PENCOM Recommends Overhaul Of Land Use Act

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Worried by the virtual absence of a secondary mortgage market and sound governance in mortgage sector which has posed some problems in the proper investment of pension fund in housing, the National Pension Commission (PENCOM) has recommended that the Land Use Act of 1978 be overhauled to make land available for building and other developmental activities.

Apart from the Land Use Act, the commission has also advocated for the development of the secondary mortgage market to serve as alternative in the present financing system, while laws on securitisation and foreclosure be enacted to attract investors.

A press release from PENCOM, which was made available to The Tide quoted the Director General of the commission, Muhammad Ahmad as saying that the secondary mortgage market would act as an impetus for pension funds to invest in the housing sector, as pension funds can strategically achieve an optimal trade off of risk and return by allocation of investment portfolio to appropriately diversify combination of assets, including mortgage backed securities.

The statement explained that the current investment in real estate and corporate debt securities stand at 7.24 percent and 1.95 percent respectively, with 30 percent investment limit in the corporate debt securities real estate trust and mortgage.

According to the press statement, “there is need to ensure sound governance of the Nigerian mortgage sector in order to attract pension funds investment. This would require transparent information disclosure, high quality management structure, and better accounting, auditing and brokerage procedure”.

The major weakness of the past housing finance system, according to the statement was the entire dependence on depository arrangements, lack of deliberation efforts at linking the housing finance to the capital market, as well as the integrating the sector into the nation’s overall financial system for a robust mortgage finance environment.

 

Corlins Walter