ABSTRACT
The pre-consolidation era in
the banking sector can be dated back prior to July 2004 when there were various
banks existing and operating in the country. During this period, the total
number of banks existing in the country was 89. After the consolidation
exercise, the banking sectors was termed as being strong, stable and reliable
mega bank. This is the first phase of the consolidation exercise which trimmed
the number of banks in Nigeria from eighty nine (89) to twenty five (25) and with each of the existing
banks, now having and average capital of about twenty five billion (N25
billion). The consolidation programme in the banking industry is expected to
have wide ranging implication on real estate profession. Because real state is
character relatively with large economy size, investors have traditionally
relied on third party financial instruction for significant positions of funds
require the investment control of large pared of real property is difficult to
achieve without access to borrowed fund which have consequently become
ambiguous factor in real estate investment decision. The different source of
capital from real estate investment are equity and debt, syndications joint
ventures, pension fund, life insurance companies, banking industry as a sector
in the economy cannot stand and operates in isolation but to associate with
various industries in order to actualize its aims and objectives. Real estate
industry on its own is a vibrant sector which involves various professionals
from various fields. The impact which recapitalization has on real estate
investment in positive funds were available, members were commissioned in carrying
out valuation for different purpose and big project were also finance.
TABLE
OF CONTENTS
Title page i
Certification ii
Dedication iii
Acknowledgment iv
Table of Contents v
Abstract vi
CHAPTER ONE
1.0 Introduction 1
1.1 Background
of the Study 1
1.2 Statement
of Problem 3
1.3 Aim
and objectives of the study 4
1.4 Justification
of the study 5
1.5 Scope
of the study 7
1.6 Limitation
of the study 8
1.7 Historical
background of Osogbo 8
CHAPTER TWO
2.0 Theoretical
frame work and Literature Review 10
2.1 Introduction 10
2.2 The
concept of Real Estate 10
2.3 Real
Estate in Nigeria 11
2.3.1 The
Land Factor 13
2.3.2 Accessibility
of Land 14
2.3.3 Finance
for Having Development 16
2.3.4 The
Building Materials Factor 17
2.3.5 The Nigeria Factor 18
2.4 The
Nigerian Banking Industry 18
2.4.1 Pre-consolidation
Era 20
2.4.2 Post-consolidation
Era 23
2.4.3 Trends
in bank consolidation 27
2.4.4 Impacts
of recapitalization on banking industry 28
2.4.5 Problem
associated with recapitalization 29
2.5 Effect of
recapitalization on real estate market and
the
Nigerian economy 31
2.6 The effect of
banking consolidation and it significance
on
real estate profession 34
2.6.1 Source
of capital for real estate investment 36
2.7 Relationship
between Banking Industry and Real
Estate Industry 39
CHAPTER THREE
3.0 Research
Methodology 44
3.1 Introduction 44
3.2 Target
Population 44
3.3 Sample
Frame 45
3.4 Sample
Size 45
3.5 Sample
Technique 46
3.6 Source
of data 48
3.6.1 Primary
source 48
3.6.2 Primary
secondary source 49
3.7 Data
collection and source 49
3.8 Questionnaire
design 49
3.9 Techniques
of analysis 51
CHAPTER FOUR
4.0 Data
Analysis, Presentation and Interpretation 53
4.1 Introduction 53
4.2 Examination
of the property market prior to
the recapitalization 55
4.3 The perception
of stakeholders on the impact
of
recapitalization on the real sector 61
4.4 The
result of the bank recapitalization programmes 63
CHAPTER FIVE
5.0 Summary
of Findings, Recommendations and Conclusion 68
5.1 Introduction 68
5.2 Summary
of findings, 68
5.3 Recommendations
69
5.4 Conclusion 70
References 73
CHAPTER
ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The trend in the Nation’s
economy in this recent year particularly from the dawn of the democratic
salting, the would be revealed that, this has been innovation and reforms to
the various sectors of the economy most especially the banking sub-sector of
the economy. This development in the banking sector is what is generally known
s the bank recapitalization or bank reformation whereby the former capital base
of various banks existing in the country was raised from two billion naira (N2
billion) to twenty five billion naira (N25 billion). This is by far the most
profound monetary policy measure, witnessed by the banking industry in Nigeria since
its interception in 1892.
