CHAPTER ONE

                                                                                          INTRODUCTION

                        BACKGROUND

Housing (adequate shelter) is recognized world-wide as one of the basic necessities of life and a pre-requisite to survival of man (Onibokun, 1983; Salau, 1990; United Nations, 1992). A house is a place which provides shelter, refuge, comfort, security and dignity. The housing industry can be a stimulus to national economy (Onibokun, 1983).Onyegiri and Okonkwo (2002) viewed housing as a physical asset of an integral part of a nation’s wealth embodied in fixed capital. The Federal Ministry of Works and Housing (2002) defined housing as “the process of providing a large number of residential buildings on a permanent basis with adequate physical infrastructure and social amenities, (services) in planned, descent, safe and sanitary neighbourhoods to meet the basic and special needs of the population”. Decent housing is one of the basic needs of every individual, the family and the community in general. The provision of housing for human habitation is considered to encompass the physical structure in addition to the immediate surrounding environment. It is among the major problems confronting both the developed and developing countries in the world (Gumel, 2000). It was further noted by (Zubairu, 2005), that in Nigeria, the population is continually increasing thus, creating the need for functional and affordable buildings and this problem gets more enormous and complex resulting to slum all over major cities in the country. It was also observed that, the development of any nation is hinged on the provision of adequate housing facilities for its citizens (Nubi, 2006).

Since housing delivery is not possible without finance, housing financing can be referred to as the process of obtaining funds or capital generally for the purpose of supporting a development and / or investment by gaining control over assets (United Nation, 1994). A housing finance system is a superstructure of laws, institutions and relationships between institutional and non-institutional units that facilitate the process of financial intermediation and capital formation in the housing sector (Olotuah, 2006). The problem of housing though universal, is significant in Nigeria. The recognition of the growing housing problems in both the rural and urban areas of Nigeria and the acceptance of the failure of the defunct 1991 National Housing Policy prompted the Federal Government of Nigeria to set up a 15- Man Committee to review existing housing policy and articulate the New National Housing Policy (NNHP) of 2002. The 2002 NNHP draft has as its primary goal of ensuring that all Nigerians own or have access to decent, safe and sanitary housing accommodation at affordable cost with secure tenure through private initiative. This draft is still making the rounds and has not yet been signed into law. Given that home ownership in Nigeria is currently put at 10% compared to 72% USA, 78% UK, 60% China, 54% Korea and 92% Singapore and outstanding mortgage loans at just 0.5% (2005) of GDP compared to 77% USA, 80% UK, 50% Hong Kong, 33% Malaysia and 61% Singapore (Financial System Strategy 2020, 2008), a lot of work needs to be done for Nigeria to approach the standards achieved in the developed world.

In Nigeria, housing is typically financed through a number of institutional sources. These include budgetary appropriations, Commercial/Merchant Banks, Insurance Companies, State Housing Corporations and the Federal Mortgage Bank of Nigeria (FMBN) and the Mortgage Institutions. These constitute the formal institutions. Informal institutions such as thrift, credit societies and money lenders who have been contributing substantially to the finance of housing construction. The Federal Mortgage Bank of Nigeria is now restricted to operate solely as a secondary mortgage institution both as an agent of the National Housing Trust Fund and as an operator in the capital market. An estate development