The Federal Mortgage Bank of Nigeria (FMBN) was established to meet the housing needs of all Nigerian citizens. The apex mortgage bank in Nigeria which was founded in 1956 is saddled with the responsibility of monitoring and regulating the activities of mortgage institutions in Nigeria. In this interview, Managing Director/Chief Executive Officer of the FMBN, Ahmed Musa Dangiwa, reveal some of the far-reaching measures he is taking to bring the bank on the path of progress, with a view to providing Affordable housing for all Nigerians.
What is your vision for Federal Mortgage Bank?
My vision, first of all, is to operate like a development bank, thereby working towards meeting the national housing mandate, facilitating funds for our customers, who are the contributors, and ensure transparency and accountable to the stakeholders as well as make profit returns within the framework of good corporate governance. So, our vision is to reposition the bank as a foremost apex mortgage bank in the country and provide affordable housing financing for contributors to be achieved through improved and transparent operations. All of these are achievable with the cooperation and collaboration of stakeholders. This is our primary aim and main focus.
This is a laudable vision, no doubt, but it takes concrete action to realise such vision. What specific measures are intending to adopt to realise your vision?
We intend to achieve this vision through five strategic areas. First is the promotion of sound corporate governance as I said earlier. Corporate governance is to ensure accountability, fairness, transparency and corporate culture, which are necessary to maintain the integrity of the bank for smooth operation in the way we do business.
Second is to encourage public private partnership to mobilise resources to reduce the country’s acute housing shortage. It is a means of sourcing adequate funding for affordable housing delivery. It is about the best way to go in closing the current nation’s housing deficit. This PPP arrangement is important because it involves partnering both local and foreign developers who are willing to develop affordable houses for Nigerians, especially for the low-income group in the society and interested contributors. We also have to strengthen partnership with finance institutions for resources and funding, which will also help the bank achieve its set objectives. Every stakeholder is carried along in ensuring that we achieve the overall objective. Last week, we went to the Federal Inland Revenue Service (FIRS) where we went to partner with them towards enhancing our contribution base. The FIRS has the checklist of all the listed and registered companies. We want to see that even the public sector is brought into the National Housing Fund contribution base. We are also working on adopting a robust risk management because it is key to identifying and applying best practices in managing risks arising from bank operations.
What has been the result of your public private partnership?
The result has been tremendous, in the sense that we have found that our contribution base is improving when it comes to NHF contributions. Even state governments that have pulled out of the scheme, we are working towards ensuring that they come back on board. Our debt recovery is also improving. We are ensuring that all our debtors are engaged in fashioning out the best to recover the debts in the mutual interests of all parties.
Under the President Muhammadu Buhari Administration, the president has promised to ensure that Nigerians get the best of dividends of democracy, among which is the issue of housing. How is the bank positioning itself to address the nation’s housing needs?
Well, in view of the commendable housing programmes of the federal government to provide houses for the low-income earners in the country en masse, the bank is positioning itself towards the realising set objectives. The bank is also positioning itself towards providing the mortgages, at least, for the houses that are on ground for interested contributors and members of the public. We are also in discussions with institutions like AMCON, which you know has a lot of funds. I can’t call them idle funds; I believe these funds can be invested in providing houses for the masses. We are also in touch with the National Health Insurance Scheme (NHIS) for similar participatory operation structure in contribution. Increasing our contribution base will mean high flow of funds into the bank, which will now be used in providing mortgages for the Nigerian population.
Your programmes and policies seem to be targeted at civil and public servants only. When you talk about making housing affordable to the large Nigerian population, do you ever think of the informal sector of the society?
The housing products of the banks include both the formal and informal sectors. The fund is also to service the non-salaried informal sector. The NHF is for the civil servants, while corporate housing funds are loans given to the informal sector through cooperative societies. The cooperative societies approach us for loans or funds for individual or housing estate, and we oblige them as long as they can make remittance or deductions.
