The Nation Newspaper

Tag: FMBN

  • Wobbling FMBN

    Wobbling FMBN

    •It is depressing that the bank can only provide loans to 60,000 of its 4m contributors

    What a disturbing trend that dearth of housing which for decades has become a serious challenge to the nation is continuing because of avoidable official incompetence. Isn’t it scandalous that the Federal Mortgage Bank of Nigeria (FMBN) shamelessly revealed through Lawal Isa, its head of corporate affairs, that “there are currently about four million Nigerians that are registered and are contributing to the National Housing Fund (NHF) but the FMBN has been able to provide mortgage loans to only about 60,000 or 1.5 per cent of contributors.’’

    He attributed the setback to several avoidable challenges,, including “…lack of access to land; inadequate funding for the housing sector; inaccessibility of mortgage loans due to lack of proper titles to properties; low income of prospective borrowers, which affects affordability; and cumbersome procedures for obtaining governor’s consent to land transactions, which is also costly.’’

    It is sad that FMBN, known at inception in 1956 as Nigerian Building Society (NBS), being a joint venture of the Commonwealth Development Corporation and the Federal and Eastern Governments of Nigeria has failed to meet public expectations. The problem encountered could not be that of ownership structure or that of putting proper legal framework in place because the Federal Government’s Indigenisation Policy that was backed by Indigenisation Act, 1973, caused the centre government to undertake 100 percent ownership of the NBS which led to its being renamed FMBN.

    The sad reality, 42 years after, is that the contributing Nigerians have not significantly benefited from the supposed mobilisation of long-term funds, lending volume and expansion of mortgage lending services. Even, FMBN’s administration and management of the contributory savings scheme through its empowerment vide the National Housing Fund (NHF) establishment Act 3 of 1992 has yielded little or no result. The NHF has failed to be an effective housing contributory pool for the mobilisation of long-term funds from Nigerian workers, banks, insurance companies and the Federal Government, in order to provide veritable platform for the advancement of housing loans at soft interest rates to contributors.

    The FMBN Act 82 of 1993 and the Mortgage Institutions Act 53 of 1989 that gave the FMBN the status of apex mortgage institution in 1994 have failed to mitigate the difficulty of Nigerians to access housing loans.

    The revelations that FMBN wants to actualise the intent of section 14(2) of the NHF Act Cap N45 of 1992 relating to easy accessibility to loans by contributors for the purpose of building, purchasing or renovating existing homes/houses should not end at the level of rhetoric. At the moment, the country’s mortgage industry is at the verge of collapse and the quicker cheap sources of loanable funds to nurture and sustain affordable home ownership in the sector are provided, the better for Nigerians.

    The FMBN’s new initiative of granting concessionary loan windows to enable Nigerians access mortgages for home ownership is commendable provided it would not end dismally like previous attempts. The introduction of home renovation loan idea to avail contributors to the NHF the opportunity of accessing mortgage loans for the renovation or improvement of their existing homes, good as it may be, is just a palliative because millions of others are still struggling to build a shelter of their own.

    It is high time the Federal Government decided whether or not it still needs FMBN. It is criminal for hardworking people to contribute money with the promise of getting loans when in the end such loans would not be forthcoming. The truth is that the organisation needs urgent recapitalisation and focused management if the housing needs of millions of average income Nigerians must be actualised.

  • Kontagora House: FMBN says sensitive materials intact

    Kontagora House: FMBN says sensitive materials intact

    The Federal Mortgage Bank of Nigeria (FMBN) said no sensitive document was lost in Wednesday’s fire which torched part of its office at Mamman Kontagora House in Lagos.

    A statement signed by Lawal K’Sauri, Head, Corporate Affairs, in Abuja also said there was no loss of life or damage to sensitive materials as to have cause for alarm.

    It thanked the Lagos State Fire Service, Federal Fire service, Nigeria Police, Julius Berger, Nigeria Ports Authority, UBA, Union bank Plc., and LASEMA, for putting out the fire.

    “The management also wishes to thank the general public for their concern and sympathy,’’ it stated.

    It stated that the bank’s Managing Director, Alhaji Gimba Kumo, during his visit assured that the extent of the damage would be made public after the outcome of the risk assessment.

    “We don’t have any report to give presently but the preliminary information we gathered tells us that the fire outbreak is from the generator room.

    “We spoke with the facility manager and we have been informed that they tried to service the generator yesterday.

    “We leave this to the state fire service and the experts coming to do the risk assessment.

    “Everything is going to be done professionally and you will be informed of the development.

    “No major document from our side is lost,’’ Kumo said

     

  • Sambo hails private partnership in housing delivery

    The Vice President, Mohammed Sambo, has inaugurated the Federal Mortgage Bank of Nigeria’s (FMBN) Sky Diamond Estate in Kaduna.

    At the event, he said the administration was pleased to note that the Federal Ministry of Lands, Housing & Urban Development (FMLHUD) and the FMBN were working hard at actualising one of the focal points of the President Goodluck Jonathan Administration Transformation Agenda in housing.

    He explained that the crucial role housing plays in the socio-economic development and political stability of a nation made the administration to take determined measures to revamp the sector and unleash its huge inherent economic potentialities for national development.

    According to Sambo, the FMBN/Sky Diamond Housing Estate, which consists of 200 units of residential houses will not only add to the housing stock of Kaduna, Kaduna State, but will go a long way in reducing the current estimated deficit in the housing sector. It is also a testimony to the concerted efforts to provide decent housing for the people of this country, which is driven by a National Policy on Housing that places the private sector in the driving seat for housing development.

    The estate commissioning, he said, is a statement in support of the fact that the policies, strategies and mechanisms for reducing the national housing deficit in every nook and cranny of the country are yielding results.

    Sambo reiterated government’s support for initiatives of this nature and its intention to improve the capacity of FMBN by re-capitalising the institution as part of the wider plans of overhauling housing financing institutions in Nigeria. “This is the exemplary form of synergy envisaged by the National Policy on Housing, which encapsulates a private sector-led housing delivery strategy hinged on governments at both national and sub-national levels, creating a conducive environment,” he said. He commended the apex mortgage institution and the developer – Sky Diamond Logistics Limited, for the successful delivery of the housing estate.

    He also charged the private and publicly-owned development firms, Primary Mortgage Banks and other stakeholders in the housing sector to redouble  efforts in tackling the huge housing deficit, which remains a challenge that must be overcome for the benefit of Nigerians.

    Sambo also assured that the government will not relent in moving the Nigerian housing sector to the next level of sustainable development so as to establish a lasting legacy of affordable home ownership and a thriving culture of mortgage lending for the gain of future generations.

    “Undoubtedly, the provision of housing represents the satisfaction of the basic human need for shelter. Beyond this however, it is widely acknowledged that the role housing plays is vital to the socio-economic construct of any society. Housing not only adds considerable aesthetic value to our living spaces, but also contributes significantly to the commonwealth and the national economy,” Sambo said.

