Apart from food and air, shelter is another basic necessity of life. Most governments in the modern times have been evaluated by their scorecards in these sectors.
Nigeria’s housing problem has been nagging for decades now. It is akin to a monster that has continued to rear its ugly heads irrespective of the temperature. Efforts of successive administrations in Nigeria, both military and civilian, to tackle it have so far hit the rock.
President Goodluck Jonathan, in his electioneering campaign, did not mince words in his determination to address the peculiar housing problems in Nigeria for good. His administration has indeed demonstrated immensely its commitment towards providing affordable and qualitative shelters for Nigerians. Although it is still too early to judge its performance in this sector, because of the sector’s herculean antecedents which date back to decades ago, there seems at last to be a light at the end of the tunnel.
The Jonathan administration, via the National Housing Fund, has at the last count, completed over 61,800 housing units equitably spread across the six geopolitical zones of the country. This giant stride no doubt makes the present administration the most proactive in the history of Nigeria when it comes to the housing sector.
The administration, quite aware of the challenges posed by this sector, has seen that its efforts and dreams for adequate housing for the Nigerian citizenry can only be achieved through a private sector-driven participation to complement government’s efforts. Hence, the Jonathan administration has increased the access of both private and public sector housing developers to the mortgage finance. This is done through a mortgage refinance company (MRC). This company, being a systemic thought-out plan, has the potential to finally lay to rest the hitherto existing housing problems which have bedeviled Nigeria since its independence. Although the company is still at its infancy because it will be launched between July – August 2013, experts in the mortgage industry assert that the initiative will be the turning point in the Nigeria’s housing industry.
Up until the present initiative, access to funds has marred the development of the housing sector in Nigeria. Many developers have got master plans on how to ameliorate the dwindling fortunes of the housing sector, but the initiatives end up a mirage because of paucity of funds.
Commercial banks in Nigeria have also not helped matters when it comes to the housing sector. This is because they do not invest in long-term projects. But from 2014, the mortgage refinance company will be a PPP arrangement with shareholders which encompass government, international DFIs, Nigerian banks and insurance companies. The blueprint of the MRC shows that about 200,000 affordable mortgages will be provided within five years.
To crown the anticipated success stories of the MRC, and above all, the federal government, the World Bank, having evaluated the efforts of the Jonathan administration in the provision of housing for the citizenry, has agreed to support the government with investment of up to $300 million at zero interest. It will be a 40-year-loan with 10 years’ grace, and 0.7% commitment charge. This will help lower costs, especially interest rates.
The 1999 Constitution, Section 16(1)(d) under the Fundamental Objectives and Directive Principles of State Policy, stresses the need ‘to provide suitable and adequate shelter for all citizens’. The Goodluck Jonathan Transformation Agenda and Vision 20:2020 itemises provision of accessible and affordable housing among its strategic national imperatives to enhance the production and well-being of the citizenry. This onerous task is being anchored by the Federal Mortgage Bank of Nigeria (FMBN) under the Ministry of Housing.
It is against this background that FMBN’s mission statement is ‘to supply the mortgage and housing markets with sustainable liquidity for the advancement of homeownership among Nigerians anchored on mortgage financing and to operate as a viable, robust and dynamic mortgage institution able to meet the challenges of developing the nation’s mortgage industry.’
The agency, which has become the flagship of President Goodluck Jonathan’s pivot in providing Nigerians with adequate housing, has become more result-oriented and proactive, and may simply be adjudged the pride of Nigeria’s housing institution.
The FMBN, established in 1956, and hitherto called the Nigerian Building Society (NBS), was a joint venture of the Commonwealth Development Corporation and the Federal and Eastern Governments of Nigeria. Following the introduction of the Indigenisation Policy, the federal government, by Indigenisation Act 1973, undertook 100 percent ownership acquisition of the NBS and consequently renamed it the Federal Mortgage Bank of Nigeria (FMBN).
