The Managing Director of the Federal Mortgage Bank of Nigeria (FMBN), Mr Shehu Osidi, has emphasised the need to review the FMBN and National Housing Fund (NHF) Acts to enhance affordable housing financing in Nigeria.
Speaking on Wednesday in Abuja during the anniversary of his one year in office, Osidi stated that the review was essential to addressing challenges in the housing sector and expanding affordable housing options for Nigerians.
According to him, the current Acts contain limitations that restrict the bank’s ability to fully deliver on its mandate.
A review, he noted, would strengthen FMBN’s capacity to achieve its objectives more effectively.
“Our biggest challenge in the FMBN is under capitalisation, because even the primary mortgage banks that we fund are more capitalised than we are.
“The second major challenge is that the NHF Act provides that the commercial banks are to contribute 10 per cent of their total output portfolio to the NHF in order to assist in financing affordable housing.
“Insurance companies, by the Act, are also required to contribute 40 per cent of their life loans and 20 per cent of their non-life loans into the NHF scheme to facilitate housing delivery.”
Osidi, however, revealed that since the establishment of FMBN and the provision of its law, neither any commercial bank nor insurance company had complied with the law.
“This challenge and several others are the reasons we have decided to collaborate with the National Assembly to review and amend both the NHF Act and the FMBN Act.
“For example, in our engagements with the central bank that ought to ensure the deductions from the commercial banks; part of the challenge they have also mentioned is that the provision is not implementable.
“This is because the deposits of commercial banks belong to investors and that they cannot on their own choose to invest 10 per cent of the total sum into NHF.”
Osidi stated that in its quest for solutions, the bank engaged extensively with the Central Bank of Nigeria (CBN) and resolved to amend the FMBN Act to include a provision requiring 10 per cent of profit after tax from these organisations as a corporate social responsibility contribution.
“This is for them to contribute back to the society from where they are also operating and generating huge profits.”
Osidi said that one of the management’s key strategic objectives upon assuming office at FMBN was to recapitalise and strengthen the bank to enhance its ability to effectively deliver on its mandate.
He emphasised that, compared to its global counterparts and given the critical nature of its mandate, describing FMBN as undercapitalised would be an understatement.
According to him, with a paid-up capital of only N2.5 billion, the bank lags behind even a national primary mortgage bank in financial capacity.
“We made it a top priority to pursue the recapitalisation of the bank through the injection of N500 billion fresh capital.
“Out of this, N250 billion is to be injected by the Federal Government while we will raise the balance through debt capital, ” he said.
Osidi said this led to the submission of a memorandum to the Federal Executive Council (FEC) by the Minister of Housing and Urban Development,Ahmed Dangiwa for the recapitalisation of FMBN.
He said that as a result, FEC directed engagement between the Ministry, Federal Ministry of Finance, CBN, BPE and FMBN and other relevant bodies to achieve the objective.
He stated that the bank had completed stakeholder engagements on the draft bills and would soon forward them to its supervising ministry for concurrence and support.
The managing director further disclosed that full automation of FMBN operations was underway to enable contributors to receive transaction alerts and access other operational services, among several new innovations
