Nigeria needs a focused and deliberate technological and business model innovation to ensure that everyone can access affordable housing finance.
In Nigeria, the rich are getting richer whilst the poor are getting poorer. Luxury rental apartments are springing up daily in the choicest parts of Maitama, Asokoro, Jabi, Ikoyi, Banana Island, etc., while tens of thousands of Nigerians are becoming homeless daily.
The gap between the demand for and supply of affordable housing finance products is huge, and this presents a sizeable business and social impact opportunity for financial institutions to develop new products and services that enable housing finance for low-income families.
Over 20 million Nigerians live in slums, and this number does not include people from rural areas who live in substandard houses. Lack of access to housing finance contributes greatly to this housing gap. Low-income families whose livelihoods come from the informal economy often lack the income proof and credit history required to be eligible for a mortgage loan. As a result, they are denied the improved health, education and sense of security, including the ability to practice social distancing, that come from adequate housing.
Not everyone can own a home, but every one deserves a safe, decent and affordable dwelling. Nigeria leads other developing countries in the number of conferences and seminars hosted every year, yet its housing finance system is the least developed.
Despite having a mortgage refinance institution, most lenders still charge between 25 per cent and 32 per cent interest rates on mortgages that are payable over 10 years or less, setting hard working people up for imminent defaults.
I stand by my strong conviction that the larger problem of homelessness is yearning to be solved, and the addition of more and more senseless programmes aren’t exactly pushing the process forward.
Housing finance remains the single most impactful financial product for helping families escape poverty and build wealth.
Nigeria needs a focused and deliberate technological and business model innovation to ensure that everyone can access affordable housing finance.
Kunle Faleti is a housing finance expert and analyst.
