The Nigerian Government on Thursday officially began the first phase of its affordable housing scheme of 10,000 units of houses.
The project which is funded by the newly established Nigeria Mortgage Refinance Company (NMRC), will enable Nigerians to buy houses at affordable rate. It would be implemented in the 14 pilot states listed by the company- Abia, Anambra, Bauchi, Bayelsa, Delta, Edo, Enugu, Ekiti, Gombe, Kaduna, Kano, Kwara, Ogun, Ondo and FCT.
The Minister of Finance, Dr Ngozi Okonjo-Iweala while speaking at the event in Abuja said with the flag-off, low income earners would begin to have the opportunity to own their houses under a flexible long term mortgage plan.
Based on the scheme, a unit of two bedroom apartment might be sold for between N4.5m and N7.5m depending on the location and cost of land, while that of a three bedroom would be sold from N8m.
To be eligible, applicants must show proof of a regular income, tax compliance, specified combined household income and others.
"Applicants who meet the eligibility requirements would be handed over to the Primary Mortgage Institutions (PMI) for final processing, the PMI will originate the mortgages to be backed or refinanced by the Nigerian Mortgage Refinance Company."
The minster said with the Mortgage Refinance Company, Nigerians would now be able to afford a home under a long term mortgage plan.
She said the processing time for application for the mass housing project had been reduced from between six and 18 months to just six weeks.
“We want Nigerians to own their houses at affordable cost. The NMRC mission is to provide long term funding for the housing sector.
“Since the ability of banks in providing mortgages is limited by the fact that 80 per cent of deposits does not ensure great level of sustainability in providing resources for the housing sector, the NMRC is here to provide a conducive financing mechanism that can allow people pay mortgage for up to 10 to 15 years.
“So instead of people not being able to own houses as they would have to pay up in 12 or 18 months, we are changing that now so that for 10 to 15 years, people can be able to pay for their own houses,” she added.
The NMRC was established to provide mortgage lending institutions with access to long-term finance at affordable interest rate, thereby, enabling mortgages to be issued by the institutions to Nigerians at longer tenures and affordable rates.
It has a take-off grant of N50 billion.
N40 billion ($250 million) loan from the World Bank, has been given under a 40-year tenure with a moratorium of 10 years and would attract zero percent interest. However, a commitment fee of 0.7 per cent will be paid on the facility.
In addition to the take off grant from the World Bank, other investors that are raising the initial equity of another N10 billion include the Ministry of Finance Incorporated, Nigeria Sovereign Investment Authority (NSIA), commercial banks, mortgage finance institutions and the International Finance Corporation, among others.
The N40 billion and N10 billion put together by the World Bank and other investors would be supported by Tier 2 capital raised by NMRC through the issuance of a N50 billion bond in the capital market by July this year to increase its total capital base to N100 billion and enhance the ability of the institution to buy and secure the mortgages created by primary mortgage institutions.
Already, the Nigeria Sovereign Investment Authority (NSIA) has approved an equity commitment of N1.6 billion through its Nigeria Infrastructure Fund (NIF) in the company. This is however subject to applicable regulatory clearance by the SEC.
Reduce housing deficit
Also speaking at the event, the Minister of Lands, Housing and Urban Development, Mrs Akon Eyakenyi said the roll out was a significant step in the Federal Government’s bid to reduce housing deficit which is currently placed at 17 million.
She said the ministry was implementing other complementary projects to help provide affordable houses for Nigerians.
The Minister said the land title system in the country was being reviewed to meet the needs and expectations of Nigerians.
She explained that various committees have been set up to fast track the implementation of the 10,000 pilot scheme of the NMRC, update a land data base and conduct a housing census in order to keep track of government’s effort to reduce the nation’s housing deficit.