Chris Ochayi
13 June 2008
Lagos — To ensure it provides affordable houses to the citizenry, the Federal Government has unveiled plans to raise over N117 billion ($1 billion) from a consortium of offshore investors.
Acting Managing Director, Federal Mortgage Bank of Nigeria (FMBN) Mr. Abdulsalam Ahmed who disclosed this at a session with journalists in Abuja, explained that from the sum, the bank will in the next four weeks seal agreement with a foreign financial institution for the N46.8 billion or $400 million credit facility for the provision of houses for lower and middle income groups to ease tension generated by the housing deficit in the country.
Mr. Ahmed, who emphasised on aggressive approach to provision of housing accommodations in the country, stressed further that, "if you look at one of the Millennium Development Goals (MDGs), we should be able to build 720,000 housing units per annum", which according to him, are to be spread across the states in the six geo-political zones.
According to him, some of the prospective beneficiaries of the facility include officers of the Nigeria Police and other paramilitary services including Nigerian Immigration Service (NIS).
He said the initiative was part of the ongoing reforms of the bank to bridge the 17 million housing deficit."We need something between N40 to N42 trillion to be able to bridge that gap. Now in the last 16 years, from 1992 to date, we have been able to get cumulative under the housing scheme of N32 billion and now you can understand why we can"t be there.
"So we need a radical approach. In this country, this system that we are operating called depository system of funding. All the scheme does is you contribute 2.5 percent of your income into a pool for period of six months then the bank can grant you up to N5 million is not possible it won"t go round.
"It has not worked. It didn"t work in Malaysia, it didn"t work in Mexico. They had similar scheme, it didn"t work in Indonesia, Malaysia and in so many countries. So it"s not sustainable. In the US they operate two systems, the depository and the secondary mortgage market", he said.
"Our focus is to actually be a robust secondary mortgage market institution. Now for us to be able to develop this sector, the truth is you really can have a combination of so many.
The MD noted that the bank with a capital base of N5 billion has been able to raise N34 billion through the National Housing Fund (NHF) scheme since inception.
He explained however that the new management of the bank in its renewed effort to avert the huge housing deficit and provision of houses for over 90 percent of the working population will soon introduce new packages in order to facilitate the process.
These include, Cooperative societies, Mortgage Tile and Mortgage Insurance among others that will enable prospective applicants especially those in the informal and formal sector to access the facility for house ownership.
"My target is that in line with the new housing policy that all Nigerians have access to decent, safe and affordable housing accommodation which is a major focus of this administration and one of the seven-point agenda of the present administration, he said. "But this bank is a new bank now for 16 years had been a mono-product bank operating solely under the National Housing Fund (NHF) scheme. Where those in the informal sector contribute 2.5 percent of your salaries into a pool, which we managed for you, but we think that is not enough.
"What I am targeting is a radical approach towards transforming this bank from a mono-product institution into multi-products bank that provides lending for all lending for commercial purposes (including NHF) and a truly robust secondary mortgage institution.
"And then into a bank that purchases these mortgages from these originators and eventually to transform this bank into institution that security services gives mortgages into mortgage bond securities for investment by prospective investors".
"There are a number of investors that are willing to invest into the securities as long as they are safe. We have the a plan in place that allows us to go into capital market and raise fund on a continuous basis".
He noted that the capital market option provides a number of advantages to the bank and Nigerians. We have the capacity to be one of the biggest banks in the next three years in terms of asset base.
He explained that the reason for the low productivity of the NHF to meet the aspiration of teeming citizenry especially the NHF contributors was due to the non-sustainability nature of the scheme.
Before his present status, Ahmed who was the general manager (policy &strategies) said he understudied mortgage programmes in both developed economies including United Kingdom (UK), United State of America as well as developing economies including Malaysia and Indonesia.
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