Abstract
This paper examines mortgage financing in Nigeria as an instrument for poverty alleviation. Data for the study were obtained from the Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS) and Federal Mortgage Bank of Nigeria (FMBN) and analyzed using descriptive statistical methods. It was found that mortgage financing in the country had not contributed significantly to poverty alleviation in the past five and a half decades due to factors, such as the poor capital base of the mortgage finance institutions resulting in inadequate loanable funds, difficulty in accessing available loanable funds by the low and middle income groups, high interest rates on available loanable funds which are unaffordable to the low and middle income groups, challenges of the Land Use Act of 1978 and the inconsistent financial policies of the Nigerian financial system. The paper concludes that the mortgage market in the country could be strengthened to act as an instrument for poverty alleviation and economic empowerment. It recommends the introduction of pro-poor mortgage facilities in the mortgage industry in Nigeria as such initiatives will economically empower the low and middle income groups in the country to invest in real estate through home ownership and thereby contribute to the alleviation of poverty.Keywords: Pro-Poor Mortgage Facilities, Mortgage Finance, Poverty Alleviation, Real Estate, Financial Policies.
Highlights
The mortgage industry is an important component of a nation’s economy as it facilitates the mobilization of financial resources, especially savings and deposits from surplus units in the economy for financing housing investment needs
This paper examines whether mortgage financing has contributed to poverty alleviation in Nigeria in the past few decades, the constraints to achieving poverty alleviation in the country through mortgage financing and the way forward
Mortgage financing has not contributed significantly to economic growth in Nigeria unlike in other countries. This is evidenced by low mortgage loans and advances to Gross Domestic Product (GDP) ratio of 0.001%, compared to 50% in the United States, 60% in the United Kingdom, 55% in Europe and 35-40% in Asia
Summary
This paper examines mortgage financing in Nigeria as an instrument for poverty alleviation. The paper concludes that the mortgage market in the country could be strengthened to act as an instrument for poverty alleviation and economic empowerment. It recommends the introduction of pro-poor mortgage facilities in the mortgage industry in Nigeria as such initiatives will economically empower the low and middle income groups in the country to invest in real estate through home ownership and thereby contribute to the alleviation of poverty
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