By 
Over a month ago when PENCOM announced the updated guidelines for accessing the balance of Pension Fund Accounts towards the payment of Equity Contributions for Residential Mortgages by Retirement Savings Account (RSA) Holders, there was excitement all around.
The media was awash with congratulatory messages and ‘how-to’ explainers for RSA holders. Within a week, Pension Fund Administrators were sending out bulk messages to their customers encouraging them to make inquiries on how to access 25% of their RSA balance as part equity in their homeownership aspiration.
In an ideal situation, the speed of adoption by the PFAs is incredibly laudable. The media engagement has been significant as well, as it is rightly a welcome development after years of advocacy for this guideline. While this new update is a brilliant idea in itself, the contextual application and its ability to move the needle in solving Nigeria’s over 28 million housing deficit is what has been at the forefront of my mind.
Who needs this 25% equity contribution toward home ownership? Certainly not the high-income earners in Nigeria who make up less than 5% of the country’s over 200 million population. By virtue of their personal balance sheets, credit scores with the banks, and network across countries – accessing capital to build or buy a house has historically not been a challenge for this demography.
For middle-income earners though, who make up over 27% of Nigeria’s population, a scheme like this seems like the light at the end of the tunnel – until we get into the practical details of home ownership, access to and cost of capital, and the cost of building materials.
For the third time in 2022, the policy-setting committee of the Central Bank of Nigeria (CBN) raised the monetary policy rate (MPR), which measures interest rate, from 14% to 15.5%. Without a staff identity card showing that a person works with a recognized (read multinational) organization in Nigeria, or collateral equal to or greater than the sum being asked for – no financial institution will provide a loan to a middle-income earner.
So, while on the one hand there appears to be increased access to funds to own property, on the other hand, double-digit interest rates and extremely limited access to capital make it practically impossible for that aspiration to be fulfilled.
As a real estate development expert with over two decades of experience building residential estates, commercial and recreational spaces, as well as mixed-use facilities, my understanding of the industry and housing policies is that if adopted contextually in Nigeria, can help to meet the housing needs of Nigerians at home and in the diaspora while unlocking value across the real estate value chain. It is also one of the reasons I constantly explore alternative financing and building models to improve affordability while retaining quality, as well as investigating the merits of decentralized finance, tokenization, and shared ownership.
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