FMBN’s bumpy road to recapitalization

A decade after the idea of ​​recapitalizing the Federal Mortgage Bank of Nigeria was conceived, to meet the challenge of the housing deficit plaguing the country, a bureaucratic bottleneck may have crept in; prompting delay in deadline, reports Abdulwahab Isa

Making housing accessible, decent and affordable for Nigerian citizens is the federal government’s open declaration on housing. The statement underpins the government’s longstanding pursuit of housing policy. Each successive administration has pronounced the slogan of housing for all. According to experts, Nigeria is struggling with a deficit of more than 18 million housing units. Unfortunately, little is being done to overcome some of the obstacles and obstacles in the way of building surplus housing. The Federal Mortgage Bank of Nigeria (FMBN) is the government institution that directs housing policy. Founded in 1956, known at the time as the Nigerian Building Society (NBS) and later FMBN, the institution in the past initiated policies to provide decent and affordable housing to eligible Nigerians in all 36 states and the

Federal Capital Territory, Abuja.

FMBN’s task is to encourage the emergence and growth of a viable secondary mortgage market to meet the housing delivery needs in all regions of Nigeria. The bank should link the capital market to the mortgage markets, and encourage and promote the development of mortgage institutions at the local, state and federal levels. The bank of the building is handicapped by very many shoes on its wheel. For decades, the offer to recapitalize the bank has remained a never-ending process. The bank’s weak capital base is its albatross.

Low capitalization

The journey to recapitalize FMBN began a few years ago, around 2009. Bank management at the time had set it at no less than 150 billion naira. The management of FMNB at the time believed that with a recapitalization of around 150 billion naira, in addition to the creation of several lending windows, it would deepen the existing windows of primary mortgage institutions (PMIs) while covering mileage. the delivery of affordable and decent housing. . It was during the same period that the federal government injected 2.5 billion naira into the bank. However, the amount was considered largely insufficient to provide the necessary impetus for mortgage financing in Nigeria. Compared to the recapitalization threshold of similar mortgage banks in less populous countries, the 2.5 billion naira injected into FMBN by the government was considered paltry and too insignificant to lift the bank. At the same time, the bank had reached an agreement to issue a 17 billion naira bond on the capital market, in addition to its recapitalization process. There was another federally guaranteed bond of 100 billion Naira for the bank in the pipeline, of which 27 billion Naira had been issued. The process was truncated.

Deepening of the NHF

The creation of the National Housing Fund through Law 3 of 1992 is the seed capital of the FMBN for the creation of mortgage loans for the average Nigerian. The proceeds of the NHF must be taken from 2.5 percent of the worker’s basic monthly salary or income. The NHF is a social savings scheme designed to mobilize long-term funds from Nigerian workers, banks, insurance companies, and the federal government to advance concessional loans to contributors. Over the years the fund has grown to a substantial amount. The bank has deployed this in the creation of mortgages across Nigeria. In 2020, the bank revealed that the NHF’s contribution increased from 232 billion naira generated in 26 years to 383 billion naira in the past three years, an addition of 151 billion naira.

The bank also revealed that contributors to the fund have increased from 4.5 million to five million, adding that the plan to recapitalize the fund to at least 500 billion naira to enable it to tackle the housing problem in the country. was about to be realized. The bank’s chief executive, 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 innovations have been made to the NHF to attract more contributors. He was at the meeting of the Director of Loans and Mortgages, FMBN, Rahimatu Aminu-Aliyu; former President of the Association of Real Estate Developers of Nigeria (REDAN), Mr. Ugochukwu Chime; Dr Banjo Obaleye of Infinity Mortgage Bank; Head, Strategy and Performance, FMBN, Oladapo Obaleye and Aliyu Wammako.

