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Bank’s Credit to Nigeria’s Real Estate sector hits 5-year low

Nigeria’s real estate sector may suffer yet another setback as the total credit allocated to the sector by banks dipped consecutively for five straight years. 

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Where to buy Real Estate in Lagos in 2021, Nigeria's Real Estate Sector recorded positive growth after three year low, Real estate: Declining credit reflects underlying weakness 

Nigeria’s real estate sector may suffer yet another setback as the total credit allocated to the sector by banks dipped consecutively for five straight years.

According to the latest data on the banking sector’s credit provision to the private sector released by the National Bureau of Statistics (NBS), banks’ total credit allocation to Nigeria’s real estate sector declined again by N26 billion in the first quarter (Q1) of 2019.

Note that banks’ credit facility to companies in the real estate sector has been on the decline since 2016. As at Q1 2019, a total sum of N593.3 billion was allocated to the sector. This is 4% lower than N615.3 allocated in the first quarter of 2015.

Credit on 5-year low

The real estate sector may be one of the best places to invest in, but low credit provision to the private sector has continued to be a major problem. Data shows that the sector is one of the least-financed by financial institutions. Out of seventeen sectors that received credit facilities from banks in Q1 2019, the real estate sector ranked 10th while the oil and gas sector scooped the highest of entire N15.2 trillion allocated to all the sectors.

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Growth despite low credit

Despite declining credit provision to the real estate sector, the sector recorded positive growth in the first quarter of 2019 after over three-year decline.

According to the NBS data, the last time Nigeria’s real estate sector recorded a positive growth was the 4th quarter of 2015 (0.13%). Thereafter, growth in the sector has nosedived for several quarters until the 0.93% growth recorded in Q1 2019.

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Real estate growth may be back to the red zone

It should be noted that according to The World Bank projection, about 108 million Nigerians are estimated to be homeless. This is said to be due to the governments’ inability to provide the required number of houses.

Get the latest insights on Nigeria’s Real Estate Sector

Despite the Federal Government’s constant claim that efforts are being made to revitalise Nigeria’s real estate sector, the lack of interest by lenders does not seem to corroborate the claims.

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Also, some real estate experts have expressed worry over the low funding for the real estate sector. According to the Chairman of Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON), Sir Nweke Umezuruike;

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“We continue talking about a large pool of funds all over the place, which is just lying idle. Such funds should be put into productive use to fund Mortgage. Until we fully embrace mortgage financing, we cannot solve the housing shortage in the country.

“We give the impression that there is plenty of money standing in certain accounts, notably the pension funds, the housing funds and in insurance companies, and this money is not being applied to housing development, that is quite a problem. “As long as we continue in this way, we cannot have a better housing market.”

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For Your consideration

In developed climes, the mortgage sub-sector obviously plays an important role in stimulating the real estate sector. While there have been several mortgage schemes and initiatives in Nigeria, the impact has remained somewhat unfelt.

However, it is pertinent to note that real estate is one of the sectors yet to recover from the recession witnessed in the country. Hence, declining credit facilities may largely dampen growth prospects and drag the sector back to the red zone.

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Energy

LPG: Nigerians paid more to refill 12.5kg gas cylinders in December

Nigerians paid more money to refill their 12.5Kg gas cylinder in December than they did in November 2020.

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Prices of Kerosene, Cooking Gas and Diesel

The average price for refilling 12.5kg cylinder of liquefied petroleum gas (LPG) increased by 1.75% in December compared to the month of November, according to the NBS report for December 2020.

The average cost of refilling the 12.5kg gas cylinder moved from N4,082.97 in November to N4,154.28 in December 2020.

According to the NBS report, the average price for refilling a 5kg cylinder of cooking gas increased by 0.12% month-on-month to N1,949.75 in December 2020 from N1,947.47 in November 2020.

Key highlights

  • Bauchi (N2,489.12), Borno (N2,396.69) and Adamawa (N2,392.88) recorded the highest average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas in the month of December 2020.
  • Enugu (N1,563.75), Imo (N1,678.89) and Oyo (N1,691.67) recorded the lowest average price for the refilling of a 5kg cylinder for Liquefied Petroleum Gas.
  • Delta (N4,838.46), Cross River/Sokoto (N4,800.00) and Akwa Ibom (N4,614.49) recorded the highest average price for the refilling of a 12.5kg cylinder for Liquefied Petroleum Gas.
  • While, Kaduna (N3,191.67), Zamfara (N3,462.50) and Niger (N3,500.00) recorded the lowest average price for the refilling of a 12.5kg cylinder for Liquefied Petroleum Gas.

LPG is fast becoming an alternative to firewood and kerosene as a means of cooking for most homes especially in urban areas in Nigeria. LPG is cleaner and more efficient than kerosene in cooking.

