Henry Umoru
1 December 2008
THE Central Bank of Nigeria (CBN) said yesterday that arrangements have been concluded to restructure and recapitalize the Federal Mortgage Bank of Nigeria (FMBN) to enable it meet with the challenges of the nation's housing sector.
Disclosing this in Abuja yesterday at the first Annual Conference on affordable homes for all and mortgage banking in Nigeria, Suleiman Barau, Deputy Governor, CBN, who noted that proposed restructuring and recapitilization would be done soon, said other initiatives put forward by the government under the auspices of the FSS 2020 include repositioning state housing corporations geared towards making them become fully effective.
The recapitilization of FMBN is among a set of initiatives under the FSS 2020 policy that is designed to turn around the mortgage sector aimed at making financing of the housing sector quite easy.
According to him, with the move, the Corporations would then deliver on their mandates as well as restructure the Federal Housing Authority (FHA) to handle social housing programme of the Federal Government of Nigeria (FGN) in the form of guarantee and insurance.
Barau, who noted that part of the programme would be the provision of tax relief on basic building materials to enable quick provision of housing stock and revamp the mortgage market, said the need for the initiatives became imperative by the government after a study tour of Dubai by some federal lawmakers and regulatory authorities to study the country's mortgage sector, adding, "the FSS 2020 mortgage plan is modelled after Dubai.
The mortgage sector is highly developed there and we are studying the model and the initiatives put in place for such success".
It will be recall that FMBN was established in 1956, but sad enough, it could no longer meet with the challenges in the country's housing sector especially achieving the housing for all slogan as housing deficits keep growing currently at 16 million units.
In the 2002 housing reform FMBN was reorganised to perform mainly secondary mortgage and capital market operations, however, Land Use Act 1978, National Housing Fund Act 1992, Mortgage Institutions Act 1989, Federal Mortgage Bank of Nigeria Act 1993 and the Trustee Investments Act 1962 as well as Nigeria Social Insurance Trust Act 1993, the Investments and Securities Act 1999 and the Federal Housing Authority Act 1990 could not allow it perform.
In his remarks, the Housing Minister, Chukka Udom, who noted that the federal government was strengthening the housing sector to make it become very vibrant to meet up with its role, said the country has large number of operators with weak financial capacity, just as he stressed that there is the urgent need to strengthen the market confidence, adding that the financial regulatory sector must consider mortgage banking consolidation
He however promised to work with members of the lower and upper legislative chambers of the National Assembly to ensure that the legislative agenda fully supports a vibrant housing and mortgage banking business in Nigeria.
According to him, "Mortgage banking sector requires consolidation to reduce their number from over 70 to about 15 mortgage banks only.
There is absence of capable structures and policies in Nigeria's capital market to enable the raising of long term capital through the issuance of bonds to force the reduction of interest rates being charged today and increase the tenure of mortgage loans to 30 years instead of today's 10 year loans and I am going to fully any initiative from Nigeria's capital market operators who work towards this goal; it is also claimed that the laws on our statue books are neither being actively enforced nor are they being updated to assure that they are fit for our purpose in the 21st century".
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