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Issues over proposed N500bn recapitalization of FMBN

Industry experts have identified key issues that must be addressed to pave way for the proposed N500 billion housing recapitalisation of the Federal Mortgage Bank…

Industry experts have identified key issues that must be addressed to pave way for the proposed N500 billion housing recapitalisation of the Federal Mortgage Bank of Nigeria (FMBN) N500 billion.

Daily Trust reports that the amendment of  the National Housing Fund (NHF) Act of 1992 and the FMBN Establishment Act of 1993 is key to the recapitalization of the Bank

Recall that in 2019, former President Muhammadu Buhari rejected assent to the National Housing Fund (establishment) Act, 2018, was  passed by the Senate on November 6, 2018, following its passage by the House of Representatives on July 17, 2018.

The Bill seeks to repeal the National Housing Fund Act Cap. N45, Laws of the Federal Republic of Nigeria, 2004 to provide for additional sources of funding for effective financing of housing development in Nigeria and was sponsored by Ahmad Kaita (APC, Katsina North).

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Consequently, Ahmed Dangiwa, Minister of Housing and Urban Development, in February this year gave the federal government’s assurance to ensure that FMBN gets all the necessary support at the highest levels possible to deliver maximally and optimally on its mandate to Nigerians.

“As a minister, I am committed to being a way-maker, facilitator, and catalyst to the evolution of the bank as a modern, impactful, and resilient housing finance institution that delivers on the maxim that ‘everyone deserves a home,’ the minister said.

He noted that FMBN must be seen as a tool of service to Nigerians, tasking the staff to see their jobs, titles, and the salaries that they are paid as recompense for the services that they offer to Nigerians.

In the same vein, the Managing Director of the Federal Mortgage Bank of Nigeria (FMBN), Shehu Usman Osidi while receiving the federal housing delivery reforms at the Bank’s headquarters in Abuja disclosed that the Bank has commenced recapitalization exercise to boost efficiency in housing delivery to Nigerians.

According to the MD, “The Bank is one the enterprises slated for commercialization by the Government, with focus to repositioning and capitalization after a series of engagements with the BPE on the need for the Bank to stay true to its mandate of affordable mortgage financing by the Federal government.

“Already we have a 5-year strategy Blueprint, approved by the Board guiding our operations and a major ICT project in core banking application is nearing completion (95%) to prove service delivery and process efficiency,” he explained.

He added that the amendments of the FMBN and NFH Acts have also commenced in the National Assembly, noting that the grey areas that hindered thr assent to the Bill have been rectified.

Daily Trust reports that the current capital base of the FMBN stands at N2.5 billion.

However, one of the challenges that the Bank faces is the fact not all states have also subscribed to the NHF.

What the federal government is Proposing

Already, the minister of housing and Urban development has set up two task force teams to ensure the recapitalization of the FMBN sees the light of the day and also improve housing delivery to Nigerians.

Part of the proposition of the Task force team is to increase minimum contribution of the National Housing Fund from 2.5 per cent to 5 per cent.l with graduated rates for different salary grades

Also, it has proposed compulsory contributions for both private and public sector workers and also initiate voluntary contributions for fixed rate mortgages above a certain threshold.

The Task Force is also proposing the reintroduction of mortgage for both private and public sector employees.

Mr. Adedeji Adesomoye chairman federal housing reforms task team had already stated that the Committee is tasked with the responsibility to Comprehensively review operations and governance Structure of the Federal Housing Authority, Federal Mortgage Bank of Nigeria and Family Homes Fund

What Experts are saying

Reacting to the development, a real estate expert, Dotun Dare while said “The NHF Act which provides for every commercial or merchant bank, insurance companies, and Pension Fund Administrators (PFAs) to invest 10 percent of its profit before tax (PBT) into the Fund at an interest rate of 1 percent above the interest rate payable on current accounts of banks is not feasible

According to him, the Act which came onboard during the military regime cannot be applicable now to commercial banks who are solely in the business of investments and profit making.

In the same vein another real estate expert, Musa Abdulqadir noted that increase minimum contribution from 2.5 per cent to 5 per cent will be met with resistance from contributions

Abdulqadir noted that “Even the 2.5 per cent contributions by workers, many people die without accessing and now the government wants to increase it so they can mop up equity ahead of recapitalization. I think that will be a kangaroo exercise,”

Speaking further he said the compulsory inclusion of public and private sector employees as part of the Proposal of the ministry of urban and housing development for the National Housing Fund may also be difficult “Because even many states are yet to key into the contributions let alone private individuals who have pessimistic views about Fund,”

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