By Yinka Kolawole

The management of Federal Mortgage Bank of Nigeria (FMBN) is planning to recapitalise the bank to a minimum of N250 billion, a fifty-fold increase over its current capitalisation of N5 billion, over the next two years.

Mr Gimba Ya’u Kumo, Managing Director, FMBN, represented by the bank’s Executive Director, Loans, Production, Security Insurance and Market Development, Mr. Bola Ogunsola, disclosed this at the recently concluded Lagos Housing Fair (LHF) in Lagos. He said that this was necessary in the medium-term in order to place the bank in a better stead to take on more mortgage requests and also explore more offshore funding options.

In his paper titled: “Housing Finance through Mortgages: Opportunities for Low and Middle Income Earners in the National Housing Fund”, Ya’u Kumo also called on the federal government to guarantee a lifeline in favour of FMBN to enable it commence bond issuances to tap funds from local and foreign capital markets and pension funds as well as tax concessions on housing-related investible instruments.

Ya’u Kumo urged the Central Bank of Nigeria (CBN) to enforce the provision of NHF Act on banks, insurance companies and other financial institutions, adding that the new Prudential Guidelines should take into cognisance the long-term nature of mortgage lending as opposed to commercial facilities. He added that the guidelines should also provide for acceptance of alternative securities for mortgage facilities in view of delays in obtaining consents to land/housing transactions from state governments.

“The Bank has the mandate to ensure that there is adequate liquidity in the Nigerian mortgage sector with a view to creating and nurturing a viable and robust housing finance system to improve homeownership for all categories of Nigerians through affordable mortgage services,” he stated, adding that the main function of the FMBN was to support the primary mortgage market with liquidity and financial capacity to provide affordable mortgage financing in the market.

He said that the apex mortgage bank is targeting the construction of between 40,000 to 100,000 housing units across the country within the next four years, adding that this could only be achieved if efforts to reform the Nigerian mortgage sector including land use reforms and other prevailing regulatory legal hindrances are successful.

The current capitalisation of FMBN which is about $33.3 million is inadequate when compared with that of similar secondary mortgage institutions elsewhere in the world.

For instance, as at 2007, Cagamas Holdings Berhad of Malaysia had US$40,350,978 paid-up capital while its total liability was US$8,884,664,348, while the Hong Kong Mortgage Corporation Ltd during the same period had paid-up capital of US$257,871,861 and total liability of US$5,140,623,760. The Sociedad Hipotecaria Federal of Mexico in 2008 had paid-up capital of US$342,235,042 with a total liability of US$4,760,743,960, while the National Housing Finance Corporation of South Africa had paid-up capital of US$80,421.00 and total liability of US$52,300,671 as at 2008.

As at 2007, FMBN had paid-up capital of US$17,005,877 (N2,5 billion) while its total liability was US$336,600,000 which was equivalent to N49.5 billion.

The shareholding structure of FMBN reflects the Federal Government (50 per cent), Central Bank of Nigeria (30 per cent) and Nigeria Social Insurance Trust Fund (20 per cent).