  • FMBN targets 15 per cent mortgage contribution to GDP

    FMBN targets 15 per cent mortgage contribution to GDP

    THE Federal Mortgage Bank of Nigeria (FMBN) is targeting 15 per cent mortgage contribution to Gross Domestic Product (GDP) in the next few years, the Managing Director, Gimba Ya’u Kumo, has said.

    He said: “The mortgage industry in Nigeria is just starting if you look at the size of our contribution to the GDP it is less than one per cent but my target before I leave here is that we should be able to contribute at least 15 per cent.”

    To drive this process, he  said  FMBN was addressing several issues one of which is how to get more cash from the National Housing Fund (NHF) that is under FMBN management, adding that his priority is how to reach out to the larger segment of the society to boost housing fund.

    “Out of the 170 million population, less than one per cent are the ones contributing, so we said this is not good,” he said, pointing out that the bank is working on how to reach out to the other segment of the society and those that are not in formal employment.

    Kumo said FMBN wants to bring all the state governments into the NHF Programme, lamenting that so far, only six states are not contributing to NHF. “One of them is Lagos and what happened is that they have formed co-operative societies. They have registered with us, so they are contributing indirectly to NHF.”

    On the others, he said the bank is in discussion with them “and as soon as possible, we will see what we can put on the ground.This is because workers want to see actual action;  they want to see the mortgages created. This is what we are trying to do in all the 36 states, to build houses, create the mortgages and at the end of the day, we will be able to convince them. But I can assure you that in the next 10 to 11 months, all the states will be back into the NHF programme”.

    Another issue affecting the target, Kumo said, is the high cost of building materials.

    He noted that there “is need for reduction in the cost of cement; there is need for a reduction in the cost of iron rod and other accessories that will make up the houses.  Once that is done, I think it will go a long way in reducing the cost of the houses”.

  • ‘Govt’s policies, others promoting housing deficit ’

    ‘Govt’s policies, others promoting housing deficit ’

    Can Nigeria achieve the ‘Housing for All’ component of Vision 20:2020? Federal Mortgage Bank of Nigeria (FMBN) Board of Directors Chairman, Chief Bisi Ogunjobi says ‘yes, if the nation works in the right direction’. But he laments that regulations, financial system and the government’s policies designed to support the housing sector have served as obstacles to its development. He says the FMBN, constrained by the huge debt it is being owed, needs recapitalisation. MUYIWA LUCAS met him.

    There is an estimated 17 million housing deficit in the country. How did we get to this stage?

    The question of housing deficit is as a result of significant increase in population. Over the years, there has been increased urbanisation, that is people moving to urban centres from rural areas. This has, therefore, necessitated more accommodation as opposed to the inadequate funding of the sector.

    You will agree with me that Nigeria is one of the few countries where the acquisition of a house is a cash and carry thing. Knowing full well that for you to be able to own a house, you have to pay almost at once the entire cost of the house, because the system does not have a well-structured and working mortgage system.

    So you end up waiting for a long time if you want to buy a house, but of course the individuals cannot wait for that long so, they have to build the house on their own. You now discover that more than 90 per cent of houses built in this country are from personal efforts, not financed through the banking system. This is a sharp contrast to what obtains in developed countries where it is the banking system that provides the funds for most houses and you pay your equity contributions, that is, a small proportion of that and then you are able to acquire the house.

    Another factor is the system of getting title for the land.

    Land acquisition is a very tedious and complex process. Take the case of Certificate of Occupancy for instance. For you to obtain the title or document has become a Herculean task.When you look at the regulations, the financial system, the policies of the government in supporting housing all over the years, they have all collectively acted as constraints for house acquisition and that is why you have a large deficit.

    How does the FMBN work or relate with other stakeholders towards finding a solution to this problem?

    There are various institutions and stakeholders such as the commercial banks; we also have the developers and of course, the state governments. We synergise with all of them. The FMBN, through two windows: the National Housing Fund (NHF) and the Estate Development Loan, combines to see that we are working in that direction. The major resource we have now is the NHF which enjoins every worker to contribute two and half per cent of their salary towards the acquisition of a house. This brings us to the point I was making that housing is a fundamental right of everybody. Workers are enjoined to pay two and half per cent of their salary at the NHF towards possible acquisition of a house, but many people misunderstand this concept. The two and half per cent of your salary using the minimum wage of N18,000 is about N450. How long will it take you if you are contributing N450 every month to acquire a house of N5 million? That will translate to a minimum of 35 to 40 years. So when people complain that they have been contributing every month and don’t have a house, the issue is not your personal contribution alone, it is the pool of resources by the large number of workers that can allow FMBN to provide housing for some of them.

    What is the way out of this situation?

    It was only recently that for the first time we have a National Housing Policy only in the last three years.That is a big progress. Although, government efforts have been here and there, institutions have been created, it is within the framework of the policy that set the goals and consistently works towards the goals. I think today we have the right direction towards which all the institutions can work and be able to do that including the recent creation of the tertiary institution of National Mortgage Finance Company.

    How effective has the NHF contribution been to mortgage financing?

    The FMBN has never been conceived as providing for everybody; it is just one of the institutions to provide housing. The NHF is very crucial, but at the same time, its ability to do it for everybody is limited. When people are saying ‘we have not got the house we paid for,’ they are saying the reality, because based on your personal contribution, it will take you 40 years to get a house of N3 or N4 million.  But when you have the pool, that is the number, then it makes for more opportunities for housing and that is why the question of contribution in large number of the workers becomes crucial.

    But the NHF has its own problems too. One of these is the non-remittance of collections to the FMBN. We have had people collect money and did not remit the entire amount. Or some remit without the schedule of who are the contributors and so it is impossible for the Federal Mortgage Bank to determine who owns what and in trying to resolve that, you find all the problems associated with non-remittance and unfortunately the Federal Mortgage Bank is the scape goat to say they have not been able to provide housing.

    On the NHF and e-collection, recently, the president launched the e-card collection, which is a product of using IT and today you can have an e-card with your identity and any payment you make, you can receive an alert that this is how much you have contributed. You can go to any ATM and check your account. It is for transparency, for accountability and for ease of doing business with the bank. In the past, part of the problems was that things were done manually. Not only that it is tedious, it takes time and it is subject to human error and possible manipulation. But with e-card and the computerisation of the system, we are now in a position to say we are making progress, we are more transparent, because it is easy to deal with us. If you want a refund, the data is there and we can be able to do that. In fact, during the commissioning, we were able to trace the contribution of the President when he was a worker in the university. That is why we are able to produce a personal card for him under the e-collection.

    How well is the FMBN funded or capitalised to discharge its statutory responsibility?

