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PROJECT TOPIC- National Housing Fund Decree No.3 of 1992. Implications on the Operations of Primary Mortgage Institutions (PMIs) in Nigeria

 National Housing Fund Decree No.3 of 1992. Implications on the Operations of Primary Mortgage Institutions (PMIs) in




This project attempts to examine the various provisions of the National Housing Fund Decree No. 3 of 1992 and its implications on
the Operations of Primary Mortgage Institutions in Nigeria, using a few of them as case study. A review has been made of various attempts by successive
Governments in Nigeria to address the housing needs of the nation and the attendant effects of such projects.It has been observed that though most Government efforts have been aimed at the low and medium income earners, very little has beer achieved in this regard. The various provisions of the National Housing Fund Decree with particular reference to the Decree’s definition of housing, sourcing and mobilisation of long term funds, on lending, banking operations and practices as well as development of secondary markets for mortgage Loans, were thoroughly discussed.

It has further been observed that in an attempt by the government to be as concise as possible a lot of areas that are necessary for the smooth operations of the Primary Mortgage Institutions and mortgage loans were left out. The project concluded by making a number of suggestions one of which is that the decree should be reviewed to give a broader definition of housing, creation of the secondary mortgage markets to stimulate investments in mortgages by making it easy in times of liquidity crisis to off load one’s stock of mortgage investments, fiscal incentives and insurance by the Nigerian Deposit Insurance
Corporation (NDIC) of the deposit liabilities of Primary Mortgage Institutions.




The economic policy measures outlined for implementation by the Federal Government over the past three years 1991 – 1993 were introduced to mitigate the adverse effects of the continuing socio-economic crises. These crises emerged since the early 1980s with the unexpected adverse terms of trade
following the four-fold decline in the international oil price. The broad goals of Economic Policy have been to restore Macroeconomic stability, rekindle growth through economic recovery, while consolidating the gains that have been made in the course of the nation’s economic reforms. Despite these
visible gains, the Nigerian economy has been experiencing severe imbalances, and aggravated distortions since 1991. This state of affairs has been brought about by both inappropriate conceptualization and faulty designs of some of these policies and compounded by poor and half-hearted implementation. The economy has thus witnessed increased macro-economic instability, declining productivity, low utilization of installed industrial and agricultural capacities and severe constraints on capital flow and debt servicing in the balance of payments.

For instance, despite the expected emergence of over a hundred items on the non-oil export list, their combined contribution has remained low, stunted by low resources application to exploit the unusual price advantage fostered by the rapidly depreciating effective exchange rate during the 1986 – 1992 period.
Economic performance in 1993 was adversely affected by the tense and uncertain political environment. The nation-wide socio-political tension retarded the volume of economic activities for a considerable period during the year as shown dramatically in massive movements of people and goods from
some parts of the country to other areas. Consequently, the strains which were evident in various sectors of the economy since 1991, became exacerbated, resulting in a f u r t h er reduction in the tempo of economic activity.

The consequent  non-conducive macro-economic environment resulted in a further decline in the growth rate of the GDP from 4.8 per cent in 1991 to 3.6 per cent in 1992 and an estimated 2.9 in 1953′. 1. Financial Guardian (Guardian Newspapers L t d . ) , January 17, 1994 p.5. A comparison of this achievement with the average growth rate of over five per cent which had been recorded during the period 1988 – 1991 clearly demonstrates the enormity of t.he test which would be involved in resuscitating and revamping the economy in 1994 and beyond. The legal framework for the establishment, operation and regulation of mortgage business and the National Housing Fund. in Nigeria are prescribed in the Mortgage Institutions Decree No. 53 of 1989 and the National Housing Fund Decree No, 3 of 1992. The promulgation of these Decrees were informed by the need to provide the national evolution of institutional
structures, to accelerate the development of financial intermediation within the housing delivery system. This is to be facilitated through the development of appropriate financial instruments, the ultimate aim being to encourage an enhanced level of resource mobilisation to support a credible housing delivery system to serve all Nigerians’.

Given the increasing population growth, of urbanisation and the concomitant demand for housing services, as well as the limited resources available for response, coping with the 2. Handbook for the Establishment of Mortgage Institutions, p, 1 -A Publication of the Federal Mortgage Bank of Nigeria 1992.
demand for housing presents a complicated challenge with many dimensions. Its dimensions are not only financial and administrative, but also technical, economic and political. The financial dimensions relate to the limited resources available. The sheer sensitiveness of housing as an issue of government concern presents administrative and political implications; the techical feasibility of providing affordable finance to the low income groups at current levels
of costs demands strict economic management. It is a challenge to which the housing finance system must respond for the socio-economic growth of the country.

 National Housing Fund Decree No.3 of 1992. Implications on the Operations of Primary Mortgage Institutions (PMIs) in



The provisions of Decree No. 3 of 1992 are intended not only to improve the operational impact of the housing financial system but also to ensure the realization of the socio- economic objectives of the National Housing Policy. It has however, been observed that some of the provisions of the decree have not been sufficiently enlarged to give broad definitions to concepts such as Housing and Financing option Other problems observed are the absence of  institutions Protection for providers of long term funds (depositors) are the lack of development of secondary markets for mortgages

1 encourage investors and active market conditions within the sector in the Capital Market. The decree also loosely addressed the issue of Government
Budgetary allocation and Financial Transfers. This is probably responsible for the stalemate in the release of the initial H250 million take-off grant from the Federal Government. This project intends to examine how these problems hold true in the operations of the Primary Mortgage Institutions being


The National Housing Fund Decree No.3 of 1992. Implications on the Operations of Primary Mortgage Institutions (PMIs) in

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