Participants were convinced that with a strong contribution to the NHF as a mortgage pool, the dream of tackling the housing deficit is surmountable. Ahmed put the disbursement of loans the FMBN approved last year at 128 billion naira, with 94 billion naira already disbursed to beneficiaries. Regarding the transparency of the bank’s operations, he said that the FMBN is regulated by the Central Bank of Nigeria (CBN), adding that any strict rules that apply to other banks also apply to the bank. He said the bank improved its turnaround time by 30 percent, generating mortgages for 4,000 homes and home improvement loans for 43,000 buildings.

He said all states in the country have joined the FMBN housing program except Oyo and Kano which have not yet enrolled in the contributory scheme. The bank’s goal, MD insists, was to involve all 36 states; get institutional investors on board; integrate the informal sector and partner diaspora mortgage loans. “When we got on board, many states were not contributing. We had to bring them on board. Only two states have not joined, namely Kano and Oyo. We have improved in this regard. We have improved the register of employers.

“We brought back 1,629 more out of the 22,000 that we encountered. Now we have 23,716, over five million contributors, with over 500,000 added in the past three years, ”he added. The bank’s general manager said that cooperative societies had been introduced into the program to encourage the informal sector, swelling the rank of program participants by 1,179 other contributors. He said: “When we arrived, the fund had so far raised 232 billion naira. We realized that this was not enough. Thus, in the last three years, we have generated 151 billion naira more than the 232 billion naira generated by the bank in 25 years, i.e. from 1992 to 2017.

Now we have a total of N383 in the fund. Ahmed noted that the bank is working hard to ensure that everyone who left the fund gets their money back, pointing out that starting at 10.8 billion naira, the FMBN has now added 23.8 billion naira to make 34 billion naira. “We are recapitalizing the bank to the tune of 500 billion naira and we have gone a long way. We are also revising the NHF and FMBN law to fight against the housing deficit, ”he said. The intervention of the privatization agency At the initiative of the Ministry of Finance, Budget and National Planning, the Office of Public Enterprises, BPE, was asked at the beginning of the year to settle the details of the recapitalization of FMBN.

A joint technical committee to oversee the marketing and recapitalization of FMBN was set up in April 2021. The committee is made up of four members each from the BPE and the FMBN. BPE CEO Alex Okoh, who chaired the inauguration of the committee, noted that the bank’s repositioning efforts were underway to address the country’s huge housing deficit estimated at 22 million in 2019. Okoh a stated that the BPE had met with the management team of FMBN. on February 18, where solid discussions on the BPE’s proposed plan for the commercialization of the FMBN were discussed. He said the proposal was in line with the continued efforts of the management of FMBN to reposition the bank for peak performance, as outlined in the five-year strategic plan developed by the bank.

He said the committee members were chosen in recognition of their wealth of knowledge and expertise in the reform project and expressed hope that the outcome of their mission will pave the way for the transformation of FMBN. The mission was to be completed within 60 days. Dangiwa, the general manager of FMBN, said that the groundbreaking exercise had further strengthened the relationship between the BPE and FMBN. He pledged to support the commercialization and recapitalization process, adding that he was optimistic that the new initiative would solve the housing deficit in the country.

Deadline missed

The BPE had set a deadline of two months to submit a detailed plan for the recapitalization and commercialization of the bank. It must have been in June. The deadline has proven to be unworkable. The Federal Ministry of Public Works and Housing, the supervisory ministry for the bank, has changed the pace of the committee’s program. The Minister of Public Works and Housing, Mr. Babatunde Fashola, asked for time to present a note on the recapitalization of FMBN to the Federal Executive Council (FEC). “The Minister of Public Works and Housing has requested time to allow him to present a note to the Federal Executive Council.

This is what delayed meeting the two-month deadline. “It had been done. The committee has met. Even today, the committee has met, ”a source at the BPE told this outlet. As it stands, a new deadline for the recapitalization of FMBN has not yet been revealed.

Last row

A weak capital base FMBN cannot provide affordable and decent housing for Nigerians. To this end, the relevant government agencies tasked with recapitalizing the bank must hasten by removing all obstacles to increasing the capital base.


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