    If you look at the capital structure of the bank, we are highly undercapitalised. In fact, when you compare us with similar institutions in Ghana, we are way below what is happening. If we compare ourselves with Malaysia, then we are far from that. There is no gainsaying that the bank is undercapitalised. As I always say, the issue is not just the capitalisation, but making the institution an effective one and managing its resources properly. In the past, this has not been done and that is why the change that is now in place, we are saying we are undercapitalised and there is need for recapitalisation.The level will be determined by the government, but what we are doing now is to show that we have the capacity to utilise the money, otherwise recapitalisation will not be effective; it will not make any sense. What we are doing now is building the necessary institutional base and providing adequate system of operation that enables us to absorb a higher level of recapitalisation. And that is what this board and this new management is saying- demonstrating that we have used what we have properly either from the government or from international institutions. There is no doubt that the resources we put at the disposal of the bank today in terms of the capital is inadequate, particularly when  compared with the assignment that has been put to us. I think that is a fundamental issue.

    How far have you gone on the Estate Development Loan (EDL) window?

    When my team got in place, we wanted to make a difference, and we looked at the opportunities in the bank, the challenges it has faced all these years and how we can address them. We found that the issue of people not respecting the agreement they entered into with Federal Mortgage Bank had been the bane of our problem. We have a lot of money outstanding under the Estate Development Loan. If you look at our annual report, you will see that the outstanding debt is almost N20 billion. We need to recover this money because it is weighing heavily on the bank. People have to respect their agreements and one of the ways we have to reduce that outstanding debt is to have aggressive debt collection system. Now, we have embarked on a process of loan recovery, talking to stakeholders that the money belongs to the bank and also ensuring they realise that the money which was loaned to them belongs to the people and therefore, we as managers must ensure that the recovery is done. We are now reviewing the whole exercise to enable us recover as much as possible. Just before we came in, the EDL operations had been suspended; we are now reviewing it; we are going to come up with proposals as to how this is going to be structured.

    It is five years away from the year 2020 target of housing for all. Do you think this is still feasible?

    I was a member of the team for the preparation of the Vision 20:2020, but I was in charge of governance and social responsibility. When you look at the Vision 20:2020, the thing it was meant to say is that this is the direction we want to go; whether we get there or not in year 2020, to me, is not the issue. The question is: Are we taking the necessary steps towards that goal? If the target is 2020 and we didn’t reach it and take stock in 2020 and we say we are 20 per cent short, then you know we are in the right direction. I think that is the essence of Vision 20:2020- it is not about getting the exact figure, but working in the right direction, taking all the necessary steps towards achieving the goal. So, if you ask me “can we achieve that?” I will say that is not my take; but rather, by taking the right steps towards achieving the goal. If you look at the Transformation Agenda, it encompasses the various steps we need to take towards Vision 2020. Of course, it requires active implementation. We may not get to that point but we are in the right direction and I think that is what is important because a journey of 20 years starts with a step.

    The bank has recently commissioned some  projects. How were you able to achieved these?

    The bank has done some laudable projects such as the Aviation Village in Abuja, where the bank financed the construction of 270 housing units. By the time the project was completed, it was already 70 per cent subscribed by the NHF contributors. But people do not know that the houses were financed by the bank; they will be looking more at the PMI (Primary Lending Institution). For example, Aso Saving and Loans, First Generation, Platinum and the likes, all of them are being financed by the FMBN. The PMIs deal directly with the contributors, but the funding is from the FMBN. You may see this estate is by a PMI, but the money is from the FMBN. We are not given enough acknowledgements for our contributions. The reality of the situation is that part of the problems of the bank are borne out of the legal frameworks that we have to grapple with, because of the difficulty in getting title for land. All this account for some of the weaknesses or constraints we face in trying to bring the best services we can offer. However, this is not to mean we are absolving ourselves completely or claiming to be perfect; that is why the institutional reforms that we have undertaken in the last two years are going to transform the institution and help it in providing better services.

    Any hope for Nigerians, especially those yet to be home owners?

    We are encouraging the people, the government, the labour unions that contributing to the NHF is the right thing to do, and that your money is safe and therefore it is going to lead you to being able to have houses in the future. Our advice and what we have been soliciting is that those who are contributing should do so. We are therefore even putting in new products to encourage those who were not covered by the system before, because it was with those with employment. We now have schemes to cover for co-operatives, private sector, artisans and even Nigerians in the Diaspora. These are new products which will encourage not just those salary earners in government employment, but the entire spectrum of workers in Nigeria.

    We have signed a tripartite MoU (memorandum of understanding) with the NLC (Nigeria Labour Congress), TUC (Trade Union Congress) and the employers of labour and the FMBN. We have a joint committee looking at the issues of how the bank could work better with the public, we have signed that agreement and they have now issued instructions to all the workers, particularly those who stopped paying at one time by their governments. We have got good result from this effort. In the last one year, we have been able to bring back about eight states that opted out of the NHF contributions. These are the efforts that we have been making and my advice is thatwe should  continue in that direction. We  have demonstrated that you can have confidence in us and we are working closely with commercial banks. This is enough hope for the people!

  • Why housing gap hasn’t been bridged, by stakeholders

    Why housing gap hasn’t been bridged, by stakeholders

    Operators and stake -holders have suggested  ways of moving the sector forward.

    Rising from a workshop on the Fourth National Council on Lands, Housing and Urban Development in Uyo, the Akwa Ibom State capital, participants said there was need to scale up the national cadastral and township mapping.

    This would be by facilitating the provision of Continuously Operating Reference Station (CORS), adopting singular mapping control network and establishing an Enterprise Geographic Information System (GIS) for the country.

    The theme was Creating enabling environment for private sector participation in affordable housing delivery in Nigeria. The forum   agreed that the Office of Surveyor-General of the Federation should be supported to provide at least one CORS Station in four states to fast-track cadastral mapping and create an Enterprise Geographic/Land Information System (GIS/LIS). They called for a National GIS/LIS summit shouldbe organised early this year to enable the placement of state and various agencies’ GIS to operate on the same template  to facilitate inter-operability.

    Approval was also given for the use of exchange of letters,  supported by a survey plan, signed by the state surveyor-general.This is to serve as a uniform and standard instrument for transfer of land between the states and the Federal Government to overcome the procedural and administrative lapses.

    The exchange of letters is to be circulated to the states before the end of the first quarter of this year for their input to ensure uniformity of application.

    The workshop, which was presided over by the Permanent Secretary, Federal Ministry of Lands, Housing and Urban Development, Mr. George Ossi, had in attendance 182 delegates (including 23 commissioners responsible for lands, housing and urban development matters in the states, as well as 159 senior officials of relevant federal and state Ministries, Departments and Agencies (MDAs), representatives of professional/regulatory bodies, and other stakeholders).

    At the end of deliberations, the Council adopted some resolutions on some issues.

     

    Housing finance

    It was noted that despite the significant progress made by the Federal Mortgage Bank of Nigeria (FMBN) and management of mortgage industry, the bank is still constrained by the failure of some states to embrace the National Housing Fund (NHF) Scheme, non-passage of critical mortgage related bills, and delay in the recapitalisation bank, urging the six  non-participating states (namely Lagos, Kano, Ondo, Ekiti, Edo and Oyo) to return to the NHF Scheme. The Federal Government was also implored to consider the  recapitalisation of FMBN.