The key driving force behind
this policy is to transform Nigeria
banks from the weak, marginal players they have been, to mega banks that would
ultimately perform effetivelly in the strong global competitors. The second and
equally important reason is to better position these banks to cope with the
vagaries of the Nigeria
operating environment and endow them with the capacity to finance major project
and real sector activity like their counterparts in the advance economics. This
development has made the total number of bank in the country to be reduced to
just twenty five.
Estate surveyors and valuers
have over the recent years been able to discharged their professional duties
and services prominent among which is valuation which is a bid to establishing
the values of this bank so as to facilitate the merger acquisition,
consolidation, asset sharing, etc on relevant bases. In order to present a comprehensive
dissertation on this topic i.e the impact of the recapitalization process on
the real estate sector. There is a need to build the impact from diverse and
given necessary details as may be demanded.
Real estate sector (market) is
a place where bundles or clusters of right are being exchanged. It could be a
system of transaction between landowner, land user and estate agents.
Real property investment is a capital formation
of new asset which involves creation of real estate products such as commercial
building, residential building. It can also be described in the sector ranging
from commercial sector, residential sector and industrial sector etc.
Since it has been said earlier
that banks from the weak. Marginal players they have been in to mega banks that
would ultimately transform into strong global competitors and to better the
position of these banks to cope with the vagaries of the Nigerian
operating environment and endow their
with the capacity of finance major industry project and real estate sector
activities.
In view of this, the project work
will focus on examine, identifying analyze and recommend all necessary things
as regard the impact of commercial banks recapitalization process on real
professions.
1.2 STATEMENT OF THE PROBLEM
In Nigerian today, research
has shown that real estate sector face some challenges, which has posed problem
or set back in the sector. Some of the challenges are lack: of adequate funding,
high cost of building, heavy reliance on imported items and costly housing
design, low returns from real estate. Since real estate is characterized by
relatively large economic size, investors have traditionally relied on third
party financial instruction for significant positions of fund required for
investment. Control of large parcel of real property is difficult to achieve
without access to borrowed fund, which have consequently become ambiguities
factors in real estate investment decisions.
Banking sector, which was the major source of
development finance, reneged on it role of financing sustainable economic
development by rather supporting the import dependence nature of the economy.
Most of the revenues generated by bank before consolidation to the highly
fragmented nature and the weak capital base of Nigerian commercial banks as at
that time.
In doing this, certain questions become
imperative; what is really meant by recapitalization? Why recapitalization?
What are the machineries put in place? What was the state of banks in the
pre-consolidation era? What was the state of banks in the post consolidation
era? What is the relationship between banking industry and real estates sector?
What are the impacts of the reform on real estate sector? What are likely
shortcomings or challenges of this reform on real estate and banking industry?
What are the probable solutions? So this project work is faced with challenges
of proffering solutions to some problems that arise in the process of
commercial bank recapitalization with emphasis is real estate sector.
1.3 AIM AND OBJECTIVES OF THE STUDY
The aim of this study is to
evaluate the impact of bank recapitalization in real estate sector of the
economy.
OBJECTIVES
- To examine
the real estate market prior to the process of recapitalization.
- To assess the
recapitalization of the affected banks in the study area
- To examine
the impact of recapitalization on the real estate sector
- To identify
the problems of the recapitalization on the real estate sector and to suggest
possible solutions.
1.4 JUSTIFICATION OF THE STUDY
Property (real estate
investment in any given country involves large sum of money or capital
commitment and also takes a long time to complete when compared to other forms
of investment. The general economic condition of country is one of the major
determinants of the level rate of real estate investment. The issue of
incurring base now becomes a necessity in the development of real estate. The
capital could be gotten from equity finance that is, from one’s saving, profit
drawn on other business that are capable of carrying out development, including
ways in which income would be earned without incurring debt. The other sources
of development finance is gotten from debt finance, which ensures a liability
on the developer to a second party that could be termed the financial on
investors. As compared with equity finance where the developer is the investor
to the land finance e.g from friends, banks, financial, institution, trust and
bonds, property companies, government, pension funds and insurance etc of al
sources of debt financing in Nigeria, bank and other financial institutions
seem to be the largest dominating factor on real estate financing.
