Affordability, still a major challenge for low income earners – CEO, ITMB

Banjo Obaleye, CEO, ITMB

Mr. Banjo Obaleye is the CEO, Infinity Trust Mortgage Bank (ITMB), a flourishing private sector-led initiative that has created mortgages in excess of ten billion. The Bank also earned renown for solely financing the luxurious Sun City Estate of over 2000 housing units, worth over thirty billion naira. It is pertinent to note that 70% financing of Sun City was a goal scored via mortgage.
In this exclusive interview with Francis Kadiri, Mr Obaleye advised the Buhari administration to prioritize the mortgage needs of low income earners, especially those who are neither in the employ of government nor the organised private sector. The consummate banker said ‘government needs to exercise the political will needed to create enabling environment that will lead to provision of affordable homes while ensuring that land is accessible and affordable.’
Obaleye who is at the wheel of a rapidly growing trust bank stressed the importance of affordability in perfecting mortgages, and warned that registration of mortgages and properties must be made affordable in order to encourage compliance. He spoke with Francis Kadiri, in Abuja. Excerpts

Low income earners are worst hit by Nigeria’s housing shortfall. What is the sure way-out of this tragedy?

We cannot underscore the importance of housing for any group of people especially those who do not have the income to cater for the huge capital needed to afford homes in Nigeria. This is especially so with regard to those who need homes in urban cities like Abuja, Lagos and Port Harcourt. It has been reported severally that Nigeria’s housing shortage is about seventeen million. The shortage has remained for about five years or more, with an annual increase of about 2.5%. Going by that statistics, if we calculate the housing shortage in Nigeria today, we can reasonably put it at about nineteen million or more.

Why is it that despite the need for investments in the housing sector, the business potentials of the sector remains unharnessed?

A country with as much housing shortages should provide opportunities for investors to play big in the provision of needed homes. Sadly, the absence of long term funding has been identified as one of the major problems of the Nigerian mortgage sector. The dearth of funding for the housing sector has become a serious problem militating against home ownership in Nigeria. If the cost of funding remains high, low income earners would remain deprived of realising their home ownership dreams.

What is your score of the Jonathan administration with regards to provision of homes?

It is wrong to situate the current state of the sector within the context of the past administration alone. I would say the past administration did its best to solve the problem, but there is still so much left undone. One crucial area in which the Buhari administration must make its mark is the need to create enabling environment for the Nigeria mortgage industry.

The Post Star Newspaper published a report on the performance of the mortgage industry in Nigeria. The report reflected the very poor performance of the Nigeria mortgage industry. It showed that that there is an industrial average dis-negative which shows that something is systematically wrong with the sector. It is unfortunate that the housing sector which is supposed to be the hub of economic development is still underdeveloped. If the sector is given the attention it deserves, it will invigorate the economy while strengthening development of other sectors.

With regards to housing finance, one other major problem is that Nigeria has not gotten the Act right. Regarding homes affordability, it should be well understood that it is impossible for the poor to favourably compete with the rich.

I have always said that the problem of affordability is enormous and it is also obvious. Interestingly, the solution to the problem is as obvious as the problem, so we don’t need to look too far to address it. The first thing we need is the political will on the part of government.

Government and providers of services in the housing sector should also be concerned about functionality of houses. In developed economies, there is little or no difference in comfort enjoyed by the person occupying one bedroom apartment and another person living in a two bedroom apartment. It is even possible to see the same comfort and functionality with the person occupying a five bedroom flat.

Housing is not cheap anywhere in the world. Sadly, the situation is aggravated in Nigeria because nearly 75% of materials used in housing construction are imported. This has caused a corresponding increase in price of homes especially that there is devaluation of the Naira. This worsens the situation for those at the grassroots.

The Buhari administration will prove itself passionate about the aspirations of the masses if it steps-in at this point by solving this particular problem among others.

In what ways can the government solve the problem?

An environment must be created where the poor works with the rich without anyone oppressing the other. That is the essence of government. Those in the corridor of power must be careful not to lose the essence of governance; they must be mindful of the fact that provision for houses for the masses should not be run entirely like a business since some citizens would not be able to afford homes. Government should tackle housing need of the poor from the perspective of welfare provision, not business perspective. If you take welfare away from housing, the consequence is that the poorest people will not realize their home-ownership aspirations.

Businessmen will do their best to make money, but government is for everybody and government must ensure that the poor have functional decent shelters. If government realizes the multiplier effects of its decisions or indecision, or its action or inaction, it will quickly appreciate what it can do as the leader of society.

As a solution, one key issue is that land must be accessible and affordable. Perfections of mortgages must not be expensive; registration of mortgages must not be expensive, registration of properties must also be affordable. It is within the power of government to ensure that these services are affordably provided to all class of citizens. For example, if government allocates a land in a remote part of Abuja to an average citizen, the person will find it difficult to pay the cost of that land. This should not be. If indeed houses would become affordable, then government should not sell lands. Revenue should not be generated by imposition of fees as that will cause a problem in homes provision.

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