The federal government approved a N250 billion real estate investment fund yesterday, with the goal of giving Nigerians access to long-term, reasonably priced mortgages.
The government clarified that the clearance was part of an effort to address Nigeria’s acute housing shortage and promote sustained economic expansion.
Initiative to Address Nigeria’s Housing Shortage
At the conclusion of the Federal Executive Council or FEC, the meeting led by President Bola Tinubu at the Presidential Villa in Abuja, Minister of Finance Wale Edun revealed this to State House media.
He clarified that the program’s goals were to increase private sector investment in the housing industry, create jobs, and solve the nation’s severe housing shortfall of 22 million units.
Key Details of the MOFI Real Estate Investment Fund
With interest rates aimed at single-digit or low double-digit numbers, the new program called the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund will provide affordable mortgages to people who want to purchase properties.
According to Edun, Nigerians could obtain mortgages with interest rates between 11% and 12% thanks to the fund’s special structure, which substantially decreases from the present market rates, which frequently surpass 30%.
Affordable Mortgage Rates and Extended Repayment Terms
To make homeownership more affordable, the loans will have lengthier repayment terms—possibly 20 years or longer.
Edun stated, “This fund is the cornerstone for the resurgence of long-term mortgage financing in Nigeria.”Along with creating jobs and boosting the economy as a whole, it will help address the massive housing shortage.
Government and Private Sector Collaboration
He stated that the program aims to promote private sector involvement in house building and provide for Nigerians’ housing needs. A combination of private sector contributions and government seed money would serve as the foundation for the N250 billion fund.
The N150 billion that the government would contribute will come from low-interest loans accessible to the government at a rate of 1% and have periods of up to 40 years. This government-backed funding will combine market-based investments from long-term savers like pension funds and life insurance firms.
Boosting Economic Growth Through Housing Investments
The fund can provide mortgages at reasonable rates by integrating these two funding sources.
Edun clarified, “The objective is to develop a financing model that reduces the cost of homeownership for Nigerians.”
“We want to attract long-term investors who contribute more money at market-based rates, such as insurance firms and pension funds. We will be able to offer mortgages at a fraction of the existing interest rates thanks to this and the government’s inexpensive funding,” he added.
The program is a component of President Tinubu’s larger economic strategy, which aims to boost economic growth and reinvigorate Nigeria by making strategic investments in important areas.
Edun claims that the fund will have a major multiplier effect on the economy and provide cheap housing.
A Strategic Step in President Tinubu’s Economic Plan
The new investments are anticipated to boost the construction sector, boost economic growth, and provide thousands of jobs.
“The real estate industry has enormous potential to stimulate economic growth. According to Edun, this fund will serve as a catalyst for private sector participation, resulting in improved infrastructure, jobs, and a general resuscitation of the housing market.
The MOFI Real Estate Investment Fund is intended to draw long-term savings and institutional investors who stand to gain from market-based profits.
Edun underlined that the government’s role in this project would be to supply the initial funds, which would subsequently be combined with private sector investments to keep the mortgages affordable for Nigerians.
Edun stated that President Bola Ahmed Tinubu’s administration has fulfilled its pledge to make homeownership more accessible to regular Nigerians.
Millions of people who have long suffered from high mortgage rates and limited payback terms will find respite. Thanks to this new program, many Nigerians can now realize their goal of home ownership,” the minister continued.
Building a Sustainable Future for Nigeria
Establishing the N250 billion real estate fund is anticipated to boost the housing industry’s substantial expansion, lower the housing deficit, and promote overall economic stability. The FEC-approved prospectus is currently available for distribution, and additional information will be made public as the fund is launched.
“This is not just about building homes; it is about building a sustainable future for Nigeria, with long-term growth, job creation, and a better standard of living for millions of Nigerians,” Edun said, highlighting the initiative’s wide-ranging economic advantages.
Get the best of Real Estate delivered straight to your inbox weekly.
Real Estate updates the way you want it.