Volume 6 March April Management Change at NMRC. Kehinde Ogundimu - Acting MD/CEO

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1 MORTGAGE DIGEST Volume 6 March April 2018 The Board and Management of Nigeria Mortgage Refinance Company wish to announce the retirement of Professor Charles Inyangete from his position as Managing Director/Chief Executive of the Company, effective from March 23rd, 2018, having attained the mandatory retirement age of 60 years. Professor Inyangete joined the company in November 2014, following the incorporation of NMRC as a key component of the Nigeria Housing Finance Programme (NHFP) funded under a US$300 million IDA Facility from the World Bank Group. During his tenure, he saw the growth of the company from a 3-man start up charged with launching unto a nascent and very challenging Nigerian Mortgage market with a clear mandate to grow the primary and secondary mortgage markets and promote home ownership in Nigeria, to one which has made significant strides in the industry and is recognized as a sector leader. Achievements under his watch include the execution of NMRC s first mortgage-backed bond issuance in July 2015, raising N8 billion, which was deployed to the refinancing of legacy and new mortgages of NMRC member banks. Professor Inyangete was a proponent of the value chain approach to tacking the challenges facing a market comprising multifaceted and complex operators, systems and processes along a supply and demand continuum. Prof. Inyangete encouraged NMRC s robust partnerships with other key stakeholders in the housing industry, including MBAN (Mortgage Banking Association of Nigeria), REDAN (Real Estate developers of Nigeria), FGSHLB Management Change at NMRC Kehinde Ogundimu - Acting MD/CEO (Federal Government Staff Housing Loans Board) in addition to several transaction-driven agreements with major developers geared at growing affordable housing supply around the country. For these and many other achievements the Board and management of NMRC wish to extend its appreciation to Prof Inyangete and wishes him well in his future endeavours. With Professor Inyangete s retirement, Mr. Kehinde Ogundimu, NMRC s Chief Finance Officer, (CFO) has been appointed Managing Director/Chief Executive in an acting capacity. Ogundimu holds a Bachelor of Electrical Engineering degree from the University of Ibadan and an MBA from the University of Lagos, Nigeria. He has over 20 years work experience in financial services industry (secondary mortgage and diversified banking), energy and public accounting. Mr. Ogundimu began his career with Price Waterhouse Coopers and subsequently worked in various capacities at Chevron Nigeria Ltd. He also worked in the Washington DC region at Pepco Energy Services, Freddie Mac, Fannie Mae and finally at Capital One Bank, where he was the Head of Debt, Derivatives and Securitization before joining NMRC. Mr. Ogundimu is a fellow of the Institute of Chartered Accountants of Nigeria (FCA), a member of the American Institute of Certified Public Accountants (CPA), a Chartered Financial Analyst (CFA) Charter-holder. He has attended several executive management programs in leading educational institutions including Harvard Business School and Gordon Institute of Business Science, University of Pretoria. CONTENT Main News page 2-6 Refinancing Updates page 7-8 Financial Market Update page 8-9 Upcoming Events page 10

2 MAIN NEWS NMRC Collaborates with Key Industry Stakeholders to Launch Informal Sector Underwriting Standards In a historic move to deepen mortgage penetration and widen access to affordable housing, the Nigeria Mortgage Refinance Company (NMRC) in conjunction with the Central Bank of Nigeria (CBN), the Mortgage Banking Association of Nigeria MBAN), Federal Mortgage Bank of Nigeria (MBAN) and the Nigeria Deposit Insurance Corporation (NDIC) in February launched Uniform Mortgage Underwriting Standards for the informal sector. The new standards will, for the first time attempt to bring the operators in this sector, who constitute about million of Nigeria s million workforce, into the mortgage and housing net. The informal sector is estimated to account for over 60 percent of the country s GDP. There is high expectation that the new mortgage standard is going to be a game-changer for the economy in housing and home-ownership because it is going to increase access to housing by enabling the informal sector operators have access to mortgages to build their own homes. The new underwriting standards will capture the self-employed and business owners categorized under the Micro, Small and Medium Enterprises (MSME). To lessen the burden of securing mortgages stringent conditions, title perfection and collateralization were relaxed, allowing communities for example, to determine title structure. Other key innovative conditions in the standards include twelve months payment receipts, utility payments, reference letters from suppliers or associates, trade association, Notarized statement of adequate net worth for the loan program, and satisfactory school fees payment record for children/ dependents amongst others. To access the standards, visit: uploads/2018/03/uniform_ underwriting_standards_for_the_ informal_sector_0318_1.pdf Development and a leading player in the municipality development space in Sub-Saharan Africa. Eleoramo said that 1,767 hectares of land had been acquired to provide affordable housing units to Nigerians. He added that 180 