Housing finance market and economic growth of West Africa region: a study of Nigeria and Ghana

Abstract

The aim of this study is to investigate the effect of housing finance on economic growth of West African States while the specific objectives were to: analyze the contributions to housing finance by mortgage banks on the economic growth of Nigeria, examine the impact of aggregate housing finance on economic growth of Ghana among others. Secondary data were used, covering the period of 1985-2014 while the ex-post facto research design was adopted. The data gathered were analyzed using Ordinary Least Square Regression Method. The findings revealed that the housing finance markets in Nigeria, Ghana and Gambia are under developed. The contributions to housing finance both Mortgage banks and Commercial banks on economic growth of Nigeria are positive but not statistically significant. On the contrary houses are built through self-help and on incremental basis in Ghana. As a result the economic values of such houses are not included in the National Income Account of the country. Hence the impact of the market on economic growth of Ghana was insignificant at 0.5 percent. In Gambia the market is almost non- existence due to wide spread poverty and high interest lending rate. We recommend that the government of West African States should create an enabling environment so as to attract both local and foreign investors to utilize the opportunities that abound in the housing and housing finance sector. To the best of our knowledge, a study of this nature that cut across Nigeria, Ghana and Gambia in the area of Mortgage financing has not been done and this is the gab our study fill in knowledge.