SECURITIZING MORTGAGES WOULD SOLVE HOUSING SHORTAGES
SECURITIZING MORTGAGES WOULD SOLVE HOUSING SHORTAGES
Apart from the recent global economic down-turn which many countries are
yet to fully recover from, as well as the growing challenge of climate
change, many parts of the developing world are groaning under the
excruciating pains of inadequate housing. Twenty years ago, in order to
express my dismay at the military government’s poor handling of their
duty to provide affordable housing for Nigerians by the year 2000, I
titled the published essay: NATIONAL URBAN HOUSING POLICY. The crux was
that few years after the promise was made the government had no policy
on which to deliver, nor was there any framework from which to examine
the proposal and its feasibility critically as well as assess its
progress or none of it. It was that perennial vicious string used by
governments, especially of developing nations which is usually using
what desperate people like to lure them or their votes. There is no
doubt that affordable housing for the masses is one of those immediate
needs of most developing countries especially in their modern towns and
cities. Indeed the National Party of Nigeria (NPN) government that won
the 1979 general election did so on a manifesto that promised delivery
of massive affordable houses and agricultural development. The two items
formed the features of the party logo. Even as they were leaving office
in 1983, putting in place an effective national policy was not achieved
not to talk of delivery. The hopes of the masses, as always were
dashed. If there were a national policy such as we find in countries
like Finland, Indonesia, USA, Malaysia etc. in Nigeria succeeding
governments since 1979 NPN government, would have achieved much in that
direction, especially if the policy specifically discourages and
condemns “abandoned projects by previous governments†syndrome. What
this means is that every year’s budget of the Housing Ministry must
progressively be delivering affordable houses irrespective of government
in power. I do not see much difficulty in making such policy an
irrevocable mandate of governments at all levels since its under
concurrent list. The incoming government has to complete housing
projects commenced by outgoing government to avoid wastages arising from
several years of abandoned projects by governments. The necessity of
affordable housing for the masses can be appreciated on realizing that
inadequacy of affordable housing relative to its demand compel average
urban dwellers to spend as much as 45% of their incomes annually on
housing. The economic implication is impoverishment of lager percentage
of the populace. And inability to save and contribute to economic growth
of the nation. It can also be appreciated further when you consider the
contribution housing makes to the GDP of countries around the world.
For a country whose population grows at about 2.5% per annum, what this
means is that in recent years the GDP has been losing huge sums of money
which should have been yielding from housing projects annually. The
reality, therefore, is that housing is not properly developed and has
the capacity to deliver accommodation as well as huge contribution to
the GDP. Advocates of social housing have researched the various causes
of inadequate housing in Nigeria and found among other things that the
Land Use Act 1978 contributed to the government’s inability to deliver
affordable housing with speed. The preamble of the Act corroborates
this claim: “An Act to vest all land comprised in the territory of
each state (except land vested in the Federal Government or its
agencies) solely in the Governor of the state, who would hold such land
in trust for the people and would henceforth be responsible for
allocation of land in all urban areas to individuals resident in the
state and to organizations resident in the state and to organizations
for residential, agricultural, commercial and other purposes while
similar powers with respect to non-urban areas are conferred on Local
Governments.†The implication, they say are enormous. The fact that
Government can revoke certificate of occupancy by s.28 of the Act and
s.51 which defined and expanded the categories of reasons beyond
‘compulsory acquisition for public purposes’ makes acquisition of
land for development controversial. What it means is that you own some
acres of land; you may go ahead to invest fortunes to provide houses but
there is no guarantee to a holder of certificate of occupancy, which is
available to your counterpart in Finland or USA who has freehold
interest. The provision has always depended on the rationale that it
curbs the increasing difficulty in acquiring land for development by
individuals, organizations and other public purposes. There seem to be
other unresolved questions associated with the Act. If the mischief of
the Land Use Act is to facilitate government’s acquisition of land for
development and mass housing programme by forestalling private
acquisition and hoarding, why do the succeeding governments since 1978
still find it difficult to use the land the way they had intended? What
role do estate and property speculators play in the quest for affordable
housing: is it better or worse? Land is a factor of production whose
value appreciates constantly; and any control of such land that involves
loss of use by occupiers attracts huge compensation under s.29 of the
Act. Therefore the control which the Act imposed on the use of land
cannot be said to have positive impact on provision of houses affordable
to the masses. The advanced countries earlier referred to above used
the mortgage system to facilitate mass housing delivery specially in
urban areas. Most owner occupier buildings in those countries were
provided through mortgage system which allows an occupier to pay for the
houses in installments for about 25 years or more. This method is what
the Federal Mortgage Bank was originally established to achieve but it
failed. In its stead is National Housing Fund consisting of contributors
funds that provide from N1 - N15 million. Another cause of inadequacy
has been attributable to building materials. Nigeria has a history of
importation of almost everything even when they can be produced locally.
