Nigerian Exchange Group (NGX) Plc plans to launch an impact board soon to meet the needs of the housing sector while also assisting Nigeria in meeting its Sustainable Development Goals (SDGs).
This comes as the group revealed that it has raised over N72 billion in 10 years for real estate companies listed on its platform.
Its Group Chief Executive Officer (GCEO), Oscar Onyema, stated this during the 16th Africa International Housing Show 2022, which was held in Abuja on Tuesday and was themed “Housing for All-The Role of Governments in Creating an Effective Enabling Environment.”
Delivering a keynote address titled “The role of the capital market in solving the housing problem in Nigeria”, Onyema noted that there is pressure on available housing and other infrastructure in urban areas as Nigeria currently faces a severe housing deficit as regards estimated by the Federal Mortgage Bank and the International Human Rights Commission (IHRC) which indicate a deficit of at least 28 million housing units.
He noted that, despite the sector’s 5.34 percent GDP contribution, the sector remains a challenge, a far cry from developed economies where GDP contributions are in the double digits, demonstrating the interdependence of the housing sector and economic growth.
He stated that, while the government has undertaken various reforms and interventions in this sector to bridge the existing deficit, ingenious financing methods are required to meet the pressing need because the government cannot do it alone.
While stating that the capital market remains an underutilized lever for addressing the country’s housing gap, Onyema stated that Nigeria can learn from developed countries such as the United States, the United Kingdom, and Australia that have used capital market instruments to fund real estate development.
“At the NGX Group Plc, we have invested in exchange platforms, market infrastructures, Fintech and a real estate company (NGX Real Estate). NGX Real Estate Ltd is focused on developing innovative solutions to the housing gap in Nigeria.
In the last decade, we have raised over N72bn ($175 million) in the Exchange for major real estates companies such as UPDC REITs, Abbey Mortgage Bank, and UACN Property Development Company through a mix of equity instruments including IPOs and rights issues”, Onyema revealed.
While adding that the Exchange has a market capitalization of about N23 trillion with a significant portion of this capital deployed to the infrastructure and housing sectors on the fixed income side, Onyema said the potential for the REIT and Mortgage Backed Securities markets have merely been scratched and bespoke instruments would aid capital formation to plug real estate financing deficit.
He said, “As we approach the eventual launch of the NGX Impact board, we will be providing the needed platform for issuing, listing, and trading of sustainability debt instruments.” This platform would support the listing of social bonds that would raise capital to meet the needs integral to the housing sector, whilst helping Nigeria meet its SDG commitments.
“We opine that the Pension Fund Administrators also have a part to play using the capital markets to ease the challenges in the housing sector given their over N13 trillion in Assets Under Management.
“The PFAs can increase their exposure to the housing value chain by allocating more resources to this sector in the form of equity, bonds, REITs, etc. under PENCOM investment guidelines.”
