Elsewhere, especially in
the advanced economies of the world, housing finance is synonymous with
mortgage, because in such societies, the only known way of buying and
owning a home is by applying for, and accessing a mortgage facility.
In Nigeria, the story is
different. This is a country where home ownership is realised almost 100
percent from own savings or through communal and co-operative efforts.
In Lagos, for instance, a
city of about 18 million people where over 60 percent of this population
lives in rented accommodation, unconfirmed report has it that about 86
percent of the housing stock in the city is funded from household
income.
Experts have revealed that
housing finance by public authorities in Nigeria is about 10 percent;
mortgage banks contribute about 2 percent, while contribution from banks
and other institutions is insignificant.
In a comparative analysis of
what obtains in Nigeria, Ghana and South Africa, Sonnie Ayere, CEO, Dunn
Loren Merrifield, notes that in South Africa, mortgage contributes
about 40 percent of housing finance while in Ghana, our much smaller
West African neighbour, the contribution is 3 percent.
Ayere, who spoke at an
economic forum in Lagos, explains that the low mortgage contribution to
housing finance in Nigeria is the cumbersome and unfriendly land
administration in the country, pointing out that Nigeria ranks highest
in property registration and construction permits.
“Nigeria is ahead of all
other African countries in procedures legally required for registering
property; it takes about 360 days to register property here as against
Ghana’s less than 10 days,” he says, adding that in Lagos, the cost of
registering property is about 15 percent of the value of the property.
Ayere points out that there are altogether 16 stages and 60 steps to getting
a property registered in Lagos, eight stages and 30 steps for each of
the lender and the borrower, stressing that this explains why it is
difficult to get mortgage for housing finance.
This, he
says, is against what obtains in other economies including Ghana and
South Africa. “Ghana before now had a dysfunctional land administration,
long and expensive procedures that lasted up to five years and
involving six different agencies supervising which resulted in
inefficient state land bureaucracy and customary tenure,” he says.
When,
however, government instituted reforms, he points out, property
registration was cut to 34 days and queues at the lands commission
disappeared, making it possible for the mortgage sector to thrive. In
Egypt, he adds, government identified high fees and inefficient
government agencies that hindered the formalisation of real estate as a
major issue and sorted it out by reducing property registration fees;
simplifying the property registration process thus encouraging citizens
and companies to obtain titles.
Ayere,
therefore, calls for discarding of multiple verification payment,
deployment of Global Information Services (GIS), making payments with a
single receipt, improving capacity building and significant investment
in technology.
Developers and mortgage providers at the forum could not agree more, and according to
Hakeem
Oguniran, managing director, UACN Property Development Company (UPDC)
plc, there are five drawbacks to housing finance including cost,
character, capacity, collateral and conditions.
Oguniran
states that the problem with land registration was much with the system,
explaining that the system is people-driven and not process-driven. He
recommends that there should be one-stop-shop for perfecting title and
should be made business-like.
Abimbola Olayinka, MD/CEO, Resort Savings and Loans
plc, says the Land Use Act should be used to empower the people and not
as an economic and political tool by state chief executives, adding
that the Act should be taken away from the constitution so that it could
be easily tinkered with.
He recommends that land
administrators should adopt what he called three-one-three strategy for
land registration, explaining that land titles should be perfected in
three days at one central place, and at the cost of 3 percent of the
value of the land.
Chuka Uroko
Comments
Post a Comment