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LPG should be made much more available and affordable to reduce the cost of living for most Nigerians.

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Coronavirus

COVID-19: FG to launch Rapid Response Register for urban poor

The FG has moved to inaugurate an emergency intervention database for the poor residing in urban centres and affected by the pandemic.

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Nigeria blows past 40,000 COVID-19 cases

The Federal Government has announced that it would inaugurate a COVID-19 Rapid Response Register (RRR), which would be a health emergency response for the poor living in urban centers that have been affected by the pandemic.

This was disclosed by Mr. Joe Abuku, Communications Manager, National Social Safety Nets Coordinating Office (NASSCO), on Sunday in Abuja.

Mr. Abuku said the register would identify Nigerians that have been made poorer due to the pandemic, targeting mainly Traders and SME Owners.

He added that the scheme was designed by the Ministry of Humanitarian Affairs, Disaster Management, and Social Development, through NASSCO, in partnership with the World Bank, and will be inaugurated by Vice President Yemi Osinbajo, on Tuesday, at Transcorp Hilton, Abuja.

What Joe Abuku is saying

  • “This register is being built by NASSCO as an expansion of the existing National Social Safety Nets Project (NASSP). It targets small business owners, street vendors, petty traders, Small and Medium Enterprises (SMEs), and service providers.
  • “Others are low wage employed individuals and families, including daily wage-based laborers, urban poor and destitute (persons with disabilities), and vulnerable families in slum areas, affected by the pandemic.
  • “The category of Nigerians who will be in this register is typically the urban/semi-urban poor engaged in the informal sectors of the economy, who lost their source of livelihood due to the impact of COVID-19 on businesses and jobs. The Federal Government plans to extend cash transfers to households in this register for a period of 12 months.”

He also stated that NASSCO would use geographical satellite sensing to locale the wards where the urban poor live, as the targeting of the poor would be done via cell phone Short Messaging Service (SMS) technology that allows residents of targeted communities register to be assisted by following simple steps using USSD codes.

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The SMS approach would be integrated through data gathered by the National Living Standard Survey Assessments and would be complemented by existing databases of Non-Governmental Organisations and local self-help-support groups.

  • “Mobile phone numbers of those deemed eligible for assistance will be linked to digitized bank accounts to receive cash support, under an expanded cash transfer program of the Federal Government. These cash payments are designed to boost consumption for these households, build their resilience, and in some cases, inject fresh capital into small businesses.”

What you should know

  • Nairametrics reported last year that the World Bank said the outbreak of the coronavirus pandemic could make an additional 5 million Nigerians poor.
  • The Poverty and Shared Prosperity Report 2020 by the World Bank Group indicate that between 88 million and 115 million people could fall back into extreme poverty as a result of the COVID-19 pandemic.
  • This is in addition to an increase between 23 million and 35 million in 2021, potentially bringing the total number of new people living in extreme poverty to between 110 million and 150 million.

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Coronavirus

Covid-19: Nigeria needs serious controls not a second lockdown – House Committee on Education

A member of the lower legislative house has advised the government to focus on serious control measures to help prevent the spread of COVID-19.

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Professor Julius Ihonvbere, Chairman, House Committee on Basic Education & Services, said the Federal and States governments should not impose a lockdown, but rather focus on serious control measures to help prevent the spread of the coronavirus.

He disclosed this during an interview with Channels TV on Sunday evening.

  • “I do not think we need a national lockdown now, I think what we need now is the first instance is serious controls. Let me say that the Governor of Lagos is the ‘poster man’ for the fight against covid-19. If we see you outside without a mask, we will arrest you and charge you to court, that is the kind of courage we need.”

READ: Lagos state police raid night clubs, arrest 237 suspects, to face prosecution

He cited serious controls like buying hand sanitizers and washing materials to schools and urban areas in Lagos as part of the controls that should be commended.

  • “The issue is not a lockdown. If you lock people down, and you are not doing the right thing inside the lockdown, the cases will still increase. They (masses) will break it and will challenge it as they did during the first lockdown. So, the real issue is to bring out the policies and implement them.
  • “The Federal Ministry as a supervisor, yes states have the autonomy, but we give the state’s money from UBEC every year, we give them billions, what are they doing with it?

READ: African Union secures 270 million Covid-19 vaccine doses from drugmakers

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He urged that the FG should investigate what States use their Universal Basic Education Funds for, as Nigeria is in a time for “retooling and repurpose” and UBEC funding should be utilized in the fight against Covid-19.

What you should know 

  • Nairametrics reported last week that the Federal Government said Nigeria is not contemplating another lockdown and urged Nigerians to ignore social media posts circulating the possibility of another lockdown.

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