Recently, the Executive Management Team of the Federal Mortgage Bank of Nigeria (FMBN) under the leadership of Arc. Ahmed M. Dangiwa clocked three years in office.
Within this period and under the supervision of the Hon. Minister of Works & Housing, Babatunde Fashola (SAN), the team of experienced professionals have posted remarkable performance.
Driven by the desire to deliver, they have pursued bold, dynamic, and strategic Institutional reforms in the Bank. The Team has done so in line with the mandate of President Muhammadu Buhari to reposition Nigeria’s foremost Mortgage Bank as a strong and effective institutional tool for the delivery of affordable social housing to Nigerians within the low – medium income segments of the economy.
From unprecedented levels of mortgage loan disbursements to stronger collaborations with industry stakeholders, innovative housing product designs, financial transparency and broad institutional reforms, the FMBN Board and Management team have built and sustained a remarkable trajectory of strong corporate performance across key indicators, as years go by.
Some of the notable achievements are as follows:
HISTORIC INCREASE IN MORTGAGE LOAN DISBURSEMENTS
Between April 2017, when the Executive Management team took charge of the bank to March 2020 (a three-year period),FMBN leveraged funds accruing to the National Housing Fund (NHF) Scheme to record over N90billion in various loan disbursements. The figure comprises:
- NHF Mortgage Loans totalling N32.38 billion granted to 4,236 beneficiaries.
- Home Renovation Loans totalling N37 billion granted to 43,920 beneficiaries
- Estate Development Loans totalling N8.71billion for the construction of 1,692 housing units.
- Cooperative Housing Development Loans totalling N6.76 billion for the construction of 1,048 housing units.
- Ministerial Pilot Housing Scheme loans totalling N4.77 billion for the construction of 793 housing units.
The size of mortgage loans disbursed within the three-year period is remarkable at many salient levels. First, it accounts for over 30 percent of the N249.5 billion loan portfolio that the Bank has recorded within the 26-year lifespan of the National Housing Fund (NHF) Scheme.
Secondly, the amount translates to over 60% percent increase in the cumulative value of mortgage loans totalling N152.5 billion in April 2017 when the Executive Management team came on board to N249.5 billion as at March 2020.
These remarkable increases in the quantum of disbursements have also been acknowledged by Mr. President in his 2020 Democracy Day Address to the Nation.
The speed of processing and size of the loan approvals and disbursements are all unprecedented in the history of the Bank. They are a result of the reforms that are underway to rejuvenate the Bank and the seriousness with which the Board and Management is working to realize the Buhari affordable housing plan for Nigerians.
SPEEDY PROCESSING OF REFUNDS TO RETIRED CONTRIBUTORS TO THE NATIONAL HOUSING FUND (NHF) SCHEME.
The past three years have witnessed improved efficiency in the management of the National Housing Fund (NHF) Scheme that requires workers to contribute 2.5% of their monthly income, which qualifies them to access all FMBN products and services. One notable area of this improvement is the radical departure from the perennial problem of long delays in processing refunds to retired workers, who contributed to the NHF scheme as stipulated in the Act establishing it.
In line with the policy of the current Board and Management of FMBN to prioritize these payments to retirees, the Bank recorded over N23.8 billion in NHF refunds in three years to 162,992 people. The figure represents a 220 percent increase from N10.8 billion recorded by previous managements over a 25-year period to 132,605.
The outstanding surge in the speed and scale of processing NHF refunds is on the back of the review of the Bank’s internal processes and a renewed Management’s commitment for improved efficiency in service delivery to Nigerian workers who contribute the bulk of the funds in the NHF pool.
REVIEW OF EQUITY REQUIREMENTS FOR ACCESSING FMBN HOUSING LOANS
Relatedly, in a strategic move designed to lower the financial burden on potential homeowners within the low and medium income segment of the economy seeking FMBN housing loans, the FMBN within the period under review proposed and secured approval for a 100 percent reduction of equity requirement for accessing mortgage loans. Notable aspects of the approval which has been in effect since 2018 are as follows:
- Mortgage loans of N5 million and under attract zero (0%) equity contribution, a downward review from the 10% previously required as loan down payment; and
- Mortgage loans of over N5 million to the maximum amount of N15 million now attract a flat equity contribution rate of 10%, down from the 20% and 30% previously mandatory to access the loan facility.
