1.1 BACKGROUND TO THE STUDY
Nigeria is the most populous country in Africa and 8th in
the world, with a population of 173 million. Over the past decade the
economy has been growing at an average rate of around seven percent
yearly and, after Johannesburg, Lagos has the biggest, most liquid
market in the region thereby creating the need for massive housing
development. A central bank, reserve bank, or monetary authority is a
public institution that usually issues the currency, regulates the
money supply, and controls the interest rates in a country. Central
banks often also oversee the commercial banking system of their
respective countries. In contrast to a commercial bank, a central bank
possesses a monopoly on printing the national currency, which usually
serves as the nation's legal tender (Arthur and Sullivan, 2003).
Example is the Central Bank of Nigeria (CBN). The various roles of CBN
will however in no doubt have specific impact on housing delivery in
According to Wikipedia.org, Central banks around
the world play similar functions some of which may include-
implementing monetary policies, determining Interest rates, controlling
the nation's entire money supply, the Government's banker and the
bankers' bank ("lender of last resort"), regulating and supervising the
banking industry, setting the official interest rate – used to manage
both inflation and the country's exchange rate– and ensuring that this
rate takes effect via a variety of policy mechanisms and managing the
country's foreign exchange and gold reserves and the Government's stock
Shelter is one of the basic necessities of life.
Indeed, the housing sector plays a very critical role in a country’s
prosperity as it directly affects not only the wellbeing of the
citizenry but also the general performance of other sectors of the
economy. Thus, provision of housing has, since the early 1970?s, engaged
the attention of most countries, especially the developing ones, for a
number of reasons. First, it is one of the three most important basic
needs of mankind. Consequently, programmes of assistance in the areas
of finance, provision of infrastructure and research have been designed
by governments to enhance adequate housing delivery. The focus on
finance has, however, been very prominent for the reason that, housing
provision requires huge capital outlay, which is often beyond the
capacity of most of the citizens (Akeju, 2007).
Increase in the rate of urbanization has exerted
pressure on government and other government agencies like the Central
Bank of Nigeria to develop plans for housing development in Nigeria as a
result of situation experienced in most cases that the demand for
housing units outweighs the supply. To address this gap, individuals,
firms, and government must intervene.
The first attempt at institutionalizing housing
financing through the apex bank in Nigeria was the establishment of the
Nigerian Building Society (NBS) in 1956. Thereafter, regional
governments set up housing corporations, savings and loans banks and
cooperative banks through the supervision of the Central Bank of
Nigeria to provide funds in the form of mortgage credit for housing
development (CBN, 2003). Following the Indigenization Act (1972) which
aimed, amongst others, at promoting and transferring the ownership and
control of foreign enterprises to Nigerians, the Nigerian Building
Society, in 1977, was renamed and metamorphosed into the Federal
Mortgage Bank of Nigeria, (FMBN) to reflect the 100 per cent ownership
of the Federal Government of Nigeria. Within two years of the
establishment of the FMBN, its capital base was increased from N20
million when it was bought over by government in 1977 to N150 million in
1979, reflecting an increase of over 600 per cent. The current equity
base of the FMBN is about N5 billion, with only 50 per cent of it
paid-up (CBN, 2011). Equity in the bank is split between the Federal
Ministry of Finance (FMF) and the Central Bank of Nigeria, (CBN). In
1994, the FMBN was granted the status of the premier and apex mortgage
institution in Nigeria under the supervision of the Central Bank of
Nigeria. However, the researcher is analyzing the role of CBN in
ensuring affordable housing for Nigerian citizens (CBN, 2007).
The Central Bank of Nigeria through the FMBN has
encouraged the emergence and promotion of the growth of viable primary
mortgage institutions to service the need of housing delivery in all
parts of Nigeria; mobilized both domestic and offshore funds into the
housing sector; linked the capital market with the housing industry by
establishing and operating a viable secondary mortgage market to
support the primary mortgage market; and distributed the National
Housing Fund (NHF) in accordance with the provisions of the NHF Act”
1.2 STATEMENT OF THE PROBLEM
The problem of housing has become a daily discussion in all
quarters of the public and private sector of the Nigeria economy and
has prompt several government agencies to implements plans for housing
development for both their staffs and the general public at affordable
cost. It has become increasingly glaring that most of the urban
population in Nigeria live in dehumanizing housing environment while
those that have access to average housing do so at abnormal cost.
According to Onibokun (1986), Nubi (1991), rent in major cities of
Nigeria is about 60% of an average workers disposable income. With the
high cost of house building and the effort of government and its
agencies that has been inadequate in the housing delivery, the
researcher will analyze the role of CBN in ensuring affordable housing
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
- To examine the role of CBN in ensuring affordable housing for Nigerians.
- To ascertain the affordability of housing for Nigerians.
- To determine the factors preventing Nigerians from getting affordable houses.
1.4 RESEARCH QUESTIONS
- What is the role of CBN in ensuring affordable housing for Nigerians?
- What is the affordability of housing for Nigerians?
- What are the factors preventing Nigerians from getting affordable houses?
HO: CBN has not contributed to the provision of affordable housing for Nigerians.
HA: CBN has contributed to the provision of affordable housing for Nigerians.
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
- The findings from this study will educate the general public
on the roles that government agencies and Central Bank of Nigeria can
play in the provision of affordable housing for Nigerians.
- This research will also serve as a resource base to other
scholars and researchers interested in carrying out further research in
this field subsequently, if applied will go to an extent to provide
new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study on the role of the CBN in ensuring affordable housing
for Nigerians will cover the contribution of the Central Bank of
Nigeria towards sustainable housing development in Nigeria. It will
also cover the overview of the services rendered by Federal Mortgage
Bank of Nigeria FMBN which can be likened to a subsidiary of the CBN.
LIMITATION OF STUDY
- Financial constraint- Insufficient fund
tends to impede the efficiency of the researcher in sourcing for the
relevant materials, literature or information and in the process of
data collection (internet, questionnaire and interview).
- Time constraint- The researcher will
simultaneously engage in this study with other academic work. This
consequently will cut down on the time devoted for the research work.
Akeju, A.A., (2007), “Challenges of Providing Affordable Housing in Nigeria” being a paper presented at the 2nd Emerging Urban Africa International Conference on Housing Finance in Nigeria.
Arthur, J and Sullivan, W (2013) “The Cross-Market
Spillover of Economic Shocks through Multi-Market Banks” Accessed
online at http://www.fdic.gov/bank/analytical /cfr/2011/sept /BRC_2011_68_Berrospide.pdf.
CBN (2003) “Guidelines for Primary Mortgage
Institutions”, Publication of the Other Financial Institutions
Department Central Bank of Nigeria.
CBN (2011) “Revised Guidelines for Primary Mortgage Banks in Nigeria”
Central Bank of Nigeria (2007), The Financial System Strategy (FSS) 2020
Nubi, T.O. (2002). Financing Low Income Housing in Nigeria Cities: Need for Paradigm Shi. Proceeding of the Faculty of Environmental Design Conference O.A.U. Ile Ife, 340 -345.
Onibokun, P. (1985). Housing in Nigeria. Ibadan University Press.