Another aspect of housing we are looking at now is the rent-to-own scheme which we are working on. It is about to be completed and sent to the FMBN’s Board for approval. It is almost like the owner occupier which we used to have in the past. For instance, the Festac 77 houses built by the Obasanjo administration were houses the federal government built for guests and when they left, the houses were given out to Nigerians. You are paying rent and at the same time, owning the house. Most of the houses that are ready and are on ground now can be used as testing ground for this policy. This one is good even for the informal sector.
The federal government recently provided about N500 billion to resuscitate the bank, with a view to making mortgage facilities easily available to Nigerians. How far has the bank gone in utilising the fund?
The bank is still pursing the N500 billion recapitalisation fund. We are yet to access that money; we are still pursing the fund from the federal government and even other stakeholders like the CBN. Talks are ongoing right now on the matter and we are optimistic that it will be approved sooner than later. The Council of Works and Housing is looking into the matter.
Different statistics are being bandied around as far as the nation’s housing deficit is concerned. What is the accurate or, perhaps, near accurate figure of the nation’s housing need?
The official figure or number of Nigeria’s housing deficit is put at 17 million, but this has been said over the last four or five years. I am sure, by now, it should be between 18 million and 20 million. The 17 million was an estimate by the World Bank. But the fact is that we are faced with an acute housing deficit that we must reduce at all cost. And that is why data is very essential. If you have a data base, it will enable you plan and then know what you have on ground.
Whatever the housing deficit is, I think that the important thing is to take concrete steps towards reducing it. Even if you start by building 100 houses per two months, it will help in reducing the deficit gradually. If you are delivering that you will surely reach your destination. There is a national housing census which the federal government is trying to carry out. There is a committee set up, National Real Estate Development Data. It is collaboration between the CBN, FMBN, estate developers and other major stakeholders in the housing sector. The data collection is ongoing. We have representatives in that committee but as you know, the housing deficit is a lot of money. We will need over N16 trillion to bridge the gap.
So, with about N16 trillion you can tackle the nation’s housing deficit?
The primary challenge facing the National Housing scheme is lack of funds and PPP is believed to be the most effective way of mobilizing funds to bridge the N16 trillion investment gap in housing. Other means have to be put in place. One, we are now pursuing our recapitalization to the tune of N500 billion like I said earlier. With the recapitalization, which is geared towards sourcing funds through both local and foreign capital markets, I am sure we will be able to enhance our portfolio, contribution base and meet set targets.
Foreign direct investment is also important in helping to meet the housing targets. It is equally important for us to get all the major stakeholders in the sector together towards achieving that goal.
Currently, in Federal Mortgage Bank of Nigeria, we are pursuing the completion of 95, 000 housing estates. Our focus is to ensure the completion of ongoing housing projects in order to reduce the deficit. The private sector has been doing remarkably in this regard. If you go round Abuja, for instance, before you see one or two of government-funded estates, you will have seen 10 housing estates owned by private developers. The private developers are doing much as far as housing delivery is concerned. What we want the government to do is to provide interventions in terms of infrastructure and access roads, even within the estates. That will also further reduce the cost of the houses when the developers are about to sell them or mortgage them to interested customers.
Is the FMBN thinking of partnering with agencies like the UN Habitat for affordable housing?
Yes. Inevitably, you have to do that inasmuch as you know that mortgage business is capital intensive, especially here that funds are not easily available. UN Habitat is where you can access cheaper loans and funds on long term basis. This is the kind of collaboration we are doing for social housing funding to customers and developers.
You said the FMBN is collaborating with the FIRS to enlist all corporate organisations to key into contributing to the National Housing Fund (NHF) Scheme. In a country where getting people to contribute to a project financially is not always easy, how do you intend to achieve this in terms of enforcing compliance?
Recently, we paid a courtesy call to the FIRS to seek collaboration in that regard. We are seeking collaboration in data sharing to identify listed companies and firms that are expected to contribute to the NHF scheme and that has helped a lot. They expected to participate but they are not. The aim is to expand the NHF base to provide adequate mortgage funding to contributors. We even went to partner the Bureau of Public Enterprise (BPE) to see how they can help us to ensure that those who are supposed to contribute to the scheme do so. As these companies bid for contracts, they are compelled to ensure that their staff and employees contribute to the NHF scheme.
