With the rising housing deficit in the country, stakeholders in the building and construction sector are calling for more investment in housing development from the growing pension fund.
The Chairman, Association of Estate Agents in Nigeria, Mr. Chudi Ubosi, said at a Mandatory Continuous Professional Development Programme of the Nigerian Institution of Estate Surveyors and Valuers, Lagos State Branch, that it had become clear that there was a critical shortfall of housing as demand outweighed supply by a ratio of 1:10.
According to him, there should be increased investment in the housing sector as N59tn is needed to bridge the deficit with 700,000 units annually as against the 100,000 units currently being supplied by both the government and the private sector.
Ubosi, a Fellow of NIESV, said, “A lot more can still be done to help housing with pension funds. Property remains one of the most stable investments. We need to create financial products and mortgage backed securities in conjunction with Pension Fund Administrators and mortgage banks.
“The investment should also focus on the lower end of the housing pyramid, while regulations should be amended to allow the PFAs to put money in the Close Pension Fund Administrators to enable them invest in housing.”
The Chairman of the occasion and a former President of the institution, Mr. Yinka Sonaike, said housing had been a recurring decimal in the country and that efforts should be geared towards reducing its deficit.
The Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu, who was represented by Mr. Ibrahim Kangiwa, said that in 2014, the Pension Reform Act was reviewed to cover federal, state and local governments and that it provided opportunities for increased investment of pension funds in infrastructure and housing development as well as allowed for part of contributing workers’ Retirement Savings Accounts balance to be used as equity contribution for residential mortgage.
According to the DG, the total value of pension fund assets under management and custody with the licensed pension operators was N5.6tn as of May this year, adding that there was a deliberate effort by PenCom to increase pension investment in infrastructure and housing.
She, however, noted that investment of the fund in housing was limited by the cumbersome nature of that type of investment.
“Direct investment is currently not allowed due to liquidity and valuation issues. Traditionally, real estate is complex; when you need to get your fund out, real estate may not be easily disposable,” Anohu-Amazu said.
The Chief Executive Officer, Stanbic IBTC Pension Managers, Mr. Eric Fajemisin, said the amount accumulated from pension in the last 12 years was nowhere near where it should be, adding that contrary to popular belief, the fund was not idle.
He said housing issues must be treated with a holistic approach that would include policy intervention and strong political will, adding that the Federal Mortgage Bank of Nigeria had estimated that N56tn would be required to meet the shortfall in the country’s housing needs, but that the current sources of housing finance were not adequate to bridge the supply deficit.
Fajemisin stated, “The Nigerian housing sector is supported by favourable demographics but fraught with a huge supply deficit and ineffective demand.
“It can play a special role in the economic dialogue in Nigeria as it generates employment, increases productivity, raises standard of living and alleviates poverty.”
The Chairman, NIESV, Lagos branch, Mr. Offiong Ukpong, said that the pension fund, if well directed, could solve the country’s housing needs now and also be a secured investment for the future.