15 Primary Mortgage Banks tasked on recapitilisation, capacity building

No fewer than 15 Primary Mortgage Banks (PMBs) in Nigeria have been urged to recapitalize and build capacity in order to utilise the Ministry of Finance Incorporated (MOFI)’s N250billion  Real Estate Investment Fund.

The Managing Director of MOFI, Armstrong Takang, while making the plea to mortgage bankers in Abuja, urged operators of PMBs on the need to step up and scale up their game to solve the problem of mortgages among Nigerians looking for accommodation.

“They must step up and scale up their game if we’re going to solve that problem.,” he said.

He explained that going by the Central Bank of Nigeria (CBN) ‘s rules of how much money should be extended to the primary mortgage banks in the country, it was found out that the latter lacked capacity to utilise the funds.

Emphasizing this at the International African Housing Show in Abuja, Armstrong said:”For those of you who run primary mortgages, I beg you, please recapitalise your institutions, because when we look at the current CBN rules of how much money we can extend to you, you don’t have capacity to utilise the funds we’re going to put out there.

 “So they have to recapitalise, put the right governance, bring down your Non Performing Loans (NPL)s to be able to access this cash.

“It pains me that we have money sitting there, but not enough PMBs have the capacity to take the money .So that’s why I’m saying that we let’s have some conversations amongst ourselves.

“I foresee that if we do not address the issue of the capacity of the primary mortgage banks, we’ll have the same situation that we have in the electricity sector where a generation capacity is over 14,000 megawatts. But there’s a restriction in our transmission capacity, so it doesn’t matter even if you generate the power, you don’t have the capacity to transmit it.”

“Same way, if we do not strengthen the lending capacity or the financial capacity of the primary mortgage banks, it doesn’t matter how much money we raise. Because we must lend this money through the PMBs. We don’t lend directly, we go through the PMBs because one of the major objectives by Mr. President is to say how do we strengthen this sector? And how do we provide liquidity for those who are in this sector?”.

For the mortgage banks that can demonstrate capacity, the MOFI’s managing director said that MREIF is their oyster because there’s enough resources out there.

“So we would like to see your capacity go up by at least five times because even at the N250 billion, we are struggling to find enough PMBs that have the capacity to take the money,  that also have low NPLs and their cap is also make sense.

“Most of the banks on the other hand that have the capacity are not interested because they are used to working with funds with higher margins. You cannot afford to have too much margins in the real estate sector and still keep the rates down,” he said.

There are 15 licensed mortgage banks in Nigeria.

Armstrong said the nation would need  credible developers to drive the process.

“I’m sorry to say,  the fact remains and based on the experience of people in the market, a lot of our developers are cowboys. They are not serious about businesses, because for you to take somebody’s money and then you hold the money for six months and come back to them and tell them that, by the way, prices have gone up. You either take your money back or there’s no house for you. I think that is dishonesty at the highest order,” he said.

This manner of behavior, Armstrong said that it would stifle growth in the sector, diminish confidence of consumers and take away trust.

“The second element of MREIF is the guarantees to developers. We are giving developers of the guarantee that allows them to go out there and borrow money to do their projects. But if I guarantee, you will not compromise on the standards for extending the guarantee because we’re going to do credit checks on every developer before we extend credit to you.

“So the more developers build credible organisations and establish credibility, the more they can access this.  That for me is the second bottleneck for the growth of the sector

“So let us not just be talking about the fact that you have 20 million housing deficit. The question is what do we need to do to make sure we fix that? If we provide all the resources and all of these bottlenecks remain, we will still be where we are. So we must fix that as well.

The MOFI’s managing director canvassed for regulation in the real estate sector so that consumers can feel secured.

“Finally, there have to be some regulations so that consumers feel protected.

“As a consumer, if a developer dupes you, what is your recourse and how quickly can you get justice? So there has to be regulation and examples have to be set for those who are misbehaving.

 “I believe that if we address some of these issues, we will make significant progress in addressing the housing problem that we have in Nigeria,” he said.

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