The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, unfolded the Federal Government’s plan to collaborate with other stakeholders in the housing sector to deliver about 10,000 housing units this year. The minister announced this at the inaugural Housing Stakeholders’ Implementation Summit in Abuja which held on March 23, 2014, where she also defended the government’s position that 1.6 million jobs were created in 2013 alone.
Her communique pointed out that an effective housing sector was imbued with important multiplier effects. The listed multiplier effects include; the creation of mass employment in the construction and building industries as well as increased employment in other related industries.
The minister said the summit was a calculated move to draw together all stakeholders in the sector for effective synergy for a robust housing delivery. She said “This housing finance and housing development implementation summit gives us the opportunity to stand true to the memories of those who died seeking immigration jobs. It also fulfills President Goodluck Ebele Jonathan’s drive to use housing to solve social problems for Nigerians whilst also creating jobs and growing the economy. So today, we are here not to talk but to take action. “I want us to leave here today having pledged to jump start the programme with at least 10,000 new house owners or mortgage beneficiaries by the end of the year. With the ratio of five direct and 2.5 indirect jobs created per house, this should enable us to create at least 75,000 jobs as a start.
Today, we should hear from different stakeholders- the States, the developers, the primary mortgage institutions on how we can make this happen,”
Today, we should hear from different stakeholders- the States, the developers, the primary mortgage institutions on how we can make this happen,”
According to Okonjo-Iweala, there are a lot of debates in the country with people questioning whether the government has really created the 1.6 million jobs it claimed in 2013.
“The answer is, it has, according to the information from the National Bureau of Statistics. The problem is however that we have 1.8 million entrants into the job market every year. So job creation has not yet caught up with the numbers entering the job market. We are creating 1.6 million jobs against 1.8 million needed per year. So there is a 200,000 job deficit per year.
“In addition, we have a pool accumulated over time, of unemployed people amounting to 5.3 million and a pool of under-employed people (those working but the job is not full time) of 13.6 million. So Nigeria has a difficult unemployment challenge accumulated over years. The good news is that the first target of creating enough jobs for new entrants of 1.8 million is almost in sight. Once we reach that on a steady level, we can now focus on creating even more for the unemployed and under-employed pool,” she said.
“In addition, we have a pool accumulated over time, of unemployed people amounting to 5.3 million and a pool of under-employed people (those working but the job is not full time) of 13.6 million. So Nigeria has a difficult unemployment challenge accumulated over years. The good news is that the first target of creating enough jobs for new entrants of 1.8 million is almost in sight. Once we reach that on a steady level, we can now focus on creating even more for the unemployed and under-employed pool,” she said.
The minister pointed out that well-functioning housing markets enable savings, wealth creation and entrepreneurial development, adding that housing therefore can address two interrelated policy priorities, including poverty reduction and economic growth through enterprise development.
“Many of you will recall that this effort dates back to early 2012, when President Goodluck Ebele Jonathan directed the convening of two Presidential retreats on key components of the sector. Many of you here present participated at both retreats and helped craft some of the outcome recommendations.
“Chief among these was the set of two parallel working groups mandated to work collaboratively to analyse and deliver on the two major constraints identified as mitigating against harnessing the full potentials of the sector: i) on Housing Finance chaired by the Ministry of Finance and included such partners as the CBN, the PMIs, World Bank, IFC, the Commercial Banks, NAICOM; and ii) land and land titling issues, mandated to review extant land regulations and registration processes to determine how best to ensure a more transparent and simplified access to land and expedited processes for acquiring Certificate of Occupancy
“This second working group was chaired by the Ministry of Land, Housing and Urban Development and included key stakeholders such as the State governors, judges, the builders, and construction companies,” the minister stated.
On what has been achieved so far, she pointed to the set up and takes off of the Nigeria Mortgage Refinance Company (NMRC), launched by President Goodluck Jonathan on January 16 this year.
On what has been achieved so far, she pointed to the set up and takes off of the Nigeria Mortgage Refinance Company (NMRC), launched by President Goodluck Jonathan on January 16 this year.
According to her, the company’s initial equity raising exercise was oversubscribed from the original N5 billion to N6.75 billion deposit for equity from 19 institutional investors, with outstanding firm equity commitments from other institutional investors to subscribe up to N2 billion in additional capital.
The NMRC, she added, had also met tough World Bank effectiveness conditions thereby enabling it to begin draw-down from the $250 million International Development Association (IDA) credit negotiated by the federal government to kick-start the liquidity facility, to be disbursed to NMRC as tier two capital, based on performance indicators.
“This was inclusive of the total $300 million financing from the World Bank to the federal government on very concessionary terms, with $25 million earmarked for the establishment of a mortgage guarantee facility for lower income borrowers; and another $25 million to support the development and piloting of housing finance microfinance products,” the minister said.
The Minister said uniform underwriting standards for eligible mortgages that NMRC will refinance were being prepared in conjunction with the Central Bank of Nigeria (CBN) and the mortgage banks, adding that these should be finalized by May 2014 even as the NMRC board has taken proactive steps towards operationalising the company to commence refinancing exercises by the end of the second quarter this year.
The company, Okonjo-Iweala said, was poised to address the key barrier of finance to developing accessible and affordable housing in Nigeria by bridging the cost of funds for residential mortgages, adding that it is a mortgage refinancing liquidity facility designed to enhance the availability and affordability of housing for Nigerians through growing liquidity and increasing tenor in the mortgage market.
These moves on the part of the government are worthy of applauds; we however look forward to seeing the implementation, and how all the stakeholders involved will be carried along.
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