     

    Adequate /affordable housing delivery

    The Council noted that there were serious factors militating against delivery of the housing stock in Nigeria. It added that Public-Private Partnership (PPP) projects could be better deployed in overcoming impediments to affordable housing delivery if the government comes up with policies to overcome the challenges of high cost of land, transfer fees and registration processes as well as promotes training of labour, provision of ancillary infrastructure and recapitalisation of mortgage institutions.

    Besides, it also noted the need to promote the unfolding paradigm shift in national housing delivery by further creating the enabling environment for private sector participation in affordable housing with special emphasis on the use of renewable energy sources and energy-efficient appliances as viable options for reducing the costs of buildings.

    It urged the need to set up a Special Purpose Vehicle (SPV), anchored on Home Ownership Property Development Cooperative Societies driven by partnership with land donors, cooperative members as ‘off-takers’, contractors, investors/financiers, shareholders, Primary Mortgage Institution (PMIs), and Bank of Industry (BoI) as  practised by Ondo State Development and Property Corporation.

    The council regretted that the impact of the housing deficit is, particularly grievous on the low income group, resulting in more urban slums and higher crime rates, and approved the setting – up of a Joint Action Task Team (JATT) of stakeholders to work out the modalities for implementing the proposed Social Housing Programme.

     

    Urban development

    The council praised the proactive initiatives of the Federal Ministry of Lands, Housing    and Urban Development towards the preparation of the National Physical Development Plan(NPDP) aimed at engendering sustainable and integrated development of the nation as well as ensuring regional balance and optimisation of the use of national resources.

    It also urged the populace to desist from engaging the services of non-town planning professionals in carrying out town planning functions, urging the state governments and other key stakeholders to further support and collaborate with FMLHUD in its efforts to prepare and produce the first National Physical Development Plan (NPDP) as well as its efforts at eradicating slums across the country.

     

    Others

    Other issues raised in the communique include that the National Building Code Advisory Committee had concluded action on the review of the National Building Code and that the approval of the Code by the Federal Executive Council (FEC) is awaiting the incorporation of additional input by other MDAs and relevant stakeholders as suggested by FEC. Approval of  the draft housing roadmap outlining the sets of actions to be undertaken for the sustainable Transformation of the Housing and Urban Development Sector in Nigeria over a 30-year period (2014-2044).

    Also, the forum gave approval to MDAs to demand for Council of Registered Engineers of Nigeria (COREN) Licence as a condition for the pre-qualification of engineering frirms, offering services in engineering contracting, manufacturing/ production, fabrication/repair/maintenance, service provision, and as vendors of engineering machinery, equipment, plants and materials.

  • FMBN: Stunted by financial inadequacies

    FMBN: Stunted by financial inadequacies

    The Federal Government’s desire to tackle the estimated 17 million housing deficit in the country may be laudable. However, a key player in achieving this dream is the Federal Mortgage Bank of Nigeria, whose operational efficiency remains stunted by its capital base. MUYIWA LUCAS writes.

    When in 1956, the Federal Government established the Federal Mortgage Bank of Nigeria (FMBN), the mandate was clear- to ensure the provision of housing for the teeming populace of the country. This is by way of providing mortgage finance assistance to Nigerians desirous of such support. But the apex mortgage financial institution, which has undergone several metamorphosis between 1956 and now, may not have been able to deliver fully on its mandate, irrespective of its desires.

    Now, following the Federal Government’s desire to build one million housing units annually, a ray of hope may have been rekindled. At various times, promises have been made by the government, where it always makes pledges to revolutionalise the sector by translating the National Housing Policy and National Urban Development Policy into a road map for housing development. Generally, delivering on these promises is believed to rest mainly on the FMBN, given its mandate.

    This is because the mortgage bank, from inception, is expected to play a pivotal role in developing a robust mortgage finance system for the country. With a mandate that among others, include promoting the growth of primary mortgage institutions to service the need of those desiring such services, through the mobilisation of both domestic and offshore funds into the housing sector; linking the capital market with the housing industry, establishing and operating a viable secondary mortgage market to support the primary mortgage market and collecting and administering the National Housing Fund (NHF) in accordance with the provisions of the NHF Act, the FMBN, as it were, has been an onerous task before it to date.

    Although the bank may have achieved some  feat, checks revealed that inadequate funding has remained an albatross for the mortgage lenders. Besides, experts in the industry are of the opinion that the lack of re-capitalisation and proper corporate governance, have also hampered the efficiency of the bank.

    For instance, the FMBN presently has a share capital of N5 billion. This figure, however, appears to be on paper. This is because, of this amount, only the Federal Government has fully paid up its own share of N2.5 billion.

    Other contributors to the fund such as the Central Bank of Nigeria (CBN) and the National Social Insurance Trust Fund (NSITF) have not paid their 30 and 20 per cent shares respectively. This situation has led to the gross under-capitalisation of the mortgage bank, thereby making achieving its task, vey daunting.

    Besides, considering the volume of the cost requirement in providing houses for the majority of the population, which is put at about 160 million, the current share capital, if fully paid up, would remain a drop in the ocean for the lofty plans the government has for the housing sector.

    It is, therefore, not surprising that stakeholders in the industry have called for an upward review of the share capital for the FMBN. One man that has advocated for this, is the Managing Director of the bank,  Gimba Yau Kumo, who has urged the government to increase FMBN share capital to N200 billion from its present N5 billion.

    “We urge the Federal Government to increase the share capital of the FMBN from its present N5 billion to N200 billion to enable the bank address the housing deficit in the country, because addressing the over 17 million housing deficit in the country would require aggressive injection of funds by the Federal Government,’’ he said.

    But notwithstanding its limitation, particularly that of the housing deficit, the apex mortgage bank initiated projects, which have delivered about 53,000 houses through the NHF, as well as launching of the housing scheme for the informal sector, and the Estate Development Guarantee (EDG) scheme, amongst others. These initiatives, coupled with its appeal to recapitalise, are set to place the industry on a new pedestal.

    For instance, with the informal sector’s Cooperative Society Loan Scheme, Kumo explained that operators such as farmers, traders and artisans would be able to tap into the benefit from the National Housing Scheme, like those in the formal sector.

    ‘’The mortgage industry in Nigeria is just starting. If you look at the size of our contribution to the GDP, it is less than one per cent, but my target before I leave here, is that we should be able to contribute at least 15 per cent. That is why we are putting a lot of issues on ground to be able to drive this process.

    “And how do you do that? If you look at the NHF that we are managing, out of the 170 million population, less than one per cent are the ones contributing. So, we said this is not good enough. How do we reach the other segments of the society that are not in formal employment?” he queried.

    Explaining the reason for the establishment of the scheme, Kumo observed that people in the lowest strata of the society have not benefited from housing loans, because they have limited capacity to pay for houses, as the income they generate is very small.

    This, he further said, led to the introduction of the Cooperative Loan Scheme, which according to him, was brought about to extend the bank’s services to people who can be deemed as “disadvantaged” in the society because of their low income level, which may be irregular and difficult to access under the NHF loan window.

