According to a report culled from , Nigeria’s mortgage lenders are buckling under the weight of unpaid loans as job losses and inflation near a record high hindering the ability of customers to pay off their debts.
“They are just struggling to survive,” Adeniyi Akinlusi, president of the Mortgage Banking Association of Nigeria, said in an interview in Lagos, the commercial capital. “A lot of them aren’t making money.”
While the association said it isn’t aware of any mortgage lenders on the verge of collapsing, increased pressure on the nation’s 36 home-loan providers presents another challenge to President Muhammadu Buhari, whose administration is grappling with how to reverse the first contraction in gross domestic product in 25 years. Rising costs for everything from building materials to school fees has meant the industry has been stagnant since June, Akinlusi said.
At least 55 percent of the mortgage industry’s 94 billion naira ($300 million) of loans are classified as non-performing, Nigeria Deposit Insurance Corp., an Abuja-based regulator, said last month. That compares with a ratio of 10 percent for the 18.5 trillion naira of loans granted by the country’s banks and 45 percent for micro-lenders, which have 195 billion naira of outstanding loans.
“The real-estate market mirrors the larger economy,” said Udo Okonjo, chief executive officer of Lagos-based real estate broker Fine & Country West Africa. “Over the last year-and-a-half, the recession affected key sectors such as oil and gas, financial and manufacturing. There were a lot of layoffs.”