The World Bank and Central Bank of Nigeria (CBN) have unveiled plans to collaborate with a view to reviewing the nation’s Land Use Act and creating a more conducive environment for housing sector’s growth.
Already, the Breton Woods institution has extended a $300 million lifeline credit to the country for the Nigerian Housing Finance Programme (NHFP) to improve mortgage finance and refinancing regime.
The CBN yesterday confirmed that the credit line would provide a guarantee to mortgage institutions that credit to customers will not be unpaid by the beneficiaries.
In addition to the guarantee by the apex bank, the two financial institutions, in partnership with the Nigerian Mortgage Refinancing Company (NMRC), the Federal Mortgage Bank of Nigeria (FMBN) and the Federal Ministry of Justice, flagged off the review of the Nigerian Land Use Act.
The move is intended to remove obsolete clauses in the Act that impede investment in mortgages in the country.
A two-day workshop on the law review exercise which started on Monday and has as its theme ‘Creating an enabling environment for the growth of the Housing and Mortgage sector: The need for Land and Law reform’ seeks a new model mortgage that will also address foreclosure and other issues in the sector.
In her remarks at the forum, CBN’s Director of Banks and Other Financial Institutions Supervision Department, Mrs.Tokunbo Martins, said that the apex bank would underwrite part of the $300 million risk of the NHFP.
She clarified: “CBN is the project implementing entity of the NHFP and the NHFP is meant to re-fund the primary and secondary markets for mortgages. It is a public-private partnership and we have a loan from the World Bank. So, CBN itself is not putting anything in directly.”
The Head of Nigeria Housing Finance Programme domiciled in CBN and Head of the Implementation Team, Adedeji Jones Adesemoye, explained that the major driver of “the programme, NMRC, funds (N8.2 billion and N11.1 billion) from the Nigerian capital market to refinance the mortgages that have been financed by Primary Mortgage Institutions.”
This is even as the Director, NMRC, Mrs. Chii Akporji, charged the state governments to take some bold steps to create the enabling environment for mortgages and housing investment to thrive in the country.
She explained that there were number of steps, including the issues of land titling, property registration and instituting a foreclosure mechanism, amongst others, that are the key things that state governments should look into in order to reform the nation’s mortgage and housing sector.