Ayo Olowookere, current president of Mortgage Bankers Association of Nigeria (MBAN) and MD/CEO, Imperial Homes Mortgage Bank, is a thorough-bred banker with over a decade in mortgage banking. In this interview with CHUKA UROKO, he shares insights on the challenges and opportunities in the mortgage banking sector in Nigeria. He also highlights areas the government can help the sector to play its role to ease homeownership burden in the country. Excerpts:
You are today the president of Mortgage Bankers Association of Nigeria (MBAN) which, in our view, is an exciting development. Why did you take up this position?
Why I came in, essentially, was to answer the call of my colleagues in the industry. We needed fresh ideas on the table. Of course, there’s also a need for leadership change because, generally, one can run a maximum of two terms. So, the former president had to leave after the election period. I thought this was a very important time for mortgage banks, especially those of us that have been in the industry a long time.
I’ve been in it for 10 years now, and 10 years at the top, running two mortgage banks as managing director. For the first time, I’m seeing a sort of government shift—being intentional and focused on mortgage banking. We saw the Federal Mortgage Bank of Nigeria (FMBN) talking about recapitalisation.
We saw the government stepping up, funding Family Homes Funds with over a billion dollars from the African Development Bank (AfDB). We also saw the Ministry of Finance Incorporated closing on its first fundraising—up to $50 million.
So, there’s a lot of activity in the housing sector, especially from the government. We’re also seeing the government actively playing on the supply side—like the Renewed Hope Initiative on housing by the Federal Ministry of Housing, where they’re planning to develop up to 1,000 housing units.
A lot of things are happening, and we we told ourselves that this is the time to put our house in order and be part of the happenings. This is a pivotal moment for us in the mortgage banking industry. That is the focus of why I think this is the time to be here. For instance, the African Development Bank (AfDB) is committing $160 million while the Ministry of Finance Integrated Real Estate Fund (MREIF) has raised N250 billion for on-lending to developers and home seekers as a form of mortgage.
Before you went for this position, you must have noticed gaps in the sector. What exactly did you notice that needed urgent attention?
It’s a gap in funding. The mortgage banking sector is not really active because there’s no availability of long-term, sustainably priced funds for mortgages. These products are long-term. Over the last two or three years, we’ve seen rates go up due to monetary policy actions. This has affected the availability of well-priced housing funding sources, because mortgage banks are in the same market, competing with everyone else for money.
To create risk assets—which mortgages are—you need long-term capital. But the current structure doesn’t support mortgage banking. So, mortgage banks have to improvise. We’ve been looking at all lending and financing opportunities, which we’ve been doing for a long time. Before, we were restricted to the Federal Mortgage Bank, but now there are more options available.
On the regulatory side, I’d say there’s been a disproportionate focus on commercial banks—reasonably so, because they account for over 90 percent of activities in the financial services space. But we’re now seeing renewed interest from regulators, which is welcome. They are now opening their doors and listening to us. We’re not asking for favours, just fairness, and to be able to operate without being unfairly limited.
Given the limitations you’ve just mentioned, what would you suggest for the government to do to make mortgage not just functional, but also attractive to homebuyers?
On the fiscal side, the government needs to harmonise efforts. Right now, there are too many players doing uncoordinated things. Ministries and agencies are working in silos. Sometimes, they even view each other as competitors, which should not be the case.
We need to sit down as stakeholders—government and private sector. Many people in government don’t understand this market as well as practitioners who’ve been in mortgage banking for 20–30 years. We see the customers every day. We did a launch for one of our platforms and over 260 people showed interest. We know why people can’t qualify and what support they need. But the government rarely seeks collaboration proactively; it’s always reactive.
For example, the Nigerian Mortgage Refinance Company (NMRC) was successful because mortgage banks were involved in its creation. It was bottom-up. Mortgage banks invested and helped to shape the model. NMRC now provides cheaper funding at around 16 percent. The Federal Mortgage Bank has also evolved because of its open-mindedness and willingness to collaborate.
We’ve also been working with Family Homes Fund. They initially weren’t inclusive, but they’re learning to engage mortgage banks. Collaboration must be intentional and continuous. Nigeria is due for housing finance reform, just like we had telecoms, pension, and subsidy reforms. Reforms like that created jobs, attracted investment, and transformed sectors.
We need a similar break from the past in housing finance. We need leadership reform to update legislation. For example, the National Housing Fund Act was passed in 1992. The Pension Reform Act came 12 years later—and look at the difference. The pension industry now manages ₦24 trillion from 16 million contributors. Compare that to the NHF, which has only half a trillion despite existing longer.
Let’s say we start this reform today; it could become our legacy. Nobody remembers who was the Minister of Housing in 2018, but everyone remembers the telecoms reform and the people behind it. We have an opportunity to do something meaningful.
The popular view out there is that the mortgage sector in Nigeria is struggling. People blame this on a number of issues many of which are conjectural. As an insider, what are the issues?
There are many issues, but I’ll highlight a few. One is the problem of effective demand. High interest rates make mortgages unaffordable for many. So, half the people who walk into a mortgage bank get discouraged and walk away. They might have, say, ₦10 million and need a mortgage of ₦30 million. But if they’re not accessing affordable loans through institutions like the Federal Mortgage Bank or Family Homes Fund—who offer rates blended at 16 percent or so—the monthly payments become overwhelming.
Another problem lies with policy—issues around property finance and land documentation. Perfection of title, planning permits, building approvals—these are all hurdles. The formalisation of these processes discourages people because they are long, tedious, and expensive.
Players also face competition for funding from other parts of the financial sector. Commercial banks, microfinance institutions are all chasing the same money with us. That limits what we can do. There has to be an intentional approach from the government, not just to support the supply side (as they always talk about) but also the demand side.
The government shouldn’t be the one building houses. They should support the supply side by empowering the demand side—people who want to buy homes. At a point, the Central Bank gave subsidies to commercial banks, identifying them as critical to the economy. If they had done that for mortgage banks—mortgages at 5-10 percent—a lot would have changed.
If the housing deficit is even just 9 million units, at ₦15 million per house, that’s ₦45 trillion. That’s a huge opportunity from which manufacturing, services, and finance would all benefit. This could help Nigeria hit its $1 trillion economy target.
The federal government at a time said it would collapse all the housing agencies into one efficient structure. But now we’re hearing about new agencies again. What do you suggest?
At the implementation level, many things are backed by Acts of Parliament. So reform isn’t simple—you need legislative changes, and that comes with ethnic and political complexity. But without going into those intricacies, the Ministry of Housing and Ministry of Finance need to sit with the president and set clear goals—say, “We want to give 1 million Nigerians access to affordable housing.”
Once the goal is clear, you appoint a presidential task force, like the one on tax, to coordinate everything. That’s what has worked in other sectors. Despite multiple tax agencies, the task force helped to harmonise efforts. We need the same approach in housing—one coordinating force with a clear mandate.
Now, let’s come back to your new role as president of MBAN. What did you meet on ground, and how do you intend to make a difference?
I don’t want to talk too much about what I met on ground. I was elected on February 27, and I enjoyed the trust of the majority of my colleagues—we do not take that for granted. We see ourselves as partners. In fact, the candidate who contested against me is now part of my team. He heads one of our committees.
We’re all focused on the mission ahead. Of course, I bring new ideas to the table, especially as someone who has been in the industry for 20 years. We’re building on what was inherited and positioning mortgage banks to play a more active role in national development.
