ROLE OF THE CBN IN ENSURING AFFORDABLE HOUSING FOR NIGERIANS
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ROLE OF THE CBN IN ENSURING AFFORDABLE HOUSING FOR NIGERIANS
CHAPITRE ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
With a population of 173 million people, Nigeria is the most populous country in Africa and the eighth most populated country in the world. Over the last decade, the economy has grown at an annual pace of roughly 7%, and Lagos, after Johannesburg, has the largest and most liquid market in the area, necessitating huge housing building.
A central bank, reserve bank, or monetary authority is a public agency in a country that typically issues currency, supervises the money supply, and controls interest rates. Central banks frequently supervise their respective countries’ commercial banking systems.
Unlike a commercial bank, a central bank has a monopoly on producing the national currency, which is normally used as legal tender (Arthur and Sullivan, 2003). The Central Bank of Nigeria (CBN) is an example. The CBN’s different duties, however, will undoubtedly have a specific impact on housing delivery in Nigeria.
According to Wikipedia.org, central banks all over the world perform similar functions, such as implementing monetary policies, determining interest rates, controlling the nation’s entire money supply, acting as 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 is effective.
One of life’s most fundamental needs is shelter. Indeed, the housing sector is crucial to a country’s prosperity since it directly influences not just the well-being of its citizens but also the overall performance of the economy. Thus, housing provision has captured the attention of most governments, particularly developing ones, since the early 1970s for a variety of reasons.
For starters, it is one of humanity’s three most basic necessities. As a result, governments have devised assistance schemes in the areas of finance, infrastructure provision, and research to improve the delivery of suitable housing.
The emphasis on finance, on the other hand, has been particularly prominent because housing provision necessitates large capital outlays, which are frequently beyond the capacity of the majority of individuals (Akeju, 2007).
The increased rate of urbanisation has put pressure on the government and other government institutions such as the Central Bank of Nigeria to produce housing development plans in Nigeria as a result of the situation in most cases where the demand for housing units outweighs the supply. Individuals, businesses, and the government must all step up to close this gap.
The Nigerian Building Society (NBS) was established in 1956 as the first attempt at institutionalising home financing through the apex bank in Nigeria. Following that, regional governments established housing organisations, savings and loans banks, and cooperative banks under the supervision of the Central Bank of Nigeria to provide financing for housing development in the form of mortgage credit (CBN, 2003).
Following the Indigenization Act (1972), which aimed, among other things, at promoting and transferring ownership and control of foreign enterprises to Nigerians, the Nigerian Building Society was renamed and metamorphosed into the Federal Mortgage Bank of Nigeria (FMBN) in 1977 to reflect the Federal Government of Nigeria’s 100% ownership.
Within two years of its establishment, the FMBN’s capital base was boosted from N20 million when it was purchased by the government in 1977 to N150 million in 1979, a 600% growth. The FMBN’s current equity basis is approximately N5 billion, with barely 50% paid-up (CBN, 2011).
The Federal Ministry of Finance (FMF) and the Central Bank of Nigeria (CBN) share ownership of the bank. Under the supervision of the Central Bank of Nigeria, the FMBN was granted the position of premier and apex mortgage institution in Nigeria in 1994. However, the researcher is investigating the role of the Central Bank of Nigeria in guaranteeing affordable housing for Nigerian citizens (CBN, 2007).
Through the FMBN, the Central Bank of Nigeria has encouraged the emergence and growth of viable primary mortgage institutions to service the need for housing delivery in all parts of Nigeria; mobilised 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).
1.2 STATEMENT OF THE PROBLEM
home has become a daily topic of conversation in many sectors of the Nigerian economy, prompting several government bodies to pursue plans for affordable home development for both their employees and the general public. It has become increasingly clear that the majority of Nigeria’s urban population lives in dehumanising housing environments,
while those who have access to average housing do so at exorbitant costs. According to Onibokun (1986) and Nubi (1991), rent in Nigeria’s main cities is approximately 60% of an average worker’s disposable income.
With the high cost of house construction and the government’s and its agencies’ insufficient effort in housing delivery, the researcher will examine the role of the CBN in providing affordable housing for Nigerians.
1.3 OBJECTIVES OF THE STUDY
The following are the study’s objectives:
1. To investigate the role of the Central Bank of Nigeria in guaranteeing affordable housing for Nigerians.
2. Determine the affordability of housing in Nigeria.
3. To identify the reasons that restrict Nigerians from obtaining affordable housing.
1.4 RESEARCH QUESTIONS
1. What role does the CBN play in providing affordable housing for Nigerians?
2. How affordable is housing in Nigeria for Nigerians?
3. What reasons are stopping Nigerians from obtaining cheap housing?
1.5 HYPOTHESIS
HO: The Central Bank of Nigeria has not contributed to the provision of affordable housing for Nigerians.
HA: The Central Bank of Nigeria has helped to the supply of cheap housing for Nigerians.
1.6 SIGNIFICANCE OF THE STUDY
The following are the study’s implications:
1. The study’s findings will inform the general public about the roles that government institutions and the Central Bank of Nigeria may play in providing affordable housing for Nigerians.
2. This research will also serve as a resource base for other academics and researchers interested in conducting additional research in this sector in the future, and if implemented, will go so far as to provide new explanations for the topic.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
The contribution of the Central Bank of Nigeria to sustainable housing development in Nigeria will be covered in this study on the role of the CBN in guaranteeing cheap housing for Nigerians. It will also provide an overview of the services provided by the Federal Mortgage Bank of Nigeria FMBN, which is similar to a subsidiary of the CBN.
STUDY LIMITATIONS
1. Financial constraint- Inadequate funds tend to hamper the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection procedure (internet, questionnaire, and interview).
2. Time constraint- The researcher will conduct this investigation alongside other academic activities. As a result, the amount of time spent on research will be reduced.
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