The dependence of imported cement has reduced drastically over the
years, since its production became sufficient for local use. But other
materials are still not available locally. The demand for increased
local contents by manufacturers is one of the ways advocates persuade
the government and stakeholders to hasten housing provision. In spite of
these obstacles there are rising expectations on the part of the public
about government’s housing delivery. Since the appointment of the
current land and housing minister some critical structural changes have
taken place. The first is the detachment of the ministry from works
ministry, which grants independence to the ministry on policy decisions
on housing. It would now be clear who makes decisions whether they lead
to success or failure. Evidently the fact that during the current
minister’s tenure about 15,000 houses had been provided is a pointer
that the structural changes are yielding positive results. Another
decision that is yielding positive result is the establishment of
Satellite Town Development Agency to enhance the speed at which houses
are delivered to ease the pressure on scanty provisions in the city of
Abuja. The minister should be encouraged to include those whose houses
were demolished whether wrongly or otherwise. That is a testimony that
the minister is passionate about social housing and should be encouraged
and sustained. The concept of social housing was alien to government
policy until it was introduced by a former minister, now Governor
Olusegun Mimiko of Ondo state. And that brings to mind the housing bill
initiated at the senate which has reportedly gone through second
reading. What the bill intends to achieve is to say the least laudable.
The beneficiaries of the provision, if enacted were defined in terms of
income earning scale, even as Federal Mortgage Bank would organize
informal sector as cooperatives to participate. It stipulates sanctions
for anyone that rents or sublets such houses. Even mortgage banks that
flout the law would not be spared. As expected aged and displaced
individuals would be given priority in allocation of the houses. The
minister reportedly said the newly approved housing program me would
erect one million housing units annually across Nigeria. Even as
laudable as the programme proposes to be it would be with 17 million
housing deficit. In furtherance of social housing policy president
Goodluck Jonathan commissioned police estate named after him, at Idimu
on 19th July 2013. It was an auspicious occasion for him to announce
government’s proposal to establish Mortgage Refinance Institute to be
supported by the world bank to the tune of $300, a free interest loan
repayable in 40 years with a moratorium of 10 years. The way forward in
my view is certainly the fact that succeeding governments should not be
allowed to abandon projects. There should be continuity of the present
housing policy that encourages specific number of houses annually. How
to encourage this must be urgent development of effective public funded
mortgage system, perhaps that’s what the president wants to do with
the proposed Mortgage Refinance Institute. In addition dormant accounts
such as pension funds, insurance deposits etc should be deployed to
provide social housing. It is also important to increase financial
literacy and intelligence of the public through relevant financial
products that encourage home ownership. Lastly foresight should be
adopted in the development of future towns and cities so as to envisage
adequate housing of the population before they explode and abuse urban
fringes.
Iyke Ozemena Corporate Attorney/Consultant, Author:
An essay that offers solution for shortage of housing in developing countries and relevant economic and political issues.
1 DIRECTORS: Duties & Enforcement http://www.amazon.com/dp/B005783S6S
2 MEETINGS: Dynamics and Legality - http://www.amazon.com/dp/B005MKCESY
COMPANY SECRETARIES' HANDBOOK (Kindle Edition)
4.LAND LAW OF NIGERIA
Iyke Ozemena Corporate Attorney/Consultant, Author:
An essay that offers solution for shortage of housing in developing countries and relevant economic and political issues.
1 DIRECTORS: Duties & Enforcement http://www.amazon.com/dp/B005783S6S
2 MEETINGS: Dynamics and Legality - http://www.amazon.com/dp/B005MKCESY
COMPANY SECRETARIES' HANDBOOK (Kindle Edition)
4.LAND LAW OF NIGERIA
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