Economics

Consumer credit and mortgage financing can help fight corruption

Working in Nigeria is quite interesting and as well, very challenging. Public sector workers have to use their meagre salaries to fend for themselves, their immediate   and extended families. In a country where the minimum wage is N18, 000 per month and the rate of inflation runs sky high, the average Nigerian public sector worker finds it challenging and begins to cut corners to meet up with his daily expenses. There is no efficient and subsidised transport system, no functional housing scheme to guarantee the workers’ welfare.

So, naturally, in a bid to meet up with their counterparts in the private sector, they cut corners, compromise their offices and take bribes to bend the rules. It is only in Nigeria that you have to save about N5million to buy a car and pay cash.

It is only in Nigeria also that you have to save and build your house, paying cash to the contractors. In other places, consumer credit and mortgage financing are developed to assist the individuals to own properties and pay over a long period of time.

In many of the countries we borrowed democracy from, their citizens hardly build houses by themselves. There are mortgage institutions and housing companies that build houses and give them out to workers on mortgage financing basis. Workers who own such houses are conscious of the fact that they have to pay their mortgage on monthly basis or be thrown out.

Such workers are committed to their jobs because losing such jobs means they cannot afford a home. So, they become dedicated. But what do you have here?

Millions of Nigerians are without homes and no hope of ever owning one. When such individuals come in contact with avenues to make money, they go all out. That is why some members of the National Assembly are all out to make money in whatever way, without considering the plight of the ordinary man on the street who they claim to represent.

This is why some civil servants steal the nation blind. Worse still, political   appointees are given free cars, housing and feeding and almost every other thing is free. Such individuals having attained a certain level of standard of living they never dreamt of do everything in their power to ensure they secure their future. Hence, corruption is at its highest level in the civil service.

Also, consumer credit in developed society has helped workers to be focused and own whatever they want without stealing from the treasury. In those societies, you only need to show proof that you are gainfully employed. The banks will finance needed household equipment, car and any other thing that will make life comfortable for the worker. But the reverse is the case here.

You have to save to buy a car, build a house, and do everything for yourself. This has become part of the Nigerian culture such that Nigerians are naturally adverse to loans and advances. Nigerians have developed an attitude towards credit as if it is a taboo. Credit helps society and economy to grow. It puts money in the hands of individuals who ordinarily will not have had the means of making certain purchases.

It stimulates demand for goods and services and encourages manufacturers to produce more and thus ensure job creation. Nigeria is a nation with massive unemployment; a developed consumer credit scheme can trigger massive demand for goods and services that will encourage production and job creation. The mortgage system is yet another channel through which Nigeria can stimulate the economy and create jobs.

The demand for housing and mortgage in Nigeria is vast. Nigeria at the moment has a housing deficit of 17 million units and it is adding to that at the rate of two million houses per year. That is on the demand side. The housing supply side in any economy is a very strong driver of economic growth, if properly handled. There are so many linkages within the economy as regards housing employment.

Once an economy starts driving the housing and construction sector, it will employ carpenters, welders, masons, interior decorators, etc.  It is a whole lot of linkages. In any economy, this is a perfect instrument for job creation. This is exactly why the USA monitors housing gaps every month. One of the key indicators is how many houses have been built, how many old houses have been purchased. An index measures the movement of housing crisis within the economy.

This is a regime of change, Nigeria’s new policy makers should realise that this is an instrument of job creation and economic growth. Last year , in Washington, the former Minister of Finance and Coordinator of the Economy, Dr. Mrs Okonjo-Iweala, told reporters that Nigeria has decided to add more access and liquidity on mortgagee financing through the creation of a mortgage refinancing institution that will be mainly private sector held. She said that government will only be a motivator and will have a small share in it.

The partners, she disclosed, are the banks, which is why the CBN has a key role in it. The CBN is a partner. Nigeria, she said, will be looking for other investors. The document has been prepared to attract domestic and foreign investors into the housing sector. The World Bank is a strong partner as it is providing $300 million of liquidity facility at concessional rate of zero per cent, commitment charge of 0.7 per cent, 10 years of grace and 40 years repayment period to help us do this.

Six states – Lagos, FCT, Bauchi, Niger, and Anambra – were said to have volunteered to pioneer the mortgage project.  How far the last regime went is not so clear now. This government should see this as an instrument that could help the nation in its war against corruption and adopt it. What ever is the bottleneck in the drive toward a credible credit system and migrating financing should be handled with dispatch and give every Nigerian a sense of belonging.

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