INNOVATIVE APPROACHES TO FINANCING AFFORDABLE HOUSING IN NIGERIA.

Nigeria is a nation beset by financial difficulties, making it exceedingly challenging to find an

affordable place to live. The severe lack of affordable housing in Nigeria is largely due to high

construction costs; the price of cement, for example, has increased from one thousand five fifty

naira(1550) to eleven thousand naira (11,000).

One of the several innovative approaches to financing affordable housing for the masses is

Public–private partnerships.

According to David L. Weimer and Aidan R. Vining, a public-private partnership (PPP/P3)

involves a private entity financing, constructing, or managing a project in exchange for a

guaranteed stream of payments directly from the government or indirectly from users over the

project's projected life or some other specified period of time.

The PPP program, or public-private partnership program, has proven to be a valuable asset in

the development of Nigeria's housing system. This program offers various benefits that help to

improve the housing sector in the country.

One of the most significant advantages is that the government can provide revenue subsidies,

including tax breaks and guaranteed annual revenues for a specific duration. These incentives

encourage private investors to participate in building affordable housing units for low-income

families and individuals.

Additionally, PPPs promote accountability and transparency in the construction industry, as

both parties are jointly responsible for delivering successful outcomes. Overall, by utilizing
PPPs, Nigeria can address its housing deficit and provide adequate shelter for its citizens while

also promoting economic growth through private investment.

Although the PPP program has been implemented in Nigeria to address housing needs, it is

insufficient. It is therefore advisable that Federal Capital Territory Administration (FCTA)

streamlines the legal and regulatory framework governing PPPs in the housing sector in order

for the citizens to have access to decent housing accomodations at affordable cost as enshrined

in the National Housing Policy goal and objective.

Another approach to financing affordable housing is Mortgage guarantee and insurance

schemes.

Mortgage guarantee insurance scheme (MGC) is a policy meant to protect a mortgage lender in

the event that a borrower is no longer able to repay their loan or meet other contractual

stipulations regarding the loan. The scheme facilitates increased access to housing finance by

reducing or replacing the requirement for equity contribution that woud otherwise disqualify

mortgagors from accessing mortgages as required by the uniform underwriting standards.

Mortgage guarantee products encourage lenders to approve loans with smaller down

payments, making them more accessible and affordable, even for those with modest incomes.

Affordability will enable more people to qualify for mortgages, increasing the amount of money

available to more prospective homeowners. In addition to providing incentives to mortgage

lenders, a high-quality mortgage guarantee program shields lenders from credit loss in the

event of a borrower's default. CBN officials assert that a healthy primary mortgage market is

the result of the cooperative efforts of multiple elements that contribute to affordability and
accessibility for prospective homeowners. The Mortgage Guarantee Scheme (MGC) lowers

lender risk and promotes lending for reasonably priced homes.

Although the mortgage system in Nigeria is faced with various challenges like its accessibility

and its clarity, the importance of this programme cannot be over-emphasized

The Microfinance and housing cooporatives is another approach to financing affordable

housing in Nigeria.

Microfinance is a banking service provided to low-income individuals or groups who otherwise

would have no other access to financial services. Microfinance allows people to take on

reasonable small business loans safely, in a manner that is consistent with ethical lending

practices. Microfinance can also be used to support housing.

A panel discussion on financing for affordable housing was organized by the Financial Inclusion

Forum (FIF) and the European Microfinance Platform (e-MFP) on May 9. The 2017 European

Microfinance Awards, an annual competition organized by e-MFP, the Luxembourg Ministry of

Foreign and European Affairs, and the Inclusive Finance Network Luxembourg, served as the

inspiration for this focus. The competition assesses companies that provide creative solutions to

assist the low-income housing market.

Similar to conventional microfinance, microfinance and housing corporative has the power to

significantly raise low-income families' standard of living everywhere. Small, non-mortgage

backed loans, ranging from a few hundred dollars, are the basis of housing microfinance, which

is designed to assist low-income groups in adopting incremental building practices.

Microfinance and housing corporative, When combined with housing support services and

technical help, microfinance and housing cooperatives have the power to expand access to

better, safer, and less impoverished living conditions and can hasten the building of sufficient

housing. with housing support services and technical assistance, has the ability to increase

access to safer, healthier and less impoverished living conditions and can help speed up the

construction of adequate housing.

Despite potential drawbacks, public-private partnerships, mortgage guarantee and insurance

programs, microfinance and housing cooperatives are all advantageous for financing and can

be used to expand access to affordable housing in Nigeria.

In conclusion, in order to promote private investment in the housing sector, the government should

strengthen the laws and regulations governing PPPs. More transparency and accessibility are needed in

the mortgage system, and housing cooperatives and microfinance are essential to improving the

standard of living for low-income families.

Name: Asabia Demilade Mercy

School: Lagos state university (LASU), Lagos, Nigeria.