By Yinka Kolawole
The deteriorating housing development in the country has come under the attention of bankers, with some bank chief executives charting the way forward for the sector. They were speaking recently at the formal launching of the new mortgage scheme of the Lagos State government.
Managing Director, Skye Bank Plc, Mr. Akinsola Akinfemiwa, noted that the greatest challenge in housing delivery is easy access to land, which remains one of the most expensive inputs in housing construction.
The situation, he said, has led to frustrations in the process of acquisition of land from official sources and consequently, the development of a risky and expensive parallel market for land. “Such cost is eventually passed to the end buyers via expensive houses,” he noted, adding that the Land Use Act, as currently constituted, remains a major impediment to the flow of fund into the real estate sector.
He has, therefore, suggested that pending the review of the Act, government should fast-track the process of granting consent for mortgage assignments and other statutory approvals. According to him, government needs to enhance the provision of land and infrastructure while also exploring opportunities in the capital market to raise long term funds.
On her own part, Mrs. Cecilia Ibru, Managing Director/CEO Oceanic Bank International Plc, counseled that mass construction of houses should focus on labour-intensive methodologies as a tool of employment creation.
Such labour intensive methodologies, she said, are powerful tools for employment creation and productivity growth, which in itself is an important consideration for creating a mortgage framework for supporting the evolution of a seamless home construction sector.
“If we set ourselves the task of working with the construction sector to eliminate the production bottlenecks, so that we can produce 10,000 homes every year, it should cost between N50 billion and N100 billion. Once we do this within the appropriate and relevant production framework, we will be creating up to 200 million man-days of productive work annually, thus creating about one million jobs, this is a worthwhile pursuit.
“This programme would also engender higher levels of productivity and commitment in the work force because each member of the service would know that upon their retirement or disengagement from the service, he or she would have decent home to retire to. This would relieve them of the burden and need to engage in other lines of business that would have a directly negative impact on their productivity and commitment to duty,” she said.
However, Managing Director/CEO, UBA Global Market, Mr. Sonnie Ayere, is convinced the mortgage market would force the reform of land regulation in the country. He said issues like the current onerous process of obtaining a Certificate of Occupancy (C-of-O), lack of land surveys and high cost of land among others would, if addressed rapidly, gear up commercial and residential development and spur growth in the economy.
Mr. Aigboje AIG-Imoukhuede, the Group Managing Director of Access Bank Plc, also noted that the most important party to a mortgage is the mortgagee, who is the individual who buys a house with money borrowed from a financial institution.
“Mortgages imposes a certain level of financial discipline on the individual. It comes from the knowledge that there are certain unpleasant consequences of non-performance. The mortgage transaction involves a number of steps which expand the knowledge base of the borrower, these ranges from purchasing the house to negotiating the loans, and then arranging one’s personal finances to ensure loan repayment. In the process, the borrower is forced to acquire a level of financial knowledge and sophistication at par with citizens of the first world,” he explained.
