The housing sector is one of the indices for measuring the standard of living of people across societies. It also plays a more critical role in a country’s welfare than is always recognized, as it directly affects not only the well-being of the citizenry but also the performance of other sectors of the economy.
Consequently, governments designed mortgage finance to enhance its adequate delivery as housing provision requires huge capital outlay, which is often beyond the capacity of the medium-income/low-income earners.
Despite its recognised economic and social importance, housing finance often remains underdeveloped. The low levels of lending reflect the small numbers who can afford mortgages because of the high cost of houses in relation to incomes. It also includes the perceptions of risk that are based on, amongst other things, the informal nature of most title deeds and property.
The Guardian gathered that the apex mortgage institution – Federal Mortgage Banks of Nigeria (FMBN) will be the beneficiaries of different reforms and strengthening of the bank through recapitalisation to facilitate effective delivery of its mandate.
It was gathered that there has been a fresh and robust stakeholder engagements, which have led to the submission of a memorandum to the Federal Executive Council (FEC) by the Minister of Housing and Urban Development, Ahmed Dangiwa for the recapitalisation of FMBN as a result of which FEC has directed engagement between the Ministry, Federal Ministry of Finance, Central Bank of Nigeria (CBN), Bureau of Public Enterprises (BPE) and FMBN.
With a paid-up capital of only N2.5 billion, the bank cannot stand side by side with national Primary Mortgage Banks (PMBs). Accordingly, The Guardian learnt that the Shehu Osidi-led management has made it a priority to pursue the recapitalisation through the injection of N500 billion fresh capital. Out of this, N250 billion is to be injected by the Federal Government, while the balance will be raised through debt capital.
There was the resolution of the CBN’s prudential guidelines on single obligor that limited FMBN’s lending capacity to PMBs to 50 per cent of their shareholders funds unimpaired by losses. The impact of this regulation has severely curtailed FMBN’s ability to finance new mortgage loans due to the low capitalisation of the PMBs.
FMBN has argued that the National Housing Funds (NHF) Act, which sets the limitation, provides that FMBN shall not lend to PMBs more than 50 per cent of their shareholders’ funds unimpaired by losses on an annual basis. The CBN has hitherto insisted on applying this provision on a cumulative basis.
However, arising from our strategic engagement on this issue with stakeholders, including the Central Bank of Nigeria (CBN), Mortgage Banking Association of Nigeria (MBAN) and the National Assembly, there seems to be light at the end of the tunnel.
To enhance service delivery and mortgage accessibility, the current management has focused on improving operational efficiency, which has resulted in significant improvements in performance parameters. Under the NHF operations, collections grew by N3b in 2024, resulting in total collection of N103b, compared to the N100b the bank recorded in 2023. “This increase in NHF contributions demonstrates renewed trust and participation in the NHF scheme by Nigerian workers,” the Managing Director, Osidi said.
To further illustrate the improvements, a total of 658 employer organisations and 178,619 employees were registered in 2024 compared to 556 and 113,577, respectively, in 2023. There was also the reabsorption of Kano State civil servants back into the NHF scheme after 24 years of being out of the scheme, which will impact positively on the NHF collections in 2025, as Kano State has a workforce of over 160,000.
Under loan operations, a total sum of N71.5b was approved in the past year compared to N39.7b in 2023. In the FMBN’s refund operations, a sum of N14.4b was refunded to 44,333 beneficiaries compared to N13.2b refunded to 40,426 beneficiaries in 2023.
The Guardian gathered that one of the major challenges of the bank was the recovery of Non-Performing Loans (NPLs) that weighed down the institution. “This is due majorly to the quality of credit that the Bank used to book. Accordingly, when we came on board, we chose to challenge the status quo and do things differently. We introduced stricter loan appraisal processes to improve credit quality, reduce loan defaults, and enhance recovery mechanisms. We have recovered N10.9 billion in bad loans through the recovery teams in addition to normal recovery activities, which also yielded the sum of N3.1 billion in 2024.”
According to Osidi, the top priorities this year will be the review of the FMBN and NHF Acts towards achieving a robust legal framework to enhance the capacity of the Bank to meet its mandate of affordable housing financing and provision of sustainable liquidity for the housing sector in Nigeria. The bank has concluded engagement with stakeholders on the draft bills and will now forward them to the supervising ministry for concurrent and support.
He disclosed that in support of Federal Government’s initiative to turn the country into a major construction site through mass housing delivery under the Renewed Hope Cities and Estates programme of the Federal Ministry of Housing and Urban Development, the FMBN will expand its support for the programme by making additional disbursements for housing delivery, as well as issuance of additional bankable off-takers’ guarantees to participating developers so that they can access funding to deliver houses under the scheme.
The bank provided a N100b off-takers’ Guarantee for the Renewed Hope Housing Projects nationwide, direct funding of N19.9b for the project in Karsana, Abuja, as well as N27b facility for the Renewed Housing Project in Ibeju Lekki, Lagos.
He pledged to implement deliberate programmes to ensure the completion of ongoing, stalled projects and ensure effective off-take by beneficiaries. “Where necessary, we will pursue the outright sale of some of the estates to recover the bank’s investments. In this regard, we are currently collaborating with Nasarawa, Gombe, Niger, Abia, Osun, Enugu and Cross River States to ensure takeover and completion of estates for allocation to civil servants.”