hectares of this would be for the Federal Integrated Staff Housing (FISH) project Kehinde Ogundimu (Acting MD/CEO) signing the MoU with Koharth Housing Corporation for the provision of affordable housing for civil servants in the Federal Capital Territory (FCT). This project has successfully weathered the storm of title and legal challenges and has survived the arduous business environment of Nigeria. It is now ready to deliver its mandate of providing qualitative and affordable housing to Nigerians. We have decided to collaborate to deliver on the aspirations of ensuring that over 500 civil servants move into their houses within the next 12 to 18 months. He said that the LoH building types would include a handful of single-family homes and a large majority of affordable housing development portfolios. Responding, Mr. Kehinde Ogundimu, Acting Chief Executive Officer, NMRC said the collaboration presents a huge opportunity to make a difference in home ownership in the nation s capital due to challenges that the LoH development would help to solve. Ogundimu said the partnership with Kohath would provide an opportunity for NMRC to support the Federal Government s housing programmes in providing affordable housing backed by affordable mortgages. This, he said, was in consideration of the fact that of all the challenges currently facing our nation today, very few are more urgent than the deficit of decent housing. Housing and economic analysts have all noted that without a stable and affordable home, low income families in Nigeria have little hope of a better livelihood. Hence, the availability of housing plays a key role in determining whether they can find well-paying jobs, send their children to school, get quality health services and access to reliable utilities. The signing of agreement between the two parties was witnessed by Directors and staff of FISH in the Office of the Head of Service of the Federation. NMRC And Kohath Housing Corporation in Partnership Deal to Provide Over 15,000 Housing Nationwide To Low Income Earners NMRC and Modern Shelter Partner to Deepen Access to Affordable Housing Modern Shelter is a leading mortgage brokerage and real estate marketing firm with working partnership with reputable developers such as Nigeria s Brains & Hammers Limited, Earthpoint Development Services. Its partners target large scale development of affordable housing stock for low and medium income earners. access to alternative finance investors and improve Modern Shelter s ongoing engagement with Sterling Bank and Jaiz Bank using non-interest mortgage banking structures. It will support Modern Shelter s plans to deliver over 5,000 housing units over a 5-year period across key states in Nigeria. On Wednesday April 25, 2018 NMRC and Kohath Housing Corporation signed a landmark partnership deal to provide over 15,000 housing nationwide to low income earners in the Abuja area. Mr. Teni Eleoramo, the Executive Chairman, Kohath Housing Corporation, said in Abuja that the partnership would help bridge housing gap in Africa, especially in Nigeria. Kohath is a promoter and developer of the Land of Honey (LoH) City In line with its market development mandate, NMRC signed a Memorandum of Understanding with Modern Shelter Systems and Services Limited as part of efforts to remove systemic barriers to home ownership for off takers. Key areas of focus for the partnership include resolving equity contribution constraints, improving access to mortgage loans and enhancing delivery of quality and affordable housing. The partnership aims to facilitate 2 Mortgage Digest Vol. 6 Mortgage Digest Vol. 6 3

3 the First Edition of the Quarterly Millard Fuller Foundation (MFF) Housing Seminar to discuss Affordable Mortgage Financing for the Informal Sector: The Way Forward NMRC participated at the first edition of The Millard Fuller Foundation (MFF) Quarterly Housing Seminars with the theme: Affordable Mortgage financing for the Informal Sector: the way forward, The seminar which held on Thursday, 22nd March 2018 had in attendance housing finance experts from both the private and public sectors. Highlights include:, (i) the concern that although the informal sector contributes 65% to the nation s GDP and is innovative and entrepreneurial, lenders consider it a risky sector to finance. It was agreed that with proper risk mitigation mechanisms, it can form a credible client base (ii) the need to reduce building costs; developers should consider incremental housing models to ensure greater inclusivity for lowincome earners and explore the use of alternative construction materials to reduce housing cost. Government should be engaged to provide infrastructure to reduce construction cost for developers. (iii) the need to develop innovative financing models to accommodate informal sector operators. Most informal sector applicants might not be eligible for traditional mortgage products; housing microfinance products might be more suited to their needs. (iv) Synchronization of communications activities between the Mortgage Bankers Association of Nigeria (MBAN), Nigerian Mortgage Refinance Company (NMRC), Real Estate Developers Association of Nigeria (REDAN) and Microfinance banks, to capacitate and support sector initiatives. The seminar noted that government should (v) simplification of titling, perfection and property registration processes by governments and the design of design simple and easy-tounderstand credit policies. The