FMDQ Securities Exchange Plc has revealed plans to introduce mortgages to boost trading in the nation’s capital market.
Bola Onadele-Koko, the chief executive officer, FMDQ, said in an interview with Bloomberg that the lack of housing finance was one of the reasons why the capital market had not grown as it should.
He stated that there should be 30-year mortgages for Nigerians at reduced interest rates.
Onadele said, “If you want 70 per cent of the people to own their own houses, you cannot expect them to borrow at 20 per cent.
“Most people save all their working lives to be able to buy or build a home, leaving them with little savings to invest in financial markets. On the other side of the spectrum, lenders in the country rely on short-term deposits when mortgages require long-term financing.”
Onadele noted that there were only about 50,000 home loans in the country.
He said the exchange was working on a blueprint, with the support of other financial institutions, such as the International Finance Corporation, Central Bank of Nigeria, Securities and Exchange Commission and the National Pension Commission.
He added that the blueprint would be presented to Nigeria’s president Muhammadu Buhari next year.
Onadele said, “The proposals will identify policy measures through which the government can provide an enabling environment and facilitate single-digit interest rates.
“The right policies will trigger the inflow of private capital from foreign and local investors into the country. For instance, rather than subsidise gasoline (petrol), the government can channel the funds into cheap housing loans.”
Onadele said the FMDQ was working to attract more foreign capital into the country by playing the role of a central counterparty clearing house to reduce risk for investors.
He said the FMDQ Clear unit was expected to employ at least 20 people within three months of operating, adding that they were waiting for the legislation to be signed into effect by the president.