FMBN’s bumpy road to recapitalisation

A decade after the idea to recapitalise the Federal Mortgage Bank of Nigeria was conceived, to address the challenge of housing deficit plaguing the nation, bureaucratic bottleneck may have crept in; prompting the shift in the deadline, Abdulwahab Isa reports

To make accessible, decent and affordable housing to citizens of Nigeria is the Federal Government’s open declaration on housing. The declaration underpins government’s age- long pursuit of housing policy. Every successive administration mouthed the slogan of housing for all. By Experts’ account, Nigeria is grappling with over 18 million housing deficit. Regrettably, little is being done to address some of the obstacles and impediments on the way of surplus housing construction. The Federal Mortgage Bank of Nigeria (FMBN) is the government’s institution driving housing policy. Established in 1956, known then as the Nigerian Building Society (NBS) and later FMBN, the institution in the past initiated policies aimed at delivering decent and affordable houses to eligible Nigerians across the 36 states and the

Federal Capital Territory, Abuja.

FMBN is saddled with the task of encouraging emergence and growth of a viable secondary mortgage market to service the needs of housing delivery in all parts of Nigeria. The bank is expected to link the capital market with mortgage markets, and encourage and promote development of mortgage institutions at local, state and federal levels. The building bank is incapacitated by very many clogs on its wheel. For decades, the bid to recapitalize the bank remained an unending process. The bank’s weak capital base is its albatross.

Weak capital base

The journey to recapitalise FMBN began some years back, at about 2009. The management of the bank at the time had pegged it at nothing less than N150 billion. The management of FMNB at that time believed with recapitalisation in the neighborhood of N150 billion, in addition to the creation of multiple lending windows, it would deepen existing windows of primary mortgage institutions (PMIs) while mileage in delivery of affordable and decent housing is covered. It was at the same period, the Federal Government injected N2.5 billion into the bank. However, the amount was considered grossly inadequate to provide the necessary boost for mortgage financing in Nigeria. Compared to recapitalisation threshold of similar mortgage banks of lesser populated nations, the N2.5 billion injected into FMBN by the government was considered paltry and too inconsequential to lift the bank. The bank had at the same time concluded an arrangement to float a N17 billion bond at the capital market, in addition to its recapitalization process. There was another N100 billion Federal Government’s guaranteed bond for the bank in the pipeline, of which N27 billion had been issued. The process was truncated.

Deepening NHF

The creation of the National Housing Fund via Act 3 of 1992 is FMBN seed capital for creating mortgages for the average Nigerian. The NHF proceeds are to be harvested from 2.5 per cent worker’s monthly basic salary or income. The NHF is a social savings scheme designed to mobilise longterm funds from Nigerian workers, banks, insurance companies and the Federal Government to advance concessionary loans to contributors. Over the years, the fund blossomed to a substantial amount. The bank deployed this into creating mortgages across Nigeria. In 2020, the bank disclosed that NHF contribution increased from N232 billion generated in 26 years to N383 billion in the last three years, an addition of N151 billion.

The bank also disclosed that contributors to the fund increased from 4.5 million to five million, adding that the plan to recapitalise the fund to at least N500 billion to enable it tackle the housing problem in the country was on the verge of being realised. Managing Director of the bank, Mr. Dangiwa Ahmed, confirmed the updates last year during a webinar tagged “Covid-19: Housing as a solution-FMBN leading through the crisis.” He said a lot of innovation had gone into NHF to attract more contributors. He was at the meeting by the Director, Loans and Mortgage, FMBN, Rahimatu Aminu-Aliyu; ex-President, Real Estate Developers Association of Nigeria (REDAN), Mr. Ugochukwu Chime; Dr Banjo Obaleye of Infinity Mortgage Bank; Head, Strategy and Performance, FMBN, Oladapo Obaleye, and Aliyu Wammako.

