Alhaji Gimba Ya’u Kumo, the Managing Director of Federal Mortgage Bank of Nigeria (FMBN) explains the recent extension of Central Bank of Nigeria (CBN) deadline on Primary Mortgage Institutions (PMIs) and efforts to revive the mortgage loan sector
CBN recently shifted by six months the deadline for the recapitalization of PMIs in Nigeria. Is the extension healthy for the mortgage sector?
Well, that has to do with what the regulatory body thinks is good for the economy — what will bring positive results in terms of housing delivery and mortgage processing. But I think it’s a very good policy. The extension is twofold. One is those primary mortgage institutions that have been given up to 31st of June to do certain things to meet up with the requirements of CBN.
The second extension is for those PMIs that are owned by the state governments who were given up till the end of July to do certain things as well. So I think it is going to significantly affect the mortgage industry because those of them that are going down will now have to be micro finance banks (MFBs).
You know Micro Finance Banks are not allowed to carry out mortgage business. Fortunately, we have already started discussing with Nigerian Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) to come up with working mechanism on how these mortgages can be transferred to these successful PMIs.
How many PMIs are we looking at?
The PMIs are categorized into three: there are those that can do national operations for the time being. Only seven PMIs or PMBs have been licensed to do national mortgage operation. We have state PMBs and I think they are 16 in number. The remaining, we’re still waiting for the guideline and the listing from the CBN.
What about the $300 million loan said to have been obtained by the Federal Government for the recently launched Nigeria Mortgage Refinancing Company NMRC?
What I know is that $300 million is a soft loan, interest-free from the World Bank to the Nigerian government through the Federal Ministry of Finance. That loan is given to the Nigerian Mortgage Refinancing Company not FMBN but the working mechanism is structured in such a way that we’re allowed to borrow $25 million from the $300 million.
The purpose of this is to put it in a guarantee form for those who will be taking mortgages. But we don’t have the capacity. We’re still working with the Nigerian Mortgage Refinancing Company and the Federal Ministry of Finance on how to take the $25 million.
We’re working together with the Nigeria Mortgage Refinancing Company to achieve our target. We have accessed part of the fund, specifically $25 million to finance low income housing. There’s another $3 to $5 million that has been set aside to finance guarantees. Most of our people are low income earning individuals that cannot afford equity contribution, so another $25 million will be set aside to provide for equity for those who cannot afford it.
So the $300 million lifeline is from the World Bank and IFC and driven by the Federal Ministry of Finance and is meant to address the issue of long term housing financing deficit.
How true is it that a Chinese loan has also been obtained by FMBN?
The Chinese offer of $4billion is an offer that has to do with direct foreign investment. It’s not going to be direct cash flow to Nigeria. Chinese companies will be funded from Industrial Commercial Bank of China, ICBC to come and deliver houses for Nigerians and we will exit them through mortgages we will create for them. Six different Chinese companies are involved. The loan is for 15 years but renewable if we can pay by then.
At what interest rate?
We are taking the loan at 2.5 percent and will be given out to beneficiaries at our normal rate of 6 percent.
What projects have FMBN commissioned recently?
The Federal Mortgage Bank of Nigeria (FMBN) fully financed the recently completed 324 housing units, Elim Estate in Nike, Enugu State which was financed by FMBN using resources of the National Housing Fund (NHF) scheme and developed by NBP Projects Limited.
The quality of work by the developer is commendable. Developers should emulate them and deliver projects in record time and at required quality.
The commissioning of the Enugu estate, named Elim, is another visible and verifiable pointer to the success of housing delivery initiative the present administration commenced about four years ago.
FMBN has commenced the packaging of loans to workers in Enugu State and we urge those who have not yet embraced the fund to do so in order to partake of the inherent benefits.
Only recently, President Jonathan also launched National Housing Fund NHF e-Card and commissioned the FMBN-financed Aviation Village Housing Estate which took place on the premises of the estate along airport road, Abuja.
The FMBN Aviation Village Housing Estate was developed by Suntrust Real Estate Investment Limited, a private developer based on funding for both construction and infrastructure financing provided by FMBN to the tune of N2.4 billion.
The estate which covers a land mass of 11.9 hectares comprises a total of 270 housing units of 144 units of two-bedroom flats, 50 units of three-bedroom semi-detached bungalows and 76 units of three-bedroom detached bungalows.
The Aviation Village is one of the mortgages that are well controlled and monitored by us. The houses we build are in line with the world best practices and standards.
Another of the several positive outcomes of the activities of the NHF was the recent commissioning of 1,000 housing units for the rank and file and officers of the Nigeria Police Force in Dakwa in Abuja by President Goodluck Jonathan.
The 1,000 housing estate, named after former police boss Sunday Adewusi consists of three, two and one-bedroom housing units in Dakwa were developed through Public-Private Partnership between a reputable developer and the police cooperative limited which financed the project.
The estate, named Goodluck Ebele Jonathan Police Housing Estate was built under a Public-Private Partnership scheme being financed by Aso Housing and Loans and developed by Remax developers and comprises 200 units of three-bedroom flats.
We also funded mortgages that the Private Mortgage Investors built in Trademore Estate in Abuja and the delivery is great. The price of some of the houses we build now is not even up to N10 million. They sell at between N8 million and N7.5 million.
How much has FMBN collected from subscribers and how much loans have been recovered from defaulters?
FMBN has collected N134billion from subscriptions and other sources and also has upped loans recovery from individuals that took facilities from the company and refused to pay in the past; stretched participation to 30 states; earns N41 million from contributions every month; and recovered N2.4 billion in loans owed in the past and also pays adequately all contributors that have retired from service within this period.