After suffering through an economic contraction that restrained demand for housing loans in Africa’s most-populous country, Nigeria’s state-backed mortgage guarantor is anticipating that a return to growth will help double its nascent asset base.

Set up four years ago to mimic the U.S.’s Fannie Mae, Nigeria Mortgage Refinance Co., or NMRC, seeks to deepen the nation’s housing market by financing lenders, which then use the money to provide home loans. The need is extreme. The country of more than 180 million people, has a shortage of at least 17 million houses, with 780,000 units needing to be built a year just to meet rising demand, NMRC Chief Executive Officer Charles Inyangete said in an interview in Abuja.

For an economy of $405 billion, Nigeria’s real estate market is small, hobbled by a dearth of mortgages, poverty and interest rates at a record high. It has also been beset by bad debts after gross domestic product shrank 1.6 percent in 2016. At least 55 percent of the mortgage industry’s 94 billion naira ($261 million) of loans last year were classified as non-performing, according to Nigeria’s Deposit Insurance Corp.

‘Cautiously Optimistic’

Inyangete is betting on a turn around after three straight quarters of GDP expansion, projecting that NMRC’s 40 billion naira of assets will double this year. As a result, it will also mean the mortgage-refinancier is tapping the bond market for the first time in three years to raise its own funding, the CEO said.

“As we come out of recession, we expect to see a resurgence of activity in the housing market,” he said. “We are cautiously optimistic that going forward, we will see significant improvement in demand in the housing market.”

NMRC plans to issue 11 billion naira worth of 15-year bonds through multiple sales as part of a five-year 440 billion-naira program. As rates in the Nigerian market trend lower, the company expects that it will get better yields than the 14.9 percent it paid when it issued 8 billion naira of notes in 2015, Inyangete said.

The sales are “driven by the desire to refinance more portfolios and we actually anticipate going to the market more than once this year,” he said. “There is greater interest in liquidity that we provide and the long-term funding that comes with that.”

It is also planning a debut Islamic debt sale, possibly by June, Inyangete said. Underwriting terms for the 1 billion-naira sukuk have been set and work with regulators is progressing to “address the issue of a non-interest mortgage,” Inyangete said.

“Part of the fundamental premise of our business is inclusion,” he said. “The sukuk emanates from that desire to create a non-interest product that allows those who wish not to invest in interest-bearing instruments to invest.”

— With assistance by Dulue Mbachu