Elsewhere, especially in the advanced economies of the world, housing finance is synonymous with mortgage, because in such societies, the only known way of building or 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 homeownership 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 about 80 percent of the 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 estimate 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.
Low mortgage contribution to housing finance in Nigeria is because of the cumbersome and unfriendly land administration in the country, making it rank highest in property registration and construction permits difficulties.
The country 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. In Lagos, the cost of registering property was, before now, about 15 percent of the value of the property.
Getting a property registered in Lagos involves long and cumbersome procedures, requiring about eight stages and 30 steps for each of the lender and the borrower and this is part of the major reasons for the difficulties in getting mortgage for housing finance.
This 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.
When, however, the country’s government instituted reforms, 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, 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.
To make mortgage contribute significantly to housing finance in Nigeria, governments at both the federal and state levels should start discarding 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 say this is a way for the mortgage industry in Nigeria 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 says the problem with land registration is 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 calls 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
