The Federal Government has unveiled a $300 million World Bank loan facility to support new housing scheme known as the National Housing Finance Programme (NHFP).
The initiative, according to the Deputy Director, Other Financial Institutions of the Central Bank of Nigeria (CBN), Mr Adedeji Adesemoye is a Public Private Partnership (PPP) programme, designed to improve more access to financing housing projects in the country.
Speaking at the unveiling yesterday in Abuja, he explained that the new structure was different from the National Housing Fund (NHF), stressing that it will encourage artisans, graduates and other low income earners to own personal homes with a guaranteed credit from the CBN.
The International Development Association (IDA) loan is a credit facility with 40 years repayment period. Adesemoye added that interested individuals would get supports from nine accredited Micro-Finance Institutions (MFI) from across the country through the Mortgage Guarantee and Insurance component of the loan to fund their mortgages.
His words: “It is designed to de-risk the sector through private partnership. We were opportuned to access an IDA facility which is a 40 years loan designed to assist in four different components. It is to help with a tier two capitals in NMRC. But for the institution to finance this kind of asset creation, we need to have institutions that will have access to a long-term debt capital.
“So today, we are providing NMRC with a long term tier two capital. The total loan we got is $300m but $250m will be given to NMRC…. It’s a tier two capital, i.e a long-term debt with almost less than one per cent commission and interest charge.”
Adesemoye said that the disbursement will be based on the performance of the loan, adding that about two tranches of the loan had been disbursed but left with four tranches.
He noted that a mortgage guarantee and insurance scheme will be set up as well as housing microfinance system for the project.
“Mortgage guarantee and insurance ought to address those who don’t have adequate equity. i.e young and elderly people who lack the 20 per cent required under the under-righting standard. So CBN designed the underwriting standard and hand it over to the NMRC.
So we have completed the standard for the formal sector but we are currently working on that of the informal sector which is a larger part of Nigeria.
“We are also working on non-interest mortgage underwriting standards for populations that want to get their mortgages through faith-based finance. These are all contributions of the CBN,” he added.
Some of the participating microfinance banks include Lapo, Hazmal, Mpf, Ab, Wetland, Hasal, Fortis among others.
In his remarks, the CBN Governor, Godwin Emefiele described the initiative as an opportunity to transit home tenants to owners to guaranteed access to mortgage finance.
Emefiele, who was represented by Mrs. Tokunbo Martins admitted that the sector had been bedeviled with several challenges including long-term credit to guarantee the mortgage.
However, she called for more awareness on the initiative to assist prospective house owners benefit from the programme.