The participants expressed confidence that with a robust contribution to NHF as a mortgage pool, the dream of tackling housing deficit is surmountable. Ahmed put loans disbursement, the FMBN had approved as of last year at N128 billion, with N94 billion already disbursed to the beneficiaries. On the transparency of the bank’s operations, he said FMBN was regulated by the Central Bank of Nigeria (CBN), adding that all the strict rules that apply to other banks also applied to the bank. According to him, the bank had improved its turnaround time by 30 per cent, generating mortgage loans for 4,000 houses and housing renovation loans for 43,000 buildings.

He said all states in the country had keyed into FMBN’s housing scheme with exception of Oyo and Kano that are yet to enlist on contributory scheme. The focus of the bank, MD insists, was to get the 36 states on board; get institutional investors to sign on; integrate the informal sector and partner diaspora mortgages. “When we came on board, many of the states were not contributing. We had to bring them on board. Only two states have not joined, that is Kano and Oyo. We have improved in that aspect. We have improved the register of employers.

“We have brought in an additional 1,629 from the 22,000 we met. Now, we have 23,716, over five million contributors, with over 500,000 added in the last three years,” he added. The chief executive of the bank said that cooperative societies have been introduced to the scheme to encourage the informal sector, swelling the rank of the participants in the scheme by another 1,179 contributors. He said: “When we came, the fund had collected N232 billion so far. We realised it was not enough. So, within the last three years, we have generated N151 billion more to the N232 billion the bank generated in 25 year, that is from 1992- 2017.

Now, we have a total of N383 in the fund.” Ahmed noted that the bank was working hard to ensure that all those who have exited the fund get their refund, stressing that from N10.8 billion, the FMBN has now added N23.8 billion to make N34 billion. “We are recapitalising the bank to the tune of N500 billion and we have gone very far. We are also reviewing the NHF and FMBN Act to tackle the housing deficit,” he had said. Privatisation agency’s intervention At the instance of the Ministry of Finance, Budget and National Planning, Bureau of Public Enterprises, BPE, was brought in, early this year, to work out the nitty gritty of FMBN’s recapitalisation.

A joint technical committee to oversee the commercialisation and recapitalisation of FMBN was put in place in April 2021. The committee comprises four members each from the BPE and FMBN. BPE Director-General, Alex Okoh, who chaired the committee’s inauguration, noted that efforts to reposition the bank were on to bridge the country’s huge housing deficit estimated at 22 million as at 2019. Okoh said the BPE had met with the management team of FMBN on February 18, where robust discussions on the BPE’s proposed plan for the commercialisation of FMBN were discussed. He said the proposal was in line with the ongoing efforts of the FMBN’s management to reposition the bank for optimum performance as articulated in the five-year strategic plan developed by the bank.

He said members of the committee were chosen in recognition of their wealth of knowledge and expertise in the reform project and expressed hope that the outcome of their assignment will pave the way for the transformation of FMBN. The assignment was to be concluded within 60 days. Dangiwa, the managing director of FMBN, said the inauguration exercise had further consolidated the relationship between the BPE and FMBN. He pledged support to the commercialisation and recapitalisation process, adding that he is optimistic that the new initiative would address the housing deficit in the country.

Missed deadline

The BPE had set a two-month deadline to submit a detailed blueprint on the bank’s re- capitalisation and commercialisation. This was to be June. The deadline turned out to be non-feasible. The Federal Ministry of Works and Housing, the bank’s parent’s ministry, altered the pace of the committee’s schedule. The Minister of Works and Housing, Mr. Babatunde Fashola, requested for time to present memo on FMBN recapitalisation to Federal Executive Council (FEC). “The Minister of Works and Housing requested time to enable him to present a memo before the Federal Executive Council.

That was what delayed meeting the two months deadline. “That had been done. The committee has been meeting. Even today the committee met,” a source at BPE told this medium. As things are, a new deadline for FMBN recapitalisation is yet to be unveiled.

Last line

A weak capital base FMBN can’t provide affordable and decent housing to Nigerians. To this end, relevant agencies of government saddled with the task of recapitalising the bank need to hasten up by removing all hurdles on boosting the capital base.




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