NGX to launch impact board to address housing deficit

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…Says it raised over N72bn for real estate coys in 10 years

By Philemon Adedeji

To meet the needs integral to the housing sector, whilst helping Nigeria meet its Sustainable Development Goals (SDGs), Nigerian Exchange Group (NGX) Plc says it intends to launch the impact board soon.

This is even as the group revealed that in 10 years, it raised over N72 billion for real estate companies quoted on its platform.

Its Group Chief Executive Officer (GCEO), Oscar Onyema, stated this during the 16th Africa International Housing show 2022 themed; ‘Housing for All-The Role of Governments in Creating an Effective Enabling Environment’ which held in Abuja on Tuesday.

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 estimates 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 per cent GDP contribution, the challenge in the sector remains, a far cry from developed economies where contribution to GDP is in double digits, depicting the interconnectivity between the housing sector and economic growth.

He said that although the government has embarked on various reforms and interventions in this sector to bridge the existing deficit, there is a need to adapt ingenious financing methods to meet the pressing need as the government cannot do it alone.

Whilst stating that the capital market remains an under-utilized lever for addressing the country’s housing gap, Onyema stated that Nigeria can draw lessons from developed countries such as the US, UK and Australia which have used capital market instruments to fund real estate projects.

“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) on the Exchange for major real estate 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 would 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 equites, bonds, REITs etc pursuant to PENCOM investment guidelines”.