The drastic downward review of equity requirement for accessing the NHF mortgage loan has made it more accessible and affordable to Nigerian workers within the low- and medium-income brackets. The implication now is that workers who contribute to the National Housing Fund (NHF) consistently and are up-to-date are eligible for up to a N5 million loan without having to put down a single kobo as equity while those seeking for loans above N5 million to N15 million will only put down 10% as equity.
INTRODUCTION OF INNOVATIVE HOUSING PRODUCTS TO INCREASE AFFORDABILITY
After decades of pushing and promoting legacy housing loan products, the current Board and Management opened a new vista of innovation home loans designed to create a good fit between what the bank is offering and the income capacity of workers who subscribe to the NHF scheme. This new management thinking, and focus led to the creation of more worker-friendly home loan products with more flexible payment conditions.
The first to consider is the FMBN Rent-To-Own’ Homeownership Product.
The rent to own product offers a cost-friendly housing loan which ensures a convenient re-payment arrangement for Nigerians. The product makes it possible for a Nigerian worker that contributes to the National Housing Fund (NHF) Scheme to move into an FMBN-owned housing property as a tenant and conveniently pay towards ownership of the property in monthly or annual instalments over as long as 30 years at an interest rate of just 9%!
According to Arc. Ahmed Dangiwa, the Managing Director/Chief Executive, “The rent-to-own housing product is designed to make sure that any worker who collects a salary should be able to live in his own home and pay conveniently over a period as long as 30-years! This is a massive relief especially given low earning capacity of Nigerian workers.”
The second is the Individual Home Construction Loan. The loan enables NHF contributors with unencumbered land, appropriate land titles and approved building plans to undertake self-construction. The loan provides up to N15 million to contributors to the National Housing Fund (NHF) scheme at 7 percent interest rate. Beneficiaries can pay back over a period of up to 15-years depending on their age and number of years left in service.
Another equally interesting and worker-centric affordable home ownership product that FMBN has upscaled significantly within the past three years is the Home Renovation Loan. The loan provides up to N1million to enable beneficiaries who already own their homes to carry out improvements. In the past three years alone, about 43,000 Nigerians have benefitted from this facility.
FMBN has also revamped its legacy Cooperative Housing Development Loan (CHDL) in line with the initiative of the Minister of Housing, Babatunde Raji Fashola (SAN) to adopt cooperative societies as the channel for the aggregation and delivery of houses to members of cooperative societies. The Minister launched the National Cooperative Housing Scheme starting with the North Central and North Eastern geopolitical zones in Abuja and Gombe on 17th and 20th February 2020, respectively.
The FMBN Cooperative Housing Development Loan (CHDL) enables a cooperative society that has acquired a plot of land to develop houses for allocation to its members. Key features include tenors of up to 24 months with a moratorium of 12 months and interest rate of 9.5%. Up to N500 million is accessible by qualified cooperative societies under the facility subject to review upon judicious assessment of utilization of funds earlier disbursed.
LEVERAGING ON TECHNOLOGY TO BOOST TRANSPARENCY IN THE NHF SCHEME
Another notable achievement of the FMBN within the past three years is the launch of FMBN Digital Platforms. The Digital Platforms have ushered in a new era of transparency and accountability in the operations of the National Housing Fund (NHF) by empowering contributors with real-time access to information on their NHF accounts.
Key components of the FMBN Digital Platform Solutions Suite of services include the following:
- The *219# USSD Short Code service via GSM mobile networks
- The NHF Mobile Apps available on android & iOS platforms
- The online Self-Service Kiosk via the Bank’s web portal (www.fmbn.gov.ng/nhfmobile) and
- SMS and email notification services to NHF customers.
The platforms enable contributors to receive instant notifications, check records of NHF contributions on the go, update NHF personal records, check NHF balance of contributions, register and retrieve NHF numbers, request for statements of account, calculate home affordability and mortgage payments, and obtain latest NHF-related information from the FMBN Bulletin Board online service.
