CHAPTER ONE
INTRODUCTION
1.1 BACK GROUND OF STUDY
Housing is one of the three basic needs of mankind and it is the most important for the physical survival of man aer the provisions of food. Decent housing is one of the basic needs of every individual, the family and the community in general. As a pre-requisite to the survival of man, it ranks second only to food. It is also one of the best indicators of a person’s standard of living and his place in the society. The housing an individual lives in is a symbol of his status, a measure of this achievement and social acceptance, an expression, an expression of his personality and the barometer that seems to indicate in a large measure, the way the individual perceives himself and how he is perceived by the larger society .It is the measure of all the good (or bad) things in life that will come to him and his family (Agbola, 1995). Also the importance of housing in human development has been well documented by scholars. The positions of scholars varies depending on the aspect of housing each one delve into. Omirin (1998)researched into land accessibility and low income house building in metropolitan Lagos . Based on her analysis of house builder’s behaviour of selected low-income earners of Lagos she posits that it is a wrong notion to continue to rank land accessibility as the greatest constraint of house builders. She Stated that lack of finance and escalating cost now takes precedence over land accessibility. Williams (2002) in his study that access to shelter produced by public agencies continue to elude the urban poor who simply cannot muster the financial resources required to procure these housing units .Jaiyeoba and Amole (2002) examined the appropriateness and socio-economic implications of low-income housing delivery as supportive rather than a provider approach. They stated that what is required is the determination of the extent to which the low-income groups require support. Olusola, Aina and Ata(2002) identified lack of so loan as one of the major obstacles against urban housing production in Nigeria.According to Oyeyipo (2001) defines housing as a residential area of similar dwellings built by property developers and usually under a single management; “they live in the new housing development” The world health organization committee on housing (1999) www.vanguard(http://www.vanguard/)news.com source defines it as “the physical structure used for shelter including equipment and devices need for physical and social well being of occupant” such equipment and devices include utilities and services like electricity, water supply, good access roads sewage and refuse damp facilities. The fact remains that Enugu metropolis has been the administrative centre for the then eastern region, Enugu metropolis is occupied mainly by government workers with low income. This position makes it diicult for them to aord the high cost of developing housing estates for their use. They therefore resort to borrowing from both formal and informal sources in other to find money for housing development and also Enugu metropolis is made up of river line area, swamp ground. The question then “Is the existing financial institutions in Enugu metropolis enough to satisfy the demand for residential housing loans of these low income earner residing in Enugu metropolis?” If not how can be situation be improved. This research work therefore intends to the existing financial structure of Enugu metropolis with a view to finding out how efficient it has been performing and proposing how the system could be improved. Housing estates is a fundamental and essential features in the urban environment. Adequate provision of housing estates have a great deal of positive impact on both the economic and social life of the urban citizens and its inadequacy has the reverse effect. The shortage of housing estate is one of the major problems facing the urban centers especially in the developing countries. Thus could be attributed estate development involves large amount of money, which is usually not within the capability of most urban dwellers particularly the medium and low income groups, the rate of housing estate construction often tend to be small and generally depend on financial resources. This institution of financial scarcity is made worse by the rigid attitude of financial institution towards lending for housing development. Their system of granting loan make it very difficult for the medium and low income groups to benefit from the available facility. The bulk of the mortgage loan go the upper class.
1.2 STATEMENT OF THE PROBLEMS
In recognition of the importance of the housing sector , and considering that financial institutions have ready access to cheap sources of funds through retail deposits as well as the infrastructure to process real estate loans efficiently and the skills to manage the risks involved, the Central Bank of Nigeria has encouraged financial institutions to support the development of the housing sector in Nigeria. In particular, the CBN has through its credit policies, required the erstwhile commercial and merchant banks to allocate a stipulated minimum proportion of their development to the Housing/construction sector Where financial institutions failed to meet the stipulated target, such shortfalls were deducted at source from the defaulting financial institutions deposit with the CBN and passed on to the housing/construction sector through the Federal Mortgage Bank of Nigeria. Most of the problems financial institutions have in housing development in Nigeria are. Low Interest Rate on National Housing Fund Low Level of Participation in the National Housing Fund Cumbersome Legal Regulatory Framework for Land Acquisition. The way forward on this issues is that The financing of national housing programmes should be viewed primarily as a national responsibility. The private sector should be encouraged to provide the bulk of actual investment funds for housing middle income and upper income groups. For the low income group, however, continued public support, individual initiative and labour movement involvement, will be required for housing and community development. Empirical evidence shows that private sector participation in housing is the most assured way to induce stability in the market. Indeed, the role of Government should emphasize creating an enabling environment to stimulate private sector participation in long-term housing finance. The housing fund contribution should be integrated into the personal income taxation system such that a defined proportion of taxes paid are allocated to the housing fund pool, as it is done in Singapore. There is need for constant re- engineering of the capital and money markets in order to cope with the renewed challenges of provision of some mortgage financing. In this regard, the restructuring and strengthening of the FMBN becomes imperative for it to remain a viable financial institution with the capacity to enhance efficient housing finance development in Nigeria.
1.3 OBJECTIVES OF STUDY
The main objective of this study is to examine the role of financial institution in housing development in Enugu metropolises with a view to
1. To examine how extent the financial institution has contributed in the housing development in Enugu state.
2. To find out whether financial has made any contribution in housing development in Enugu metropolises.
3. To identify the difficulties encountered by financial institution towards housing development in Enugu.
4. To examine the relationship between financial institutions and housing development in Enugu.
5. Ascertain the Low Interest Rate on National Housing Fund
6. Ascertain the Low Level of Participation in the National Housing Fund