Pension, a veritable source to funding mortgage —Jagun

Stepen Ola Jagun is the Chairman of the Lagos State Branch of Nigerian Institution of Estate Surveyors and Values (NIESV) and Chairman of the Property and Facility Management Association. He is also principal partner of Jagun Associates. He has served in various capacity including past President of the Nigerian Chapter of the International Facility Management Association (IFMA) among others. Mr. Jagun has worked in various firms including Yinka Sonaike and Co, Bode Adediji Partnership, Jide Taiwo and Co. In this interview with VERONICA NKAH, he sheds light on the Nigerian mortgage system vis-à-vis the developed countries, the property market in Nigeria and the challenges in the housing sector among others. Excerpts: How would you appraise the contributions of real estate to the economic development of the country so far? The wealth of a country is tied to its land because land produces majority of the assets of any country. To the best of my knowledge, real estate has not contributed much to the development of this country. In advanced countries, there are new structures and estates with high rises, but such things can hardly be found here in Nigeria. Things are happening in the industry but it is not at the level it ought to be now. Nigeria’s dream is to be among the first top 20 economies of the world. And for Nigeria to achieve that goal, real estate must be a key factor, the impact must be felt in terms of what people have produced, what the government has done and also see structures on ground for us to say these are what we have achieved so far. How would you describe the challenges facing the industry? Basically, the major challenge is that our leaders have not got it right. It is one thing to know what is important to you, and it is another to take it seriously. Our leaders have been paying lips service to the development of the housing sector. For instance, when the Federal Ministry of Works was merged with Ministry of Housing (Federal Ministry of Works and Housing), most of the budget allocations were meant for roads. Of course, road is important, but what are the structures put on ground to assist the real estate sector to grow? In places like England, even areas that are deformed often get redeveloped. In fact, you will be impressed to see some of the new structures and estates. And as new estates are built, the artisans, insurance experts, lawyers and real estate professionals will be engaged. Interestingly too, new commercial centers and offices will spring up and all these will boost the economy. So if we get it right, our economy will improve as fast as possible. Recently, the Minister of Finance, Dr. Ngozi Okonjo Iweala said that Nigerians should expect cheaper mortgages that would assist them own their houses soon. How feasible is this especially in view of the structure of the financial sector? It is unfortunate that the financial sector gives loan and expects that it must be paid back within six months, or at most in 1year. Mortgage is expected to be repaid over a period of 15 years, 20 years or even 25 years. Of course, this gives the beneficiary a long way to go. For instance, in the past when banks were buying houses in all nooks and cranny, they would buy three houses next to each other for N500 million and by the time the value of what they bought in the same street is summed up, it goes for N5 billion. If they had gone to a new area, open up the place, build bungalows, sell to their own staff at N12 or N15 million and tell the staff to pay over a period of 15 years; most of them will not quit the banks, they will be grateful to their employers. The amount they would pay may not even be as much as they pay as rent. But sadly, the financial sector is not ready for this, what it wants is quick money. There are several methods the government can use to revolutionize mortgage. The Pension Funds can be tied to mortgage because the contributors will not need it until 15 or 20 years later. People can access these funds at a cheaper interest rate of 5, 8 and 10 percent. The Pension Fund can boost the financial sector since the contributors are not in a hurry to collect their money, unlike the normal savings which can be withdrawn at any time if the need arises. Pension is a veritable source to plough money into mortgage. Interestingly too, the money saved can be used for real estate. The government should create an enabling environment, through the Land Use Act, for those who have the funds to build their own houses. Government should also ensure that only genuine investors, not speculators, invest in real estate. Government must also provide infrastructure. Since 1992 when the National Housing Policy, (NHP) was promulgated, the daunting challenges facing the country’s housing sector, such as poor policy implementation, bureaucracy and corruption, are yet to be tackled. What is the way forward? The policy did not face realities; it was formulated theoretically and did not face what was on ground. The policy has been in existence for a long time without review. Some of our laws are outdated. Of course, they need to be compatible with the current things in the world. How best can professional bodies like the NIESV help government to produce a reliable blueprint for housing development in Nigeria? It is possible if only the government can take professional advice from members of such bodies. Professionals hardly have a say because government officials have already made up their minds on what to do. They always look for a political solution to every problem. But we all know it is not realistic. Even when they engage professionals as their advisers, do they take their advice? Of course, they do what the ruling party wants. Whenever professionals hold conferences, seminars or workshops, they come up with a communiqué; but to what extent has the government implement their recommendations? Sadly too, when the professionals get to the helm of affairs, they become politicians because when they realize they cannot change the system, they join it.