Millard Fuller Foundation is a faith-driven organization which promotes collaborative and innovative partnerships with individuals & organizations to provide on a sustainable basis affordable housing for all people in need. The primary target of its low-cost housing solutions, some as cheap as N2.9M, fall into the informal sector. the Global Debate On Cities for All and Housing at the Centre at the 9th World Urban Forum (Wuf9) in Kuala Lumpur, Malaysia NMRC joined other global housing stakeholders to deliberate on, identify and commit to the implementation of concrete solutions for the transformative commitments made in the United Nation s New Urban Agenda at the 9th session of the World Urban Forum (WUF9), which held from 7th 13th February in Kuala Lumpur, Malaysia. The event had as its theme: Cities 2030, Cities for All: Implementing the New Urban Agenda and had more than participants from 165 countries, among them more than 100 Ministers and Deputy Ministers. Development Habitat III - in Quito, Ecuador as a strategic global response to unprecedented urbanization. More than half of the world s population currently lives in cities and projections are that this will nearly double by 2050, making urbanization one of the twentyfirst century s most transformative trends with massive sustainability challenges for housing, infrastructure, basic services, security, food security, health, education, decent jobs, safety and natural resources, among others. Given this unprecedented growth in urbanization, and in the context of the 2030 Sustainable Development Goals, the New Urban Agenda lays out standards and principles for the planning, construction, development, management, and improvement of urban areas along five main pillars of implementation: national urban policies, urban legislation and regulations, urban planning and design, local economy and municipal finance, and local implementation. The New Urban Agenda underlines the linkages between good urbanization and job creation, livelihood opportunities, and improved quality of life, which should be included in every urban renewal policy and strategy. This further highlights the connection between the New Urban Agenda and the 2030 Agenda for Sustainable Development, especially Goal 11 on Sustainable Cities and Communities. Housing is positioned as the pivot round the New Urban Agenda revolves, NMRC was represented at the global event by the Executive Director, for Policy, Corporate Strategy and Business Development, Dr. Chii Akporji, who participated as a member of the Federal Government of Nigeria delegation to the WUF 9 led by the Ministers for Power, Works and Housing, Babatunde Raji Fashola, SAN, and the Minister for FCT, Malam Musa Muhammed Bello. The 9th World Urban Forum (WUF9) concluded with the Kuala Lumpur Declaration on Cities 2030 This calls for the deployment of all efforts, means and resources available towards the operationalization of the concept of cities for all, ensuring that all inhabitants, of present and future generations, without discrimination of any kind, are able to inhabit and produce just, safe, healthy, accessible, affordable, resilient and sustainable cities and human settlements to foster prosperity and quality of life for all. The New Urban Agenda is the result of a consensus reached among United Nations countries - Nigeria included - which sets out a common vision and global standards for urban development in the coming decades. It was adopted in October 2016 at the United Nations Conference on Housing and Sustainable Urban 4 Mortgage Digest Vol. 6 Mortgage Digest Vol. 6 5

4 NMRC Empowers 45 Internally Displaced Persons (IDPs) with Technical Skills in Housing Construction collapses in the country is partly due to a worrying lack of qualified professionals in the housing construction sector. The training program is NMRC s strategic response to helping deal with the problem through structured and sustainable partnerships with relevant government agencies such as the Industrial Training Fund. REFINANCING PORTFOLIO REPORT ANALYSIS NMRC empowered 45 Internally Displaced Persons (IDPs) with technical skills in different aspects of housing construction work. The skills are in masonry/tiling plumbing as well as electrical installations. The 45 beneficiaries who currently reside at the IDP Camp in New Kuchingoro Abuja, graduated from a 2-months NMRC sponsored vocational training programme which was facilitated by the Industrial Training Fund (ITF) using qualified building professionals and experts. NMRC also provided the graduates with relevant start-up tool kits in their respective fields of training to enable them to ply their new skills. The training course commenced in November last year as NMRC s 2017 Corporate Social Responsibility and was designed to empower lives as well as contribute to efforts to redress the skills gap in the building industry in Nigeria, often cited as one of the key constraints to a robust housing market growth. Speaking at the closing ceremony to mark the graduation of the IDPs, former NMRC Managing Director/Chief Executive, Professor Charles Inyangete noted that the training program was part of NMRC s strategic community outreach program designed to impact lives and contribute to solving problems in the housing construction sector. In his words: Today is a day of delight for me. NMRC is proud to have initiated this program and happy to note that the first batch of beneficiaries have graduated. We