By Auwal Muhammed
The housing deficit in Nigeria is estimated at between 17 to 20 million housing units, and to meet the shortfall, the country will require a minimum of an additional two million housing units per annum for 10 years. That would require an estimated potential cost of about N6 trillion
The challenge for successive governments in the country has been how to bridge this huge gap in housing. The Federal Mortgage Bank of Nigeria (FMBN) which was established to deliver affordable housing to Nigerians had not lived up to expectations until recently, after Ahmed Musa Dangiwa, an architect, became it managing director.
Dangiwa brought with him professional integrity and a sense of commitment which have turned the FMBN into a more proactive mortgage institution. The Dangiwa-led management has reformed the operations of the bank and created a list of innovative housing products tailored to tackle the housing affordability challenge for Nigerians, especially contributors to the National Housing Fund (NHF).
Former Chairman of the Senate Committee on Housing in the 8th Senate, Barnabas Gemade, had publicly commended the foresight of the management of the bank under Dangiwa. He told journalists after an oversight visit to the bank late last year that in the two years his committee worked with the bank, they had been impressed by “a strong sense of direction and accountability by the management” of the bank.
It was a testimonial for the focus, professionalism and commitment of the management to the core mandates of the bank. The main goal of the FMBN under Dangiwa has been to advance homeownership among every Nigerian by creating innovative mortgage products and markets with a sustainable financing system.
This is why the bank made amendments to the FMBN Act a priority. After 12 years of failed attempts at institutional restructuring, the Dangiwa-led management’ deepened engagement with all relevant stakeholders to ensure critical reforms come through. This proactive engagement has resulted in the successful passage of key amendments to the laws establishing the FMBN and the National Housing Fund (NHF) by both chambers of the National Assembly.
The amended laws, when assented to by the President, would birth a new, more independent and financially stronger FMBN with a robust capital base of N500 billion. The additional liquidity and operational flexibility will greatly enhance FMBN’s capacity to more effectively deliver on its mandate to provide access to affordable mortgage finance for home ownership by Nigerian workers.
Since he was appointed Managing Director of the FMBN, Dangiwa has focused on expanding the capital base of the bank so it could help to fast-track the bridging of the housing deficit said to exist in the country. The current capital base of the bank is a miserable N5 billion described by Dangiwa himself as “grossly inadequate”.
The bank under Dangiwa has also strengthened its collaboration with key stakeholders, especially the labour unions, whose members constitute the bulk of contributors to the National Housing Fund Scheme.
This has culminated in the commencement of a need-targeted housing delivery program across the country – the National Affordable Housing Delivery Programme (NAHDEP) for Nigerian workers, in collaboration with the Nigeria Labour Congress (NLC), the Trade Union Congress (TUC) and the Nigeria Employers’ Consultative Association (NECA).
The program has a unique in the way its implementation was conceptualized. The housing designs and bill of quantities are commissioned directly by the bank to ensure the profit motive is greatly minimized. This template would ensure that the selling prices for the housing units are affordable and range between N3.1million and N8.3million for one, two- and three-bedroom flats. Construction work has commenced in five states, spread across the six geopolitical zones of the country.
Others are said to be in the pipeline as all states would be covered. But more importantly, as Dangiwa himself stated during the bank’s 2018 management retreat in Kano, part of the central focus is to establish a template for affordable housing delivery in Nigeria.
Other innovative housing products tailored to tackle the housing affordability challenge for contributors to the NHF include the rent-to-own scheme, where contributors can own a home and pay by monthly or yearly rents over a 30-year period, and the NHF Individual Housing Construction loans that are payable over a 15-year period at interest rates of seven per cent.
One of his achievements also include the reduction of equity contribution requirements for accessing NHF loans from ten to zero per cent for sums of up to N5million and 20, 30 per cent to ten per cent for loans of up to N15million.
All of these have no doubt made housing loan more accessible to contributors to the NHF. Since he came on board, the FMBN has disbursed housing loans totaling N40.9 billion to 1,843 NHF contributors.
The bank has also provided home renovation loans totaling N14.072billion to 16,031 Nigerian workers, and processed N12.4billion refunds to contributors and registered 224,752 to the fund.
One of the major challenges of the FMBN over the years, like most lending institutions, has been loan repayments. Many institutions are struggling with bad debt which, if not tamed, can make a bank collapse. This is why debt collection as a way of mitigating risks is critical for any lending institution.
But the management of the FMBN, through the services of recovery agents, was able to recover debts totaling N5.4 billion within two years. The loans – N2.4billion and N3billion were recovered in 2017 and 2018 respectively. Also, while some debtors’ loans were restructured, recalcitrant ones have been reported to the security agencies for necessary action.
But the management of the FMBN is not resting on its oars. It is constantly challenging itself and it has set out to ensure its operations are fully automated as soon as possible. Dangiwa recently stated that this is part of the ongoing efforts to fully automate its business operations to improve efficiency and timeliness in the delivery of its services to Nigerian workers.
This strategic policy is aimed at achieving end-to-end automation of all its operations ranging from NHF collection, loan processing, issuance of statement of accounts, NHF refunds amongst others.
But while the FMBN has no doubt performed creditably in recent times, especially under the current management, there is still some mileage to be covered considering the mandate it has. The mandate of the FMBN include provision of long-term credit services to mortgage banks in Nigeria and other mortgage institutions at rates that will allow the mortgage banks and institution grant loans to individuals who want to acquire their own houses, and encourage and promote the establishment and development of mortgage institutions at federal, state, local, and even rural levels.
As the monitor and regulator of the activities of mortgage institutions in Nigeria, it has a lot to do ensure these institutions are well regulated and encouraged to meet the housing needs of Nigerians who are not in public service.
Now that the FMBN has challenged itself, it is the time for all stakeholders, including the Federal Government to support the FMBN in its effort to deliver affordable housing to Nigerians.
– Muhammed writes from Jalingo