    Therefore, he said, the FMBN, under the scheme, is now using cooperative societies to benefit a certain group of people operating in the informal sector category, especially because of the nature and structure of their income, which is not definite or regular.

    “The loan enables a cooperative society that has acquired a plot of land to develop houses for allocation to its members. The parcel of land would have title in the name of the society which would act as facilitator on behalf of its members in the loan transaction and facilitate construction of the housing units. The root of the title of the estate land would be sublease to the beneficiaries,’’ Kumo explained.

    While the various strides by the agency may not have met all the expectations of stakeholders, majority of stakeholders are of the view that going by the steps taken so far, a bright future lay ahead of the industry. They expressed confidence that the FMBN has done well with its schemes and only needs some propping to deliver greater benefits to the people.

    The Managing Partner of Havillah Shelter, Mr. Isaiah Dualong, shared this view. According to him, if the policies initiated in this dispensation are well executed, the mortgage challenge in the country would have been greatly surmounted. “It is quite promising that we have seen programmes, which if fully implemented, would provide answers to the various housing questions in Nigeria. I am not in doubt that they are not on the right path. All we demand is for the Federal Government to keep faith with FMBN. Policy somersaults would not be in the interest of the good policies that have been put in place in the sector,’’ he warned.

    Similarly, the managing director of Chiekwena Homes, Chief Chike Chiekwena, observed that there is a new direction for the FMBN and the nation’s mortgage sector, adding that there is need for a comprehensive database for generating statistics. He said responsible government does not joke with its mortgage sector. He therefore, said there was huge relief when the government expressed seriousness about reinventing the sector.

    “So far, there are prospects and they are doing well. However, there has to be incentives and necessary legal and regulatory environment to attract public-private partnerships in mass housing development,’’ he noted.

    Other efforts by the FMBN include a mass housing scheme under the “rent-to-own” option for workers. Experts say if this is purposefully pursued, it will increase the number of completed mortgages from the current 20,000 housing units to more than 200,000 units in three years.

  • FMBN mulls Diaspora mortgage scheme

    FMBN mulls Diaspora mortgage scheme

    The Federal Government, through the Federal Mortgage Bank of Nigeria (FMBN), is finalising a process that will build houses for Nigerians living abroad in the country, its Chief Executive Officer, Mr. Gimba Ya’u Kumo, has said.

    He told The Nation in Abuja that the initiative comes under the aegis of the Diaspora Home Ownership Scheme, now nearing completion.

    Kumo said: “I’m happy to let you know that we are for the first time trying to launch what we call the Nigerian Diaspora mortgage programme. This is a programme that will make Nigerians that are living outside the country to have houses of their own in their country of origin.”

    Already, Kumo said the mortgage institution was seeking to raise funds from international agencies, especially from Asia, to execute the programme.

    He said payment for the homes would be tied up to the VISA and Mastercard gate of the owners, adding that a consultant has been appointed to work out the modalities with the appropriate bodies. He said it would be made public and launched in New York, United States (U.S.).

    He further said preparatory to the initiative, the bank has been privileged to deliver three lectures in the U.S. on the scheme and one in London, all aimed at sensitising and testing the waters before the commencement.

    According to him, the bank has recorded tremendous success since he took over its management in December 2010. For instance, Kumo said the first thing his team did was to strengthen the collection process of the mortgage firm, as it was able to move the collection of the National Housing Fund (NHF) by almost 300 per cent, that is, from N700 million in 2010 to the present collection level of N2.5 billion. Besides, the bank’s operation has been upgraded from manual operation to fully computerised institution, thereby making it possible to institute a new electronic collection for the NHF, that is, NHF e-collection.

    Kumo said there was need for greater participation and integration of other groups and individuals into the government housing delivery scheme, especially through the cooperative societies.

    He said in the 22-year-old FMBN, 45 per cent of its portfolio came through mortgage and estate development schemes, which were achieved in the last three years – a feat he attributed to the collaboration between the bank, Nigerian Labour Congress, Trade Union Congress, Nigerian Employers Consultative Association and the Nigerian Union of Journalists (NUJ).

    He admitted that the establishment of the Nigerian Mortgage Refinances Company (NMRC) in January, would further boost housing delivery in the country.

    Kumo said the organisation had been able to deliver 6, 100 houses across the nation.

  • FMBN mulls Diaspora mortgage scheme

    FMBN mulls Diaspora mortgage scheme

    The Federal Government, through the Federal Mortgage Bank of Nigeria (FMBN), is finalising a process that will build houses for Nigerians living abroad in the country, its Chief Executive Officer, Mr. Gimba Ya’u Kumo, has said.

    He told The Nation in Abuja that the initiative comes under the aegis of the Diaspora Home Ownership Scheme, now nearing completion.

    Kumo said: “I’m happy to let you know that we are for the first time trying to launch what we call the Nigerian Diaspora mortgage programme. This is a programme that will make Nigerians that are living outside the country to have houses of their own in their country of origin.”

    Already, Kumo said the mortgage institution was seeking to raise funds from international agencies, especially from Asia, to execute the programme.

    He said payment for the homes would be tied up to the VISA and Mastercard gate of the owners, adding that a consultant has been appointed to work out the modalities with the appropriate bodies. He said it would be made public and launched in New York, United States (U.S.).

    He further said preparatory to the initiative, the bank has been privileged to deliver three lectures in the U.S. on the scheme and one in London, all aimed at sensitising and testing the waters before the commencement.

    According to him, the bank has recorded tremendous success since he took over its management in December 2010. For instance, Kumo said the first thing his team did was to strengthen the collection process of the mortgage firm, as it was able to move the collection of the National Housing Fund (NHF) by almost 300 per cent, that is, from N700 million in 2010 to the present collection level of N2.5 billion. Besides, the bank’s operation has been upgraded from manual operation to fully computerised institution, thereby making it possible to institute a new electronic collection for the NHF, that is, NHF e-collection.

    Kumo said there was need for greater participation and integration of other groups and individuals into the government housing delivery scheme, especially through the cooperative societies.

    He said in the 22-year-old FMBN, 45 per cent of its portfolio came through mortgage and estate development schemes, which were achieved in the last three years – a feat he attributed to the collaboration between the bank, Nigerian Labour Congress, Trade Union Congress, Nigerian Employers Consultative Association and the Nigerian Union of Journalists (NUJ).

    He admitted that the establishment of the Nigerian Mortgage Refinances Company (NMRC) in January, would further boost housing delivery in the country.

    Kumo said the organisation had been able to deliver 6, 100 houses across the nation.

  • ‘Housing for all by 2020 unrealistic’

    ‘Housing for all by 2020 unrealistic’

    Is it possible to provide houses for all Nigerians in the next six years? No, says Gimba Ya’u Kumo, Managing Director/Chief Executive Officer, Federal Mortgage Bank of Nigeria (FMBN). In this interview with Assistant Editor NDUKA CHIEJINA, Kumo says the National Housing Fund (NHF) is “grossly underfunded”. FMBN provides mortgage for Nigerians to build, buy or renovate their houses under the NHF scheme. Although Kumo lauds the scheme, he says a lot still has to be done to make it work.

