Housing crisis: Reps Committee advocates urgent recapitalisation of FMBN

.…Warns bank may collapse if….
….We need N500bn bailout, says Osidi, MD/CE

By Chris Ochayi

The House of Representatives Committee on Housing and Habitat has advocated urgent recapitalisation of the Federal Mortgage Bank of Nigeria, FMBN, to enable it deliver its mandate to Nigerians.

The Chairman of the House Committee, Dr. Abdulmumin Jibrin, who made the call when he led other members of the Committee on oversight functions to the bank in Abuja, said the bank is in dire need of bailout.

Dr. Jibrin insisted that the Federal Government must take all necessary measures with urgency to resuscitate the bank in view of its important to housing development in the country.

Meanwhile, the Managing Director and Chief Executive Officer of the FMBN, Shehu Usman Osidi, had earlier informed the members of the Committee on the need for recapitalisation of the FMBN to the tune of a minimum of N500 billion.

Osidi, in his presentation, also revealed that FMBN has increased its loan limit from N15 million to N50 million..

This according to him, “Is to meet the financing need of higher medium income earners and address challenges of higher construction costs.”

Speaking further, the House Committee Chairman said FMBN was in very critical stage of financial mess and therefore in a dire need of a live support.

The Committee lamented that contrary to its believe, the Federal Market Bank was not beneficiary of some of the interventions that are going on in the country.

According to him, “Right now, we’ve just concluded our exercise. We’ve scrutinized the presentation of the management and we’ve also looked at the challenges that they are faced with and as a committee, I wish to actually state that the Federal Market Bank of Nigeria is in a dire need of a live support. I can see they need a live support.

‘They are so poorly funded and everybody knows that the Federal Market Bank of Nigeria, it’s the most authentic organization that can access the low income and the medium income of takers.

“And by the time an organization like that, that has had a lengthy history in the housing sector in Nigeria, cannot be able to advance mortgages and do not even have the liquidity to carry out its statutory function, then I will say the housing sector in Nigeria is in a mess.

“So for us as a committee, we’ve taken a position, we will draw the attention of the Federal Government to take all necessary measures with urgency to resuscitate this organization.

“And that has to be done without further delay. Otherwise, if it collapses, then we will be in real trouble. And apart from that, there are a lot of interventions that are currently going on.

“And I’m actually surprised, one of the reasons why we came here, we actually thought that the Federal Market Bank is a key beneficiary of some of the interventions that are going on. Only for us to realize that a lot of such interventions are not domiciled here.

“So as well as a committee, we’ve taken a position to make a presentation to the Federal Government to ensure that any intervention that will become a special component is put aside, to be extended to the Federal Market Bank of Nigeria, so that they can continue to carry out their function.”

The MD/CE of the bank, while addressing the committee on various activities and challenges of the institution, said the bank emphasized on the bank’s commitment to provide long-term loans at single digit interest rate (6%-7%) which is the lowest in the market to drive affordability.

He also stressed on the support for Housing Construction – N100 Billion Bankable Off-Taker Guarantee.

According to Osidi, “In support of the Federal Government’s Renewed Hope Agenda for the housing sector, the Bank provided a N100 billion Bankable Off-Taker Guarantee to real estate developers executing the construction of affordable houses under the Renewed Hope Housing Programme coordinated by the Federal Ministry of Housing & Urban Development.

“By this Guarantee, the Bank will provide single-digit, long-term off-taker home financing to prospective homeowners of the housing units to be delivered under the housing programme.”

On Audited reports of FMBN, he explained that,
“During the period under review, the new Executive Management secured the Central Bank of Nigeria (CBN)’s approval of FMBN audited accounts for the year 2019, 2020 and 2021.

‘This was achieved within 6 months of resumption.
• Deduction of 40% from National Housing Fund (NHF) Collections by the OAF:

“During the period, in compliance with the Federal Government directive to deduct 40% of revenues from MDAs including the FMBN, the OAG deducted 40% of NHF inflows erroneously misconstruing it as revenue, which they are not.

“A total sum of N19b was deducted from NHF collections under this directive and domiciled with the Office of the Accountant-General for the Federation at the time we assumed office in February 2024.

“The Bank has been in constructive engagement with the Honourable Minister of Finance and Coordinating Minister of the Economy on the need to stop the 40% deductions form NHF and access the 19b in trapped funds.

“As a result of our engagements over the issue with the Hon. Minister of Finance as well as the OAGF, a sum of 12b has been returned to the Bank.

“We are still engaging relevant authorities on this matter and the engagement continues until the deductions are stopped and we recover the outstanding balance of the trapped NHF funds.”

On promotion of new affordable Housing models , he said the Bank is collaboration with the University of Lagos Centre for Housing Studies for research on promoting affordability and financial inclusion.

“We are also encouraging the development of new affordable housing models with the recent approval of housing development loans for KASU/ASUU which is proposing to use biodigester to generate power instead of connecting to the National Grid.

“Biodigester is the use of liquid wastages such as defecation, urine and other liquid wastes to generate electricity.”

Emphasizing on the way forward for the bank, Osidi dwelled on the Need for the recapitalisation of FMBN.

He said “There is a need for the recapitalisation of FMBN to the tune of a minimum of A500 billion.

“Resolution of the Central Bank of Nigeria (CBN) Prudential Guidelines on single obligor

“The CBN guidelines limit FMBN’s ending capacity to 50% of its shareholders funds unimpaired by losses as well as mortgage lending to Primary Mortgage Banks (PMBs) limited to 50% of their Shareholders funds unimpaired by losses. “