"Credit Guarantee Fund, Panacea for affordable housing in Nigeria" - UBA Global Market MD

July 9 2008

The Federal Government has been advised to revert the under utilized and sub-optimal National Housing Fund to Credit Guarantee Fund (CGF) if it is determined to redress the current housing deficits, in the country. The advice was given by the Managing Director of UBA Global Markets, Mr. Sonnie Ayere, at the National Conference on financing the 7 Point Agenda of the Federal Government, through the Capital Market.

The UBA boss who presented a paper titled “Pertinent Issues in Residential & Commercial Mortgage Growth in Nigeria” said the Credit Guarantee Fund is necessary to finance the housing deficits especially in line with the present administration’s 7 point agenda because the Fund will guarantee bonds issued by the FMBN who can, in turn borrow funds at much cheaper rates than the commercial banks, for on lending. According to the investment banking expert, by taking only 1-1.5 % spread above their funding costs, FMBN can provide more cost effective mortgages to Nigerians. He also said that the fund will also provide credit protection to the Federal Government as there were will not be any additional cost.

Describing the present state of the Nigerian Mortgage Industry as cumbersome and expensive, he stressed that the current mortgage practices in the country do not help to create economic wellbeing. He listed the constraint to the mortgage market to include liquidity, failure of banks to adopt medium to long term domestic currency funding strategies, difficulty in implementing the current foreclosure law, lengthy title perfection process, Governor’s consent and no government incentives at the primary mortgage level.

In order to reverse some of these problems, his advocating that the titling process should be made less cumbersome and the complete abolition of the 1979 Land Use Act for a more mortgage friendly law. He also called on Banks and Non Bank Financial Institutions to invest in training, adding that government must grant tax relief on mortgages and interest must be paid by the borrower whilst the amount saved on tax can be used by borrower to repay the principal mortgage obligations.

Notable speakers at the event include  Mr. Kayode Falowo  Chairman  Association of Issuing Houses of Nigeria, Mr. Jonathan Wood, Head of Project Finance, Standard Bank of South Africa Limited, Prof Bart Nanji, CEO, Geometric Power Limited, Mr. Ransome Owan, Executive Chairman, National Electric Regulatory Commission (NERC),  and Mr. Sam Anani, Former Managing Director, Tinapa Resort Limited, Cross Rivers State.