FMBN: New Dawn in Affordable Housing Delivery

Ahmed Dangiwa

John Ikyaave

Nigerians who are subscribers of the National Housing Fund (NHF) Scheme with the aspiration to access affordable mortgage loans to build or purchase a home of their own have good reason to be hopeful. A lot has changed for good at the Federal Mortgage Bank of Nigeria (FMBN), the country’s apex mortgage institution that manage the NHF scheme for the government. Under the leadership of Managing Director/Chief Executive Officer, Arc. Ahmed Dangiwa, a competent Board that is chaired by Dr. Adewale Adeeyo, and the visionary direction of the Minister of Works & Housing, Babatunde Raji Fashola, the Bank is witnessing a historic turnaround.

Between April 2017 and January 2020, the bank made historic loan disbursements totaling N88.6 billion, averaging N29.5 billion per year. Some of the notable disbursements include home renovation loans worth N32.7 billion, NHF loans totaling N29.3 billion, estate development loans in the sum of N17.2 billion, cooperative housing development loans totaling N6.2 billion and N3.1billion financing of the Ministerial Pilot Housing Scheme (MPHS).

While there is still room for improvement, it is important to acknowledge that the narrative is changing at the FMBN. From easing accessibility and affordability of homeownership – through the review of equity requirement for NHF loans from 10 per cent to zero per cent for loans of up to N5 million; 20 per cent to 10 per cent for loans from N5 million to N10 million and 30 per cent to 10 per cent for loans of N10 to N15 million – to development of innovative home products such as individual construction loans of up to N15 million and the rent to own scheme that enables immediate access to houses under a rental arrangement, it has been a refreshing potpourri of commendable strides at the bank over these past three years. More than ever before, FMBN is gradually playing the role of facilitating increased access to affordable housing as was conceived in the Act that established the bank decades ago.

In line with the aggressive drive of the Dangiwa-led management of the FMBN to make a difference has defined this still strong, the bank started 2020 on a strong and practical note. Last month, the Minister for Works & Housing, Babatunde Fashola, in quick succession, commissioned two FMBN housing projects with a total of 304 housing units in Abuja and Gombe.

First was the 154-housing unit Woodhill Estate in Kuje, Abuja, which FMBN financed under its Cooperative Housing Development Loan window for members of the Akacare Multipurpose Cooperative Society.
The estate comprises 2-bedroom semi-detached and 3-bedroom detached bungalows at the selling price of N7.5 million and 3-bedroom detached bungalows at the selling price of N9.5 million respectively.

In his address at the event, Fashola, announced the official flag-off the National Cooperative Housing Development that is designed to serve as the umbrella policy thrust of the Federal Government for promoting the delivery of affordable housing based on the actual needs and financial capacity of workers.
The underlying principle of the scheme, an initiative of the Minister of Works & Housing, was to promote targeted building of housing stock that speaks to the peculiar financial needs and incomes of workers within the low- and medium-income bracket by focusing on houses that they can afford.
Under the framework, workers are encouraged to organize themselves into structured cooperatives; collectively purchase a piece of land, get an architect to design the types of houses that they want and can afford.

The FMBN is to play a strong role as the provider of affordable housing estate construction finance to the Cooperatives through reputable developers under the banks Cooperative Housing Development Loan Portfolio. Members of the Cooperatives are expected to join the NHF Scheme and make monthly contributions of 2.5 per cent of their salaries.

Upon completion of the housing estates, the FMBN will package NHF Mortgage Loans of up to N15million to the members of the cooperatives at nine per cent interest rate per annum with tenors of up to 30 years depending on the age of the contributors through one of its primary mortgage institutions.
Fashola noted at the commissioning ceremony that “FMBN as an agent of the Buhari administration is addressing the problem of housing affordability frontally. I commend the Board and Management of FMBN for this first in a series of many events that define our new partnership with cooperative societies.

“Yes, we have come to commission a housing estate and I commend the architect, the property development company, the cooperative members and the subscribers.
“This string of partnerships, including subscribers who want a house, who are ready to pay for it, who can afford it; the developer who is committed to delivering it, an architect who can meet the needs of the subscribers and most importantly a bank that can translate their dreams and vision into an actual homestead, where people can say I have shelter, is important and we want to do more of it,” Fashola said.

The minister decried the prevalence of empty houses in Nigerian cities saying that they speak eloquently to the problem that FMBN in collaboration with the Developer of the estate, Perfect Estate Developers Limited have solved for members of Akacare Cooperative Society.

“You will hear that 150 houses are already fully subscribed. That means they are affordable. You will hear that 77 units have been delivered, that means there is a waiting list for a house that has been paid as distinct from an empty house that nobody can afford.

