federal Mortgage Bank should have being a discount house for already committed credits into the housing sector. Unfortunately this role was not assigned to them initially. Just like NEXIM, I would say. But the Federal Mortgage Bank has been trying to provide funds for the housing sector. And I can tell you, it has not been working. They are not committed and so people don't have confidence in the scheme. Many have had money put in and a lot of things are brought in to frustrate them later. To correct this anomaly, the role of the Federal Mortgage Bank should be redefined as a discounting window so that when mortgage banks finance medium houses and loop all the investment together, they can take this to the Federal Mortgage Bank for rediscounting. But there is a lot of mistrust now. A lot of people have not been getting service from them, even the mortgage banks on the ground have not been doing that.
So, how do you intend to be differentfrom the pack?
We are going to loop the deposits and with adequate capitalisation, use the equity to deliver mortgage to people. We will then take the papers to Federal Mortgage bank for reimbursement. We believe that people's confidence in mortgage institutions will be brought back in this manner, by selecting only few reliable clientsJof N2 million, N4 million worth or more. Once the market sees that many are holding the license, confidence will be restored. You see in this industry, people need to be proactive. Rather, what you find is that people are waiting on government and they don't have the equity. But few houses like ours that have good shareholders with good track record and goodwill are in for good business.
There were so many nzoffgage institutions i'' the early 90s. What happened to them?
Many went under. The ones on the ground now are the ones that are adequately capitalised.
Are you in paffnership with state governments in providing houses for the people. Can we have a repeat of the Jakande success for low income earners?
We are looking [nto that actually. But again you will agree with me that Jakande was unique. He adopted the Western Regional system of direct labour. We have however floated a property company called Laser Property Company and by September this year it should be operational. We will recruit qualified engineers, surveyors, builders and with that focusJwe can be in partnership with state governments.
Do we really have a moffgage policy in this country that will guide such partnership?
I can say that before now, the government was paying lip service. You remember Housing for all by the year 2000. The year came and people were still homeless. But since Obasanjo's second coming, with the policy being put in place with Professor
Mabogunje's committee, I think a new impetus has been added to the efforts. In fact as I am talking to you, there is a conference going on in Abuja that is looking at the policy with the view to fashioning out the way forward. So, if the tempo is maintained we can see a good precedence laid down. This policy framework will involve housing delivery by both the private and public sectors. I however believe the Federal Mortgage Bank should be proactive. The present MD is a positive person. I know him well enough as a former colleague banker. I believe he will be able to work with serious mortgage institutions through which the Federal Government could reach out to the ultimate goal of providing housing to the middle and low income earners.
As a banker, I want to ask you, should banks merge to curb further distress?
Why not. If in the developed economy of the world, banks merge, why not here. If it will enhance adequate capitalisation, more service delivery, why not, instead of dying individually. I tell you, the banking distress distortion we had in the late 90s and late 80s thG] can't happen any more. The industry toady is wise, the information technology'that is vailable has gone up, accounts can be monitored, technically we can talk of faster and improved services. The capitalisation has been mandatorily beefed up and don't underestimate the fact that no matter from which angle you look at it, the country is more politically stable unlike the period of military instability. And the CBN knows it is better to manage any red signal in any bank since any bank failure is now synonymous with CBN failure too. I believe we have learnt from the lessons of the past. The CBN also has the collateral power to reinject capital even if it has to be by force. There are such instances one can quote. We are better secured in the banking sector now.
But the image of Advance Fee fraud still looms large. To open an LC now, you require a correspondent bank to certify your bank and it is all due to the lack of international confidence brought about by the 419 problem. By the time we are able to deal with the image problem once and for all as a country, I can tell you the coast will be clearer.
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