believe that they are now empowered with the right skill set to work as experts and earn a decent living for themselves and their families. We also know that by this, we are helping to reduce the skill deficit in the housing sector. It is our plan to sustain this effort as our contribution to improving technical skills in the construction industry The former MD thanked the management of the ITF for ensuring timely completion of the training program. He also encouraged the beneficiaries to take pride in themselves and the skills they have acquired to take their lives to the next phase. In her remarks at the event, the representative of the Director General/ CEO, Industrial Training Fund, Mrs. Evelyn Irabor, Director/Head of Training, ITF commended NMRC for the initiative to empower IDPs. She said that the training has given the beneficiaries the capacity to constructively participate in the rebuilding of their communities which have been destroyed by the Boko Haram insurgency. Dr. Chii Akporji, NMRC s Executive Director in charge of Policy, Strategy and Business Development and initiator of the programme expressed fulfilment that the two-pronged strategy of NMRC - to economically empower displaced persons and contribute to reducing the housing industry skill deficit - is now a reality. She re-stated NMRC s commitment to progressing the training and impacting more lives. In his response on behalf of the beneficiaries, Mr. Enoch Yohanna, the Camp Secretary expressed gratitude to NMRC for coming to their aid after their displacement from their homes by the Boko Haram crisis. He said that with the new skills in construction work the beneficiaries now have the capacity to take care of themselves, their families and become more responsible Nigerian citizens. He thanked NMRC for their commitment to continuing the program so more IDPs can benefit. It would be recalled that the spate of building Total outstanding mortgage refinance portfolio stood at N8.138Bn in March 2018 down from N8.171Bn in February Stanbic, Imperial, Sterling, Suntrust, Homebase, and TrustBond continue to lead in terms of number and value of mortgages refinanced. All six institutions currently hold about N8.539Billion equivalent of 98.26% of NMRC s total refinance portfolio recorded as at March 2018 with a total number of mortgages refinanced at 456 as at March Mortgage Digest Vol. 6

5 NMRC s refinancing rate continues to hold steady at 15.5% (1.5% or 150 basis points above Central Bank s monetary policy rate) with total value of mortgages refinanced at N8.69 Billion as at March The total value of mortgages created remained at N7.58 Billion Naira for 205 Mortgages in March 2018 from NMRC s member banks (representative of a performance ratio of about 0.45 new mortgages for every mortgage refinanced by NMRC). Trustbond and Stanbic IBTC are in pole position with 40 new mortgages each, followed by Imperial, Homebase and Sterling with 32, 33, and 24 new mortgages respectively. At the lower end of mortgage creation and penetration spectrum are Infinity Trust and Abbey Mortgage banks with 8 and 3 mortgages respectively. FOREX MARKET EXCHANGE RATE At the parallel market, the naira traded flat at N363/$ on April, before appreciating to N362/$ on April 30. At the IEFX window the naira traded closely between N360/$ and N360.54/$ in the review period. Total forex traded at the IEFX window was $2.69bn, compared to $2.46bn in the first half of the month. EXTERNAL RESERVES According to the CBN, Nigeria s external reserves level has increased to $47.93bn. However, on the CBN s website, the gross external reserves were $47.36bn as at April 25th. This is 0.74% higher when compared to $47.01bn on April 16th. The positive trend continues to be primarily supported by strong oil proceeds. FINANCIAL MARKET HIGHLIGHTS MONEY MARKETS At the interbank market, the average opening position was N475.28bn long between April 15th -30th, compared to N215.82bn long in the corresponding period in March. This is 23.67% lower than the average opening position of N622.69bn positive on April 3rd 13th. During the period, the CBN issued more OMO bills compared to the maturities. period, compared to 18.90% pa in the corresponding period in March OIL PRODUCTION According to OPEC s monthly oil report, Nigeria s domestic oil production expanded by 1.12% to 1.81mbpd in March, from a revised level of 1.79mbpd in February. A total of N776.68bn was issued against a maturity of N502.76bn, compared to a total issue of N1.59trn and maturity of N571.41bn in the first half of April. T/Bills yields maintained their downward trend, losing an average of 84bps during the period. The 91, 182 and 364- day T/Bills closed at 10.9%, 12.0% and 12.08% respectively in the primary market. In the secondary market, the yields for T/bills all declined to 10.72%, 10.89% and 11.79% respectively from 12.76%, 13.36% and 13.21% for the 91, 182 and 364-day bills. Average NIBOR (OBB, O/N) was 2.93% pa within the review Culled from Financial Derivatives Company (FDC) May report. 8 Mortgage Digest Vol. 6 Mortgage Digest Vol. 6 9

6 UPCOMING EVENTS: IFC s EDGE Discovery Workshop with NMRC Lagos: May 22, 2018 Abuja: May 24, th Global Housing Finance Conference Washington, DC: May 30-June 01, th Abuja Housing Show July 16th 19th 2018 CONTACT US: Head Office 18, Mississippi Street, Off Alvan Ikoku Way, Maitama Abuja, Nigeria. Lagos Office 17 Sanusi Fafunwa, Victoria Island, Lagos, Nigeria. 10 Mortgage Digest Vol. 6