Nigeria has successfully negotiated a US$300 million financing agreement with the International Development Association (IDA) for the new housing scheme targeted at helping the middle and at the lower end of the income scale to own their own houses.

Coordinating Minister for the Economy/Minister of Finance, Dr. Ngozi Okonjo-Iweala, disclosed this today while speaking at the launch of the Nigeria Mortgage Refinance Company (NMRC). The launch was performed by President Goodluck Jonathan at the Banquet Hall, State House, Abuja.

Okonjo-Iweala disclosed that the funding agreement with the IDA is “on very concessionary terms, zero interest rate, 40-year tenor with 10 years of grace.” According to her, “US$250 million will be disbursed in installments to NMRC as Tier 2 Capital based on performance indicators; US$25 million will be for the establishment of a Mortgage Guarantee Facility for lower income borrowers; and US$25 million will support the development and piloting of Housing Finance Microfinance Products including support to FMBN to restructure and strengthen its programme of mass housing.”

The minister made it clear that for the initiative to be successful, the federal government has to work with states. “Many of the states have initiated strong housing programme themselves but the advent of the NMRC will enable them to scale up their efforts. To this end, we are grateful to the Governors of Abia, Anambra, Bauchi, Bayelsa, Delta, Ekiti, Gombe, Kano, Kwara, Kaduna, Lagos, Edo, Enugu, Nassarawa, Ondo, Rivers and Ogun states as well as Minister FCT for their collaboration,” she said.

Okonjo-Iweala added: “The State Governors have committed to supporting the NMRC initiative and to collaborating with us towards creating the enabling environment for mortgage origination to be refinanced by NMRC, in key areas under their jurisdiction; (i) Property Registration; (ii) Enforcement of foreclosure; (iii) Access to Serviced Land, Laws or Arbitration initiatives etc.

Let me now turn to the issue of interest rates. With the full operation of the NMRC, a substantial building block will be put in place for interest rates to come down from the current spread of 20% – 23% to the low double digits or highly single digits provided macroeconomic stability continues, in concert with the responsible behavior of other agencies of government and the private sector. Macroeconomic policy and fiscal discipline must be maintained to achieve low inflation rates and enable refinancing Efficiencies in the financial institutions. Land registries and courts have to provide quick and easy access to certificates of occupancy and fair justice.”

She also disclosed that “the federal government is working in partnership with private developers and International Finance Institutions on mass housing rent-to-own schemes which will enable lower income Nigerians to ultimately own the houses they live in after 15-20 years of paying rents. Rent-to-own, also known as rental-purchase, is a type of legally documented transaction under which a house is leased in exchange for an annual rent, with the option to own house at some point during the agreement.”

She disclosed that the NMRC will need three to four months to start operation, float bonds and begin to enhance high access to PMIs and others. Her assurance: “Starting end of June, you can approach your PMI to assist with a mortgage. We have hotlines available on the website – www.nmrc.com.ng.”

•Photo shows Okonjo-Iweala.