The Federal Mortgage Bank of Nigeria (FMBN) is targeting to recapitalise the bank to the tune of N250 billion and desires to contribute 15 per cent to the nation’s GDP in the coming years. Managing Director of the FMBN Gimba Ya’u Kumo spoke with Assistant Editor Nduka Chiejina on these issues and more.
A lot of efforts have been made towards recapitalising the bank. How soon will this happen?
Very soon. Timing is very essential. There are few issues now. You know we are in the season of politicking so government will concentrate more in that area now. But we have been promised that it will happen as soon as possible.
What amount are you looking at as recapitalisation for the bank?
What we have requested for is N250 billion. But at the moment, there are a lot of competing needs, security, infrastructure. But I know that they will do it.
To what extent have you been able to resolve the issue of the NHF concerning some states that pulled out?
As at today, we have only six states that are not in NHF and particularly Lago. What happened is that they have formed cooperative societies on their own.m So, they are contributing indirectly to NHF. As for the other states, we are talking to 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 be able to build the 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.
Within the next four years, how many mortgages are you looking at creating?
It depends on availability of funds. But I hope to create based on the memorandum of understanding with NLC, TUC and NECA. We should be able to do at least four million.
Developers are not really giving Nigerians affordable houses. What do you think is responsible for this problem?
The houses 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 rods 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.
These are the issues we are trying to address, it has been an area that I have laid so much emphasis and concern on because if you look at the earnings of Nigerians particularly somebody who earns N18,000, that is not up to $100 going by today’s exchange rate. That person is not in a position to buy even a one-bedroom apartment going by the present structure. So, what we are trying to do is working together with the ministry to see if we can have discount on some of the inputs that make up the house like discount on cement, discount on rods for construction and so forth. However, what we are trying to do on our own is to introduce new building methods that will now reduce the cost of houses ultimately.
We just came back from Thailand with officials of FCDA, Ministry of Lands, and Housing and Urban Development. After the Tsunami, they commissioned seven universities to do research on affordable and sustainable housing. We have seen the development in that country. We took sand from Kuje here and they took it to three of the universities and it was discovered that it is even 17 times better than their own sand. So, they are producing some blocks for us with less than five per cent cement content. So, if we do that, that issue of affordability will be addressed. Because apart from addressing the issue of affordability, we want to address that issue of delivering quality houses. This is because most of the houses particularly in Abuja today for which some of the mortgages have been created; you will end up paying for a mortgage for 20, 25 years.
How are we sure that these houses will last up to that time?
We want to check that aspect because for us to be able to give you mortgage for a particular tenor, we have to make sure that the house will be able to stand within that period. With the support of Nigerians, these are some of the things we want to do.
Accessibility to land is still an issue, how do you plan to tackle it?
I agree with you, but we have put an MoU in place whereby we are working with various state ministries of land and we are also working with the various labour organisations for the land to either be allocated to us as a government bank or to be allocated to labour directly. Why we are doing that is to reduce the cost because if you allocate it to the developer directly, he will put any cost he likes on the property. And we insist that the particular government that is allocating whether it is a state, federal of even a local government that the land should be allocated freely particularly on the houses that we are building for NHF contributors. I am happy to say that as at today, in all the six zones where we have pilot projects, we are doing on the ministerial pilot scheme all the land that have been given to us are donated free by the various state governments. I want to call on other state governments that if we approach them or if the labour leaders approach them, they should please make land available.
You just got re-appointed for a second time in office. How do you intend to improve the fortunes of the bank?
We will work to continue to provide quality and affordable houses to Nigerians and strive to improve the bank’s balance sheet to modify its standing as a financial institution.
Our strategy will involve developing proactive and effective strategies to attract offshore funding for affordable housing to Nigerians as well as improving service delivery to NHF contributors across the country. We also plan to look at improvement of members of staff welfare across board to ensure a well-motivated workforce and profitable operations.
The new management will also ensure the completion of ongoing housing estate projects under the Ministerial Pilot Housing Scheme nationwide and the completion of the Goodluck Jonathan Legacy Estate in Kaba District in the Federal Capital Territory, FCT, will be vigorously pursued.
I also want to assure the federal government and other stakeholders in the sector, of our determination to sustain the cordial relationship we enjoyed in the previous years.
I use this opportunity to request that the same support and cooperation enjoyed by the previous executive management team be equally extended to the present team. As a returning member of the team, I have had the privilege of experiencing the various challenges facing the FMBN as well as the housing sector in general.
We have tried to improve on the little we found on ground. People say we did well but we are just starting and we hope within the next few months we will be able to do more so that the results of the efforts will be realised.
We have set an agenda for ourselves and chief among them is the recapitalisation of the bank. We have made substantial progress on that. In the next few weeks we will see results on the table. We will work hard to continue to satisfy the yearnings of Nigerian workers.
Do you think a single digit mortgage rate is feasible given the current economic indices?
Yes, our rate has always been single digit. Our estate development loan or construction loan is 10 per cent, our mortgages are at six per cent and we also intend to extend that same rate to the informal sector so that we can make the houses affordable to them. Nigerians cannot afford any 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.
Like we took the minimum wage of N18,000 as a base, with that you can be able to do a mortgage of N450 monthly. So 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 that primary mortgage institutions can be prevailed upon to charge single digit interest rates?
If you say government, you are talking in terms of agencies that deliver mortgages. On the government side, for now, it is only FMBN that is really delivering mortgage. And our mortgage is single digit, six percent. 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, 20 and even up to 35 years.
How would you describe the mortgage industry in Nigeria at the moment?
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.
How will you do that?
If you look at the National Housing Fund (NHF) that we are managing, out of the 170million population less than one per cent are the ones contributing. So, we said this is not good, hence we have extended it to reach the other segments of the society that are not in formal employment.
