By Emeka Ezekiel

The recent criticism of the Federal Mortgage Bank of Nigeria’s management of the National Housing Fund may have forced the apex mortgage bank to release information on its performance in recent times, writes EMEKA EZEKIEL.

At a time when home ownership has become increasingly difficult for majority of Nigerians, the managers of the nation’s mortgage system are flaunting their recent performance.

The Federal Mortgage Bank of Nigeria said it had approved N115bn loans for housing development under the National Housing Fund and Estate Developers Loan scheme.

The bank also said that it had so far disbursed N64.52bn as loan to individual and institutional real estate developers as at December 31, 2010.

The Chairman, Board of Directors, FMBN, Alhaji Deda Atta, confirmed this in an interview with our correspondent in Abuja on Friday.

According to him, although the EDL scheme was established in 2002, the bank only commenced approval and disbursement of loans to the developers in 2004.

Atta explained that from 2004 till date, FMBN had disbursed N35.63bn to individual contributors to the NHF, while N64.75bn had been approved under the EDL scheme.

The EDL was established for private developers, housing corporations and cooperatives to borrow from in order to build affordable houses and sell at predetermined prices.

Atta, however, noted that under the NHF, the bank had approved N50.68bn from 1992 till date, while N23.89bn out of the amount had been disbursed to prospective homeowners within the same period.

The NHF was established the Federal Government through Decree 2 of 1992 for workers to contribute 2.5 per cent of their basic salaries to a pool to be managed by the FMBN for the purpose of granting mortgage loans to the contributors at concessionary rates for the purchase, building, expansion and renovation of their houses.

Contributors are to access the fund through licensed Primary Mortgage Institutions accredited by the Central Bank of Nigeria and the FMBN.

The apex mortgage bank collects contributions to the fund from statutory deductions and remittances of 2.5 per cent of monthly incomes of Nigerian workers earning above the national minimum wage.

The maximum loan accessible by any contributor under the scheme is N15m, while the lending rate is six per cent per annum. The repayment period is a maximum of 30 years, subject to the applicant’s present age. The maximum repayments period is determined by deducting the applicant’s current age from 60.

Atta said, “In accordance with the Federal Government’s mandate of delivering quality mass housing for Nigerians, FMBN has come up with workable arrangement to help individuals and real estate development organisations to build affordable houses across the country.

“Since the creation of the Estate Developers Loan and the National Housing Fund schemes, the FMBN has so far approved loans totalling N64.75bn for housing development under the EDL and N50.68bn under the NHF. With respect to disbursement, the bank has also disbursed N35.63bn for housing development under the EDL scheme.”

He added, “The loans were used to finance 26,169 housing units across the country. These comprise 18,220 housing units for private developers, 7, 449 for the public sector and 500 units under the Presidential Mandate Initiative.

“But under the NHF window, the FMBN has so far disbursed N23.89bn to finance 16,468 mortgages through 57 primary mortgage institutions across the country.”

Atta stressed that the bank was currently hampered by insufficient fund to meet the growing mortgage needs of Nigerians, adding that FMBN was finalising discussions with foreign banks to enable it raise offshore capital for its operations.

He said, “One of our major constraints today is insufficient funds to meet the growing mortgage needs of Nigerians, especially the middle and low income earners. We are in the process of finalising discussions with some foreign banks, including HSBC of London, which is one of the largest banking and financial services organisations in the world.

“Our plan is to raise offshore funds to shore up our operations once we get all the necessary approvals and guarantees from the Federal Government. One of the possible options is to raise funds from the international capital market because the reason for seeking offshore funds is to get cheap funds with lower interest rates.

“If we go to the local capital market, the interest rate will hover around10 per cent or 11 per cent, and this will increase the cost of fund, which will not be suitable for low income earners seeking mortgage facilities.”

 

Source: Punch