Bridging Nigeria’s Housing Deficit through Mortgage

In this piece, the Group Chief Executive, Cititrust Holdings Plc., Yemi Adefisan, takes a beneath-the-surface look at Nigeria’s 22 million Housing Deficit with practical steps on how this can be fixed through Mortgage.

With an estimated population of 198 million as at December 2018, and a housing deficit projected at between 17 and 22 million housing units, Nigeria’s private sector needs to participate actively and work with the government in tackling the deficit. While it is important for companies in the private sector to innovate and facilitate change within the sector, the government must create the appropriate environment and formulate policies that would help bridge the housing gap and encourage increased sector investment.

As conversations centre on this issue, the commitment of the Federal government to housing growth has improved with the commencement of operations by the Nigeria Mortgage Refinance Company (NMRC) to provide secondary mortgage market services to mortgage lenders and the introduction of various stimulus packages, which include the N500billion to be provided to the Federal Mortgage Bank (FMBN) to meet the housing deficits needs, the Family Homes Fund (FHF) scheme (an initiative of the Federal Ministry of Finance); the commencement of operations of the Mortgage Warehouse Fund Limited and the take-off of the Nigeria Mortgage Guarantee Company (NMGC) to provide additional insurance and promote the ease of doing mortgage business which has been adversely affected by the existing Land Use Act.

The outbreak of the COVID-19 pandemic in late 2019, which led to lockdowns in different parts of the world gave rise to renewed housing opportunities; as individuals and businesses alike began to adapt to the new reality of our environment, professionals began to demand for larger apartments that could accommodate a home office. This was accompanied by a gradual shift towards garden-style communities that offer environments fit for social distancing with open spaces, lower density, and greater air circulation.

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To reduce the severity of the effect of the pandemic on various sectors of the Nigerian Economy, the Central Bank of Nigeria (CBN) in April 2020 said it would focus on bridging the housing deficit in the country by facilitating government intervention in three critical areas namely housing development, mortgage finance, and institutional capacity to boost job creation, household incomes and economic growth.

To achieve this, the banking sector regulator said it would pursue the creation of a fund that will target housing construction for developers that provide evidence of profiled off-takers with financial capacity to repay. The current identification framework in the banking sector using the bank verification number (BVN) will be used to verify the information provided by the off takers before the developer can access the funds. It will also consider ways to assist the Mortgage Finance sub-sector while building capacity at the State levels for their land administration agencies to process and issue land titles promptly, implement investment friendly foreclosure laws and reduce the cost of land documentation, as these have remained major inhibiting factors in the provision of affordable housing in the country.

Amongst the mortgage banks championing the course towards reduced housing deficit in the country is LivingTrust Mortgage Bank Plc, a member of Cititrust Group. Currently, the bank is accredited by the Federal Mortgage Bank of Nigeria (FMBN) for the National Housing Fund (NHF) scheme and a subscriber to the Nigerian Mortgage Refinance Company Plc. (NMRC). So far, the bank has funded or directly executed projects worth more than N130Billion in mortgage loans (NHF, Residential Mortgages and Estate Development loans) from inception to date and prides itself as being supportive of numerous clients. Also, the bank has continually established a pipeline to partnership strategic relations with FMBN approved Estate developers and other reputable estate developers in the funding of exquisite residential properties all over Nigeria.

Cititrust Financial Services Plc invested into the bank- LivingTrust Mortgage Bank Plc in 2019 and became the majority shareholder, setting the stage for the bank to be more competitive with a wider coverage in its service delivery.

This move led to a name change from Omoluabi Mortgage Bank Plc to LivingTrust Mortgage Bank Plc, a member of CITITRUST Group, thus positioning the over 27 years old bank from a regional powerhouse to an emerging leading national player in the mortgage finance sub-sector of the economy. The bank was also amongst the four listed companies to be migrated to the growth board of the Nigerian Stock Exchange (NSE) in 2020 with the aim of leveraging on the exchange listings to raise long term capital, facilitate liquidity in the trading of its shares and provide a cost-effective platform to raise the capital needed to scale, attract investors, enhance its corporate visibility and regulatory structure that fosters growth.

The bank also witnessed the unveiling of a new website (www. livingtrustng.com) with enhanced capabilities for account opening, loan application and online repayment simulations which has increased the bank’s loan application and customer acquisition processes and aims at delivering superior quality products and services to all customers, regardless of their status and locations in line with the increasing cultural diversity of her fast-growing customer base.

As part of the bank’s digital transformation efforts, it has launched a new mobile banking smartphone application, TRUSTMOBILEPLUS with features that enable easy banking such as funds transfer, utility bill payments, airtime recharge, account statement and balance inquiry, amongst others; while it commenced the use of USSD *723# and onboarded numerous Automated teller machines (ATM) across her branches and other business units to enable customers gain unrestrictive access to their funds 24/7.

LivingTrust Mortgage Bank is also supporting the drive towards improving access to finance for MSMEs. As part of efforts to proffer solutions to the funding challenges faced by small businesses, the bank in November 2020 joined the league of other participating financial institutions appointed by the Development Bank of Nigeria (DBN) to access funds for on-lending to qualifying Micro, Small and Medium Enterprises (MSMEs) in the country.

The benefits of MSMEs funding include, but are not limited to, increased contribution to the economy in terms of output of goods and services; the creation of jobs at relatively low capital cost, especially in the fast-growing service sector; provision of a vehicle for reducing income disparities; development of a pool of skilled and semi-skilled workers as a basis for future industrial expansion; improvement in forward and backward linkages between economically, socially and geographically diverse sectors of the economy; provision of opportunities for developing and adapting appropriate technological approaches; and offer an excellent breeding ground for entrepreneurial and managerial talent.

In months ahead, LivingTrust Mortgage Bank Plc will be focused on consolidating on the gains of previous years, building a stronger balance sheet by deepening her core mortgage business, maintaining strategic investments and partnership with businesses complementary to her core services, strengthening customer relationships, digital transformation and driving strategy of being a market facing adhocratic organization.

Source: Proshare