Where is the NHF account domiciled?
The Federal Mortgage Bank of Nigeria (FMBN) is the manager of the funds. We collect the contributions and manage the NHF. It is from this fund that we give out mortgage financing and loans to contributors and estate developers.
How much do you have in the NHF account currently?
Presently, we have over N40 billion in the NHF account but it is money that comes and goes out. The NHF contributions are refundable in a way to the contributors. Whether you access loans or not, the money is refunded to you when you retire or reach the age of 60. It is with this fund and other investments that we get the liquidity to provide mortgages for houses to individuals and developers.
What role is the FMBN playing in the implementation of the federal government’s FISH programme?
We have been a major stakeholder in the FISH programme in many areas in the sense that from inception, we have on the FISH committee. We have been part of the design and implementation of the programme through our representatives on the board. Currently, we are packaging and disbursing 600 houses to the FISH programme. Out of these 600 houses, we are mortgaging 200 of our funded houses to the FISH programme. We have communicated to the FISH headquarters and they have sent acceptance letter. We also have another 400 houses from the non-funded which we are packaging to mortgage to them.
What is the volume of the loans that the FMBN has given out?
The volume of the loans is much. We have given out a lot of mortgages, repayments are being made and more people are coming into the scheme. Since inception, over N160 billion has been given out as loans. This is from the estates that we have already constructed.
We are in an economy where people don’t like repaying loans. How is that affecting your operation?
It is affecting our operation in that it is only when people pay back their loans that we will have enough funds for others to benefit. But we are happy with the coming of new technology that will address that. We are partnering with NIMC on accessing bank accounts and BVN of loan defaulters. A defaulter, who has three or more bank accounts, can have his accounts mopped up once there is any payment into any of the accounts through BVN. This technology is going to help us a great deal.
Talking about loan defaulters, the FMBN once sought the assistance of the EFCC in the recovery of about N90 billion bad debts from fraudulent developers and others who obtained housing loans from it but misappropriated such funds. We are yet to see any prosecution or conviction. To what extent have you gone in this regard?
Well, you won’t see prosecution or conviction now because we are engaging our debtors. When we came in four months ago the first thing we did was to invite them here for discussion. We have been engaging them to ensure that we recover our funds with minimal or zero litigation. The EFCC too has been of great assistance in the recovery of debts owed to the FMBN. Due to that effort, over the last four months, the bank has recovered over N700 million. We have been able to increase the recovered debts from N692, 057,316.58 by end of March 2017 to N2,409,068,660.18 by August 2017. We are working with the NDIC, especially, as it affects distressed banks. And we have some fruitful responses from the debtors.
You also expressed worry that seven states, including Lagos, Kano, Edo, Ondo, Kebbi, Niger and Oyo have withdrawn their participation from the NHF scheme, and the reluctance of some corporate organisations and states government to deduct and remit 2.5 per cent of basic salary of their workers to the Bank, thus impeding the operations of the bank and the NHF scheme. What steps are you taking to address this?
Well, we are currently reaching out to these states to see if we can bring them back on board to the NHF scheme. You forgot to mention Ekiti which has just returned back to the scheme. Mostly, we always tell them the advantages of joining the bank because of the numerous products they can access and enjoy. We have, for example, the renovation loans, which non-participants can’t benefit. 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.
Since you came on board four months ago, there must have been some challenges that you have encountered that you didn’t envisage before now. In the face of all of these, what has kept you focused?
What encourages me in the face of daily challenges is the fact that this is Nigeria, our country, where a lot of people don’t feel comfortable doing the right thing. There is no where you will go to that there are no challenges but the major challenge has been the insincerity of Nigerians. People think that mortgage funds are government money which is meant to be shared into private pockets. That is why when they collect mortgage they feel reluctant to pay back. But with concerted effort this can be addressed.
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