03 March 2014, Abuja – Sovereign Wealth Fund is to invest $10 million (about N1.56 billion) in the Nigerian Mortgage Refinancing Company (NMRC) to improve its market position.
Mr. Uche Orji, Chief Executive Officer, Nigeria Sovereign Investment Authority, managers of the Fund, said the current investment in NMRC has been planned as a core equity investment by the SWF.
The Federal Government provided additional funding of $550 million to SWF two weeks ago, bringing the current portfolio of the Fund to $1.55 billion.
NMRC offers help to property owners to refinance their mortgage. The private-sector driven company has been setup with main objective of solving the issue of long-term funding constraints which have stalled the growth of the primary mortgage market.
With government support, NMRC is expected to boost the real estate sector in Nigeria, which has seen continued growth over the last few years.
In November 2013, the federal government secured a $300 million soft loan from the World Bank for the take-off of the NMRC, in a bid to tackle the nation’s housing deficit estimated to be 17 million units. At the launch of NMRC last month in Abuja, Finance Minister & Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, said the company will help provide long-term financing to mortgage lenders which will help them to be able to give more housing loans.
She said needs to provide more than two million homes a year to reduce the housing shortage, noting that NMRC will help extend maturities for Nigerian home-buyers to as much as 20 years, encouraging the building of 75,000 new homes a year and creating at least 300,000 jobs initially.
SWF was set up via the Nigeria Sovereign Investment Authority Act of 2011 for the purpose of managing the surplus income produced from Nigeria’s excess oil reserves and investing invest the savings gained on the difference between the budgeted and actual market prices for oil to earn returns that would benefit future generations of Nigerians. It commenced operations in October 2012 with an initial allocation of $1 billion as seed capital.
The Fund is composed of three distinct funds or windows, each with specific investment and development objectives, namely: The Stabilisation Fund is meant to safeguard against budgetary deficits, a last resort from which government may withdraw annually to meet shortfalls in the budget brought about by falls in oil prices or other budgetary constraints; The Future Generation Fund is a savings fund that will seek investment in long-term investments and assets to provide savings for future generations of Nigerians and; The Nigeria Infrastructure fund is to secure investments in the infrastructure development of the country in areas such as agriculture and other government directed projects.