    How will you assess the mortgage industry?

    The mortgage industry is just starting. If you look at the size of our contribution to the Gross Domestic Product (GDP), it is less than one per cent, but my target before I leave here is that we should be able to contribute at least 15 per cent to the GDP. That is why we are putting a lot of issues on ground to be able to drive the process. Now the question is: How do we do that? It is simple. If you look at the National Housing Fund (NHF), out of the population of 170 million people, less than one per cent of the population is contributing to the Fund. This is not good. Our target is on how to reach the other segments of the society that is not in formal employment. Essentially, the mandate of FMBN is to finance housing delivery to Nigeria’s teeming population by exploring funding sources such as NHF, the Nigerian capital market and offshore financial markets. Its mandate also include ensuring that there is adequate liquidity in the Nigerian mortgage sector; it also strives to create and nurture a viable and robust housing finance system to improve home ownership for all categories of Nigerians through affordable mortgage services.

    Do you think a single digit mortgage rate is sustainable given the economic indices?

    Yes, our rate has always been single digit, our estate development loan or construction loan is 10 per cent, our mortgage rates are at six per cent and we also intend to extend the same rate to the informal sector so that we can make houses affordable to them. Nigerians cannot afford anything above single digit because the average income is very low. That’s why we are providing a buffer whereby they are able to pay. We took the minimum wage of N18,000 as a base and with that, a beneficiary would be able to do a mortgage of N450 monthly. This is the minimum the informal sector beneficiaries are expected to pay but this will be difficult for some of them, so we are looking at a subsidy.

    Is there any way Primary Mortgage Institutions (PMIs) can be prevailed upon to charge single digit interest rates?

    If you say the government, you are talking in terms of agencies that deliver mortgages. It is only the FMBN that is delivering mortgage as a govrnment entity. Our mortgage isin single digit, six per cent. That is what President Goodluck Jonathan has told us and that is what we are doing. We charge our mortgage at the rate of six per cent on a long tenure basis, 15 years, 20 years and even up to 35 years.

    There are concerns that contributors to NHF have not been able to access loans in the last few months. How true is this?

    Contributors to the NHF have in the last six months been paid over N9 billion either as refunds or as funds to assist them own their homes. The information is in the public domain for anyone that wants to verify to do so. We have been paying contributors and in the last six months, we have disbursed over N9 billion to contributors. Publication of the list may not have been regular like before, but that does not mean that disbursement has not been going on. We have disbursed through 57 PMIs. We are doing all we can within the bank to ensure that our facilities are up to date so as to reduce the waiting time in the disbursement of loans to recipients.

    Some people didn’t subscribe to NHF due to problems encountered at maturity. What is your take on this?

    The NHF loan is a transparent exercise and that is why we decided to be publishing the names of beneficiaries of disbursements and refunds when we came on board. We published the names of refunds of those that have left service. It is because of our desire to address these discrepancies that we came up with the e-collection platform so that each individual contributing to the scheme will be able to, on a monthly basis, know whether his/her account is credited or not. The essence of this is to make them inquire from their organisations why it is not done. These are the issues and we will be able to address them as we move on. We have several strategies for implementation to provide houses to Nigerians. If you look at the minimum wage of N18,000, the deduction is 2.5 per cent. If you run your numbers, it is about N450. We have 3,777,000 contributors.  We have delivered only 56,000 houses. It takes 250 contributors contributing N500 monthly for 10 years for one person to be able to access N15 million. That is the statistics and that is why we are talking to government to fund us, even if it is a low interest loan for a long tenure. By the time you run a mortgage for five years, it is not a mortgage. A mortgage should run for 15 years or more. What this means is that an average Nigerian can identify a house in any location in Nigeria and approach FMBN for a loan through a PMI for financing for either outright purchase or for renovation.

    How can Nigerians access NHF loans?

    Those who want to access the loans need to have equity contribution of some percentage of what they are asking for as loan. If for instance they require N5 million to N10 million from the bank, the equity contribution is 20 per cent, for N10 million to N15 million, the equity is 30 per cent while for N5 million and below, the equity contribution is 10 per cent.

    The bank does not deal with individuals in its transactions. As individuals wishing to buy a house or access the loans, they have to go through PMIs.

    Has there been any  problems with loans granted to property developers?

    Up till now, we don’t have any problem with the loans we have given to developers but the ones issued before we came on board, there are problems and we are trying to resolve them. But generally, Nigeria has an issue that has to do with titling. Mortgage business is based on title and for you to get title in Nigeria is difficult. For instance, you are given a land in Abuja under the development lease agreement to build 500 houses, for you to be able to create mortgages for these houses, you need an individual certificate for each of the houses. If you apply to Federal Capital Territory Authority (FCTA) to get these, it takes you not less than two years. That of Lagos is even worse. But on our own, what we have done is to create a buffer zone which we call the internal record office whereby you will sign our legal mortgage documents and we give you your mortgage, leave us with the responsibility to get the title. By this, we try to reduce the burden to beneficiaries.

    How has repayment been?

    For the ones issued before we came in, it has not been encouraging and that is why we have embarked on an aggressive drive to recover loans in order to meet our obligations to our shareholders. The move is in line with the resolution of the last management meeting held in Abuja. The Board of Directors of the bank also mandated the management to go all out to recover loans given through the NHF. PMIs will also be included in the loan recovery exercise.

    How much are we looking at?

    I will not mention specific figure for now, but we need to recover these monies in order to enable other Nigerians benefit from the fund. We noticed that some provisions in the estate development window gave rise to this and that is why we are planning to review the estate development loan window to remove observed lacuna. The National Housing Scheme (NHS) also would be reviewed to ensure better collection of contributions from the PMIs as FMBN is reforming its operations to enforce discipline and transparency.

    What new innovations are you bringing into the scheme?

    FMBN is working out modalities to roll out a Diaspora product to assist Nigerians living abroad own homes in Nigeria. The product has become necessary given the large number of Nigerians in Diaspora who wish to own homes back home and also as a means of reducing the housing deficit in the country. We realised that about 17 million Nigerians are living outside the country and most of them plan own houses but they have not been able to do so. We understand that over the years, people have been remitting money for building or buying of a house and they have not been getting good results with sad tales to tell.

    By the time we develop the Diaspora mortgage model, it will be a model whereby Nigerians living abroad who want to buy houses can approach FMBN. If they do not take the mortgage, they can get refund of their money with interest. The reason the bank has chosen the United States (US) is because out of the 17 million Nigerians living outside the country, America has about 58 per cent. We will do our case study here and in the United Kingdom (UK). If it works well, we will try to replicate it in Asia and other parts of the world. The move would also lead to the inflow of Diaspora finance to Nigeria. This would further assist to reduce the housing needs. The target of Diaspora is because the inflow of Diaspora money to Nigeria is about $10 billion. If the housing sector takes about 25 per cent of that inflow, we are expecting that about $2.5 billion will come to us in the form of inflow from Diapora people that would need houses and investments in the housing sector. That would translate to about N4billion and with that, we can fund mortgages and build about 30,000 units/ That would be an opportunity for those who would want to have houses in Nigeria. That is within the envelope that we are allowed to operate which is N15 million or $90,000.

