Formerly known as the Nigerian Building Society (NBS), after its establishment in 1956 through a joint venture of the Commonwealth Development Corporation and the Federal and Eastern Governments of Nigeria, the Federal Mortgage Bank of Nigeria later metamorphosed into what it is today, following the introduction of the Indigenization Policy, the Federal Government, by Indigenization Act [1973], acquired the NBS. Consequently, it was renamed into the Federal Mortgage Bank of Nigeria (FMBN).
With Arc. Ahmed Musa Dangiwa, a product of the prestigious Ahmadu Bello University as the Managing Director and CEO, Federal Mortgage Bank of Nigeria has been largely operating as a commercial bank, that offers liquidity for the advancement of homeownership among Nigerians anchored on mortgage financing. He has ensured the Bank serves customers throughout Nigeria.
Named 2018 Mortgage Finance Person of the Year in the male category, Ahmed Dangiwa, has instituted an ongoing aggressive and innovative reform and repositioning of Nigeria’s foremost mortgage finance institution so it can more effectively deliver on its mandate to catalyse the provision of affordable social housing to Nigerian workers.
Chief among Dangiwa’s landmarks at FMBN is the N500 billion recapitalization drive of the bank. This boosted FMBN’s capacity to create affordable mortgages, which hugely received the President Muhammed Buhari led Federal government and stakeholder’s support.
His other ground-breaking milestones include zero equity contribution for mortgage loans that are N5million and below, reduction of equity for loans of up to 15 Million from 30 to 10 percent as well as increased tempo in the provision of housing loans to Nigerian workers under the National Housing Fund (NHF).
Dangiwa has received a warm embrace from his executive management team and staff at FMBN, through support, contributions and hard work that has helped drive the restructuring at FMBN. He has played the leading role in tackling the very high housing deficit but also building a strong and robust mortgage finance market.
Being the apex mortgage institution in Nigeria with the promulgation of the FMBN Act 82 [1993] and the Mortgage Institutions Act 53 [1989], FMBN became the first operator in Nigeria’s formal institutional mortgage lending sector. 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 mobilize long-term funds from Nigerian workers, banks, insurance companies and the Federal Government to advance concessionary loans to contributors.
The Bank has a history of retail and wholesale activities in the country’s mortgage industry; however, its performance was insignificant until the housing reforms of 2002. 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 therefore, has shifted its mode of operation and emphasis 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.
Findings revealed that between 2002 to 2005, the Bank was able to mobilize N18.164 billion compared to the pre-reform period (1992-2002) figure of N10.359 billion, representing a growth of 75%. Between 2006 to 2009, the Bank recorded more collections amounting to N41.963 billion. Within the period, the Bank granted loans valued at N3.628 billion to 3,915 National Housing Fund contributors to either build or renovate their houses. This was against the value of N1.327 billion disbursed to 2,347 in the pre-reform period. Between 2005 to 2008, the Bank through its concessionary lending window granted a loan of N10.743billion to 44 estate developers who have constructed more than 7106 housing units.
This is a significant improvement on the pre-reform approved estate loan value at N406.500million, which achieved only 545 housing units.
However, it was also discovered that as at 2009, 25 private developers owed the Bank varying sums of loan aggregating to N10.963billion. This has caused a great hindrance to the Banks’ operation. The truth is that FMBN has appreciably improved in terms of fund mobilization and loan disbursement, which has increased housing production quantitatively in Nigeria.
In light of the foregoing, it is apparent that the Bank is determined to deepen the impact of its affordable housing delivery programmes to a greater number of Nigerian workers within the low and medium-income bracket, the Federal Mortgage Bank of Nigeria (FMBN).
In fact, it was revealed that early this year, as part of expansion, FMBN opened talks with State Governments in order to build robust collaboration with them. Invariably, to achieve this, FMBN solicited for stronger support and participation of States in the National Housing Fund (NHF) Scheme, provision of unencumbered land for the execution of strategic affordable housing schemes as well as support for the elimination of high cost and systemic bottlenecks to title perfection and Governor’s consent to mortgage transactions.
Through its diligent Managing Director cum CEO, Ahmed Dangiwa, the Bank has opened the floor for improved and affordable housing partnership with State Governments. He boldly addressed a gathering of Nigerian Governors in Abuja, through the Nigerian Governors Forum (NGF) convincing them on the activities, programmes of the bank.
The partnership will enable State Governments to take advantage of its strategic financing windows for real estate construction and decades-old institutional experience in social housing provisioning.
In soliciting the support and partnership of the State Governors, he stated that the current executive management has set the bank on a new path of reform, innovation, accountability, efficiency and high performance such that within the last three years, it has increased public sensitisation that has led to a spike in registered contributors to the NHF scheme to 5,026,777.
One pertinent way to achieve this seemingly insurmountable task is for the state governments to reduce title perfection fees, which currently range from 5 percent to 10 percent to the flat rate of 0.5 percent for mortgage affordability and expeditious treatment of consent to mortgage transactions by Governors to improve turnaround time.
Dangiwa once reassured the bank’s commitment to this, adding that the bank is strategically positioned to energise State Governments’ efforts to deliver affordable housing to their citizens in a sustainable and cost-effective manner.
FMBN products include NHF housing loan of up to N15 million payable over a 30-year period at interest rate of 6 percent per annum; and NHF individual construction loan at 9 percent interest rate per annum with a 15-year tenor.
Others include rent-to-own scheme which allows beneficiaries to move into FMBN owned houses and payback in monthly installments over a 15-year period at single-digit interest rate with no equity requirement and the home renovation loans where up to N1 million is given to NHF contributors who already own their homes, to carry out necessary improvements and payback over five years.
With a binding mission, to be the preferred mortgage institution providing reliable and affordable access to homeownership for Nigerians the bank makes the provision for zero equity contributions for housing loans below N5 million and a maximum of 10 percent for loans from N5 million to N15 million, is an additional unique FMBN partnership advantages.
Act 3 of 1992 established the National Housing Fund (NHF). Section 2 of the Act outlines the aims and objectives of the fund. Sections 20, 21 and 22 define the offences and penalties for non-compliance. Act 3 is being amended to bring it in line with new realities aimed at strengthening the National Housing Fund.
FMBN has also said that the NHF scheme is for Nigerians in all sectors of the economy, particularly those within the low and medium income levels who cannot afford commercial housing loans e.g. civil servants, traders, artisans, commercial drivers etc. Any intending beneficiary must be a registered contributor and up to date with his/her contributions.
With just 2.5% of any interested individual’s monthly basic salary contribution, he or she qualifies to access the loan. The pool of funds created by the contributors nationwide becomes available to any contributor to borrow from, after contributing for a minimum of six months. Just like an insurance scheme.
Olamide Adeniji is a member of the editorial board of TheScript Newspaper
