For the federal government’s agencies whose responsibility it is to deliver housing to Nigerians, the challenge is how to deliver those houses at prices that are affordable especially to those in the low-income class who cannot afford what is on offer in the open market.
This challenge is quite enormous for all the agencies whether they are operating from the demand side of the housing value chain or from the supply side. But for some of these agencies, even though the challenge is tasking, the path to solution is clear and therefore it is surmountable.
One of such agencies is the federal mortgage bank of Nigeria (FMBN) whose current management was appointed just 10 months ago by President Bola Tinubu with Shehu Osidi as managing director and chief executive.
Read also: Africa needs 56m new homes to meet housing demand, says Adesina
With a housing deficit estimated at 20 million units, worsened by rising costs of building materials, inflation, and low income, the task ahead for Osidi who was appointed to lead the new era of making FMBN both impactful and responsive was clear but daunting.
Osidi acknowledged this enormous challenge and it is reflected in his catchphrase which says, “Nigeria has houses it doesn’t need, but needs houses it doesn’t have” which is a pointer to the fact that the challenge of housing in the country is characterised by the need for what is considered affordable housing for low- and middle-income earners.
So far, Osidi has shown a clear understanding of the challenge, engaging and partnering with critical stakeholders and leading a transformation at the Bank. He has initiated and pursued crucial reforms to strengthen the bank’s capacity to perform, optimise its processes, enhance customer service delivery, and generally increase its impact on Nigerians. These have been demonstrated many ways such as:
Playing pivotal role in affordable housing delivery
The FMBN stands in a pivotal position due to its structure and mandate. It is today seen as one institution with the capacity and design to provide the kind of housing solutions that Nigerians need. For example, the FMBN is the only institution in Nigeria that offers housing loans and mortgages at single-digit interest rates, mostly between 6-7 percent, while also offering a repayment tenor of up to 30 years. No wonder it has done more in the provision of mortgages than any other mortgage or commercial bank in the country.
As the institution mandated to oversee the National Housing Fund (NHF) Scheme, a contributory scheme set up to provide a pool of funds through monthly contributions from Nigerian workers. This includes economically-active Nigerians from both the public and private, formal and informal sectors. Once an individual has contributed 2.5 percent of their monthly income to the scheme for up to six months, such an individual qualifies to apply for a mortgage loan, up to N50 million depending on affordability, and for up to 30 years, depending on age or number of years left before their 60th birthday.
With mortgage products like the National Housing Fund (NHF) Mortgage Loan, Individual Construction Loan, Rent-to-Own, Home Renovation Loan (HRL), Estate Development Loan (EDL), Cooperative Housing Development Loan (CHDL), as well as the soon-to-be-launched Rental Assistance Loan, and NHF Diaspora Mortgage Loan, the FMBN is strategically positioned to cater to the varying needs on both the demand and supply ends of the housing industry.
In the last 10 months, the management of the bank has embarked on transformative initiatives that are spurring FMBN to greater impact and the results are clear for all to see.
As of September 2024, the Bank had delivered 1,033 housing units out of the 39,425 recorded since the FMBN’s inception. With these efforts sustained, the task of decimating Nigeria’s housing deficit would witness significant positive results and restore the lost dignity of many Nigerians, especially those within the low and middle-income segments.
Read also: 5 things you can do to create a difference in your home
Similarly, a total of N10.477 billion in NHF refunds have been recorded within this short period of Osidi’s administration. Total loans disbursed within this period is placed at N28.328 billion out of a total of N453.954 billion disbursed since the bank’s inception. Added to these, are 6,853 ongoing housing projects in 106 locations across the country, with a potential of creating 171,325 jobs for Nigeria’s teeming unemployed population.
New products development
In the bid to tailor solutions to specific housing needs of Nigerians, the bank has continued to develop products to cater to different segments of the Nigerian population, both within and outside the country. The Bank has demonstrated this recently with the introduction of the Rental Assistance Loan and the Diaspora Mortgage Loan.
