Osidi: Repositioning FMBN to Deliver Renewed Hope for Affordable Housing

Richard Imhoagene

In Nigeria, like in many parts of the world, housing is a fundamental human need and a crucial determinant of wellbeing and socio-economic development. Yet, despite its significance, millions of Nigerians lack access to adequate housing, facing a myriad of challenges ranging from homelessness to inadequate housing conditions.

According to the World Bank, Nigeria faces a significant housing deficit, with an estimated shortfall of over 22 million housing units. This gap continues to widen due to rapid urbanisation, population growth, and insufficient investment in housing infrastructure.

The consequences of this deficit are far-reaching, impacting not only individual households but also the broader economy and social fabric of the nation. Inadequate housing leads to overcrowding, informal settlements, and proliferation of slums, exacerbating issues of poverty, inequality and social exclusion.

The United Nations Human Settlements Programme highlights the critical role of housing in achieving sustainable development goals, emphasising its links to health, education, employment, and environmental sustainability. In Nigeria, the lack of access to adequate housing undermines progress towards these goals, perpetuating cycles of poverty and marginalisation.

Moreover, inadequate housing conditions contribute to health hazards, with millions of Nigerians living in substandard dwellings, lacking basic amenities such as clean water, sanitation, and electricity.

The state of housing in Nigeria reflects a pressing need for government intervention and policy reforms. Despite various initiatives aimed at addressing the housing deficit, progress has been slow, hindered by challenges such as limited access to financing, land tenure issues, inefficient regulatory frameworks, and institutional capacity constraints.

To effectively tackle these challenges, concerted efforts are required from both the federal and state governments, as well as collaboration with the private sector, civil society organisations, and international development partners.

FMBN & Nigeria’s Housing Gap

One key institution poised to play a pivotal role in addressing Nigeria’s housing crisis is the Federal Mortgage Bank of Nigeria (FMBN).

Established with a mandate to promote the delivery of affordable housing finance to Nigerians, the FMBN has the potential to catalyse investments in the housing sector, facilitate access to mortgage financing, and support the development of affordable housing projects across the country.

However, to maximise its impact, the FMBN requires adequate funding, enhanced operational efficiency, and greater transparency in its operations.

Osidi in the Saddle

The appointment of Mr. Shehu Osidi as the new Managing Director of the Federal Mortgage Bank of Nigeria (FMBN) marks a significant turning point in the institution’s trajectory. With a wealth of experience and a proven track record in the financial sector, Osidi brings a fresh perspective and renewed vigour to FMBN’s leadership. His appointment signals a commitment to ushering in a new era of innovation, efficiency, and accountability within the organisation.

Under Osidi’s leadership, the FMBN’s new management team has embarked on a bold and ambitious agenda aimed at repositioning the bank as a key player in Nigeria’s housing sector. Recognising the magnitude of Nigeria’s housing crisis and the urgent need for action, the management team has developed a comprehensive roadmap to address the multifaceted challenges facing the housing sector.

Central to this agenda is a commitment to harnessing technology to drive operational efficiency and enhance customer experience. The management team recognises that in today’s rapidly evolving digital landscape, technology plays a pivotal role in streamlining processes, reducing costs, and improving service delivery. By leveraging digital platforms and automation tools, the FMBN aims to simplify and expedite the mortgage application process, making it more accessible and transparent for aspiring homeowners.

Moreover, the management team is keenly focused on strengthening the FMBN’s financial position and enhancing its capacity to mobilise resources for housing finance. This includes initiatives to improve credit quality, reduce non-performing loans, and explore innovative financing mechanisms to expand the reach of affordable housing finance to underserved populations.

By adopting sound financial management practices and forging strategic partnerships with financial institutions and development agencies, the FMBN aims to leverage its resources more effectively and maximize its impact in addressing Nigeria’s housing deficit.

In addition to financial reforms, the management team is committed to enhancing the FMBN’s operational effectiveness through improved project management practices and performance monitoring systems. By equipping staff with the necessary skills and tools to deliver projects on time and within budget, the FMBN aims to enhance its reputation as a reliable and efficient housing finance provider.

Furthermore, the management team recognises the importance of stakeholder engagement and collaboration in driving sustainable change in the housing sector. By fostering partnerships with government agencies, real estate developers, community organisations, and other key stakeholders, the FMBN aims to build consensus and mobilise collective action to address the root causes of Nigeria’s housing crisis.

As the FMBN undergoes transformative reforms under the visionary leadership of Mr. Shehu Osidi, the institution is not only revitalising its operational capabilities but also enhancing its ability to provide affordable housing solutions to Nigerians. Central to this endeavour are the bank’s suite of unique affordable housing products, designed to cater for the diverse needs of aspiring homeowners across the country.

National Housing Fund Mortgage Loan

One of the flagship housing products offered by the FMBN is the National Housing Fund (NHF) Mortgage Loan, which provides eligible contributors with access to long-term mortgage financing at single-digit interest rates. The NHF Loan stands out in the market due to its favourable terms, including extended repayment periods of up to 30 years and 6 per cent interest rates, making home ownership more accessible and affordable for low and middle-income earners.

