By YINKA KOLAWOLE
A liquidity facility vehicle aimed at injecting funds into the Nigerian mortgage sector is expected to become operational in the third quarter of this year, with an initial capital of N20 billion.
President of Mortgage Banking Association of Nigeria (MBAN), Mr. Abimbola Olayinka, said the primary aim of establishing the firm – Nigerian Mortgage Company (NMC) – which is an initiative of MBAN, in collaboration with the International Finance Corporation (IFC), World Bank, Central Bank of Nigeria (CBN) and the Federal Ministry of Finance, is to create liquidity for the mortgage sector.
“The initiative came from MBAN and that vehicle should become operational by the third quarter of this year. Initially, the statutory plan is to start with about N20 billion and then it will grow. It’s going to be far more than that, on a yearly basis it will grow,” he remarked.
Speaking recently at an interactive session, in Lagos, Olayinka said stakeholders came up with the idea of starting the company after identifying paucity of long-term funds as a major problem inhibiting the growth of the mortgage sector in the country. “The mortgage sector has some peculiar problems.
One of them is long term funds, another one is liquidity, interest rate, foreclosure laws, land use act, so many. But we in the mortgage sector decided that let’s take one and deal with it. One of the key problems, one of the major problems is liquidity. If I have N5 billion and book mortgages of N5 million, if I give out 1000 mortgages, N5 billion is gone. And when I spend everything on mortgage, what happens after that?
“So, we said that liquidity is the key thing, we need to create a vehicle which after creating a primary mortgage, we can now offload those mortgages onto that vehicle and the vehicle will create liquidity, inject funds back, either by buying the mortgages off me or taking the mortgages off me in form of recount back with me and then they can now pull the mortgages back together in terms of mortgage-backed securities or mortgage bonds and offer it to the capital market so investors can also invest in it.
That is the primary aim of that company, to create liquidity. We are collaborating with IFC, World Bank, Federal Ministry of Finance, and Central Bank of Nigeria (CBN).”
Olayinka, who is also the Managing Director/CEO of Resort Savings & Loans Plc, asserted that the mortgage sector is the future of Nigerian economy. “The mortgage sector is the future, whether we like it or not, it’s the future. It’s just that we have a lopsided policy in place here. Out there in Europe and the US, mortgage banks are the biggest banks. Because everybody needs a roof over his head and mortgages are the in-thing over there.
The mortgage sector is a place to invest in. It’s a long-term investment but I can guarantee you that there is a steady, stable stream of income coming from the mortgage sector, because there is nothing you can get wrong in bricks and mortar. Once the house is there, even if the houses are not being lived in by you, you can rent it out. There will be a stream of income,” he declared.
The MBAN president noted that without such a liquidity facility vehicle in place, it will be almost impossible to bridge the current huge housing deficit in Nigeria, estimated at about 16 million units.
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