By Akanimo Sampson
Like the campaign slogan of one of the big technological corporations, life is getting good at the Federal Mortgage Bank of Nigeria (FMBN). It is currently witnessing what industry watchers describe as, ‘’dramatic transformation’’ in the last three years. This is largely due to the driving spirit of its Managing Director, Ahmed Musa Dangiwa.
Under his watch, FMBN which was long perceived as a byword for sub-optimal performance is building an impressive track record of high performance. This positive shift is helping to redefine the government-owned entity as a more effective, innovative and reform-friendly tool for affordable housing delivery to Nigerian workers within the low- and medium-income bracket.
Insiders say Dangiwa has championed and sustained implementation of a reform roadmap that is delivering remarkable results. He took charge of the apex mortgage establishment in April 2017. Surprisingly, the bank says it has disbursed loans tallying N85 billion.
This implies that on the average, FMBN was able to successfully process and disburse loans worth N28 billion per year, within a three-year period. Between 1992 and 2016, FMBN was recording a paltry N6.00 billion per year, posting a total loan disbursements of N153 billion. Comparatively, the Dangiwa feat in three years is an equivalent of 14-years performance of the bank before April 2017.
Secondly, there is an appreciable rise in the bank’s financing of affordable housing projects across the country. Out of a total figure of 28,175 housing units the bank funded since 1992, about 7,740 units, representing over 27 per cent of the total, fall within the past three years. This indicates that the current FMBN management is delivering an average of 2,580 housing units annually as against 851 previously from 1992 to 2016 (a total of 20,435 housing units within the period).
Greater number of Nigerian workers are benefitting from the bank’s affordable suite of housing loans, at a scale that is unprecedented in its history. According to its performance report, the bank provisioned a total of 43,207 housing loans – this comprises 3,749 mortgage loans and 39,458 home renovation loans within the period.
The magic of Dangiwa is in effective leadership he has unleashed to spark growth and impact in the mortgage institution. Its National Housing Fund (NHF) is a source of long-term funds to drive its aggressive push to deliver affordable housing to Nigerian workers. Increased transparency has seen the increase of workers who contribute 2.5 per cent of the monthly salaries to NHF scheme rise above five million.
Presently, the bank has pooled a total of N134 billion from the NHF within three years, with N121 billion in loan approvals, an average of N44 billion in total contributions per year. The difference is stark when compared to total collections of N232 billion between 1992 and 2016 at a yearly average of N9.6billion.
Without the doubt, the bank’s housing development scheme possesses great potential to act as impact as an institutional enabler of affordable housing delivery and above all, under the right type of leadership.
Dangiwa’s leadership wizardry has enabled FMBN to be pooling funds from the NHF scheme to grant wholesale loans at four per cent interest rate per annum to its accredited Primary Mortgage Banks (PMBs) for on-lending at six per cent to NHF contributors over a maximum tenure of 30 years. The loan is secured by the mortgaged property.
A contributor to the National Housing Fund (NHF) can access up to N15 million through the licenced PMB of his choice as a mortgage loan to build or purchase a home after six months of continuous contributions to the scheme.
Loans of up to N5.00 million attract zero equity contribution, while those from N5 million to N15 million attract only 10 per cent interest rate per annum. Then, there is FMBN Individual Home Construction Loan, designed to help contributors to the NHF scheme to access affordable, long-term housing construction finance to build their own homes. Key features of the loan comprise a maximum loan amount of N15 million that can be accessed and paid back over 15 years at single digit interest rate per annum of seven per cent.
There is also the home renovation loan, that provides N1.00 million to contributors to renovate or carry out improvements on their existing homes and pay back over five years at single digit interest rate of six per cent. The innovative product specifically targets contributors to the NHF who already own their homes and are not seeking mortgage loans to build or purchase new ones. Latest results from the bank show that 42,037 Nigerian workers have benefitted from the home renovation loans since it was launched less than three years ago. Because of the ease of accessing it, beneficiaries living in rural areas and own land have been reported to deploy the funds to building complete homes using local building materials.
That is not all. There is innovative rent-to-own scheme that further reduce the financial burden on homeownership on workers. The FMBN Rent-to-Own housing scheme provides an easy and convenient payment plan towards homeownership for Nigerian workers. Specifically, the scheme makes it possible for Nigerian workers to move into FMBN homes – located nation-wide – as tenants, pay for and own the properties through monthly or yearly rent payments spread over periods of up to 30-years. The scheme is available at single digit interest rate of nine per cent per annum on the price of the property.
Properties with a maximum value of N15 million are eligible under the program. Other features include immediate access to a home for beneficiaries, early/advanced payment allowable, and elimination of equity down payment requirements and savings of costs related to a mortgage transaction.
From the NHF Mortgage loan to the rent-to-own scheme, the recurring decimal is affordability: single digit interest rates, longer terms for payment, zero or minimal equity requirement amongst others. By sustaining the momentum of ongoing reforms of the NHF scheme, boosting its financial resilience and ensuring that a greater number Nigerians that can access these loans, the Dangiwa-led management of the FMBN is providing practical proof of how the NHF scheme can directly impact Nigerian workers.
Low Cost Financing Windows
This plank is powering FMBN’s financing windows for real estate construction through products such as the FMBN Estate Development Loan (EDL) with maximum loan amounts of up to N500 million.
FMBN uses funds pooled from the NHF to provide affordable loans to reputable private developers, state housing corporations and housing cooperatives at single digit interest rates of 10 per cent per annum to help bridge the housing deficit through mass production of decent, quality and affordable houses for ownership by NHF contributors.