    How viable is the real estate sector?

    The total value of the real estate market is put at N59 trillion and that is potentially six times bigger than the local stock market which is valued at N12 trillion. On this basis, the sector cannot be ignored. Let me explain how we arrived at that figure. The housing deficit in the country is estimated to be 17 million units . When multiplied by N3.5 million, the estimated cost of a single housing unit, it will result in that amount. I am however, optimistic that with the coming on stream of the Mortgage Utility Refinancing Company (MURC), the housing sector will experience a revival that will attract investments to the sector and boost the economy.

    Why has it taken government this long to  address financing issues in the sector?

    I think it has taken the government this long to decide to finance the sector because it initially wanted to see if the funds would be well managed before doing so. Government initially wanted to see what we have done before it puts money there. This bank has been operating for 22 years and during that time, it was operating on deficit, we were able to break-even last year and made profit. Secondly, we did some reforms like full computerisation of the bank. The only source of income is the NHF we now collect through the e-collection portal, which has tripled collections. We were able to pay more mortgages and fund more constructions. We did that to show transparency so that contributors can see their contributions being used. We also went ahead to start publishing the names of those who benefitted and those we have refunded because the law says if they retire, they ought to take their contributions and two per cent interest. We have refunded N1.2 billion to about 78,000 people in the last two years.

    What are you doing to create awareness so that the less privileged can be part of this?

    We have come up with a product called the cooperative housing loan, which is designed for people that are not earning salaries. Everyone is privileged. But for people that are not earning salaries, we have made provisions for them such that they can form cooperatives and also access loans in the housing sector. The only way you can do that is through cooperatives or organised informal sector involving farmers, traders, carpenters, among others. They can form cooperative societies and benefit from corporate mortgage facility from us. With that we hope to grow the sector and contribute to the development of Nigeria.

    How does the cooperative loan scheme work?

    Those in the lowest strata of the society have not benefitted from loans because they have limited capacity to access funds to pay for houses as the income they generate is very small. This led to the introduction of the Cooperative Loan Scheme. It was brought about to extend the bank’s services to people who can be termed disadvantaged in the society because their income is low, irregular and difficult to access under the NHF loan window. What the bank has done is to use cooperative societies in the informal sector to service people who can be termed disadvantaged in the society because their income is low, irregular and difficult to access under the NHF loan window. The informal sector constitutes a larger per cent of the economy. Since they do not get salaries on monthly basis, the bank has to look at ways to reach them so that they can contribute and also benefit by owning their own houses. The cooperative loan scheme enables a cooperative society that has acquired a plot of land to develop houses for allocation to its members. The parcel of land would have title in the name of the society which would act as facilitator on behalf of its members in the loan transaction and which would facilitate construction of the housing units. The root of the title of the estate land would be subleased to the beneficiaries. FMBN is aware that people gather in groups to contribute money like ajo, esusu as they call it in different places. They can make contribution of only N450 each per month after joining NHF on N18,000 minimum wage benchmark, which is at 2.5 per cent rate.

    How do cooperatives access loans?

    Cooperatives are registered in states under the Ministry of Commerce and Industry while at the federal level, they are registered with the Ministry of Agriculture. FMBN has presence in all the 36 states and it is therefore our duty to identify cooperatives that are viable. The way this works is that we will not give loans to individual members of the cooperatives to go and build houses, but instead give loans to the cooperatives as a group. The cooperative goes and identifies a plot, does all it needs to do and then applies to FMBN for a loan. When we are satisfied that the cooperative has met all our conditions, provided all the necessary documents and passed our internal credit test, we approve the loans. If they have professionals among them, we will allow them build, subject to our monitoring. It is when the cooperative has finished building that we will give loans to individual members to enable them purchase the houses their cooperative has built. The money the members pay back will be paid into the account of the cooperative to offset the loans. We have created a mortgage loans that will be paid over time by individual members, which is either 35 years of service or 60 years of age, that is retirement time. I normally use retirement age, which is 60 years to calculate repayment period. Labour law provides that a worker should not spend more than 33 per cent of his income to service any loan. We apply that principle and try to establish the average of the person and situate what he can service within that income. Income for this sector may not be regular, but it has to be reasonable for the person to qualify for the loan. We give the loans at four per cent interest to the PMIs while they in turn give it at six per cent to the customers.

    What is e-collection platform about?

    This system will automate NHF deductions and remittances from employers’ salary payments account domiciled with any of the 23 commercial banks enlisted in the project. The e-collection form will ensure compliance by employers and provide contributors with transaction alert in addition to online, real time access to records of their contributions. We expect an increase of at least 300 to 500 per cent, although currently we have recorded over 100 per cent increase in the collections. We are working hard and hope that very soon, we will attain our desired goal. One of the problems that we faced in the past was that of non-remittance of contributors by the employers. Some ministries collect but they don’t remit to FMBN so the money does not get to us, now we are doing e-collection and we know that things will improve. Over N100 billion has been lost in revenue to the NHF due to loopholes in the collection process that encouraged flagrant violation of the NHF Act by employers.

    What does the government need to do to enhance your operations?

    As I have said, the major challenge is funding. The second challenge is recapitalisation and the Federal Government is attending to these. So apart from these, we have others like the issue of corporate governance, we are trying to get the bank to be focused and competitive. FMBN was established 21 years ago and since then, it has not made profit but when I came on board, we were able to break even and make profit for the first time. At present, the NHF only has 3,772,031 contributors and it would require 50 contributors to contribute N500 monthly for 10 years before the bank would be able to provide a loan of N15 million for one individual. So far, the bank has approved NHF loans of about N90 billion out of which only N39 billion or about 22 per cent has been disbursed. While it has also approved N110 billion Estate Development Loans (EDL) out of which only N62 billion or 52 per cent has been disbursed. The total disbursement we have made so far is N100.5 billion and we have been able to deliver 56,000 houses which is just a drop in the ocean when compared to the housing deficit we are confronted with. Since the NHF commenced, we have been able to collect a total of N106 billion and looking at our disbursements, we have disbursed more than that. This is because some of the funds we collected from contributors, we put them in investments. Also, out of the total number of houses delivered, 46-52 per cent was done by the current management of the bank within the last two years, while a further N1.6 billion representing 1.58 per cent of total collections was refunded to retirees. We would also urge the Federal Government to increase the share capital of the FMBN from its present N5 billion to N200 billion to enable the bank address the housing deficit in the country because addressing the over 17 million housing deficit in the country would require aggressive injection of funds by the Federal Government. The bank presently has a share capital of N5 billion out of which the Federal Government has paid up its own share of N2.5 billion representing 50 per cent, while the Central Bank of Nigeria (CBN)  and the National Social Insurance Trust Fund ( NSITF) have not paid up their 30 per cent and 20 per cent shares respectively. The bank  is grossly undercapitalised compared to other countries even in West Africa but the government is currently working on ways to improve its capitalisation. Government can even loan us money to carry out our functions, which we can repay with interest so that we can build houses for Nigerians at cheap rates because the current rate in the banking sector is quite high.

