Repositioning FMBN for Affordable Mortgage Financing
The aggressive delivery of an affordable housing for low and medium income earners appears to be the fulcrum on which the Federal Mortgage Bank of Nigeria (FMBN) is trying to reposition itself for leadership in mortgage financing, reports Ndubuisi Francis
Despite being in existence for several decades, the FMBN has been plagued by a combination of long-standing structural, institutional and policy challenges, which have negatively impacted its performance.
Among them include undercapitalisation, lack of appropriate legal frameworks to enforce compliance to the provisions of the National Housing Fund (NHF) Act, and a deficient corporate governance system that eroded the confidence of critical local and international stakeholders.
But it does seem that a silver lining is in the horizon. Stakeholders in the housing sector agree that it has indeed been a good year for Nigeria’s foremost housing finance institution because of the innovative and progressive leadership of the new management team of the bank.
As the Managing Director, Arch. Ahmed Musa Dangiwa and his management team mark one year of overseeing affairs at the bank, it is instructive that he had clearly outlined his mission for the housing sector in his inaugural speech with an avowed commitment to pursue “a mortgage finance change agenda”, underscored by an aggressive multi-pronged strategy anchored on key priorities.
These include the promotion of a sound corporate governance culture to ensure transparency and accountability, implementation of a robust enterprise-wide risk management framework and an aggressive debt recovery drive. Other key planks of the plan comprised cost containment to ensure judicious use of resources; improvement of stakeholder relationship as well as the automation of business processes.
Performance indicators of the bank, one year down the line, seem to give practical expression of the aggressive implementation and effectiveness of the agenda which focuses on the delivery of affordable housing for low and medium income earners. In the last 12 months, FMBN disbursed N7.1 billion (about 10 per cent) of the cumulative N78.2 billion NHF mortgage loan, through which 993 Nigerians achieved their dream of becoming homeowners. Its Home Renovation Loan portfolio, which provides microfinance loans to improve housing conditions also grew from N2.1 billion to N9.9 billion and from just 2,579 beneficiaries to 11,927. FMBN funded housing units also rose from 20,435 to 25,850 while construction loan portfolio grew by N12.3 billion, a 16 per cent rise from N79.2 billion to N91.6 billion. Overall, a total of N27.2 billion was disbursed within the review period (15 per cent of the aggregate loan portfolio of N179.7 billion).
The Bank’s process for the refund of NHF contributions was also greatly revamped in response to the concern of retired workers. Within the past one year, the sum of N7.8 billion (42 per cent of a cumulative N18.6 billion) was refunded to 64,676 excontributors.
The current leadership has brought refreshing dynamism and clarity of purpose to Nigeria’s premier housing finance institution.
The management team not only displayed a quick understanding of these issues which torpedoed the performance of FMBN, but clear and quick in defining strategic actions to tackle them. It has done a good job of following through (at political and administrative levels), to earn good results.
The N500bn recapitalisation drive A stakeholder rally to support the recapitalisation of FMBN from the current N5 billion capital base to at least N500 billion had been held. Even with the N5 billion capital base, only N2.5 billion or 50 per cent of it is paid-up. The Dangiwa-led management is spearheading the move to accelerate the final push to actualise the process of recapitalisation.
The drive is renewed via strategic stakeholders and public advocacy, effectively using public and media outings, meetings and events. In collaboration with the Ministry of Power, Works & Housing, politicians, housing industry leaders as well as influential persons in the executive and legislature are being wooed to secure their buy-in on the need to expand and strengthen the Bank’s financial capacity to deliver on its mandate of providing affordable housing..
Considering the overall benefits, the management’s push to actualise the longstanding recapitalisation plan is one that deserves the support of stakeholders to enable the Bank provide affordable mortgages to more Nigerians through social housing. .
Reviewing the FMBN Act FMBN’s management team also did a good job of rallying stakeholder support for the Bill to review the extant FMBN Act before the National Assembly. The Bill is meant to usher in a comprehensive overhaul of FMBN and strengthen its board to make it more effective by including stakeholders such as the Nigeria Labour Congress (NLC), Trade Union Congress (TUC), Nigeria Employers Consultative Association (NECA), etc. The Bill also supports the recapitalisation by prescribing a N500 billion share capital base with sole ownership. Dangiwa believes the bank should be wholly-owned by the federal government to avoid conflict of interest with co-owners--Central Bank of Nigeria (CBN) and Nigeria Social Insurance Trust Fund (NSITF).
Building a New Culture of Corporate Governance FMBN has taken bold measures to strengthen the institutional system of rules, practices, and processes that guide the conduct of its operations as a necessary measure to win back the confidence of local and international investors as well as critical stakeholders in the industry.
These include the adoption of a robust Corporate Governance Framework which was put together by a reputable consultancy firms affiliated to the Institute of Directors.