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Central Bank of Nigeria has released a framework for homes financing towards targeting people on low income level across the country. Mass housing construction is among the key economic activities with potentials to create significant number of jobs rapidly.
It is in the light of this that the Bank introduces this financing initiative to support the Federal Government’s Economic Sustainability programme to fast track the deployment of 300,000 homes in the 36 states of the federation and the Federal Capital Territory and to create up to up to 1.5m jobs in 5 years.
This initiative is to be implemented in collaboration with Family Homes Fund Ltd as the lead developer.
The Objectives of the homes financing initiative is to create jobs at scale – The programme will aim at creating rapidly, up to 1.5 million direct construction sector jobs (at the rate of 5 jobs/home) particularly young people on low income. In addition, the programme has potential to create a further 1m jobs through its supply chain.
Also, to boost local manufacturing – the programme is designed to utilize at least 90% locally manufactured inputs and as a result conserve foreign exchange. In that regard the programme will deliberately aim to revitalize local manufacture of construction materials including doors and windows, ironmongery, sanitary fittings, concrete products, tiles, glass, electrical fittings/fixtures and bricks etc. For example, it is estimated that the programme will require up to 1.7m doors, 7m door hinges and locks etc.
The Homes Financing initiative will have a direct impact on the quality of life – The programme will house up to 900,000 children and adults (at an average of 3 persons/home) on low income with direct impact on health, education and economic outcomes. Most of these would currently live in informal settlements with shared facilities in unsanitary environments.
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HOW THE HOMES FINANCING INITIATIVE WILL WORK?
A construction finance facility to enable FHFL implement the Federal Government’s Social Housing programme as part of the Economic Sustainability Plan 2020. And its eligible obligor is
Family Homes Funds Limited (FHFL).
CBN shall appoint a Technical Advisor to, among others, appraise the requests for funding by FHFL, recommend for the release of funds and monitor the delivery of the programme and utilization of funds including quality of the portfolio.
Funding: Funds would be released to FHF on project basis subject to the cumulative maximum limit of ₦200 billion. A project is defined as cluster of homes in the same geographical location and covered with the same title documents and approvals.
Loan Type: Term loan to enable FHF finance the construction of social housing units for people on low income. Three (3) years from date of disbursement as the loan tenor. Interest rate under the intervention shall be at not more than 5.0% p.a. (all inclusive).
APPROVAL PROCESS FOR THE HOMES FINANCING INITATIVE
A formal written application by FHF to the CBN Governor to be accompanied with copies of the Federal Executive Council (FEC) approval, Guarantee document from the Federal Ministry of Finance, Comprehensive project plan;
Work should begin at the site within 2 weeks of receipt of funds from CBN. FHF shall implement the housing projects subject to: use labour intensive system to maximum the use of labour from the project catchment area; exclusively use local materials (unless where it is not available).
Allow the TA or any other CBN representative(s) access to the project site and information as deemed necessary for monitoring.
Loan Repayment: the facility related to any batch should be repaid in not more than 3 installments within the tenor of the facility.
Collateral Requirements for the Homes Financing Initiative is just a Guarantee of the Federal Ministry of Finance.
Periodic monitoring of projects financed under the initiative shall be conducted by the TA and CBN.
Management of the Facility – the Development Finance Department of the Central Bank of Nigeria shall be responsible for the management of the intervention facility.
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For the effective implementation of the intervention facility, the responsibilities of the stakeholders shall include:
The Central Bank of Nigeria shall:
Family Homes Funds (FHF) FHF shall:
The Federal Ministry of finance shall:
The Framework shall be subject to review from time to time as may be deemed necessary by the CBN. All enquiries and returns should be addressed to: The Director, Development Finance Department, Central Bank of Nigeria, Corporate Headquarters Central Business District, Abuja.
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