With a focus on affordable housing stock development, the Estate Development Loan, a legacy product of the apex mortgage bank, is designed to facilitate large scale production of houses for sale to contributors at affordable prices with the overall objective of expanding the availability of affordable housing in Nigeria.
As a result, houses built through the EDL window are built based on designs that are approved by FMBN, do not exceed N15million in price and are sold only to NHF contributors. The bank finances infrastructure facilities up to 70 per cent for private developers only while housing corporations and government own development projects are to provide 100 per cent infrastructure. Another product is the Cooperative Development Loan (CDL) to encourage members of cooperatives to access funds to build homes for their members.
Briefing Nigerian Governors’ Forum (NGF) recently in Abuja, Dangiwa said within three years they increased registered contributors to the NHF scheme to 5,026,777 and recorded collections totalling N134 billion from the scheme to bring the cumulative collections on NHF since inception 26 years ago to N366 billion. Other highlights included N21 billion refunds to retired contributors to the NHF scheme totalling N21 billion, provision of finance for the construction of 7,740 housing units, provision of mortgage loans to 3,749 amongst others.
However, as spelt out in its ENABLING ACT and other related legislations, FMBN functions include to: Provide long-term credit facilities to mortgage institutions in Nigeria; encourage the emergence and promote the growth of viable primary and secondary mortgage institutions to service the need of housing delivery in all parts of Nigeria; mobilising both domestic and offshore funds into the housing sector; link the capital market with the housing industry; establish and operate a viable secondary mortgage market; collect and administer the National Housing Fund in accordance with the provisions of the NHF Act; and do anything and enter into any transaction which in the opinion of the Board is necessary to ensure the proper performance of its functions under the FMBN Act.
The bank was established in 1956, known then as the Nigerian Building Society (NBS), a joint venture of the Commonwealth Development Corporation and the Federal and Eastern Governments of Nigeria. Following the introduction of the Indigenisation Policy, the Federal Government, by Indigenization Act [1973], acquired the NBS and consequently renamed it the Federal Mortgage Bank of Nigeria (FMBN).
In 1994, FMBN assumed the status of an apex mortgage institution in Nigeria with the promulgation of the FMBN Act 82 [1993] and the Mortgage Institutions Act 53 [1989]. It also commenced the management and administration of the contributory savings scheme known as the National Housing Fund (NHF) established by Act 3 of [1992]. The National Housing Fund (NHF) is a social savings scheme designed to mobilise long-term funds from Nigerian workers, banks, insurance companies and the Federal Government to advance concessionary loans to contributors.
In fulfilling its mandate, the bank is to also float capital market instruments such as Mortgage-Backed Bonds and Mortgage-Backed Securities for sale to institutional investors, such as pension funds, insurance companies, securities companies and banks, to raise long term funds for its secondary mortgage lending activities. This is to ensure a sustainable supply of liquidity to finance first home mortgage loan originations.
Following the reform of the Nigerian housing sector, FMBN was restructured into a Federal Government-Sponsored Enterprise (FGSE) with more focus on its secondary mortgage and capital market functions. FMBN is shifting operational emphasis to expand its functions from solely social housing on-lending under the NHF, to other areas of business including commercial on-lending for housing, refinancing of commercial mortgages created by mortgage loan originators, mortgage purchasing and warehousing and mortgage-backed securitization.
The bank’s current business model targets partnerships with local and international organisations with financial and technical capacity, interested in delivering affordable mass housing for the low income end of the market.
In the past two years, Dangiwa has won high-profile awards of Housing Finance Person of the year at the Nigeria Housing Award. The miracle-working CEO of FMBN is a consummate and resilient architect with over 30 years of real estate, infrastructure development, banking, and management experience spanning private and public practices as well as in academia.
Prior to his appointment, this game-changing architect at FMBN held sway as the Managing Partner of AM Design Consults since 1996, an architectural and real estate development consultancy and Jarlo international Nig. Ltd, a construction company, where he supervised the delivery of several outstanding projects in diverse areas and sectors across the country.
He also worked in a reputable architectural firm on graduation: TRIAD Associates, Kaduna where he developed his professional career in Designs and Project Management from Pupil to Principal to Senior Architect and Associate Partner. Dangiwa excelled as a mortgage finance practitioner, rising through the ranks in Sahel Mortgage Finance Limited from a Property Manager to Head of Credit Control to becoming the Manager, Mortgage Banking Division. In this capacity, he was involved in the design and delivery of wide variety of mortgage products and real estate projects, especially social mass housing.
This professional architect is a Fellow of the Nigerian Institute of Architects (FNIA), Fellow of the Institute of Corporate Executives of Nigeria (FICEN) and an Associate Member of American Institute of Architects (AAIA). He is also a member of other professional bodies such as: a Senior Associate Member of Risk Managers Associate of Nigeria (RIMAN); Fellow of both the Institute of Credit Administration (FICA) and institute of Strategic Customer Service & Trade Management (ICSTM); an Honorary Fellow of Chartered Institute of Loan & Risk Management of Nigeria (CILRM) and an Honorary Senior Member of the Chartered Institute of Bankers of Nigeria (CIBN).
He holds an MSc. (Arc) and MBA both from Ahmadu Bello University, Zaria in addition to a Bachelor’s Honours degree in Architecture from the same university. He is an alumnus of the prestigious Wharton University Pennsylvania and has attended numerous training courses (Local and International) on Housing Finance, Computer Aided Designs, Design and Build Workshops and Project Managenent, as well as several other professional and leadership training programmes.Dangiwa loves traveling, intellectual engagements and photography. He is happily married with children