The FMBN’s role in this sector has been significant because the bane of the housing sector in Nigeria from the onset has been access to funds. The gap has been abridged by the FMBN in the current dispensation. For the first time, the FMBN has been made to work maximally; it has for the first ever sporadically improved upon its mobilisation of long-term funds, lending volume and expansion of mortgage lending services to all segments of the Nigerian population.
The near moribund National Housing Fund (NHF), established by Act 3 of 1992, is now resuscitated to serve as the live wire of the Jonathan administration in the provision of affordable housing for the citizenry. This is through its proper management and administration of the contributory savings scheme, which has continued to mobilize long-term funds from Nigerian workers, banks, insurance companies and the federal government to advance loans at soft interest rates to its contributors.
The Federal Mortgage Bank of Nigeria, in 1994, through the promulgation of the FMBN Act 82 (1993) and the Mortgage Institutions Act 53 [1989], got the status of an apex mortgage institution and thus ceded its retail function to an autonomous company, Federal Mortgage Finance Limited (FMFL), which was carved out of the FMBN.
When the housing sector was reformed based on the FGs 2002/2006 National Policy on Housing and Urban Development, the FMBN got the status of a Federal Government-Sponsored Enterprise (FGSE) and mandated to handle secondary mortgage and capital market functions. Having this role at the back of the mind, the authorities of the FMBN have incorporated among their roles to include not only social housing on-lending but also commercial on-lending for housing, commercial mortgages refinancing, mortgage purchasing and warehousing and Mortgage-Backed Securitisation.
The scorecard of the Jonathan administration in the housing sector shows that there have been tremendous improvements. The improvements, which are the first of its kind, have propelled significant growth in the mortgage sector and aroused the interests of several international investors.
Apart from the National Housing Fund (NHF) scheme, other themes that have come on board are expanding the Frontier of Mortgage Banking in Nigeria, review of the Housing Finance Sector in Nigeria within the global context, Financial Strategies to Boost Long-term Funding for the Sector and Technology Alternatives to aid Reduction in Housing Costs.
The significant achievements of the FMBN in the recent time are enormous. There has been a large scale automation of the bank’s operation to eliminate inefficiencies of the previous manual mode of operations. There is also an expansion of the coverage of mortgage services to the informal sector which constitutes about 85% of the Nigerian working population.
Probably, one major breakthrough of the FMBN in the present dispensation is its profit-orientation posture, which has not been the case in the past 56 years. The NHF collection has also geometrically risen to almost 300% from the average monthly collection of N730 million to over N2.1 billion. Within 30 months in office, the NHF has posted over 53% of cumulative its collections of N110.79 since 1992.
There has also been an unprecedented and sporadic improvement in NHF refund of contributions. It grew by 196% from N990m to N1.94b within 30 months. This is attributed to a 7,527% increase in the rate of monthly refunds from N440,000 to N33 million.
Statistics indicate that as at December 2010, only one transaction was recorded by the bank in the capital market being Series 1 – Mortgage-Backed Bond (MBB) N26 billion issued in May 2006. Between December 2010 and April 2013, however, two additional issuances under the MBB transaction totalling N32 billion were successfully concluded. These are Series 2 – MBB N6 billion issued in April 2013 and Series 3 – MBB N26 billion issued in April 2013 (to refinance Series 1)
Over the recent 30 months under review, N26.3 billion and N18.5 billion were disbursed as estate development (construction) and mortgage loans respectively. This translates to 41.8% and 42% respectively of the cumulative loans of N62.7 billion and N44 billion recorded in 257 months since commencement of the NHF Scheme. By aggregation, the total disbursement of N44.8 billion recorded in the past 30 months constitutes 42% of the N106.7 billion to date.
The quantum of EDLs delivered 37,020 housing units, of which 10,015 [27%] was in the last 30 months. Also the quantum of approved NHF loans to deliver 21,974 mortgages, of which 6,800 [31%] were in the last 30 months.
May be one area that the Jonathan administration may look into is to recapitalise the FMBN to the tune of N100 billion to enable it to sustain the current tempo in the housing sector.
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James wrote in through: brunoemenike@gmail.com