The property and development,
gazette (1991) recognizes that without a well-organized and efficient housing
finance system. It is difficult to mobilize substantial financial resources for
channeling funds in to the real estate sector.
In the light of this, various works
have been concerned with the problem of banking industry in Nigeria economy
from a broad view Oboh G.A.F (1991), carried out a research work on banking and
Nigeria
economy. Contemporary issues in the Nigeria banking system. However,
during the time they were carrying out the research, the banking sector, which
was the major source of finance reneged on its role of financing sustainable
economic development by rather supporting the import dependence nature of the
economy.
Most of the revenues generated
by banks before the recapitalization program was import business related. This
was largely due to the highly fragmented nature and the weak capital base of
Nigerian commercial banks as at that time.
Therefore, this study seeks to
establish link between the reforms initiated by the central banks of Nigeria
(CBN) and the accessibility of real investor to finance in order to ensure
better performance and this, reduce the problem of real estate to the barest
minimum.
1.5 SCOPE OF THE STUDY
This project work sought to
establish the impact of recapitalization programe on real estate sector in Nigeria.
However, as a result of time constraint, the writer limited the scope of this
study to Osogbo.
Ideally, the study was
supposed to embrace all the banks that were recipients of the recapitalization
exercise and that are situated in Osogbo as well as the estate firms involves
in the real estate practices, but the writer decided to focus on a random
selection of the estate firms registered under estate surveyors and valuers
registration Board of Nigeria (ESVARBON) and some banks that survived the
recapitalization exercise.
1.6 LIMITATION OF THE STUDY
In the course of carrying out
the research work, the following were the challenges encountered by the
researcher.
There was the challenge of time constraints in
which case, there was limited time to carrying out this research work, in the
same vein, there was also the constraint of funds to carry out a very thorugh
research work. There was also the challenge of retrieving all the
questionnaires administered to these respondents and nonchalant attitude from
the respondents.
1.7 HISTORICAL BACKGROUND OF OSOGBO
In Yoruba mirth, Osogbo as a
historical town was founded by Osun a river of goddess and wife of legendry
king Sango of the ancient Oyo Empire Osogbo’s prominence as an important
tourist attraction stems from the Osun
River where the Osun
grooves and shrine are both located. As early as 1929’s Gesman Art connoisseurs
stated flocking to Osogbo to afford themselves of the fertile Osogbo art in
Textile design and fertility frame evidence in sympathetic magic in the Osun
goddess. Little wonder, Osogbo is praised as Osogbo Ilu-aro, Oroki asala,
“Osogbo the town of dye, Oriki the one that embraces all”
Notable among these Germans
Swan Wenger who was the moving figure behinds the imbari art movement was a
training ground for performing literary and visual artistes who were later
bestrode the artistes framament like colluses.
The point being chorused is
the fact that Osogbo has always played lost to visitors and thus have compelled
the need for terminal expansion and accommodation beckoning. At another level,
with the contact of British colonial administration, Osogbo became a prominent
town as the capital of Osun division which was home to the colonial
representatives in the area.
To crown it all commerce
becomes centred in Osogbo with the coming of J. B Olivant, Peterson Zochonis
and Royal Niger company later UAC, Mr. Bigg’s, Species and enactment of Banks
like bank PHB, Spring, Intercontinental bank, Pacific, UBA, Zenith all extended
there merchandize tentacles in the city.
The coming of Railway and
sitting if terminus at Osogbo also share up into the compelling housing need at
the city. By the way, employees of various government and non-government
organizations settled down in Osogbo and necessitated an accelerated,
affordable medium size low income housing need.
Click “DOWNLOAD NOW” below to get the complete Projects
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Login To Comment