Nigeria’s government plans to inject  $1.4 billion into its low-cost mortgage Lender

In an effort to increase homeownership in Nigeria, the Nigerian government plans to inject N500 billion ($1.4 billion) into its low-cost mortgage lender Federal Mortgage Bank of Nigeria (FMBN) over the next five years.

Africa’s most populous country is faced with serious housing deficit and the country seeks to solve this problem by improving access to loans. According to the Chief Executive Officer of Federal Mortgage Bank of Nigeria (FMBN), Ahmed Musa Dangiwa who spoke with bloomberg in an interview, the country can only boast of an estimated 50,000 registered mortgages, of which state-owned Federal Mortgage Bank of Nigeria accounts for 18,200.

FMBN seeks to boost its capital as well as reorganizing its business, although it needs the approval of all arms of the government by the end of 2018 before this can be done. “The company’s current capital base is “grossly inadequate that’s why we’re in the process of ensuring that the capital base is increased,” Dangiwa said.

According to Bloomberg, in August, FMBN will flag off a 1,500 housing project it is providing funding for under a new “rent-to-own” program that Dangiwa says will help create more mortgages and access to housing.

The Centre for Affordable Housing Finance in Africa says that for an organised developer to build a house in Nigeria, the cost comes to $28,000. So, it is estimated that only about 9.7 per cent of urban households in Nigeria can afford the cheapest house. This means that it is difficult for even a young person to own a home in Nigeria.

From the recent data available on the website of South Africa’s Central Bank mortgages in the country which vies with Nigeria as the continent’s biggest accounts for almost 30 percent of total credit, the largest component of banks’ assets, which amounted to about R5.14 trillion ($382 billion).

In other to be at par with its competitors on the continent, the Chief Executive Officer of the nation’s state-backed mortgage guarantor, which provides loans to banks, Nigeria Mortgage Refinance Co. (NMRC), Charles Inyangete  said that the company plans to issue 11 billion naira worth of 15-year bonds through multiple sales as part of a five-year 440 billion-naira program.