National Housing Programme : FG to embrace mortgage system to ensure affordability , says Fashola
NATIONAL HOUSING PROGRAMME: FG TO EMBRACE MORTGAGE SYSTEM TO ENSURE AFFORDABILITY , SAYS
The Federal Government plans to
embrace the mortgage system to drive the on-going National Housing Programme when
it finally comes on stream, Minister of Power Works and Housing, Mr. Babatunde
Fashola SAN, said in Abuja at the weekend.
Fashola, who spoke after the
inspection of sites and building materials production facilities of some of the
Private Sector partners in Housing Development in the Federal Capital Territory,
assured that when the scheme takes off, government would issue mortgages which
would be tied to the incomes of prospective beneficiaries.
Fielding questions from newsmen
after the exercise which took the inspection team to the sites of Brains and
Hammer Limited in Gwarimpa, Life Camp and Galadimawa; Citec International Estates Limited’s sites
and building material component manufacturing facilities in Gwarimpa; and Le
Chase Morgan/ Net Construct’s Sunny Vale in Apo, the Minister said government
was already putting measures in place to strengthen the Federal Mortgage Bank
to be able to handle the programme.
Fashola, who expressed delight
that the bank was already on a recovery trend after six year of loss balance
sheet, hinted that government would inject fund into it to enable it
recapitalize as soon as it returned to clean books and could expand the Housing
Fund under its management.
According to the Minister, “The new management
of the Federal Mortgage Bank, still in an acting capacity, has reversed the
loss balance sheet of the company and for the first time in about six years,
they are returning surplus from deficit in billions; they have a surplus of
about N472million as at Q3 from N3-4-5 billion negative position”.
“So once the bank goes back to
clean books and expanding the housing fund which it is managing, government can
say, as a matter of national policy, ‘look, capitalize, we will inject fund
just as we have done with Bank of Industry and we are planning to do with Bank
of Agriculture, we can do the same thing”, he said adding, however, that although
the possibility was there, there must be a market in which to spend the money.
The Minister said embracing the
mortgage system in the Housing Programme would also bring relief to the
ordinary Nigerian worker as it would move the society away from the system
whereby landlords demand rent in advance from tenants who receive their
salaries in arrears.
Fashola told the newsmen, in
response to a related question on why people who collect salaries in arrears
would be expected to pay rent in advance as currently prevalent, “In our own
scheme when it starts, we hope we will be in a position to issue mortgages and
if you have a mortgage, clearly it can only be tied to your income which is in
arrears”, adding, however, that how much progress the country could make as a
nation would depend on how much love Nigerians would want to show to themselves.
He declared, “So, if I build a
house and I know you are going to be paid at the end of December and I tell you
to go and bring a rent up to 2017 that you haven’t worked for, do I really love
you? So let us show the kind of nation that we want”.
“What does a landlord lose if
he tells the employer of his prospective tenant to guarantee deduction of the
money from the man’s salary at the end of the month? If we can reach that kind
of arrangements it will give a lot of people relief because that is the kind of
thing that causes inflation, hiked prices”, the Minister said adding that in
many parts of the world people pay their house rents when they collect their
Noting that the advance payment
of house rents fuel inflation, the Minister cited the example of a worker who
has to pay N17,000 in advance to rent a room, adding, “He must be looking for
all sorts of ways to make it. Anybody he too has to render service, he just
gives a cut throat price and the person then passes it on”.
He urged landlords and home
owners to reflect the fact that by doing so they inflict pains on fellow Nigerians
adding, however, that to the extent that there are also bad tenants who would
rent a house and the landlord would have to be in court for 10 years just to
get him out as a result of rent default, government would find a balance.
On the readiness of the local
housing materials manufacturing and building partners to meet the nation’s
housing demands, Fashola, who said government was now at the stage where
letters of awards were being issued, said since there was already a design, the
builders would be told that once the design was validated then they would
embark on mass production using polystyrene and other locally manufactured
Pointing out, however, that the
typical concrete block models was being used to start with, the Minister
reiterated, “Once we validate the designs then we do mass production”, adding
that polystyrene models were not being used at this stage until when production
was ready for industrialization. “That is what polystyrene brings, we
industrialize construction”, he said.
The Minister, who also stressed
the importance of the cost and the delivery time of the houses, said the
partners were being given the government designs to ascertain how fast and at
what cost they could build and sell the houses with the designs adding that
government could then ask them to build for it to buy on behalf of the people.
He noted that Citech, one of
the building component production partners, promised to bring their cost down
by 10 per cent, a reduction he described as significant for residential
housing. He added, however, “But it is not only cost of building but also
delivery time; because that is when the deficit then comes under threat; we can
now assault it vigorously with industrialized capacity”.
Fashola, who said there was
need to develop a system, noted that the models by some of the partners doing
industrialized capacity would bring down the construction time and also reduce
some of the costs, adding, “So we are giving out that design now of our own
housing to them to say go and look at these designs, can you build it better
and cheaper than us?”
“As soon as they can show us that they can do
that, we are going to the stage where we would say to them, ‘build, we would
buy’. So if they have government as a ready buyer, it then becomes easier to
contemplate a situation where they will finance because there is a guaranteed
market”, the Minister said adding that the Federal Mortgage Bank would then do
its core job of funding demand.
