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Boosting Nigeria’s housing stock with FMBN’s workers’ fund

By Kunle Adekoya
With an estimated 16 million shortfall in the national housing stock, there is need for a radical policy review of the strategies that would accelerate the provision of decent accommodation for affluent and average income earning Nigerians.

It is important that the government has admitted the enormity of the situation by accepting to review existing mortgage services with a view to liberalising lending to citizens who are interested in owing personal houses. More importantly, there has been a deliberate effort to recognise the contributions of the private sector as the key driver of the economy..

President Jonathan presenting house keys to a beneficiary of of the Goodluck Jonathan Housing Estate, Idimu, Lagosousing Estate giving a salute to guests at the official unveiling of the  Estate on Friday July 19, 2013 in Lagos, watching with admiration are Mr. Olatunde Ayeni, Chairman, ASO Savings & Loans- financier of the Goodluck Jonathan Housing Estate, Idimu, Lagos; Oba of Lagos, Rilwan Akiolu, Lieutenant Colonel Ogogbane Adegbe Aide de Camp to Mr. President, Special Guest of Honour Dr Ebele Jonathan, President, Commander in Chief of Armed Forces of Nigeria and Mr. Muhammed Abubakar, Inspector General of Police at the official unveiling of the 200 of the 504 units of 3-Bedroom block of flats. Photo by Lamidi Bamdiele
President Jonathan presenting house keys to a beneficiary of of the Goodluck Jonathan Housing Estate at Idimu, Lagos housing Estate Photo by Lamidi Bamdiele

Former Minister of Lands, Housing and Urban Development, Ms Amal Pepple, sometime last year, described as unimpressive previous efforts of government to get directly involved in building of houses. For instance, the Federal Housing Authority, established some 40 years ago, could deliver only 37, 000 houses, an average of just a thousand units per year. This is not a good record given the abundance of resources in the country.

Instructively, the houses were beyond the reach of the low income earners. Although the houses were financed with tax payers money, they were priced too high and of comparatively low quality. In some instances, they were built on bad terrains and inaccessible neighborhoods. All these contributed to high cost of delivery. Invariably, only the rich could afford to buy and re-sell, thus defeating the intention of the government.

The Dr Goodluck Jonathan administration is, however, charting a new course through a long term perspective planning – developing the right policies, strategies and frameworks and involving all stakeholders, especially the private sector in financing massive erection of new, standard houses. One of these new initiatives is the revitalisation of the National Housing Fund, NHF, with the introduction of an electronic collection platform in June, last year. The e-card was formally unveiled penultimate week by President Jonathan at an impressive ceremony where he also commissioned 270 housing units in the ‘Aviation Village’, along Abuja Airport Road.

The President, who received his own e-card from the Supervising Minister of Lands, Housing and Urban Development, Musa Sada, an architect, recognised the benefits of the e-platform and noted that it will engender the confidence of contributors to the NHF while also eliminating fraud and promoting transparency with accountability. Besides these immediate benefits, the NHF e-card is also seen as a huge step forward in achieving speed, accuracy, and value-added services. The e-card is a form of identification card bearing the contributor’s name, participation number and photograph. It also enables the holder to access records of his/her contributions using any of the information technology channels such as Automated Teller Machine, Point-of-Sale terminals and the internet.

Using the NHF e-collection platform web portal, a contributor can scrutinise his record of contributions online and print out a statement of account at a computer workstation around the world. Yet another benefit- NHF card can be used as an e-wallet to stash extra cash for purchases via POS terminals or online. But only the extra cash, excluding the NHF funds, can be spent.

Gimba Ya’u Kumo the managing director of the bank, is elated at the success of the initiative. “Mr. President would be pleased to know that we have begun to harvest the benefits of the NHF e-collection platform, especially in the volume of NHF collections. For instance, the rate of collections rose significantly from about N700 million to over N2.2 billion per month. We estimate a further 100 per cent increase in monthly collections to achieve about N4 billion per month before the end of the year,” he said proudly.

