The Securities and Exchange Commission (SEC) Nigeria has said that the non-interest segment of the capital market is capable of financing the housing sector and by so doing lead to better well-being of the citizenry as well as improved performance of other sectors of the nation’s economy.
Director-General of the SEC, Mr. Lamido Yuguda, who made this during a webinar with the theme ‘The Non-Interest Capital Market as Panacea to Mortgage Financing in Nigeria’ explained that was a well-known fact that financing residential and commercial real estate to enhance societal well-being and unlock economic opportunities remains a global challenge.
The investment expert said he considered the theme of the forum as timely and relevant in the discourse of issues pertinent to the growth and advancement of the Nigerian capital market and the economy.
Yuguda said: “I have observed with delight, the attention this webinar has generated, and come to the conclusion that it is a clear indication of the keen interest in the potentials, that the Non-interest finance segment holds in furthering the development of the Capital Market and the growth of our economy.
“According to a World Bank study, Nigeria’s housing sector requires an investment of about N59.5 trillion to bridge the 20 million housing deficit that is increasing yearly. Undoubtedly, this shows a huge untapped investment opportunity in the Nation’s real estate sector”, he added.
The SEC boss further said that governments at both federal and state levels, and businesses in Nigeria had been tapping various available sources of financing, including capital market products for funding real estate developments.
He stressed that the Nigerian capital market provided a platform for mobilizing long-term funds for real estate investments to complement the mortgage funding sources by commercial banks, Primary Mortgage Institutions (PMIs), Non-Governmental Organizations (NGOs), Cooperative Societies and International Finance Institutions.
Yuguda expatiated: “The Capital Market creates investment opportunities to enhance the flow of low-cost, long-term funds to the real estate sector through investment vehicles such as Real Estate Investment Trust Schemes (REITs) and Mortgage-Backed Securities. These instruments are usually traded on recognised Exchanges.
“I am delighted to inform you that some corporate entities have started taking advantage of the Non-Interest Capital Market. In 2021, Family Homes Funds Limited, a social housing initiative promoted by the Federal Government, issued a N10 billion Sukuk to finance residential houses across the six geopolitical zones of the country and it was oversubscribed by over 200%.
“The company also recently raised another N10 billion from the market. This development was a strong indication of the readiness of the Capital Market and corresponding investors’ appetite for non-Interest mortgage instruments.
“We strongly believe that the operationalization of the Non-Interest Pension Fund (Fund VI) and the recent amendment of the Pension Act to facilitate withdrawals from RSA for down payments of equity contributions for mortgage will increase the quantum of low-cost long-term investible funds to the Mortgage Industry by unlocking the untapped capital in the economy”, he added.
The Director-General pointed out that the webinar was organized to create awareness of the Non-Interest Capital Market Instruments as a new source of financing for mortgage institutions as well as to facilitate the active participation of the private sector towards positioning the sector for optimal performance and improve its contribution to the nation’s economy.
Yuguda expressed the confidence that the non-interest finance experts at the webinar would evoke the interest and attention of participants and enhance their knowledge on the subject to eventually lead to the birth of promoters and off-takers of new Non-interest products in the Capital Market.
Speaking at the event, the Managing Director/CEO of the Federal Mortgage Bank of Nigeria, Mr. Madu Hamman, explained that the non-interest financial products have gained a lot of interest by investors in Nigeria and globally and could aid housing finance sources and expand the frontiers of home ownership through non interest finance sources.
He pointed out that the engagement would go a long way in giving the capital market the needed boost to un-bundle funds that were hitherto not accessible to Nigerians, adding that it is obvious that the Nigerian economy is on the verge of experiencing a tremendous transformation in this regard.
Hamman said the sourcing of non interest funds from the capital is very necessary for seamless operations as funds sourced from interest based facilities cannot be leveraged to deliver on non interest mortgage transactions.
The seasoned banker said: “We are committed to linking the mortgage market with the Nigerian capital market and thereby ensure sustainable long term funding for the housing and mortgage sector. The non interest capital market is therefore one area for such sustainable long term funds that can be assured.”
In his remarks, Managing Director of Nigeria Mortgage Refinancing Company, Mr. Kehinde Ogundimu, said there was no way the nation can meet the housing deficit without having the non-interest services sector actively participating in it and commended the SEC on the initiative.