According to the Minister,
there was need to address the supply side first before the Mortgage Bank would
be asked to come in and do its part. He declared, “Thought out differently, if
the Federal Mortgage Bank issues 100,000 mortgages to workers today, there are no
100,000 houses waiting to be bought; so we must address the supply side first”.
Fashola also emphasized the
need to “re-sensitize” and “re-dimension” Nigerians in terms of what should be
their legitimate expectations concerning what government could do and what it
should do by way of the provision of infrastructure pointing out that it would
be impossible for any government to provide the entire infrastructure needed by
According to the Minister while responding to a question
on how far the government in providing infrastructure support to private
developers, “In cities, for example, part of the responsibilities for
infrastructure like roads belong to the state governments, some belong to the
local governments; and so long as we have those clearly defined
responsibilities for provision of infrastructure, you can’t, in good faith,
begin to encroach any body’s jurisdiction”.
“So we have to understand this.
What we must do is to continue to manage this kind of communication with
members of the public”, he said adding that in his recent meeting with members
of the Nigeria Labour Congress, he urged them to start the process of
re-sensitization of ordinary Nigerian’s “so that we redimension their
legitimate expectations; what they should legitimately expect in terms of what
government can do and what it should do”.
The Minister reiterated that as
much as nations try to increase the number of house ownership and reduce the
number of rentals, not everybody could be a house owner in terms of
affordability, adding, “Nations try to improve employment and therefore provide
shelter by ownership and by rental; but some people may have to rent for life
and we must find a system that responds to that market need”.
Urging the Private Sector to also
look at that as an investment opportunity, Fashola said it might also be a very
useful area for very sensitive funding like the Pension Fund that requires
quick returns so that it could pay pensioners adding that it may be useful to
invest some of the fund in build-and-rent-to-own so that payments would be made
The Minister, who recalled the
recently concluded Habitat 111 Conference in Ecuador where, “we articulated
that in the National Housing Policy, affordable housing was the way to go”,
said what was missing was the programme that could deliver Affordable Housing
adding that government was now developing that programme, including design,
building types, cost and supply.
Asked why he was visiting the
sites and facilities of building development companies from time to time,
Fashola said he was at the sites to keep his own side of the bargain to
ascertain the authenticity of the claims of many of the sponsors, during the
Ministry’s Affordable Housing Summit, who had said they had the capacity to
build. “I said I would come and see what they are doing; I am keeping my own
side of the bargain today. So I will be taking it in bits and pieces now we are
here”, he told the media team.
Reiterating that “no government
in the world has ever been able to unilaterally supply the needs of the people”,
Fashola cited transport where there is both public and private transport,
Health, where there are government hospitals and private hospitals and the Oil
Sector where the NNPC has said it could not supply everybody’s fuel and so must
have independent marketers to fill the gap.
The Minister declared, “The
same thing has to happen here if we really want to solve the problem. So we are
going to need the Private Sector to build. What is missing is how we will
converge this Private Sector with the market so that what they build is
affordable to all the people”.
“We see five bedroom houses;
majority of the people who need houses are not look for five-bedrooms, they
cannot afford it. Majority of those people are workers like you. How can we fit
their incomes into a programme that attracts these people to want to supply
them?” he said adding that those were the issues being addressed in the
Explaining that Acceptability
and Affordability were at the core of the Housing Development, Fashola
declared, “So we can bring our cost; we can meet the market; because when we do
that the Federal Mortgage Bank will do its work. Our work will now be more of
research, assisting to improve design qualities that reduce cost”.
He recalled the Citech
industrialized construction sites, where, “end to end, from iron mongery to cement, to
interlocking blocks, to furnishings, to roofing” the company has everything in
one place including patching plants for its roads and concrete rings for waste
treatment, among other building accessories, adding, “So it is ready to go”.
“We saw doors, we saw windows
too and we saw window nettings too. So that is more of what we want to see. Not
just buildings but now also supplying demands for all those people who do not
want to get involved in manufacturing of construction materials. They may also
choose to industrialize but we want to see more of the Citechs using
polystyrene”, he said.
Fashola expressed delight over
the existence of local capacity development programme in the housing sector
like young people engaging in apprenticeship in the factories of some of the companies
adding that focus should be more on those kinds of stories “because, whether
you like it or not, in spite of the depression, people like these are
investing, they are moving on, they are committed”.
The Minister again declared, “Instead
of fighting, let’s come together and build this country; we can do it. In all
of those sites we saw people at work; that is what interests me, that is what
we should do, that is what interests our team; many more people getting back to
work and fewer people fighting”.
Noting that of the three sites visited,
two were being dominated by women, Fashola expressed joy that more women were
now getting involved directly in what traditionally was men’s job adding, “Again
people are getting on with their lives; it’s tough but those who are trying to
distract and just complain, should learn one thing or the other from these
The Minister recalled what is
now going on in the Agriculture Sector especially concerning rice production
adding, “So it is not a lost cause. Go and ask the farmers now, they are
getting more money in their pockets. So perhaps those of us who are still here
who don’t want to get their hands dirty, if you don’t want to get your hands dirty
you won’t get rich”.
“So you have to be ready with
your jeans, with your hard hats and with your hands because it is a lot of work
to do. Mining, you have to get your hands dirty; oil exploration, we have to
take it over, slowly and gradually we have to go and get back nature’s gift for
our own use”, he said.