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FMBN: Affordable housing through collaboration and accountability

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Under the watch of its new Managing Director, Arc Ahmed Musa Dangiwa, the Federal Mortgage Bank of Nigeria (FMBN) is on a steady match towards bridging the huge housing deficit in the country. The World Bank estimated that Nigeria has a housing deficit of about 17 million units.

But at a time, optimism is in short supply in virtually all sectors, the FMBN is giving contributors to the National Housing Fund reasons for hope. The new management is pulling off some remarkable feat particularly with its promotion of the following innovative reforms:

The FMBN has embraced technologies aimed at achieving end-to-end business process automation within the institution. Its adoption of core banking application, wide area networking and mobile and internet solutions will allow the Bank to seamlessly link with primary mortgage banks and interface with customers.

The Bank has engaged the Centre for Corporate Governance which is affiliated to the Institute of Directors (IoD) to carry out Corporate Governance Audit and develop a Corporate Governance Framework and Governance structure in line with international best practices. It is presently implementing an Enterprise Risk Management Framework project undertaken by PricewaterhouseCoopers (PwC) Limited and which is due for completion by Q2 2018.

The institution has embarked on aggressive loan recovery that has, in turn, improved its loan portfolio performance. By engaging debt collectors and working with the Nigeria Inter-Bank Settlement System (NIBSS) and PMBs, the Bank is automating loan repayment debits from customers’ bank accounts, which will reduce the rate of loan defaults.

As part of its on-going reforms, the bank has worked with government and private institutions like the Central Bank of Nigeria (CBN), the Real Estate Developers Association Nigeria (REDAN) and the Nigeria Mortgage Refinance Company (NMRC) on advocacy with State Governments to enact mortgage friendly (foreclosure) laws and improve land registry practices.

To ensure accountability and regulatory compliance in FMBN, the new Executive Management Team of the Bank has taken crucial steps to ensure the rendering of all outstanding financial statements by end of 2018. And the Bank will soon finish reconciling all backlogs of its outstanding and audited financial accounts. Prior to resumption of the new management, no submission of the Bank’s audited account was done since 2013.  Not until the entrance of the new FMBN management in April 2017 that a task force was constituted to clear outstanding backlogs.

Furthermore, the new management of the FMBN has continued to ensure transparency in the NHF with SMS and email alerts now being introduced. The Bank has steadied its application of best practices in managing risks both within the institution and in its dealings with stakeholders.

The FMBN has demonstrated a strong will to remain accountable and transparent through stable and uninterrupted monthly NHF refunds from April 2017 to January 2018. The disbursement of NHF mortgage loans and FMBN Home renovation loans (FHRL) have equally remained steady.

Documents obtained from the FMBN show that between April 2017 and January 2018, the new Executive Management Team of the Bank has refunded N5,568,252,279.88 to 38,255 contributors of the National Housing Scheme. This indicates a 31.4% increase in NHF refunds from a cumulative repayment of N17, 734, 599, 814.76 to a total of 190,943 contributors since inception of the window in 2015.

Also, the usually long period taken to process NHF Refunds has been shortened by the FMBN new management. This is intended to ease the time and strain it ordinarily would have taken NHF contributors to initiate and complete the refund process. The condensed procedure has seen a prompt repayment of funds to the scheme’s contributors under the new FMBN management. As part of the reforms, contributors to the NHF will before the end of the second quarter of 2018 begin to receive SMS and email updates on their refund.

Figures obtained from the FMBN show that the Bank has equally disbursed N7.97 billion as NHF mortgage loans to 1,019 beneficiaries between April 2017 and January 2018.

Disbursements totalling N5.06 billion was made as home renovation loan to a total of 6, 718 beneficiaries under the aforesaid period.

The FMBN, incorporated as the Federal Mortgage Bank of Nigeria in 1956, is the sole government institution saddled with the task of providing mortgage finance to Nigerians through the National Housing Fund (NHF).

Previously known as the Nigerian Building Society, the FMBN is tasked with the provision of long-term facilities to mortgage institutions, mobilization of both domestic and offshore funds into the housing sector, collection and administration of the National Housing Fund in the country in accordance with the provisions of the NHF Act.

The FMBN has carefully designed the NHF to mobilize funds to provide the citizens with affordable residential houses through accredited Primary Mortgage Banks (PMBs) at 6% which is the lowest rate in the country.

Even though the FMBN has faced a couple of operational challenges over the years, the institution has continued to ensure increased accountability in the management of the National Housing Fund. The FMBN has taken thoughtful steps to re-integrate defaulting states like Niger, Bauchi Kebbi, Lagos, Kano, Ondo, Edo and Oyo into the NHF scheme in order to improve its performance indices.

“We are currently reaching out to these states to see if we can bring them back on board to the NHF scheme…Mostly, we always tell them the advantages of joining the scheme because of the numerous products they can access and enjoy. We have, for example, the home renovation loans, which non-participating states can’t benefit from,” Mr Dangiwa said in a newspaper interview, adding that, “We have about 500 houses that are lying idle in the states funded by the Federal Mortgage Bank of Nigeria.  But the houses are not accessed because the states are not joining the scheme. Lagos is about returning; we have been engaging them.”

The Bank’s new management is undoubtedly treading a part of progress especially with its promotion of corporate governance practices in the Bank’s dealings. The management’s determination to ensure accountability, transparency and collaboration in the discharge of its core mandate is a sure way to guarantee success, and ensure that the provision of affordable housing for Nigerians is not a mirage.

Citizens in the formal and informal sectors, salaried or non-salaried, can be assured of access to affordable housing products of the Bank. Also, when the FBMN finally accesses the N500billion recapitalization, more mortgage facilities can be easily made available to Nigerians through the institution.

This way, the FMBN would be poised to contribute significantly towards bridging the nation’s 17 million housing deficit.

Olu wrote this piece from Abuja.

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