Loans under N5 million attract zero equity down payment while loans ranging from N5 million to N15 million qualifies a contributor to apply after only six months of continuous contributions to the scheme. The terms and features of the NHF Mortgage loan are unbeatable in the market.

For comparison, interest rates on housing loans in the open market range from 18 per cent to 25 per cent per annum while maximum loan repayment tenors hover between 10 – 20 years. Most commercial banks and mortgage lenders would also require that applicants provide between 30 per cent to 50 per cent equity contribution before loans are processed and possibly approved for disbursement.

Rent-to-Own Product

In addition to its suite of housing products, the FMBN offers the innovative Rent-to-Own Housing Scheme, representing a groundbreaking approach to home ownership for Nigerian workers. This scheme provides an easy and convenient payment arrangement that enables individuals to transition from renting to owning their homes, thereby fulfilling their homeownership aspirations.

The FMBN Rent-to-Own housing product offers a unique opportunity for Nigerian workers to instantly move into an FMBN-owned housing property as tenants and conveniently pay towards ownership of the property in monthly or annual instalments over a period of up to 30 years.

This flexible payment plan is designed to accommodate the financial circumstances of aspiring homeowners, allowing them to spread the cost of homeownership over an extended period while enjoying the benefits of residing in their own homes.

One of the key advantages of the Rent-to-Own housing product is its affordability, with an interest rate of 9 per cent over the repayment period. This competitive interest rate ensures that monthly or annual instalments remain manageable for participants, making home ownership accessible to a broader segment of the population.

By providing a path to home ownership that is both affordable and sustainable, the FMBN empowers Nigerian workers to achieve their dream of owning a home without experiencing undue financial strain.

Moreover, the Rent-to-Own housing scheme offers participants the opportunity to enjoy the benefits of homeownership from the outset, including the security and stability of owning their own homes. By moving into an FMBN-owned housing property as tenants, individuals can begin building equity in their homes while enjoying the comfort and convenience of living in a property that meets their needs and preferences.

Home Renovation Loan

Another innovative product offered by the FMBN is the Home Renovation Loan, designed to enable homeowners to undertake renovation and improvement works on their existing properties. This product addresses the pressing need for housing maintenance and upgrades, allowing homeowners to enhance the quality and value of their homes without the financial burden of upfront costs.

With flexible repayment options and competitive interest rates, the Home Renovation Loan empowers homeowners to invest in the upkeep and modernisation of their properties, contributing to the overall enhancement of the housing stock in Nigeria.

Cooperative Housing Development Loan (CHDL)

Furthermore, the FMBN offers the Cooperative Housing Development Loan, tailored to support cooperative societies in the development of affordable housing projects for their members.

This unique product leverages the collective strength and resources of cooperative societies to finance the construction of housing units, thereby reducing individual financial burdens and promoting community-based homeownership initiatives. By facilitating the formation and operation of housing cooperatives, the FMBN empowers communities to take ownership of their housing needs and drive grassroots development initiatives.

Individual Construction Loan

In addition, the FMBN offers the Individual Construction Loan, a specialised financing solution designed to support individuals in the construction of their own homes. This product caters for the unique needs of aspiring homeowners who prefer to build their homes from scratch or undertake significant renovation and expansion projects.

Specifically, the loan enables NHF contributors with unencumbered land, appropriate land titles, and approved building plans to undertake self-construction. The loan provides up to N15 million to contributors to the NHF scheme at a 7 per cent interest rate.

Beneficiaries can pay over a period of up to 30 years depending on their age and the number of years left in service. By providing access to long-term financing with favourable terms, the FMBN empowers individuals to realise their homeownership aspirations and invest in the construction of quality, sustainable homes for themselves and their families.

Renewed Hope for Housing Agenda

The spirit of creativity and dynamism which Osidi has brought to the nation’s foremost mortgage institution aligns perfectly with the renewed hope agenda of the Bola Tinubu administration.

On assumption of office, the president made it clear through his Renewed Hope Agenda to give Nigerians hope with regards to housing provision, kicking the ball rolling with strategic actions. From demerging the Ministry of Works and Housing and creating a new Ministry of Housing and Urban Development, to strategic appointments of experts to the new ministry, to larger housing budgetary allocations as well as continuously re-echoing the rights of Nigerians to decent and affordable housing and his administration’s commitment to this vision, he has left no one in doubt about achieving astounding success in this regard.

As the FMBN continues to implement its transformative agenda and strengthen its capacity to provide affordable housing to Nigerians, its suite of unique housing products will play a pivotal role in driving progress towards the realisation of the country’s housing aspirations. By offering innovative solutions that address the evolving needs of the housing market, the FMBN is poised to become a catalyst for positive change and a beacon of hope for aspiring homeowners nationwide.

•Richard Imhoagene writes from Abuja

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