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Appraising FMBN’s 3 years of reforms for delivering affordable housing 

Recently, the executive management team of the Federal Mortgage Bank of Nigeria (FMBN) under the leadership of  Ahmed Dangiwa clocked three years in office. Within this period and under the supervision of Babatunde  Fashola,  the Minister of Works  and Housing, the team posted a remarkable performance across key corporate indicators.

First is the historic increase in mortgage loan disbursements. Between April 2017, when the team took charge of the bank to March 2020 (a three-year period), FMBN leveraged funds accruing to the National Housing Fund (NHF) scheme to record over N90 billion in various loan disbursements.

The figure comprises NHF mortgage loans totaling N32.38 billion granted to 4,236 beneficiaries; Home Renovation Loans totaling N37billion to 43,920 beneficiaries and Estate Development Loans totaling N8.71billion for the construction of 1,692 housing units.

Others include Cooperative Housing Development Loans totaling N6.76 billion for the construction of 1,048 housing units and Ministerial Pilot Housing Scheme loans totaling N4.77 billion for the construction of 793 housing units.

The size of the loan approvals and disbursements are all unprecedented in the history of the bank. Second is the speedy processing of refunds to retired contributors to the NHF scheme.

Within the past three years, the bank recorded over N23.8 billion in NHF refunds to 162,992 people. The figure represents a 220 percent increase from N10.8 billion recorded by previous managements over a 25-year period to 132,605.

The FMBN also secured approval for a reduction of equity requirement for accessing mortgage loans effective 2018. Mortgage loans of N5million and belownow attract zero percent equity contribution, a downward review from the 10 percent previously required as loan down payment; and loans of over N5 million to N15 million attract a flat equity contribution rate of 10 percent, down from the 20 percent and 30 percent previously mandatory to access the loan facility.

The historic downward review of equity requirement for accessing the NHF mortgage loan has made it more accessible and affordable to Nigerian workers within the low- and medium-income brackets.

This implies that workers who contribute to the NHF consistently and are up-to-date are eligible for up to a N5 million loan without having to put down a single kobo as equity while those seeking for loans above N5 million to N15 million will only put down 10 percent as equity.

Another notable achievement of the FMBN management within the last three years is the introduction of innovative housing products to increase affordability. After decades of pushing and promoting legacy housing loan products, the current management opened a new vista of innovative home loans designed to create a good fit between what the bank is offering and the income capacity of workers who subscribe to the NHF scheme.

A good example is the Rent-To-Own homeownership product. The product enables contributors to the the NHF scheme to move into an FMBN property as a tenant and conveniently pay for it in monthly or annual installments over a 30-year period at a single digit interest rate of 9 percent.

Another is the Individual Home Construction Loan. This loan provides up to N15 million at a 7 percent interest rate per annum to NHF contributors with land titles and approved building plans to undertake self-construction. Beneficiaries can pay back over a period of up to 15-years depending on their age and number of years left in service.

Another equally affordable housing product is the Home Renovation Loan. Under this loan, beneficiaries who already own their homes can access up to N1million to carry out improvements. About 43,000 Nigerians have benefitted from this facility in the last three years.

The FMBN management has also done a good job of leveraging technology to boost transparency in the NHF scheme. A notable illustration is the launch of FMBN Digital Platforms.  With the introduction of the digital platforms, including the USSD code *219#, contributors to the fund are now able to receive instant notifications, check records of NHF contributions on the go and request for statements of account remotely.

The ability of the current team of the FMBN to undertake these reforms inspires hope for the much-needed growth of the Nigerian housing industry. Given the urgent need to address the huge housing deficit, estimated to range between 17million and 22million, it is imperative that government, critical stakeholders in the housing industry and international development partners support the advocacy for the N500billion recapitalization of the bank and review of its establishment Acts currently under review at the National Assembly. A stronger, more resilient FMBN is essential to affordable housing delivery in Nigeria.

.Contributed by Ikyaave, an Abuja-based public policy researcher/analyst 

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