Bridging Housing Deficit in Nigeria via Housing, Mortgage Initiatives

By most accounts, shelter and food are the predominant needs of man.

However, observers insist that many Nigerians are still lacking decent accommodation in spite of the designed efforts of the government to provide shelter for the citizens, the News Agency of Nigeria reports.

For instance, the Federal Mortgage Bank of Nigeria (FMBN) initiated the National Housing Fund (NHF) scheme to facilitate the provision of houses to Nigeria and bridge the housing deficit in the country.

The FMBN, as part of efforts to fulfil these tasks, evolved the NHF, a contributory savings scheme, which was established by Decree 2 of 1992.

Under the NHF scheme, workers to contribute 2.5 per cent of the basic salary into the Fund, while and the funds therein are supposed to be used for mortgage loans to the workers at concessionary terms for the purchase, building, expansion or renovation of their houses.

Apart from the workers’ contribution, the NHF also mobilises domestic and offshore long-term funds from banks, insurance companies and the Federal Government, which are supposed to be used as soft loans to its contributors.

Generally speaking, the FMBN is constitutionally empowered to facilitate the growth of viable primary mortgage institutions that would service the housing needs of Nigerians.

Nevertheless, observers note while some civil servants have benefited from the NHF scheme, several others have yet to benefit from it, prompting many to clamour for the review or outright abolition of the scheme.

Although the FMBN is to facilitate housing delivery to Nigerians, many contributors to the NHF grumble that they have yet to feel the impact of the scheme.

The Managing Director of the FMBN, Mr Gimba Ya’u Kumo, who tried to explain the reasons behind the slow access of contributors to the Fund, said that the FMBN had initiated new schemes and measures to bridge Nigeria’s housing deficit.

He, nonetheless, conceded that the bank needed Federal Government’s intervention in order to enhance its services and the people’s access to the NHF.

Kumo said that the FMBN, being a secondary mortgage institution and the custodian of the NHF forms, had 10 national Primary Mortgage Banks (PMBs) that have just been cleared by the Central Band of Nigeria (CBN) to provide mortgage facilities for the people.

“We have 27 original or state mortgage banks; you apply with your NHF number, you look for the house yourself and where you see a house that is being funded by FMBN, the process becomes simpler for you.

“We have launched the NHF e-Card where by a contributor can go to the Automated Teller Machine (ATM) on a monthly basis to access his or her account. From now till January 2016, we will be able to cover everybody,’’ he said.

Kumo said that any retiree should be able to have access to his or her account once the necessary documentations were in place, adding, however, that that the FMBN had been paying out refunds regularly.

He said that the bank’s management, including its all state offices, had been directed to treat any application for refund within one month after receipt of such application.

On the perceived slow access of contributors to the scheme, Kumo explained that the monthly contributions to the NHF were inadequate to guarantee full and prompt access of contributors to the Fund.

``It is so because if you look at the NHF today, we have over four million contributors into the scheme but if you look at the size of contribution, it is a meagre 2.5 per cent of their basic salary.

``The total contribution is not enough to give out loans to 100,000 contributors; that is the rationale behind our complaint that we need the Federal Government’s intervention.

“And the analysis runs this way: it means 250 contributors would contribute to the scheme for 10 years for only one person to be able to access N15 million.

“And the FMBN Act provides that apart from the contributions which the bank receives from the contributors to the NHF scheme, government is supposed to be intervening on a yearly basis.

“Then, Nigerian banks, which are supposed to be depositing 10 per cent of their loan portfolio to the scheme, have not been doing so over the years,’’ he said.

“Similarly, insurance firms have been mandated to contribute a certain percentage of their life insurance funds and non-life insurance funds to the NHF but the companies have not been doing that.

“The CBN has almost 40 per cent of FMBN’s equity but since 2006, it has not paid those shares,’’ he added.

Moreover, Kumo noted the six-per-cent interest rate of the NHF was fixed; adding that no mortgage loan under the NHF scheme had more than six per cent interest rate.

“Two per cent comes to the FMBN as service and administrative fees; two per cent goes to contributors to the NHF scheme, while the remaining two per cent goes to the PMBs –agencies that facilitate the mortgage scheme’s implementation,’’ he said.

He called for quick intervention of the government to enhance housing delivery in the country by addressing problems relating the interest rate, provision of long-term finance for house construction and mortgage, as well as special taxes and subsidies on construction materials.