The Federal Government on Thursday approved the establishment of a Ministry of Finance Incorporated Real Estate Investment Fund, with an initial N250 billion to provide low-cost, long-term mortgages to Nigerians desirous of acquiring houses.
The approval was disclosed by the Federal Executive Council (FEC) meeting presided over by President Bola Tinubu at the Presidential Villa, Abuja.
Minister of Finance, Wale Edun, while briefing newsmen, said the fund is the basis for the revival and return of long-term mortgage financing to the Nigerian economy.
He explained that it would help fill part of the 22 million units housing deficit, create jobs, stimulate economic growth, and pave the way for other investors in the private sector to participate more in the housing construction industry, with huge benefits to the whole economy.
Edun stressed that long-term investors have the opportunity to earn market rates of interest on investment and market returns, market price-based rates of return on investment.
He added: “When I say low cost, we are talking about low double digits, maybe 11, 12%, maybe even less, depending on market conditions. And that will be achieved by attracting long-term savers, life insurance companies, maybe pension funds, within the limits of what is allowed, and other savers.
“Their money will be blended with low-cost funding that the government has access to, at 1% funds that are available for 40 years. And by blending the two, depending on what percentage of 1% money you merge with market-based interest rates, you will end up with affordable pricing on the mortgages.
“The tenor can be the likes of 20 years and more. It relieves Nigerians, who normally would be faced with almost 30% interest rates, and they would be faced with 10, 2, 3, or 4 years within which they have to pay back. Now, they will have rates closer to 10%, and they will have tenures over 20 years, and that will be a tremendous relief.”
Meanwhile, the Council at its sitting also approved a proposed budget of N47.9 trillion for 2025.
Minister of Budget and Economic Planning, Atiku Bagudu, explained that the approval is part of the Medium Term Expenditure Framework (MTEF) for 2025-2027, in accordance with the Fiscal Responsibility Act of 2007.
According to the Minister, the Council pegged the price of crude oil at $75, an exchange rate of 1,400 Naira to $1, and oil production of 2.06 million barrels per day.
He added that with a growth rate of 3.19% projected for the second quarter of 2024, the Federal Government will continue to tackle inflation, strengthen economic resilience, and provide more support for the economy.
“It also included a review of the 2024 budget implementation, where it acknowledged that a review of the implementation of the 2024 budget shows promising progress in revenue collection and expenditure management, despite lags in prorated targets. The overall trajectory shows that fiscal efforts are on track, with key non-oil streams performing better than anticipated.
“It equally included parameters for the 2025-2027 medium-term fiscal framework, which includes an oil price benchmark of $75 per barrel for 2025, oil production of 2.06 million barrels a day, as well as an exchange rate of 1,400 Naira to $1 and GDP growth of 4.6%. For 2025, the federal government budget estimate is for an aggregate expenditure of N47 trillion, which includes borrowing of N13.8 trillion, 3.87% of estimated GDP, and includes projections.
“Especially for the first time, provisions for contributions to the development commissions that have been passed by the National Assembly, or are in the process of being passed, have been included.”
Bagudu also noted that FEC approved the 2025-2027 MTEF and Fiscal Strategy Papers (FSP).
He said the executive will make efforts to ensure the 2025 budget is passed and signed before December 2024.
He also noted that, significantly, Nigeria’s economy has turned in the right direction, achieving a positive gross growth rate and economic stability.
The minister further disclosed that the Council also reviewed the 2024 budget implementation, adding that this included promising progress in revenue collection and expenditure management.
He said, “It also included a review of the 2024 budget implementation, where it acknowledged that a review of the implementation of the 2024 budget shows promising progress in revenue collection and expenditure management, despite lags in prorated targets. The overall trajectory shows that fiscal efforts are on track, with key non-oil streams performing better than anticipated.”
Bagudu added that the federal government is working to ensure a January-December budget cycle.
