Boat houses in Lagos Nigeria               Photo courtesy

The Lagos State Commissioner for Housing’s comment on mortgage and housing delivery is evasive and lacks substance. Mr. Jeje’s comment does not give what really needs to happen to unleash sustainable and affordable delivery of housing to deserving Nigerians. Using few far-and-wide examples like Elegant Court, of mere 72 housing units, is a fly in the face of needs. It is obvious that his limited knowledge on the meaning of mortgage and how it works, coupled with a leadership that celebrates minor moves clouds actual issues. (Click to read http://www.3investonline.com/news/latest-news/580-lagos-mortgage-scheme-set-to-take-off)

Mortgage is basically a local instrument which can be aided by foreign financing muscle. However, for the local instrument to garner momentum, certain local laws and related infrastructure must be put in place. Mortgage is an elastic financial instrument whose extended benefits are enhanced by active financial and credit markets, including a secondary market that places value and weight on the underlining collateral assets on which the mortgages are secured.

Asset underwriting in Nigeria is behind what anyone involved in mortgage backed securities would be interested in or impressed by. The in-and-out measures of prior and present governments in Nigeria, tell the tales of half measures and failed policies and programs.

Refusal to embrace the soft aspects of financing which enable creation of credit by instruments with legal and legislative backing will forever shackle Nigeria's stride towards a robust economy anchored on incalculable benefits from well planned and executed land use and housing policies. The Lagos State pebble drop, I am afraid, will not carry a wave strong and wide to create a model to address the millions in unmet housing needs. 

Nigeria mortgage needs run in billions of dollars and can never be achieved by evasive measures and steps that Mr. Jeje outlines as the Lagos State model.  It is absurd to speak of mortgage in a sectional sense when there is no nationwide reform and effective leadership to actualize the model. Lagos is behind in housing delivery. Having the state's government involvement in actual construction of houses (and given the way contracts are awarded with corruption to boot) makes housing delivery like pulling a tooth with a tooth pick.

Significant and sustainable achievements in this socio-economic [mortgage] sector can only emerge when the soft aspects of mortgage lending is matched and sustained by a system that is devoid of the undue influence one gets when dealing with Nigerian states, the federal government and the political class. The public/private partnerships often used to indicate success are at best laughable given that the approach when taken apart lacks merit.

Mr. Jeje, does not disclose what the lending rates for Lagos State backed mortgages would be and what financial instruments authorized by legislature back such a program. To deliver housing via budget allocation will never achieve housing delivery for Lagos or Nigeria.

Mr. Jeje mentions 10-15 years, but does not say what the house value/price cap is, whether the interest rate is pegged or floating; the buyer initial down payment and equity versus debt ratio - in other words; loan-to-value matrix, interest-only or amortized payments, pre-payment penalties, who holds the paper, whether a Deed Trust will be executed, whether foreclosure will be a judicial process and/or administrative fiat, among other factors.

Nigeria’s public officials are often limited in their content. Maybe they do not know and simply believe that just saying something gets it done. For Mr. Jeje to appear credible, he has to explain and disclose other factors in the housing delivery agenda. On a face value of his comments, only those not given to understanding what mortgage means and how that impacts housing delivery may be impressed. A lot needs to be said by him to attract applause.

By Ejike Okpa II

The author holds a certificate in Real Estate Securitization, a program of European Business School and Harvard University, and in early 90s, served as Regional Appraisal Manager for US FDIC as Receiver for failed banks and financial institutions assets, in FDIC central region office that covered 8 states. In 1983, he wrote a paper on the Role of Nigeria Federal Mortgage Bank in Housing Development, Case study of Rivers State. In 1995, was Guest Speaker to a Housing symposium in Brazzaville, Congo, organized by Africa Shelter Afrique in conjunction with UN Center for Urban Settlement.