    What should be done to accelerate housing development?

    There is need for the government to put money into it. Secondly,  private sector initiative should also be put in place with a view to fast-tracking government’s housing delivery programme. The issue of 17million housing deficit cannot be addressed by government alone. We have a delivery deficit of 17 million at a N3.5 million per unit, that is N59 trillion, so there should be joint and coordinated efforts both by the private and public sectors with a view to providing houses for Nigerians.

    How affordable are the houses?

    They are expensive in the sense that cost of materials for constructing these houses are also high. So, there is need for reduction in the cost of cement, there is need for a reduction in the cost of iron rod and other accessories that make up these houses. Once that is done, I think it will go a long way in reducing the cost of the houses.

    Do you think housing for all by 2020 is realistic?

    No, it is not. 2020 is the next five to six years. The implication is if you run your statistics to say you need to cover the deficits in the next six years, each year you have to be building more than two million housing units. But don’t forget the deficit keeps on growing because people keep coming up increasing the need for more houses. Government alone does not have all the money, so there will always be gaps but we are working hard to see that we close the gap. So providing houses for all Nigerians in the next six years, I don’t think it is possible.

     

     

     

     

    What would you identify as the major constraint in realizing your mandate of providing affordable housing to Nigerians?

    The major constraint is funding which government is working on. The laws that established the institution also need to be reviewed and we are working on it.  Thirdly we need public awareness on the existence of mortgage and the mortgage we are doing. That we are doing now through sensitization of Nigerians.

    Can you react to claims that the Mortgage Refinancing Company was set up due to the failing of FMBN?

    That is a wrong perception. Nigerian economy is so big, FMBN is supposed to address housing issues for the lower cadre while the Nigerian Mortgage Refinancing Company (NMRC) is supposed to address housing needs of medium and upper class, and  also to some extent, that of the lower class by the introduction of micro financing. NMRC will be market and private sector driven. If you look at most Nigerian workers, they cannot afford any funding that is market-driven; we will take care of that ladder. We will continue to do our social lending. Actually we have not been able to satisfy demand because we have more than 100,000 requests with us and I told you we did less than 60,000 mortgages including the construction that we have done. So there is a gap, we have been able to meet demand by about 40 per cent. People are on the queue because the quantum of money we have is not sufficient to go round, these are some of the issues. If we had enough money, we would have given everybody that requires mortgage. But we cannot do it because we are not properly funded, the money is not there. These are some of the issues that we are facing.

    There are allegations that your management has spent about N600million in renovating the head office. How true is this?

    What the board has approved for us to renovate the entire fourth floor that was damaged by fire and also give facelift of the entrance including replacement of two lifts, was N245million and that is what we have started spending and I don’t think we will spend up to that.

    Some disengaged staff are alleging that management is not favourably disposed to paying them their entitlements. Is this true?

    Maybe before I came in, but since I came in, I have not seen any staff that has been disengaged and has not been paid his entitlements. Maybe they are referring to staff that have been dismissed before we came. But we are in court, they took the bank to court after even taking their money, their exit allowances, they still took the bank to court.

    Going forward, what would you tell Nigerians wishing to own their homes and don’t have the financial muscle?

    Nigerians need to imbibe the culture of mortgage. This idea of me using my money to build my house is too stressful on their savings and keeps people in a very difficult financial situation. So I appeal to them to imbibe the culture of saving. They should embrace the culture of going for mortgages whether through the NMRC, which is market-driven or through the Federal Mortgage Bank, which is specifically designed for contributors of the National Housing Fund (NHF) because the market is now big enough to accommodate all.

    The bank recorded a profit of N188 million in the first quarter of 2012 as against N256.415 million loss in the corresponding period in 2011. What is the magic?

    I would attribute the feat to the reform strategy implemented by the new FMBN management in line with the transformation agenda of the Federal Government. Prior to the current year, the bank also had deficit of N4.420 billion in 2010; N8.898 billion in 2009; N6.560 billion in 2008; and N5.974 billion in 2007. The FMBN-administered National Housing Fund (NHF) scheme had been making gradual impact on Nigerians; the scheme has since funded the building of more than 61,193 housing units in the six geopolitical zones in the country. FMBN is also computerising its operations to make it easier for it’s over 3.7 million customers to access its products and services and the process has become necessary to conform to globally accepted standards and also serve the bank’s customers better. When we came in, we saw that the entire operations were being done manually and we reasoned that there was no way we could carry out effective and efficient banking operations if we continue to operate manually. That led us to award some contracts that will entail entire computerisation of our banking operations and in doing that, the issue of security came up that we have to secure our offices as well. So, we are carrying out this computerisation exercise at the head office in Abuja, our 36 branches as well as our eight zonal offices and this will be done in phases. For the phase one which will comprise of full computerisation of all the bank’s buildings, the bank has already paid out about N200 million. At the end of the exercise the bank would be able to track applications more efficiently. From this exercise, we intend to have a situation where an intending customer who wants to access a mortgage loan can go online to fill the form and submit to the Primary Mortgage Institution and also to us. During the process of submission, it will indicate the date and in the event that the PMI does not submit to us on time, we can call them quoting the date the application was submitted and find out why we have not seen the application.

    What do contributors stand to gain from this computerisation exercise?

    In this computerisation exercise, NHF contributors will be given an NHF e-card, which is like the regular ATM card. With that card, they can check if their contributions have been remitted at any time and also be able to check their balance whenever they want to. Also, if they apply for NHF loans, they will know what their contributions are and what they are entitled to get. The reason why we have decided to computerise our operations is because before now, the operations have been very slow and cumbersome which made it very difficult for contributors to access loans when they need it but with the new system, the organisation intends to cut transaction time by 90 per cent. Staff as well as NHF contributors will have the cards that will allow staff access to their offices and contributors’ access to the first floor that deals with mortgage applications. Staff will have access to their offices while contributors will only have access to the floors that they have dealings with. The cards are ready but for now, we are running a pilot scheme for our Staff, the Police and Central Bank of Nigeria, (CBN). After we have assessed its performance, we will expand it.

    Are there any restrictions to contributions?

    No, if contributors have more income and they wish to contribute more than that, the scheme allows them to. What happens is that the balance contribution that they make aside the statutory 2.5 per cent of their salaries will not go to equity when they wish to take a loan. For example, someone that is supposed to be contributing N450 and now decides to contribute N1000, the excess is multiplied by the number of months he has contributed and that goes to reduce the equity he is required to bring when he wants to access a loan.