THE ROLE OF MORTGAGE BANKS IN HOUSING DEVELOPMENT IN NIGERIA

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Housing is one of the three basic needs of mankind and it is the most important for the physical survival of man after the provision of food. Decent housing is one of the basic needs of every individual, the family and the community in general. As a pre-requisite to the survival of man, it ranks secondly only the food. It is also one of the best indicates of a persons standard of driving and his place in a society. The housing and individual lives in a symbol of his status, a measure of this achievement and social acceptance, an expression, an expression of his personality and the barometer that seems to indicate in a large measure. The way the individual perceives himself and how the perceived by the large society. Is the measure of all good (or bad) things in life that will come to him and his family (Agbola, 1995). The importance of housing in human development has been well documented by scholars. The position of scholars varys depending on the aspect of housing each one delves into. Omirin (1998), researched into land a accessibility and low income house building in metropolitan Lagos. Based on her analysis of house builders behavior of selected low income earners of Lagos she asserts that it is a wrong notion to continue to rank land accessibility as the greatest constraints of house builders. She stated that lack of finance an escalating cost now takes precedence overland accessibility. Williams (2022), opines that access to shelter produced by public agencies continue to conclude the urban poor who simply cannot muster the financial resources required to procure these housing units. Jaiyeoba and Amole (2022) examined the appropriateness and socio economic implications of law income housing delivery as supportive rather than provider approach. They stated that what a required is the determination of the extent to which the law income groups requuire support. Olusola Aina and Ata (2022) identified lack of soft loan as one of the major obstacle against urban housing production Nigeria. According to Oyeyipo (2021) defines housing as a residential area of similar dwellings built by property developers and usually under a single management; "they live in the new housing development" The world health organization committee on housing (1999) www.vanguardnews.com source defines it as “the physical structure used for shelter including equipment and devices need for physical and social well being of occupant” such equipment and devices include utilities and services like electricity, water supply, good access roads sewage and refuse damp facilities. The fact remains that Enugu metropolis has been the administrative centre for the then eastern region, Enugu metropolis is occupied mainly by government workers with low income. This position makes it difficult for them to afford the high cost of developing housing estates for their use. They therefore resort to borrowing from both formal and informal sources in other to find money for housing development and also Enugu metropolis is made up of river line area, swamp ground. The question then “Is the existing financial institutions in Enugu metropolis enough to satisfy the demand for residential housing loans of these low income earner residing in Enugu metropolis?” If not how can be situation be improved. This research work therefore intends to the existing financial structure of Enugu metropolis with a view to finding out how efficient it has been performing and proposing how the system could be improved. Housing estates is a fundamental and essential features in the urban environment. Adequate provision of housing estates have a great deal of positive impact on both the economic and social life of the urban citizens and its inadequacy has the reverse effect. The shortage of housing estate is one of the major problems facing the urban centers especially in the developing countries. Thus could be attributed estate development involves large amount of money, which is usually not within the capability of most urban dwellers particularly the medium and low income groups, the rate of housing estate construction often tend to be small and generally depend on financial resources. This institution of financial scarcity is made worse by the rigid attitude of financial institution towards lending for housing development. Their system of granting loan make it very difficult for the medium and low income groups to benefit from the available facility. The bulk of the mortgage loans go the upper class. 1.2 STATEMENT OF THE PROBLEM In recognition of the importance of the housing sector , and considering that financial institutions have ready access to cheap sources of funds through retail deposits as well as the infrastructure to process real estate loans efficiently and the skills to manage the risks involved, the Central Bank of Nigeria has encouraged financial institutions to support the development of the housing sector in Nigeria. In particular, the CBN has through its credit policies, required the erstwhile commercial and merchant banks to allocate a stipulated minimum proportion of their development to the Housing/construction sector Where financial institutions failed to meet the stipulated target, such shortfalls were deducted at source from the defaulting financial institutions deposit with the CBN and passed on to the housing/construction sector through the Federal Mortgage Bank of