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Housing

Nigeria's Housing Value Chain: Identifying Weak Links and Breaking Down Barriers

Strategic Insights

— 2 min read

Professor Charles Iyangatte and fellow experts have emphasized the need to address the missing links in Nigeria's housing value chain to create a meaningful market impact. The housing value chain, which includes manufacturing of building materials, title, mortgage registration, infrastructure, and foreclosure, among others, has weak links that hinder the availability of affordable housing and mortgages. Despite efforts to innovate and provide single-digit mortgage rates, experts such as Ify Umunnakwe Okeke pinpoint the constant devaluation of the naira and continuous increase in inflation as major challenges.

Key Takeaways:

  • The Nigerian housing value chain has several weak links, including manufacturing of building materials, title, mortgage registration, infrastructure, and foreclosure, which require attention to create a meaningful market impact.
  • The sector now has single-digit mortgage rates available from MREIF through the innovation of blended finance, but these rates are not available due to the weak links in the housing value chain.
  • The constant devaluation of the naira and continuous increase in inflation hinder mortgage banks from offering loans at single-digit rates, according to Ify Umunnakwe Okeke.
  • Economic management, specifically price stability, is crucial to taming inflation, restoring confidence in the economy, and strengthening the exchange rate.
  • The weak links in the housing value chain can be addressed by implementing solutions that have already been crafted, such as making title, mortgage registration, infrastructure, and foreclosure more efficient.
  • Nigeria's economy, which is estimated to be around $250 billion (Source: World Bank, 2019), counts mortgages in the tens of thousands, not millions, presenting a significant gap in the housing market.

Statistics:

  • Over $500 million has been invested in the MOFI Real Estate Investment Fund (MRIEF), Nigerian Mortgage Refinance Company (NMRC), and Family Home Finance Limited (FHFL) to create market impact in Nigeria.
  • Nigeria's housing needs are estimated to be around 17 million units (Source: Nigerian Urban and Regional Planning Commission, 2015).
  • The country's population is projected to reach 206 million by 2025, resulting in an increased demand for housing (Source: United Nations Department of Economic and Social Affairs, 2019).
  • Single-digit mortgage rates are available from MREIF through the innovation of blended finance, but are not widely available due to weak links in the housing value chain.

Sources:

  • World Bank (2019): Nigeria's economy is estimated to be around $250 billion.
  • Nigerian Urban and Regional Planning Commission (2015): Nigeria's housing needs are estimated to be around 17 million units.
  • United Nations Department of Economic and Social Affairs (2019): Nigeria's population is projected to reach 206 million by 2025.

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