“Therefore, cooperatives have become a critical tool to address this problem. So apart from commissioning the estate, we are flagging off our National Cooperative Housing Development Scheme today in the FCT. This will be followed by zonal flag offs in each of the six geopolitical zones”
In his remarks at the event, Dangiwa stated that the commissioning of the housing project is an affirmation that the NHF scheme is meeting its mandate of delivering houses that are well-built, decent and affordable to Nigerian workers, especially those within the medium and low-income bracket.
Dangiwa added that the estate is fully serviced with basic infrastructure including an internal road network, electricity and water works to create a conducive and livable environment for residents.

He assured the Hon. Minister for Works & Housing, Babatunde Raji Fashola, SAN that the second phase of the project is on course to deliver the additional 77 housing units and that FMBN would provide additional finance to complete the 2.1-kilometer access road.
“This is our socio-economic contribution to opening up this area of Kuje for other real estate developments. Already at about 17 jobs per unit, this project has created 1,309 direct jobs to the local environment.

The FMBN boss thanked the Minister for his visionary leadership and aggressive drive to deepen cooperatives as a veritable tool for the provision of affordable housing to Nigerian workers.

Adeeyo, in his remarks commended the Minister of Works & Housing and pleaded for the increase of FMBN’s capitalisation to N500 billion. He noted that the injection of the funds will boost FMBN’s capacity to scale up its activities and make a greater impact on tackling the housing deficit.
Three days after the commissioning of the Woodhill estate in Abuja, Fashola commissioned a 150-housing unit FMBN/Gombe State Investment & Property Development Company Housing Estate in Gombe. The estate comprised 82 units of 2-bedroom detached bungalows at N6.5 million and 68 units of 3-bedroom detached bungalows at N7.3 million.

The completion of these estate – the latest in the series of many others that the bank has recorded over the past three years under the dynamic leadership of Arc. Ahmed Musa Dangiwa – is significant on many counts.

One, it provides practical evidence that FMBN is working and Nigerians are benefitting from its affordable portfolio of housing products. Consider the 154housing unit Woodhill Estate in Abuja for instance.

FMBN approved N997.9billion for its construction – inclusive of infrastructure and 1.2kilomer access road – under its Cooperative Housing Development Loan (CHDL) window.
It is noteworthy that the FMBN CHDL is a legacy FMBN housing construction loan for cooperative societies that have secured land to build houses for their members. Qualified Cooperative societies can access up to N500M using reputable developers. The loan is payable over a 24month period at 10 per cent interest rate.

In the case of Woodhill estate, all the houses have already been fully subscribed by members of the Akacare Multipurpose Cooperative Society. As contributors to the NHF Scheme, the beneficiaries will be granted NHF Mortgage Loans at unrivalled convenient terms that they can use to purchase the houses and pay over a long period of time.

With the prices of the houses ranging from N6.5 million to N7.5 million and equity requirement of a mere 10 per cent, this means members can own their homes by raising only N650,000 or N750,000 plus some marginal charges to move into their homes.

Another notable benefit is that the loans are payable over a 30-year period and attract a very low interest rate of merely six per cent
The second point of note is the shift in the old narrative of uncompleted/abandoned housing projects nationwide. The past three years have witnessed a commendable timeliness in the completion of housing projects. The FMBN management has disbursed unprecedented levels of funds towards the completion of old and abandoned projects nationwide. They have also commendably ensured that new housing projects are adequately funded to enable developers meet delivery timelines.

Take the case of the National Affordable Housing Scheme for Workers, a collaborative housing programme in partnership with the Nigeria Labor Congress (NLC), Trade Union Congress (TUC) and the Nigeria Employers Consultative Association (NECA), to deliver affordable houses for Nigerian workers.
The groundbreaking ceremonies for the first phase of the scheme was launched in October 2018 to deliver about 1,400 housing units. As at date all the projects are at advanced levels of completion and would soon be ready for commissioning.

In a recent presentation to the Nigeria Governors Forum (NGF), Dangiwa stated that 52 housing projects comprising 4,624 housing units are scheduled for completion in the second and third quarter of 2020.

The broad implication of the shifting narrative at the FMBN and the launch of the National Housing Cooperative Development Scheme by Fashola, provides proof that the government and the FMBN is serious and committed to supporting workers to own their own homes in line with the Next Level Agenda of the Buhari administration. Indeed, it is a call on state governments, political and community leaders as well as other interested organisations that are interested in helping Nigerians – in their areas of influence – to own their homes, to take a cue and organize them into cooperatives so they can take advantage of the cooperative housing development loans from the FMBN.

Ikyaave, is a public affairs analyst based in Abuja