Nigeria. Most of the problems financial institutions have in housing development in Nigeria are. Low Interest Rate on National Housing Fund Low Level of Participation in the National Housing Fund Cumbersome Legal Regulatory Framework for Land Acquisition. The way forward on this issues is that The financing of national housing programmes should be viewed primarily as a national responsibility. The private sector should be encouraged to provide the bulk of actual investment funds for housing middle income and upper income groups. For the low income group, however, continued public support, individual initiative and labour movement involvement, will be required for housing and community development. Empirical evidence shows that private sector participation in housing is the most assured way to induce stability in the market. Indeed, the role of Government should emphasize creating an enabling environment to stimulate private sector participation in long-term housing finance. The housing fund contribution should be integrated into the personal income taxation system such that a defined proportion of taxes paid are allocated to the housing fund pool, as it is done in Singapore. There is need for constant re- engineering of the capital and money markets in order to cope with the renewed challenges of provision of some mortgage financing. In this regard, the restructuring and strengthening of the FMBN becomes imperative for it to remain a viable financial institution with the capacity to enhance efficient housing finance development in Nigeria. 1.3 OBJECTIVES OF STUDY The main objective of this study is to examine the role of financial institution in housing development in Enugu metropolises with a view to: 1. To find out whether financial has made any contribution in housing development in Enugu metropolises. 2. To examine the extent financial institution has contributed in the housing development in Enugu state. 3. To identify the difficulties encountered by financial institution towards housing development in Enugu. 1.4 RESEARCH QUESTIONS The following research questions will be answered in this study: 1. To what extent has the financial institution contributed in the housing development in Enugu state? 2. Has financial institution made any contributions in housing development in Enugu metropolises? 3. Has there been any difficulties, encountered by financial institution towards housing development in Enugu? 1.5 SIGNIFICANCE OF THE STUDY A study on housing estate finance is very financial institution of housing estate finance is valuable and could be utilized to achieve certain academic objectives. It can enlighten both the government, students and researchers on the importance of housing estate finance. The general result obtained from this study is educative, informative and broader the awareness of the public on current sources of housing estate finance in the estate. Estate surveyors and valuers could apply the result of this research work in their future housing estate finance planning and their advisory role to the public. The study would be utilized in making new housing estate policies and ensuring their implementation. This is because any housing policy that does not place priority on source of finance would ever remain incomplete. It will also serve as a basic for the allocation of finance for housing estate programmers. 1.6 SCOPE OF THE STUDY This topic “The Role of Financial institutions in housing development in Nigeria (A case study of Enugu metropolises in Enugu state ) is very vast but for purpose of manageability, and financial constraints, it has therefore been restricted or limited itself to financial institutions in Enugu state. In choosing the financial institutions the researcher has limited his research to those areas of the financial institutions or operations of the institutions that helps in the development of housing in the state . This has been so because the research assumes that financial institutions are saddle with the sole responsibility of enhancing even in the development of housing in Enugu state. 1.7 LIMITATIONS OF THE STUDY In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. However, the researcher were able to manage these just to ensure the success of this study. Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges. 1.8 DEFINITION OF TERMS Housing estate development: is a group of houses in an area of land, built only for dwelling purpose and not for commercial or industrial purpose. Financial institution: Is defined as informational or formal act of providing money. this sense financial planning, the estimating of cash receipt and disbursement. Finance may be defined as the management function of managing the flow of funds in an organization. It is also seen as the provision of money or means of payment at the time it is wanted, Aniagolu (1997). Finance as defined by western” dictionary is the science of managing money” here it concerns the control of money by individuals. Development: The term development is mostly applied in relation of land valuers and estate surveyors sees it as a way of embarking on constructional work that will amount or give rise to utilization of land with its improvement or re-improvement of an already utilized one. According to Todaro (1999:78) Development implies the multi-dimensional process involving charges in structures, attitude and institutions as well as the accelerations of economic growth, the reduction of inequality and eradication if absolute property.