By Jude Njoku
THE National Housing Fund, NHF, the scheme set up by Decree 3 (Act) of 1992 to provide cheap loanable funds for housing development, has been the subject of intense criticisms in the last few years. Nigerian workers who felt that they have not benefitted enough from the scheme, have repeatedly canvassed its abrogation.
The clamour for the scrapping of the Fund seemed to have gathered weight when in February, the Minister of Labour and Productivity, Chief Emeka Wogu, hinted that the Federal Government will consider scrapping the Fund.
The Minister explained that the move is in line with the position of Nigerian workers who have requested that the NHF be scrapped because it has been ineffective and wasteful all the years.
Chief Nwogu who spoke at a meeting with the executives of the Joint National Public Service Negotiating Council, JNPSNC, said the government would consider scrapping the Fund as requested by the council.
His words: “Government will consider your earlier position on Staff Housing Loan Board. However, the National Housing Fund was created by an Act and consequently, where there is an Act, it is either you repeal, amend or totally set it aside, and that is purely the duty of the National Assembly. I will reach out to the Head of Civil Service of the Federation with your request that the National Housing Fund Act be repealed, amended or reviewed.”
Urgent medical attention
The NHF has indeed become a sick baby in need of urgent medical attention. Banks and Insurance companies who were supposed to be major contributors, have failed to buy into the scheme.
In fact it was reported that banks and insurance firms in the country are between 2006 and 2010, owing about N8.58 trillion which the failed to remit in the Fund in line with the provisions of the Act. Banks should have invested N8.49 trillion, being 10 percent of their loans and advances for the five year period.
Mortgage operators who spoke to Vanguard Homes & Property gave further insight into why the NHF has failed to achieved the goal was setting it up.
Vice Chairman of Crossover Savings & Loans Limited, Mr Bode Akinboye stated that the greatest drawback to the NHF scheme is the fact that it focused more on the formal sector while neglecting the informal sector. “The fundamental problem with the National Housing Fund, NHF, is that people are not contributing to the Fund.
It is supposed to be a pool of large funds but you find out that there are a lot of defaulters -companies, institutions are not participating. That is the number one problem. This scheme has focused mainly on the formal sector but you know that the strength of this economy is in the informal sector.
If you go to Idumota or Alaba International, that is where the economy is controlled from. How can you start a housing scheme that does not carry these people along. It is bound to fail,” he said. Continuing, Akinboye noted that the current management of the Federal Mortgage Bank is trying to address that problem.
“They are trying to invite the informal sector -road transport workers, carpenters, bricklayers, all these people have money. You need to know how much the tipper drivers are making, that is, those who are selling sand. They are earning more than me,” he said.
The Crossover Savings and Loans Vice Chairman regretted that prior to this time, the NHF and FMBN have not been properly managed. “Even the few funds they had were used to build befitting offices. You see the FMBN building on Marina and Abuja, that is not what they ought to have been doing. It is not this current management that did that.
So, when you look at the past leadership of that institution, they haven’t really done well. But this new team is trying to do a turn around of the place but unfortunately, when they came in, there were not funds. They are now trying to generate more funds for people to draw from the scheme. So, the more money comes, the more money will be available to pay,he explained.
He decried the penchant to borrow money and not repaying the loan. “Again some people are defaulting; those who have taken the loans are defaulting. The culture of people taking money and not wanting to pay back is also a problem which is an element of what we are addressing in Crossover because once you do your underwriting properly and you have the title right and everything with you, it is easier to recover the house if they default by carelessness.
Proper due diligence
Then you can recover because it is also very sensitive to recover houses where people live. In order not to do that, you have to do your proper due diligence and also encourage them to buy insurance. There is insurance for default as a result of your inability to have money to pay and there is default due to death. You don’t want to drive out somebody whose breadwinner is dead from the house. People must embrace all those small small policies that would make easier for them to continue to enjoy the house on which they have put their funds,” he posited.
Initially, the NHF loan was fixed at a maximum of N500,000 and when granted, must be utilised for the purchase of building, purchasing or renovating a residential accommodation. But when the clamour for its increase became intense, the loan was increased to a maximum of N5 million. Each applicant is expected to provide 10 per cent of the total amount being sought for while FMBN will grant a loan in excess of 90 per cent of the cost or value of the property to be mortgaged.
The interest rate as prescribed by the NHF Act shall not exceed six per cent per annum while a maximum of 30 years is the repayment period. Repayment is to be made through a PMI through which the loan was disbursed.
Also, security for the loan sought for is ensured by the property which must have a valid Certificate of Occupancy, C of O. It must also conform to the existing planning laws which serve as the approved building plan just as the property must be insured against hazards and its value should be sufficient enough to recover the loan.