The Federal Mortgage Bank of Nigeria (FMBN) is on its toes, making sure that credibility issues associated with the home ownership fund, the National Housing Fund (NHF) are appropriately resolved.
This, according to the bank, is important in order to win the trust of its subscribers and to encourage more — especially those in the informal sector — to sign on to the fund and have legal chances of owning their own homes.
During a recent webinar organized by the Housing Development Advocacy Network (HDAN) with the theme “Digital Off Takers Affordability Profiling: Some Experiences,” the Deputy General Manager and Special Assistant to the Managing Director of FMBN, Mallam Shehu Osidi mentioned that the bank is taking novel steps in ensuring accountability and transparency.
As a 21st century institution, he revealed that the bank is actively leveraging on information technology amongst others to solve all issues associated with credibility in order to address the concern of subscribers.
“One of the issues we are trying to address is the issue of accountability and transparency. A number of individuals have complained that they are contributing but don’t have any way or means by which they can check their NHF contribution,” he said.
“So we are leveraging on our I.T institution. Now you can type *21# on your mobile device and then you will be able to get a number of options, where you can check your contribution. Also you can do a mortgage calculation with respect to affordability,” he added.
This should come as a relief to many, especially those whom have previously spoken to our reporters about not being able to access or verify their contributions.
On the issue of equity contribution, Osidi revealed that many Nigerians are unable to pay equity, but the FMBN is working on improving that.
“We also try to enhance affordability by looking at issues like equity contribution. A lot of Nigerians are able to ordinarily service mortgage but don’t have the capacity to provide equity, but what we really did to address this is making it flat. If you are taking a loan of 5 million and up to 15 million, you will pay a flat equity contribution of 10 percent, while loans of 5 million and below is zero equity. This is set to enhance affordability to a large extent.”
There has been a lot of comment about the reach or coverage of the NHF. The housing deficit in Nigeria is in millions and having an NHF scheme that caters solely to those in the formal sector can barely fix this huge deficit.
As a reaction to this concern, Osidi said that the bank is very aware of this and is always promoting financial inclusion, with special regards to the country’s informal sector.
“Like we know, the informal sector has been going through a lot of challenges because that is the unbanked segment of the Nigerian society. So how do we bring them into the banking sector? That is only possible through financial inclusion.
“So we use the instrumentality of cooperative society to form what we call Cooperative Loans, where individuals can get what we call cooperative housing development loan, where individuals can form a cooperative, approach FMBN for loans and then when the loan is approved, they will do design of houses they want. They determine the prices and they come to FMBN. What we do is vet the prices and the costing to ensure they are able to afford such houses, and then we finance the construction of such houses. And when the houses are constructed, the FMBN creates mortgage for individual members of the cooperative, so they can own their house.”
Moving a step further, he said the bank has introduced what they call Home Renovation Loan.
Through the Home Renovation Loan, individual contributors to NHF can access this facility to improve their houses.
“Regarding this, our experience has been exciting. Quite a number of Nigerians have accessed this loan which is N1 million, repayable over a period of five years,” he said.
Speaking on the major challenges being faced, he revealed that there are a lot of houses being built without off takers.
In order to address this challenge, Osidi stated that going forward, the sector would be wary of funding any construction without prospective off takers.
He declared that “every single construction we want to carry out must have off takers on ground.’’
Osidi re-echoed the importance of housing in Nigeria and why stakeholders must continue to seek collaborative networks and fashion out ways to address the country’s nagging deficit.
“Nigeria housing provides a very huge opportunity. Just to drive home this point, the N5 million contributor bill that FMBN is currently carrying at an average of N5 million per house, that would require about N25 trillion to fund and N25 trillion is about 14.75 percent of Nigeria’s GDP, and that is also more than the country’s budget for 2 years — 2019 and 2020 — that tells you the huge potential opportunity in the housing sector.”
