The Federal Mortgage Bank of Nigeria (FMBN) is experiencing a remarkable turnaround for good. The current set of professionals led by Arc Ahmed Musa Dangiwa, that run the country’s foremost mortgage institution have, in 18 months, demonstrated that it is indeed possible to reform and revitalise the bank, not only to serve as a more effective provider of affordable mortgage finance but also as one that is more accountable, transparent and innovative.
This much-awaited positive twist in the narrative of the national mortgage bank is commendable. It is important that the government and stakeholders support the team that is leading the reform agenda to ensure that it is sustained and deepened even further.
At the heart of the efforts to reposition the bank is the aggressive push for the comprehensive review of the law setting up the FMBN by the National Assembly. The review will help to remove administrative and regulatory encumbrances and other gaps that have hindered the bank’s growth over the four decades of its existence, and set it on the path of efficiency, quick progress and impact.
Key aspects of the review include the N500billion recapitalisation of the bank to expand its capacity to provide affordable mortgage housing finance, the strengthening of the powers of the bank’s board and a friendlier regulatory regime that will aid professionalism and enhanced service delivery.
In this regard, the bank has recorded remarkable progress. After 12 years of attempts to have the National Assembly act on the bills to amend the FMBN and the National Housing Fund (NHF) laws, the Senate and the House of Representatives finally did so in 2018. What is left now is for the President to sign the amended bills into law. The assent will fundamentally reset the structure, size, depth of FMBN’s operations and birth a more robust national mortgage finance facility.
The current executive management team has also braved several inherited challenges to record strong corporate performance. The FMBN MD, Dangiwa, reported during the visit of the Senate committee on housing in December, impressive performance scorecard for the period from April 2017 to September 2018. This includes total loan disbursements totaling N40.9 billion for the creation of about 2000 mortgages, provision of home renovation loans totaling N14billion to 16,031 Nigerian workers, processing of N12.4billion refunds to 97,215 retirees and the registration of 224,752 to the fund. Of note is the speed of processing NHF refunds which increased by over 53.44 per cent, 21.82 per cent increase in NHF collections, and 21.15 per cent spike in loan disbursements when compared to earlier trends. Others include the recovery of N4.2billion outstanding debt and Innovative Affordable Housing Products.
Another hallmark of the new FMBN is the emerging strong focus on innovation in the design of its housing products. Consider some of the signature initiatives that are now redefining the bank. First is the introduction of the rent to own scheme. The new housing product makes it possible for workers to move into their homes and pay conveniently, via monthly or yearly rentals over a 30-year period maximum at 9 per cent interest rate. Another key feature of the product is the elimination of the need for equity payment and other costs associated with a typical mortgage transaction, access to the house is immediate.
Second is the individual NHF construction loan product. Under the facility, a contributor to the NHF with a Certificate of Occupancy, and an approved building plan with certified bill of quantities can access up to N15million and pay back over a 15-year period at single digit interest rates of 7 per cent.
The third is the reduction of equity contribution requirements for accessing NHF loans from ten to zero per cent for sums of up to N5m and below 10 per cent for loans of between N5m and N15m.
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