Matters Arising: Making diaspora mortgage scheme work in Nigeria 

Dr. Lanre Towry-Coker, FRIBA, FNIA, MA Law (UL), Ph.D, a former commissioner for housing in Lagos State, with a doctorate from Lagos State University, is founder of Towry-Coker Associates since 1976, and a professional architect with a postgraduate qualification in Architecture from the University of North East London. He had his professional training at the world famous Royal Institute of British Architects (RIBA) and is an Associate of the Chartered Institute of Arbitrators in the United Kingdom (ACI.Arb.); a Fellow of the Nigerian Institute of Architects (FNIA), he was elected Fellow of The Royal Institute of British Architects, (founded 1834), in November 2016, and is one of only forty architects worldwide to be so honoured. He is also the author of the book, “Housing Policy And The Dynamics Of Housing Delivery In Nigeria: Lagos State As Case Study” published by Makeway Publishers, and available on Amazon and also at The Royal Institute of British Architects, Portland Place. London.

His consortium, Towry-Coker Associates/Neue Heimat Abuja Consortium, was also one of the master planners of the Federal Capital Abuja, along with Japanese architect Kenzo Tange and Brazilian architect Oscar Neimeyer.

Tapping wealth, financial resources of citizens abroad

The diaspora mortgage scheme is a financial arrangement designed to enable Nigerians living abroad (the diaspora) to purchase property in Nigeria. Here’s how such a scheme could work and potentially boost the Nigerian economy:

Structure of the scheme

• Eligibility criteria – Define who qualifies (Nigerian citizens living abroad, possibly with a minimum income or employment criteria).
• Financial institutions’ role – Partner with banks in   

       Nigeria and possibly in countries with significant

       Nigerian populations.

    –  Property eligibility – Set standards for the types of

       properties that can be purchased (e.g., residential,

       commercial, new developments).

Economic benefits

• Foreign exchange inflows – Payments for mortgages

      from abroad would increase foreign currency inflows,

      strengthening Nigeria’s foreign reserves.

• Real estate development – Increased demand for properties can stimulate the real estate sector, leading to job creation and economic growth.
• Banking sector strengthening – The influx of reliable   

      mortgage payments can enhance the financial stability  

      and capacity of Nigerian banks.

• Infrastructure development – Increased real estate activities could lead to improved infrastructure in areas with high diaspora investment.

Implementation considerations

   – Legal framework – Establish clear legal frameworks  

     to protect the rights of overseas borrowers and to  

     facilitate property ownership and mortgage processes.

• Economic Policies – Ensure that economic policies   

       are conducive to investment, with stable currency 

       exchange rates and inflation control.

• Transparency and trust – Build trust among the diaspora community through transparency and accountability in the property buying and mortgage processes.
• Marketing and outreach – Actively market the scheme to the diaspora community through Nigerian embassies, diaspora events, and digital platforms.

Risk management

   – Risk assessment – Banks and financial institutions

     should conduct thorough risk assessments to manage   

     default risks.

  – Insurance – Offer insurance products to cover risks   

    related to property ownership and mortgage repayment.

Economic diversification

 – The scheme can contribute to economic diversification by reducing over-reliance on oil revenues and promoting growth in the real estate, finance, and construction sectors.

By effectively implementing a diaspora mortgage scheme, Nigeria can tap into the wealth and financial resources of its overseas citizens, translating this into sustainable economic development and growth within the country.

Successful diaspora mortgage scheme elsewhere

The concept of a diaspora mortgage scheme has seen varying degrees of success in different countries. While there might not be a universally acknowledged “success story,” several countries have implemented similar programmes, targeting their diaspora communities for real estate investments. Some notable examples include:

India – The Indian banking sector, including both private and state-owned banks, offers Non-Resident Indian (NRI) mortgage schemes. These programmes have been quite successful in attracting investments from the Indian diaspora into the real estate market in India.

Kenya – Kenya has actively engaged its diaspora in property investment. Banks and property development companies regularly hold investment forums in countries with significant Kenyan populations. These initiatives have contributed to the growth of the real estate sector in Kenya.

Mexico – Mexico’s ‘Infonavit’ offers mortgage loans to Mexican nationals living abroad, mainly in the United States. This scheme has helped Mexicans invest in properties back home, contributing to the housing sector’s growth.

Philippines – The Philippine government and private banks have programmes targeting Overseas Filipino Workers (OFWs) for property investments. These schemes have been essential in driving remittances and boosting the real estate market.

Egypt – Egypt has introduced various initiatives to encourage its diaspora to invest in the country’s real estate, offering various incentives and facilitating the investment process.

These examples demonstrate that diaspora mortgage schemes can be successful with the right mix of government support, effective banking structures, and diaspora engagement strategies. However, success depends on many factors, including economic stability, attractive investment returns, legal safeguards, and trust in the system.

But is it a ‘one size fits all’ situation? The answer is no, because of the following reasons.

Diverse needs of the diaspora: Nigerian diaspora members have varied financial capabilities, preferences, and needs. Some may seek luxury properties, while others might prioritise affordability.

Different financial regulations: The scheme must navigate different financial regulations and systems in the countries where the diaspora resides, which can vary widely.

Exchange rate fluctuations: Exchange rates between the Nigerian Naira and other currencies can significantly affect the affordability and attractiveness of such mortgages.

Risk profiles: The risk assessment for borrowers will differ based on their country of residence, income stability, and credit history.

Local market variations: Real estate markets in Nigeria vary by region, affecting property prices, demand, and investment viability.

Cultural considerations: Diaspora members might have differing views on property ownership and investment in Nigeria, influenced by their experiences abroad.

Legal and administrative differences: The legal and administrative processes involved in acquiring property in Nigeria might be challenging for some diaspora members, necessitating tailored assistance.

In conclusion, a successful diaspora mortgage scheme would need to be flexible, accommodating these diverse factors to effectively meet the needs of a broad range of diaspora members.

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