'Housing Needs More Than Increased Bank Capitalisation'
Housing
On bank capitalisation as it affects real estate The directive that banks should recapitalise to the tune of N25 billion and the withdrawal of government and parastatals funds from the banks have led already to illiquidity in the economy. This has slowed down the demand for property. In the long run, the new capital base may engender accelerated development in the real estate sector but the increase in the capital base of the banks will not necessarily translate into upswing in supply and demand for property. For that to happen, other institutional reforms must take place. If you are going to have an expanded property market in the country, you cannot do without a virile and viable mortgage institution. In the long run as well, we cannot have a robust supply situation if we continue to depend on massive importation of building materials. The totality of the picture I am trying to paint is that for a healthy property market environment to prevail in terms of sustainable supply and demand, it will take much more than recapitalisation of the banking sector. It will entail a lot of other reforms if we are to benefit from the massive build up of capital in the banking sector.
On provision of mortgage in housing delivery process
My own opinion about mortgage institutions in Nigeria can be likened to a popular proverb that what you see is crusade, crusade and crusade all the time, yet you never see a change. There has been a lot of policy formulation, guideline pronouncement, but once a nation lacks the practical and political will to midwife a revolutionary policy, there is no amount of paper work that will create sustainable effect.
What I am saying in short is that we already have much more than sufficient groundwork and policy paper on mortgage. It is very essential for government to put its feet down to ensure their implementation. For instance, once you set up primary mortgage institutions and others like that and there is no regulatory, enforceable authorities that make sure that any fund given to then is strictly tied to the property sector, that is when they divert the funds to trading and the purpose of setting them up in the first instance is lost.
The other issue is that there was a time in this country when there was sectoral allocation to mortgage whereby banks like UBA, First Bank, IBWA (now Afribank) Union Bank and so on and so forth, would be mandated to devote between 1-5 percent of their loan port-folio to housing. I feel strongly that a developing economy should not have abandoned that kind of policy on the premise of liberalisation. We can go on and on mentioning those factors responsible for the epileptic situation problem we have in the mortgage sector.
But do the PMIs have enough funds?
Well let us talk straight. What I am saying essentially is that we must develop and deploy social-political will to enthrone mortgage institutions as the only vehicle through which majority of Nigerian homeowner class can participate in the housing sector. When you view this viz and viz the monetization policy and others, unless you emphasize it, a man can put in 30 years of sound service in the public service without having a roof on his head. That has to be taken care of. The other one, which we all know is all gamuts of problems is that, left, right and centre, properties are being embarked upon and are being abandoned in their various stages of completion. All these amount to waste of natural resources. If we are going to embrace a culture of organized corporate property developer, it means that if a certain section of Lekki is opened up, predominately those who are going to operate there must be those viable property development companies to the extent that when a phase is finished, then they can proceed to the second phase. Go to Badagry, Agege, Lagos-Ibadan expressway and Lekki, thousands of properties have been abandoned at various stages of construction. It is a national shame.
On monetisation and the property market
Monetisation has affected the property market substantially. It is the only instrument of government through which we know the real market worth of properties. A situation where the legal department or administration department of government or large corporations would scout for property and present a paper that you and I know is worth about N500,000.00, is being rented for N1 million for whatever reasons, has stopped. Also a situation where a man earns N50,000.00 monthly and is being housed at government expense in a house rented at N250,000.00 per month to me is an anathema. It is the same thing where a man is being housed at government expense for 20 years and is being retired without a home of his own. It is a big problem both to himself and the nation. But Monetisation has given the civil servants the freedom to live where they choose to live and can afford with the housing allowance that they receive. So I fully endorse it.
Some real estate practitioners complain that monetisation has taken business out of their hands.
I don�t think that any serious professionals in this economy like myself will approach this issue from that angle. If you are a serious, honest businessman, whatever product you deliver into the market, there must be a demand for it. What people have been riding upon is what I would call artificial property market and this nation cannot sustain it. Now we have a level playing ground in terms of house accommodations and the rent.
On proliferation of property development companies
Some people have looked at this as progress. In a way it is; but in another way, it is disaster. Housing estate proliferation in Nigeria is unplanned, unco-ordinated and is likely to backfire in the short run. Every notable developer now concentrates on the Lekki axis. The issue is that we do not have sufficient robust market that can focus on the Kind of prices they are talking about. We do not have sufficient infrastructure in terms of road network, electricity, water and communication to actually back up these estates; and a situation where the largest city in the country is developing on the basis of mono-axis or single polar development is anathema to the concept of healthy environment. The houses they build are hardly affordable. It amounts to mal-development. A property market should be able to take care of all sections of buyers and sellers. If Lekki is so attractive, I do not see why the government would not try to make other axis attractive for developers to come to operate in. I would have thought that the potential value along Badagry expressway is higher than Lekki for the single reason that it is the only link between several national communities - Benin, Togo, on one hand; and Nigeria, on the other.
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