THE ROLE OF THE FINANCIAL INVESTORS IN HOUSING PROVISIONING IN NIGERIA

Code No: 829278

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ABSTRACT

Housing plays a key role in the socio-economic development of every country but unfortunately, housing supply worldwide has not been able to meet demand. The inadequate housing is one of the biggest challenges facing both developed and developing countries today with finance being a crucial factor. The financial Investors is the largest housing supply system but has not been able to meet the increasing demand partly as a result of the inadequate and ineffective financial mechanisms for financing housing in the country.
The study therefore investigated the major finance mechanisms used by the financial Investors and factors which hinder their access to formal credit facilities. It also made suggestions to improve access to credit facilities to the financial Investors to improve housing delivery.
A cross-sectional research design was adopted as a research approach for the study. The simple random sampling was used to select the ten communities whilst the convenience sampling method was used to select the homeowners. In order to increase the accuracy of the work, the research was operated at a 95 percent confidence level with a 5 percent margin of error. A total of 310 interviews were conducted out of the total determined sample size of 392.
The study came out with some major findings which included the dominant use of financial source of finance, the existence of an underdeveloped mortgage market and uneasy access to formal credit facilities from financial institutions due to the type and nature of jobs. It was realised that this has affected housing delivery because homeowners had to build incrementally which took a lot of time before house completion.
The study recommended microfinance for housing, site and services scheme by the financial institutions and a non-mortgage lending facility for the financial Investors. Also, how to sustain the formal credit facilities for the financial Investors is seen as an area for further research.

CHAPTER 1

CHAPTER ONE
BACKGROUND TO THE STUDY
1.1 Introduction
Housing as a social need is vital to socio-economic development of every country (Giddings, 2007). The housing Investors is generally accepted as one of the most important determinants of the economic and social wellbeing of people. It plays a key role in the lives of people as the provision of shelter is one of the basic necessities of man (Moss, 2010). The need to provide adequate housing cannot be over emphasized and its importance can hardly be exaggerated (IMF, 2011).
Derban et al (2002) indicate that the availability of adequate and decent housing enhances good living conditions and productivity of all individuals. It plays a vital role in the health, happiness and civilized living of the individuals. Housing does not only satisfy the physical and biological requirement of man but also upholds his dignity and improves his quality of life (NCH, 2008). The provision of housing is so linked with national economic development that the rate of house construction is directly related to the economic performance of a country (BoG, 2007).
Unfortunately, the provision of housing worldwide has not been able to meet demand (Ogu and Ogbuozobe, 2001). This lag can be attributed to the population surge which has more than doubled in numbers in recent times (Giddings, 2007). Most developing countries are confronted with the problem of accommodating the rapidly growing population especially in their urban areas and Ghana is not an exception (Konadu- Agyeman, 2001). The provision of adequate shelter is one problem that the country has had to contend with. The inadequate housing stock and the lack of basic housing requirements induces stress and affects the living condition of households as well as productivity( Derban et al,2002).
One of the major problems facing housing delivery in Ghana is finance. The unavailability and inaccessibility of housing finance mechanisms has been identified as one of the important hurdles in improving housing delivery in the country (Hoek- Smit, 1998).
There are two main sources of finance in the housing finance system (Moss, 2010). They are the formal and financial sources. The formal source consists of government budgetary allocation and financial institutions in the form of mortgages. The financial sources include personal/family savings, individual money lenders, and remittances from family members.
Over the years, government of Ghana through housing schemes and plans has found ways and means of financing housing in the country. The rationale for government intervention in the housing market revolves around the goal of providing all Ghanaians with a decent house in a suitable living environment (IFA, 1993). During the 1970â€Ÿs and the 1980â€Ÿs, the main focus of government housing intervention in the country was by embarking on mass housing projects for the citizenry with the government being the sole financier of the projects. Examples of some of these housing projects are the government built low and medium class estates for civil servants (Afrane and Asamoah, 2011).
Currently government plays a double role when it comes to financing housing delivery (IFA, 1993). The government plays a direct role through the construction of public/mass houses but it is mostly not realized due to the lack of funds, lack of coordination and policy abandonment due to change in government. The government also plays an indirect role by creating an enabling environment through tax policies which includes tax subsidies for real estate developers and subsidized interest rates for borrowers from financial institutions associated to housing finance (eg. Home Finance Company Ltd).