Chairman of Honeywell Group, Dr. Oba Otudeko has said that mortgage financing models would provide Deposit Money Banks (DMB) greater access to the under-served lower to lower-middle income segments and reduce financial exclusion.
Otudeko was speaking at the Chartered Institute of Bankers of Nigeria (CIBN) valedictory service organised for its outgoing president, Debola Osibogun in Lagos.
According to the industrialist, the limitations of Nigeria’s current mortgage financing model that entails high equity contributions, leading to shallowness of the secondary refinancing market, which are obviously evidenced by the low contribution of mortgage loans and advances to Gross Domestic Product (GDP) at 0.5 per cent, compared to other developing countries such as South Africa and Malaysia with an average rate of 40 per cent.
To him, the multiplier effects of the additional financing on the construction value chain, employment and aggregate money supply would further drive the growth of deposits and assets in the Nigerian banking sector.
Otudeko says , financial inclusiveness for sustainable development is a strategy that could unlock newer sources of growth, access to housing and by implication, mortgage financing.
According to Otudeko, “This is indeed indicative of the volume of re-engineering that needs to take place in the mortgage banking/housing finance sector. Invariably, this is a daunting task in a slowing economy with a 2.8 GDP growth rate, accompanied with much lower foreign direct and portfolio investment, which together create a much smaller pool of investible funds for housing,”