EXAMINATION OF THE ROLE OF COMMERCIAL BANKS IN HOUSING DEVELOPMENT IN NIGERIA.
(A CASE STUDY OF PORT-HARCOURT METROPOLIS RIVERS STATE)
Abstract
The relevance of real estate to our economics and social development cannot be over-emphasized not at least in the housing sector, which has a critical impact on Individual and National Welfare. Firstly finance plays a key role in the housing development project and process and this provides the most important element that is been taken into consideration. The objective of this study is to find a suitable source of finance for housing development project. To provide affordable house to household, viability for commercial bank and developers and recourses mobilization for expansion of the sector. This research focuses on Portharcourt metropolis capital of River State. The source in which data was collected and gathered is through primary and secondary source. This has contributed immensely in producing relevant information that gives extensive investigation on the examination of the role of commercial banks in Port-Harcourt metropolis. Areas are as follow Iworfre is 45, Rumasen area are 49, Rumokor area are 35, Rumador area are 51, so total are now 200. The techniques stratified random sampling. The technique used for questions. It has equally collected and carefully analyzed data from both primary and secondary sources using percentages. The finding are as follows (i) The need to find a suitable source of finance for housing development . (ii) The need for expansion of the sector. (iii) Possible means of affordability of house to household. Viability for commercial banks and resources mobilization. We therefore recommend the following: (i) The central bank should encourage the commercial banks in the country to invest a large percentage of their loans and advances into long-term loans. (ii) The commercial banks should be giving a directive to increase their loans to value ratio to about 80 percent or more. (iii) The merchant bank should decentralize their operations by establishing branches in all the state capital in the country.
CHAPTER I
INTRODUCTION
Chapter one consist of the following:
- Background of the study
- Statement of the problem
- Purpose of the study
- Significance of the study
- Research questions
- Scope/delimitation of the study
- Limitation of the study
- Definitions of terms
1.1 Background of the Study
Right from the time, food, clothing and shelter have been the three most basic requirements of man, of all these three requirements food and clothing are the two, which influence man’s life more than housing in which they seek shelter, security, comfort and dignity. It is infact where man start and ends his daily activities.
Housing is mainly the most important factor, which determine the nature and from of urban settlements and the quality of human existence is directly related to it. housing is defined by Oyeyipo (1980) to mean the provision of any form of structure, erection of building which is man made for the purpose of accommodating a person or persons by taking housing to mean only shelter, the definition appears deflective as it ignores all these infrastructural facility, which housing brings along with it. the World Health Organization Committee on Housing define it as “the physical structure then use for shelter including equipment and devices needed for physical and social well being of occupants” such equipment and devices includes utilities and services like electricity, water supply, and good access roads, sewage and refuse dump facilities.
The fact remains that Port-Harcourt metropolis is occupies mainly by government workers with low income. These positions make it difficult for them to afford the cost of developing housing for their use. They therefore resort to borrowing from the commercial banks in other to find money for housing development and also Port-Harcourt metropolis is made up of river line areas, swamp ground.
The Questions then “is the existing commercial banks in Port-Harcourt metropolis enough to satisfy the demands for residential housing? Are loans of these low income earners residing in Port-Harcourt metropolis? If not, how can the bank be improved.
This research work therefore intends to existing commercial banks of Port-Harcourt metropolis with a view to find out how efficient it has been performing and proposing how the system could improved.
Housing development is a fundamental and essential features in the urban environment. Adequate provision of housing development have a great deal of positive impact on both the economic and social life of the urban citizens and its inadequacy has reverse effect.
The shortage of housing development is one of the major problem facing urban centres especially in the developing countries. Housing 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 construction often tend to be small and generally depends on financial resources. This situation of finance scarcity is made worse by the rigid attitude of commercial banks towards lending for housing development. Their system of granting loans make it very difficult for the medium and low income groups to benefit the available facility. The bulk of the mortgage loans goes to the upper class.
This research work intend to look into existing commercial banks in River State urban, to find out if it is adequate to satisfy the housing needs of inhabitants of Port-Harcourt.
1.2 Statement of the Problem
One problem facing the inhabitants of Port-Harcourt metropolis is the issue of housing supply. This is as a result of government little interest in housing development in the area. The attitude of some financial institutions in the insurance of finance to real estate developers and the building societies also mitigate the pace of housing development in the area.
The difficulties encountered by housing developers in obtaining loans from the Federal Mortgage Bank of Nigeria (FMBN) in turn discourages interested developers from investing in housing development as most of them would not want to hang their money on incomplete housing project. This however, create low supply of housing to accommodate the incessant population of the metropolis and lead to congestion.
As a result of the present economic crunch where equity capital has become inadequate and insufficient for finance housing development, it has been observed that only commercial banks that can help in providing loans with low interest rate to at least encourage developers into the business again. On this note, we want to undertake an examination of the role of commercial banks in housing development in project of Port-Harcourt metropolis.
1.3 Objectives of the Study
The major objectives of this study is to examine the roles of commercial banks in housing development project of Port-Harcourt metropolis. The objectives include:-
(i) To assess the existing commercial banks
(ii) To find ways of improving them on their major functions.
(iii) To identify the role of commercial banks in funding housing development projects with particular focus on Port-Harcourt metropolis
(iv) To make recommendations based on findings.
1.4 Research Questions
Considering these issues, the study set out to seek answers to the following Questions.
(i) What roles can the commercial banks play in the development of housing project?
(ii) What are the policies, laws or decrees affecting the operations of the commercial banks involvement.
(iii) What are the likely solutions that can enhance their roles?
(iv) What are the likely impacts of their effective participation in housing development finance?
1.5 Significance of the Study
The essence of the study is to enlighten the government, students and researchers on the importance of housing development finance. The general result obtained from the study is educative, informative and broader the awareness of the public on current sources of housing development finance in the estate.
Estate surveyors and valuers could apply the result of this research work in their future housing development finance planning and their advisory role to the general public.
Also, it is hoped that the project would be a reference point of the academic sector from where ideal information/fact could be easily sourced for knowledge and equally to the commercial banks as a guide in taking investment decision.
1.6 Scope of the study
The research work covers most on the roles commercial banks play in assisting housing development in the country. The study equally looks into some of the problem encountered by commercial banks in granting of loans for housing developments.
1.7 Limitations of Study
The major problem encountered in this project is lack of finance and time factor, which include:
The researchers lacks finance to buy stationeries and also in certain things like photocopying the work, transportation to research places of need.
The researcher may not have enough time to carry out the research work as supposed due to some circumstances or that the semester is too short.
Again problem encountered raged from the difficult associated with sourcing and collecting research materials, appropriate textbooks and magazines.
1.8 Definition of Terms
(a) Housing development can be defined as a residential area of similar dwellings built by property developers and usually under a single management.
(b) Metropolis examines contemporary life through design-architecture, interior design, product design, graphic design, crafts, planning, and preservation.
It could also be seen as a large and densely populated urban area; may include several independent administrative districts; “Ancient Troy was a great city”.
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