The need for recapitalisation of the Federal Mortgage Bank of Nigeria (FMBN) to the tune of N500 billion was brought to the fore at the weekend when Real Estate Developers Association of Nigeria (REDAN) inaugurated a new president to steer its affairs. Dayo Ayeyemi reports
hen the Federal Government promised to recapitalise the Federal Mortgage Bank of Nigeria (FMBN) to the tune of N500 billion sometimes ago in order to boost housing development, the entire stakeholders in built environment were hopeful of a vibrant real estate sector.
Three years down the line, the promise is yet to be kept as housing finance remains a major obstacle to effective home ownership among Nigerians.
The inability of the central authorities to recapitalise the nation’s apex mortgage bank had created less opportunities for average Nigerian to own a home and tackle housing deficit in the country.
As at present, the nation’s housing deficit stands at over 17 million units and it would require building one million houses yearly for next 20 years to bridge the gap.
The capital base of FMBN is N1.5 billion, the primary mortgage banks (PMBs) is N5 billion while that of commercial banks is N25 billion.
Worried by absence of housing finance in the sector, the new President of the Real Estate Developers Association of Nigeria (REDAN), Dr. Aliyu Wammako, brought to the fore a call for the urgent recapitalisation and streamlining of the FMBN.
Wammako seized the occasion of his investiture as the 4th President of REDAN to make the call.
He stressed on the importance of the FMBN in Nigeria especially as the costs of building materials were escalating, and the purchasing power of real estate developers diminishing, hence the urgent need for total recapitalisation of the bank.
According to him, to sustain the tempo of reform, government and stakeholders should rally round the management to provide the needed support in its plan to recapitalise the bank and review the National Housing Fund (NHF) and FMBN Act.
These, he said, were critical to taking the bank to the next level in line with government’s plans for housing development.
He said: “I believe that in executing the mandate of the FMBN to deliver affordable housing, we must improve access to cheap housing finance and encourage developers to build houses that workers can afford.
“From design to finish, the uppermost consideration must be the financial capacity of workers.”
Wammko noted that many previous housing programmes failed due to the fact that they were not built based on a thorough understanding of the financial dynamics of the Nigerian worker in mind.
The new REDAN boss added that FMBN had a low capital of N5 billion with other institutions pegging theirs at about N8billion, according to the Central Bank of Nigeria’s indices.
The inadequacy of FMBN, he stated, made the provision of more homes a herculean task for real estate developers.
He advised the Federal Government to look into the challenges of housing development and the underlying responsibilities of the FMBN in providing affordable houses for Nigerians.
“The real estate development contributed about 6.4 per cent to the Gross Domestic Product (GDP) of the country. it is very important to consider recapitalisation and streamlining the FMBN for the development of the housing sector,” he said, just as he also commending the bank for having the lowest interest rate of six per cent.
The president advocated for cheaper mortgage rates that will further create jobs and provide more affordable houses in Nigeria, saying it was the only way the housing sector would be properly and effectively developed.
Advocacy
Before the latest call, stakeholders in built environment sector had mounted pressure on the Federal Government to priortise the recapitalisation of FMBN to the tune of N500billion.
The exercise, they said, would enable the foremost nation’s apex mortgage bank to provide affordable housing for Nigerians and also upscaling of the secondary mortgage market.
The stakeholders noted that it would be impossible for the bank, which was established over two decades ago, with a capital base of just N5 billion, to meet the housing needs of over 17 million Nigerians seeking roofs over their heads.
According to the stakeholders under the auspices of Housing Development Advocacy Network led by Festus Adebayo, the bank needs urgent rescue and recapitalisation of N500 billion.
This was also supported by the management of FMBN, who has been calling on the Federal Government to urgently recapitalise the bank to make houses more affordable for the average Nigerian workers.
While showcasing the bank’s performance recently, FMBN’s Managing Director, Ahmed Dangiwa, said it processed and disbursed a total of N75.5 billion for 3,541 mortgages and 25,242 home renovation loans in two years.
He said: “From 2017 when we came on board to date, we have been able to successfully process and disburse loans totalling N75.5 billion. This includes 3,541 mortgages and 25,242 home renovation loans. We have also financed the construction of over 7,286 housing units within this period.”
Dangiwa said the bank was committed to the speedy processing of qualified housing loan applications of Nigerian workers who registered contributors to the NHF scheme.
According to him, efforts of the bank’s management have led to a 45 per cent increase in the FMBN’s speed of processing the NHF housing loan applications.
The FMBN boss, however, added that the bank’s weak financial capitalisation remained a major handicap to its ability to deliver affordable housing units.
Dangiwa called on the Federal Government to increase the capitalisation of the bank from the meagre N5 billion, with only N2.56 billion fully paid up, to N500 billion.
This, he said, was a necessary first step to strengthening the capacity of the bank to meet the housing demands of Nigerian workers.
According to him, a stronger capital base for the bank will put the institution in a better place to leverage more finance from the private sector, capital market and international development agencies for the deployment of affordable homes.
One of the affordable housing advocates, Mr Fonahanmi Idris, said that N500billion recapitalisation of FMBN was most deserving considering its import in providing accessible and affordable housing finance for the teeming populace, especially those at the base of the pyramid.
Idris said on the housing development social media platform that there were relevant questions the bank needed to ask itself.
“Where are they coming from? What is the vision and mission statements at inception?” he said.
Going down memory lane, he stated that during the time of Alhaji Bichi, Hajia Nuratu Batagarawa, et al, NHF to customers was small in size with higher interest rate.
“I know of a two-term minister in Nigeria that benefited N1million from a NHF to purchase a three bedroom bungalow”, he said, adding that staff of SSS, civil/public servants benefited from the scheme to the sum of money ranging from N500,000 – N1.5million for home purchase.
At a time, he said the NHF was reviewed upwards and interest rates downward, adding that developer’s loan was introduced later to widen the net.
Since the introduction of developer’s loan, he noted that “things never remained same”.
Another stakeholder, John Bede Anthonio, pointed out that developers loan was used to siphon the money out of FMBN.
New Telegraph gathered that the bank is yet to recover some of these loans, running to the tune of N100 billion from defaulting developers.
Anthonio urged that henceforth, developers should approach commercial banks to borrow money.
He said: “FMBN should guarantee the developers that they will buy the houses through funding for Primary Mortgage Institutions (PMI.)
“PMIs will pre-qualify owner occupiers who have account with them and 30 per cent equity of the house they want to buy.”
For liquidity sake, Anthonio, a former Managing Director, Lagos State Development and Property Company, said that FMBN could source unlimited amounts of money from the capital market, in tranches if it has good corporate governance.
Last line
The Federal Government needs to understand the implications of strengthening the FMBN by recapitalising it so as to facilitate the demand and supply of affordable houses in Nigeria.
Source: newtelegraphng