The greater transparency, clearer disclosure, and convenient access to records of contributions from the comfort of homes and offices or while on the go via personal computers or mobile phones has boosted confidence in the NHF Scheme.
As affirmed by the Managing Director, Arc. Dangiwa, “On resumption of office, we audited the system and discovered that some employers under-remit deductions, schedules of deductions were not provided, contribution records are not updated or maintained in passbooks and most contributors do not know the status of their contributions. Having critically evaluated the issues, we decided to automate the process to give contributors unfettered access to information pertaining to their contributions and the policies associated with the Scheme for greater efficiency, transparency, accountability and service delivery.”
IMPLEMENTATION OF THE NATIONAL AFFORDABLE HOUSING DELIVERY PROGRAMME FOR NIGERIAN WORKERS
In a move aimed at strengthening stakeholder participation and confidence in the operations of the National Housing Fund (NHF), the FMBN in conjunction with the Nigeria Labour Congress (NLC), Trade Union Congress (TUC) and the Nigeria Employers’ Consultative Association (NECA) embarked on the National Affordable Housing Delivery Programme for Nigerian Workers. The Housing Programme aims at a structured and sustainable approach to affordable housing delivery for Nigerian workers Nationwide.
About 2,800 housing units are to be delivered in fourteen (14) sites across the six geopolitical zones of the country in addition to Lagos and Abuja, in batches of a minimum of 200 units per zone. House types include finished semi-detached bungalows as well as 1-, 2- and 3-bedrooms in blocks of flats.
RESUMPTION OF DEFAULTING STATES OF THE FEDERATION IN THE NHF SCHEME
The FMBN Board and Management have worked hard in the past three years to rebuild stakeholder confidence in the National Housing Fund (NHF) Scheme. As a result of the visible transparency and commitment of the management, six (6) States re-joined the NHF Scheme. This includes Borno, Niger, Edo, Ondo, Kebbi and Lagos bringing the total to thirty-four (34) States and the FCT. The Management is sustaining efforts for Kano and Oyo State to resume their workers’ contributions within the current year. The Bank added over 513,416 additional subscribers to the NHF scheme within the past three years alone, bringing the total to a record 5,052,500.
UPDATING THE FINANCIAL ACCOUNTS OF THE BANK
It is important to note that when the current Board assumed office, five years of corporate financial statements were lacking for the period 2013 – 2018. Within the past three years, the Management team has worked hard to update the records. Currently the 2013, 2014 and 2015 FMBN audited financial accounts have been prepared and approved by the Central Bank of Nigeria (CBN) in accordance with the banking regulations. Those for the year 2016, 2017 are prepared and have been submitted to the CBN for approval while the audit field work for 2018 accounts have also been concluded and account undergoing conversion to IFRS. In the same vein, audit work for the year 2019 is already at advanced stage.
IMPROVEMENT IN PROCESS TURNAROUND TIME
Having noted significant efficiency challenges in service delivery, the Bank observed annual management retreats in years 2017 and 2018 to review business processes and sharpen the skills of its staff. The outcome of the retreats identified process bottlenecks and streamlined business processes that resulted in the reduction of process turnaround time by as much as 40-60%. For instance, the NHF refund process reduced from an average of 6-12 months to the mandatory 90 days in some cases within 30 days.
The past three years of the current Board and Management of FMBN represent a period of unprecedented transformation, high-performance and impact at the FMBN in the pursuit of its mandate of deepening access to housing finance, providing access to affordable housing for low- and medium-income earners. This is a result of the visionary reforms being championed by the leadership in line with the policy direction of the Buhari administration and strong support the Bank has enjoyed from the Hon. Minister of Works and Housing, Babatunde Fashola, SAN.
The stellar results and increased impact of the Bank are helping to change the longstanding narrative from negative to better corporate performance, improved transparency, greater efficiency, and service improvement.
FMBN’s remarkable turnaround is significant for the growth of the housing industry and rapid delivery of affordable housing in the country. Given the urgent need to address the huge housing deficit, estimated to range between 17 million and 22 million, the repositioning of the FMBN to better play its role as a catalyst for affordable housing delivery inspires optimism.