Housing Microfinance

The growth in demand for affordable housing has led to the search for alternative financing options. High transaction costs and rigid financial products have made commercial bank loans unattractive to low income earners in Nigeria. We are here to update you with tailored finance solutions for your housing needs and guide you on your path to securing best product offerings and properties to ensure financial success. Banking institutions hoping to invest in housing microfinance can subscribe to this portal and be informed on viable business models and financial products to adopt to serve the needs of the widening low income bracket. REIC ensures access to information on institutional financial services which target poor households and micro enterprises. Our research on commercially viable business models for microcredit is dependent on innovative practices imbibed in emerging economies of Asia with similar demographic features as Nigeria. We believe this is the best approach to solving Nigeria housing problems and financial institutions have already started benefiting from our knowledge in this area.

Housing microfinance, otherwise known as microfinance for housing or incremental financing, is regarded as the application of a microfinance based approach to housing finance. While the concept ‘housing microfinance’ is relatively new in development circles, the practice is not. Access to housing and access to housing finance by low income earners is a critical development issue facing most countries around the globe. Many households in Africa are unable to access mortgage finance either because it does not exist or because it is inaccessible.

Like microfinance, housing microfinance is about liberalizing access. Traditional mortgage practices leave out low-income people and like microfinance, it is possible to use flexible structures and processes to achieve mass housing targets on a sustainable basis.

In 2013, the Federal Mortgage Bank of Nigeria (FMBN) launched its Informal Sector Cooperative Society Loan Scheme, designed to enable informal sector participants to access the benefits of the National Housing Scheme. FMBN explained that the scheme will provide a platform for members to form housing cooperatives to access loans for estate development.

Private sector partnerships between lending institutions and construction companies such as the one between LAPO Microfinance Bank and Lafarge in October 2013 had seen an affordable housing scheme take off. The scheme tagged “Easy Home” was initiated in response to the challenges of urbanization in Nigeria, the most populous country in Africa, with a housing gap estimated at about 17 million units. Prospective beneficiaries under the scheme are identified through the network of LAPO microfinance bank branches or distributors of Lafarge.

Under this micro-finance scheme, applicants can access loans to own properties as cheap as N1million naira, 2-year tenure and no collateral. Documentation required to access loan is not excessive and initial savings deposit of N1,000; all these are realistic in light of the financial capability of the applicants who are mostly the poor. The loan product is designed to aid low income earners in becoming home owners through provision of funds for the construction or reconstruction of homes. Construction is facilitated by the free technical assistance from Lafarge.

 

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