The FMBN Rental Assistance Loan was introduced in response to the need to engage a more inclusive and equitable housing finance system for Nigerians. The product, meticulously designed to alleviate the financial burden of rental payments for eligible Nigerians, is a testament to FMBN’s commitment to ensuring that all Nigerians, regardless of their income level or employment status, have access to safe and affordable housing.
This commitment, which draws inspiration from the Bank’s mandate of providing mortgages for affordable housing delivery to low- and middle-income earners, resonates with the vision of Ahmed Dangiwa, the Minister of Housing and Urban Development, which is drawn from President Tinubu’s Renewed Hope Agenda for the housing sector.
This micro-housing product has been thoughtfully crafted to ensure accessibility, affordability and flexibility, making it a viable solution for many who have found it challenging to secure housing finance through other traditional financial arrangements.
Similarly, in order to cater to the housing needs of Nigerians living outside the shores of the country, the Bank, in collaboration with the Nigerians in Diaspora Commission (NiDCOM), introduced the NHF Diaspora Mortgage Loan.
The Diaspora Mortgage Loan is designed in such a way that a Nigerian subscriber living abroad, who has contributed to the National Housing Fund (NHF) for a period of at least 6 months, can access up to N50 Million to buy or build their own home in Nigeria.
This product is critical to addressing the plight of Nigerians living abroad who have always found it difficult to acquire property in Nigeria, as well as those who have fallen victim to fraudulent individuals. The scheme provides an easy way for them to own homes in Nigeria while plying their trade abroad.
In order to ensure a perfect product, Osidi, alongside other members of FMBN management, has been engaging with NiDCOM and the Central Bank of Nigeria to finalise processes on the product.
Read also: Mixta Africa partners FG to drive accessible homeownership
N100billion Off-taker Guarantee for Karsana Renewed Hope City
Driven by the vision to provide affordable housing for Nigerians of average income status, the FMBN recently provided N100 Billion in Off-taker guarantee in support of the Renewed Hope Cities and Estates Programme of the Federal Ministry of Housing and Urban Development. This is in addition to the Bank’s commitment to provide mortgage loans to the off-takers upon completion of the houses, which would be spread across the nation.
While at these efforts, Nigerians who are NHF subscribers continue to access products and services from the Bank through its various product offerings. This is apart from the Bank’s direct funding of some projects in the Renewed Hope Cities and Estates Programme, particularly in Lagos.
Reduction of non-performing loans
Few weeks after resuming at the FMBN, the Shehu Osidi-led management revealed seven priority areas that would guide their operations in repositioning the Bank. The third item on this agenda is “Enhancing Credit Quality/Reducing Non-Performing Loans (NPLs).”
To reduce the Bank’s Non-Performing Loans (NPLs) which rose to a disturbing point, thereby hindering the Bank’s capacity to effectively deliver on its mandate of providing access to affordable mortgages, the FMBN inaugurated seven Loan Recovery Task Teams to drive the recovery of the Bank’s delinquent loans across the country’s six geopolitical zones and the Federal Capital Territory (FCT).
This was a significant milestone in the Bank’s ongoing efforts at enhancing its financial stability and operational efficiency, given that it would ensure the availability of funds for disbursement to new beneficiaries, while maintaining the integrity of the Bank’s lending operations.
Inaugurated about six months back, the loan recovery task teams have successfully recovered ₦5.7 billion as disclosed by Osidi recently. By implication, ₦5.7 Billion that was earlier tied down somewhere has been released within this period for the benefit of Nigerians desiring access to mortgages. This also translates to a reduction in the housing deficit, having ensured the emergence of new beneficiaries to the NHF loan.
Read also: AG Mortgage Bank PLC: Celebrating 20 Years of Empowering Homeownership in Nigeria
Deepening process automation through core banking application
The importance of technology in driving business growth in today’s fast-paced business landscape cannot be overstated. Aware of this fact, FMBN has, at the top of its 7-point agenda ‘deepening process automation’ to enable it stay ahead of the business curve. For this reason, the bank has been working on concluding the deployment of the core banking application to usher in a new era of automated service delivery to its corporate and individual customers. By deepening process automation, the Bank streamlines operations, reduces turnaround times, and improves service delivery. This will enable it to respond more swiftly to market demands and better serve its customers.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