Collection platform

Managers of the e- collection platform, the Puzzles Group, represented by Mr. Bayo Adeyemo, quoting World Bank statistics, described Nigeria as the sixth fastest growing economy; an economy with a huge housing deficit. He said the new project would mobilise funds to finance massive housing projects across the country. “The implication of this pool of funds on the socio-economic development of our country is quite considerable. The FMBN would be able to fund the construction of about 1000 housing units in every state of the federation with the associated benefits of generating over one million new employments all over the country as a direct consequence of the growing construction and mortgage sub-sector.” Mr. Adeyemo rationalised.

He identified massive leakages in revenue collection as the bane of economic growth and development and fingered the lack of capacity by government agencies to track and collect funds legally due to government. “Failure to block these leakages, which often runs into billions of Naira, will continue to hamper genuine efforts to stimulate the economy, create employment and help achieve the transformation agenda of this administration,” he warned. He, however, assured the President that Nigeria has the requisite skill and knowledge to reverse this ugly trend.

President Jonathan played a smart politician when he rose to a seemingly cynical remark by the President, Nigeria Labour Congress, Comrade Abdulwaheed Omar. The labour chief said a friend had asked why the President would leave his job to commission a mere estate of 270 housing units when the country needs an excess of 16 million housing units. Quoting the Singaporean legend, Lee Kwan Yu, President Jonathan said “changes occur because of the little things we do”. He described the efforts of the FMBN on the ‘Aviation Village’ as significant and noted that with consistency, government can replicate and re-create the “small but durable” estates across the country. The President reasoned that most times big projects had failed the nation, citing the abandoned iron and steel industries at Ajaokuta and Ikot Abasi.

Despite the altercations, the President sought the co-operation of the NLC in ensuring the success of the NHF, although Comrade Omar had earlier pledged to mobilise and sensitise workers on the benefits of embracing the scheme which he described as  a testimony of true transformation in the housing sector.

Testimony of true transformation

The Supervising Minister, Sada disclosed that the estate was originally conceived to house the personnel of the Nigerian Airforce, but was expanded to 270 units to accommodate more contributors to the NHF. The bank provided a N2.4 billion loan, for buildings and infrastructure and was built by Suntrust Real Estate Investment Limited.

Chairman, Senate Committee on Lands, Housing and Urban Development, Senator Bukar Abba Ibrahim praised the track record of the bank in the last three years but asked government to re-capitalise it to enable the bank deliver its mandate. He also advocated the integration of the informal sector into the scheme to make the NHF serve more people.

Established in 1956 as the Nigerian Building Society, the FMBN has come a long way in discharging its mandate. To meet the challenges of raising the national housing stock, experts reckon that the bank requires a massive injection of funds and a capital base up to N200 billion. As a first step, government may provide sovereign guarantee for the Bank’s bonds and loans.

Furthermore, the Central Bank of Nigeria could grant the bank long term loan as high as N250 billion at an interest rate lower than 5%. This will put the bank on a solid pedestal to fund the building of affordable housing for teeming Nigerians yearning to own their own houses.

The Bank also requires a favourable business environment to thrive, especially a   review of existing legal and legislative framework to ease transactions in housing property, property and lien registrations and lien enforcement. It is also necessary to review the Land use Act of 1978 to meet critical national demands. The land registry in the various states must be modernized to support timely and cost effective transactions.

To ensure that Nigeria meets its housing target, government will have to enforce compliance with the NHF Act. Specifically, it is imperative to rein in defaulting corporate bodies, especially commercial banks and insurance companies. By the provisions of the Act, commercial banks are expected to invest 10% of loans and advances in the housing sector. Similarly insurance companies should invest 20% and 40% of their earnings on non-life and life funds in housing. That will provide more investible funds for a radical improvement in housing delivery.



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