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Providing solutions to housing deficit


A News Analysis by Ella Anokam

The Federal Mortgage Bank of Nigeria (FMBN) initiated the National Housing Fund (NHF) scheme to facilitate the provision of houses to Nigerians and bridge the housing deficit.

NHF is a pool which mobilises long-term funds from Nigerian workers, banks, insurance companies and Federal Government to advance loans at a single-digit interest rate to its contributors.

With the NHF scheme, workers are to contribute 2.5 per cent of the basic salary to 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.

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

But while some civil servants have benefited from the NHF scheme, others have yet to benefit, prompting many people to clamour for the review or outright abolition of the scheme.

On this background, some stakeholders in the housing sector express concern about the operations of NHF and call for stiffer penalties against violators of the NHF Act.

But Mr Ayuba Wabba, President of the Nigeria Labour Congress (NLC), rather called for a realistic housing scheme that would enable workers to afford houses.

“For us to address the issue of housing deficit, we must have an agreeable interest rate that is affordable to citizens and workers, if not the houses will be built and will not be affordable,’’ he said.

Expressing worry that Nigerian workers could still not afford the houses in spite of putting in 2.5 per cent of their monthly salaries to have shelter, he called on the Federal Government to intervene by providing the necessary funds required to drive the housing scheme.

He decried the violation of the NHF Act by some stakeholders, observing that failure of commercial banks to contribute to the fund had retarded progress of the scheme.

“We actually keyed to the scheme but along the line, in 2003 and 2004, we had challenges because the houses were built and workers could not afford them.

“The type of houses required were not the type built, so hundreds of houses are lying fallow in Abuja because nobody can afford them,’’ Wabba observed.

In his opinion, Mr Oluseyi Lufadeju, a trustee at Real Estate Development Association of Nigeria, accused the Central Bank of Nigeria and some commercial banks of not contributing to the fund.

According to him, Section 5 of the NHF Act stipulates that commercial or merchant banks shall invest in the fund 10 per cent of its loans and advances.

“The loan or advance will be at an interest rate of one per cent above the interest rate payable on current account by banks.

“Every registered insurance company shall invest minimum of 20 per cent of its non-life funds and 40 per cent of its life funds in real property development; of this, not less than 50 per cent shall be paid to the fund through the FMBN.

“Section 11 of the NHF Act provides that the Central Bank of Nigeria shall collect from commercial and merchant banks at the end of every year and not later than one month after, the percentage of their contribution to the fund,’’ he explained.

Lufadeju said without full capitalisation, the bank could not fulfil its obligation of providing affordable houses to Nigerians.

Sharing similar sentiments, Mr Mohammed Khalil, a consultant, said since the enactment of the NHF Act, deposit banks and insurance companies had not invested in the fund.

He observed that an analysis of total loans and advances by the commercial and merchant banks in 2016 was N15 trillion.

“At the rate of 10 per cent, the CBN pursuant to Section 11 is supposed to have credited the NHF with the sum of N1.5 trillion by March 2017,’’ he said.

Khalil said that if the Federal Government was to create at least one million new homes through a national mortgage single digit interest rate, it would require N6 trillion.

“It follows, therefore, that at the current official figure of 17 million housing deficit, the Federal Government will require N102 trillion,’’ he said.

Mrs Hannatu Fika, Executive Secretary, Federal Government Staff Housing Loans Board, therefore, noted that providing incentives for the capital market to invest in property development was crucial in proffering sustainable solutions to housing deficit in the country.

She urged the Federal Government to encourage the development of specific programmes that would ensure effective financing of housing development, particularly low-cost housing for low income earners.

In his reaction, Mr Ahmed Dangiwa, Managing Director of FMBN, said banks and insurance companies in Nigeria were required to be investing in the NHF scheme but they defaulted.

He said unless these provisions of the act were complied with, the pool of funds available for mortgage financing at affordable interest rate would continue to be inadequate.

“This means that the FMBN will be unable to make low interest mortgages available to Nigerians as the 2.5 per cent workers monthly contribution is grossly inadequate, especially that of the medium income earners,’’ he observed.

However, Mr Ahmad Kaita, the Chairman, House Committee on Housing, stated that the committee, in line with the legislative agenda of the House of Representatives, had recognised the need to provide required legal and legislative frameworks to ensure affordable housing for Nigerians.

Similarly, Speaker of the House of Representatives Yakubu Dogara reiterated the commitment of the house to initiate a legislative framework that would address housing deficit in the country.

He expressed concern that policies designed to provide adequate housing for Nigerians had not yielded positive results due to violation of the NHF Act by the stakeholders.

He also emphasised the need to unravel the reason why some stakeholders in the housing sector failed to comply with the NHF Act and the Federal Mortgage Bank Act.

“The National Housing Fund is designed to assist the public servants and private sector employees while saving a percentage of their income.

“The government, through mortgage banks, is expected to provide loans to real estate developers to build low cost houses for Nigerians.

“But both programmes are not yielding the desired result as houses are still not within the reach of Nigerians,’’ Dogara said.

He, nonetheless, said the legislature would collaborate with the stakeholders in ensuring safe and affordable homes.

For affordable houses, the Senate Committee on Lands, Housing and Urban Development, pleaded with shareholders to pay up their equities to actualise the planned recapitalisation of FMBN.

Chairman of the Committee, Sen. Barnabas Gemade, listed the shareholders to include the Federal Government, Central Bank of Nigeria and Nigeria Social Insurance Trust Fund.

He observed that the CBN had vital role to play in making the FMBN function effectively by exercising its statutory roles, especially in the areas of funding and regulation.

“The N5 billion capital base of the FMBN is low and the shareholders should hasten up by increasing the capital base to reflect current realities.

“CBN should sanction commercial banks that defaulted in remitting 10 per cent of their loan portfolio to FMBN as investment to the development of a virile mortgage industry as required by the law,’’ he said.

He promised that the committee would also ensure amendment of both the FMBN and NHF Acts to make the bank function effectively.

Gemade noted that N100 billion was approved in 2017 budget as intervention fund to support mortgage activities in the country.

He directed the bank to follow up the matter with its supervisory ministry, noting that the Ministry of Power, Works and Housing should contact the Federal Ministry of Finance to secure the release of the fund.

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