The Director General of the Securities and Exchange Commission (SEC), Lamido Yuguda said the non-interest segment of the capital market is capable of financing the housing sector which will lead to better well-being of the citizenry as well as general performance of the other sectors of the economy.
He said this in a recent Webinar themed: “Non-Interest Capital Market as Panacea to Mortgage Financing in Nigeria”
Yuguda also said that is a well-known fact that financing residential and commercial real estate to enhance societal well-being and unlock economic opportunities remains a global challenge.
“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, he stated.
“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”.
While revealing that governments at both federal and state levels, and businesses in the country have been tapping various available sources of financing, including capital market products for funding real estate developments, the The SEC DG added that methods of finance have various associated costs, some which are deemed to be high.
He emphasised that the Nigerian Capital Market provides a platform for mobilizing long-term funds for real estate investments to complement the mortgage funding sources by commercial banks, Primary Mortgage Institutions, Non-Governmental Organizations, Cooperative Societies and International Finance Institutions.
“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”