FG recapitalisation of FMBN to drive housing mortgages

… as bank makes N472m surplus first time in 6yrs
Following its declaration of financial surplus amounting to N472 million in third quarter (Q3) 2016, the Federal Mortgage Bank of Nigeria (FMBN) is now better placed to receive additional capital from the Federal Government in its bid to revamp the housing sector through affordable mortgages and reduce or eliminate the nation’s housing deficit.
This was stated by Babatunde Fashola, minister of power, works and housing, who expressed that the bank was already on a recovery trend after six years of balance sheets reflecting losses, and that the government would inject fund into it to enable it recapitalise as soon as it returned to clean books and could expand the National Housing Fund under its management.
According to Fashola, “the new management of the Federal Mortgage Bank, still in an acting capacity, has reversed the loss balance sheet of the company and for the first time in about six years, they are returning surplus from deficit in billions; they have a surplus of about N472 million as at Q3 from N3-4-5 billion negative position.
“So, once the bank goes back to clean books and expanding the housing fund which it is managing, government can say, as a matter of national policy, ‘look, capitalise, we will inject fund just as we have done with Bank of Industry and we are planning to do with Bank of Agriculture, we can do the same thing.”
The minister noted that embracing the mortgage system in the housing programme would also bring relief to the ordinary Nigerian worker, as it would move the society away from the system whereby landlords demand rent in advance from tenants who receive their salaries in arrears.
“In our own scheme when it starts, we hope we will be in a position to issue mortgages and if you have a mortgage, clearly it can only be tied to your income which is in arrears,” he said, while questioning the rationale behind collection of rents by landlords from tenants in advance.
“So, if I build a house and I know you are going to be paid at the end of December and I tell you to go and bring a rent up to 2017 that you haven’t worked for, do I really love you? So let us show the kind of nation that we want,” he queried.
The minister said that in many parts of the world, people pay their house rents when they collect their salaries, and that if that kind of arrangement is reached in Nigeria, it will give a lot of people relief because inflation is caused by hiked prices.
“What does a landlord lose if he tells the employer of his prospective tenant to guarantee deduction of the money from the man’s salary at the end of the month?” asked the minister.
He urged landlords and homeowners to reflect the fact that by doing so they inflict pains on fellow Nigerians.
Fashola, however, held that to the extent that there are also bad tenants who would rent a house and the landlord would have to be in court for 10 years just to get him out as a result of rent default, the government would also find a balance.
On the readiness of the local housing materials manufacturing and building partners to meet the nation’s housing demands, Fashola said government was now at the stage where letters of awards were being issued.
According to him, “since there was already a design, the builders would be told that once the design was validated then they would embark on mass production using polystyrene and other locally manufactured components.”
The minister, who also stressed the importance of the cost and the delivery time of the houses, said the partners were being given the government designs to ascertain how fast and at what cost they could build and sell the houses, after which the government could then ask them to build for it to buy on behalf of the people.