CBN to Underwrite $300m World Bank Housing Finance Loan

The Central Bank of Nigeria (CBN) has stated that it is undertaking to underwrite part of a $300 million loan,  which was extended by the World Bank to the Nigerian Housing Finance Programme (NHFP).

The Director, Other Financial Institutions Supervision Department, CBN, Mrs. Tokunbo Martins, who briefed journalists in Abuja on Monday, said the CBN "is underwriting part of the $300 million risk of the NHFP."

Martins, who spoke  on the sidelines of a conference seeking to explore solutions to mortgage financing in Nigeria, stated that the  NHFP benefited from a loan of $300 million for 40 years, from the World Bank, adding that the CBN was underwriting the foreign exchange risks.

Martins said: "the CBN is the project implementing entity of the NHFP and the NHFP is meant to re-fund the primary and secondary markets for mortgages. It is a public-private partnership and we have a loan from the world bank so CBN itself is not putting anything in directly."

Also speaking, the Head, Nigeria Housing Finance Programme domiciled in CBN and head of the implementation, Adedeji Jones Adesemoye stated that "the major driver of the programme, the Nigeria Mortgage Refinancing Company (NMRC) funds (N8.2 billion and N11.1 billion) from the Nigerian capital market to refinance the mortgages that have been financed by Primary mortgage institutions."
According to him, a component of the mortgage package is that money will be disbursed through 7 microfinance banks across the nation, this money is given to them in naira.
He added that "between now and November we will be launching mortgage guarantee company hopefully by the president to widen and bring us to the tail end of modern mortgage system in such a way that those mortgagees the institutions that are lending to our people can actually share risk so that more people will have access, to the housing fund."

Also speaking at the event, Mrs Chii Akporji director at NMRC said modern mortgage basically requires certain steps that state governments need to take in order to create the enabling environment for mortgages and housing investment to thrive.

She said, "there are a number of steps, essentially looking at issues of land titling, property registration, instituting a foreclosure mechanism, those are the key things that state governments are asked to look into with a view to reforming it."

She regretted that the issue of governor's consent, "which is what you need to gain access to land ownership. Initially what we find is that sometimes this can take years, we find requests for governor's consent piled up in most governors offices, what the new bill is proposing is that the governor either takes that as a priority or delegates it to a commissioner."

She added that the difficulty is accessing land titles and urged state governments to leverage technology, digitize their land register, to have adequate and proper record of who owns what in terms of land. 

In terms of property registration she said "sometimes it takes years to register a property and so expensive, studies we did found that in some states property registration takes up 45% of the cost of the property itself this is crazy."

Going forward, the NMRC she said has asked state governors "to review this, review the charges downwards, review the time it takes to do that so it will actually incentivize people to now take mortgage, knowing that they won't have to suffer to get the basic needs and investors also will be incentivized."