Housing finance: FMBN forges through daunting challenges

The Federal Mortgage Bank of Nigeria (FMBN) has taken steps over the years to navigate through numerous challenges in the quest to deliver on its core mandate of promoting the delivery of affordable and modern houses to Nigerians.

One of the challenges is the issue of low capital base. The bank currently has a share capital of N5 billion out of which the Federal Government has paid up its own share of N2.5 billion representing 50 per cent, while the Central Bank of Nigeria (CBN)  and the National Social Insurance Trust Fund ( NSITF) have not paid up their 30 and 20 percent share respectively.

A Housing Estates in Lagos

The bank was established in 1956, as the Nigerian Building Society (NBS), a joint venture of the Commonwealth Development Corporation and the Federal and Eastern Governments of Nigeria. It was subsequently renamed Federal Mortgage Bank of Nigeria after the federal government undertook 100 percent ownership acquisition of the NBS via the Indigenisation Act of 1973.

A new management team was recently inaugurated for FMBN, headed by Mr. Gimba Ya’u Kumo as the Managing Director, for a second term in office. At the event, He promised to develop pro-active and effective strategies to attract offshore funding for affordable housing to Nigerians. He also pledged to improve service delivery to National Housing Fund (NHF) contributors across the country, and improve welfare of staff members across board to ensure a well-motivated workforce and profitable operations.

Low capital base

Yaú Kumo lamented that FMBN was grossly undercapitalized compared to similar institutions in other countries in West Africa, disclosing that there was need for government to speed up plans to re-capitalization the bank. According to him, an improved capital base will place FMBN in a better position to refinance mortgages, as it cannot meet the larger part of demands for mortgage loans from various stakeholders at the moment.

“For now, the only source of funding the bank has to meet the teeming demands of Nigerians is the National Housing Fund (NHF) collection which is minimal compared to the housing needs of Nigerians. Every worker is expected to contribute 2.5 per cent of the salaries to the fund and if you look at this sum, it is small compared to the housing needs of Nigerians.”

He however said the Federal Government is exploring ways of raising the share capital of the bank to N250 billion within the next few months. He assured that discussions to raise the share capital had reached advanced stages by all stakeholders. “We have set an agenda for ourselves and chief among them is the recapitalization of the bank. We have made substantial progress on that, in the next few weeks we will see results on the table,” he said.

The last three years has seen improvement in housing finance in Nigeria. A housing retreat hosted by President Goodluck Jonathan for key players in the housing sector, including FMBN, resulted in the launching of the Nigeria Mortgage Finance Company (NMRC). This signaled the beginning of a process that is today increasing opportunities for Nigerians to own their homes at an affordable price.

Before now, the lack of healthy mortgage financing system in Nigeria had made the rate of home ownership in the country one of the lowest in Africa. Nigeria’s homeownership rate was put at about 25 per cent which is much lower than contemporary countries.

To address this development, the Kumo-led FMBN management has embarked on drastic measures to ensure that the housing deficit is bridged and this has led to the introduction of mass housing schemes in various parts of the country. Some of the mass housing schemes are done on a rent-and-own model that allows low income participants to rent a home for 15 to 20 years and own the property at the end of that period.


Notwithstanding its limitation, particularly the housing deficit, the apex mortgage bank initiated projects, which have delivered about 53,000 houses through the NHF, as well as launching of the housing scheme for the informal sector, and the Estate Development Guarantee (EDG) scheme, amongst others. These initiatives, coupled with its plan to recapitalize, are set to place the industry on a new pedestal.

For instance, with the informal sector’s Cooperative Society Loan Scheme, Yaú Kumo explained that operators such as farmers, traders and artisans would be able to tap into the benefit from the National Housing Scheme, like those in the formal sector. He said the scheme to extend the bank’s services to people who can be deemed as “disadvantaged” in the society because of their low income level, which may be irregular and difficult to access under the NHF loan window.

The FMBN, under the scheme, he added, is now using cooperative societies to benefit a certain group of people operating in the informal sector category, especially because of the nature and structure of their income, which is not definite or regular. “The loan enables a cooperative society that has acquired a plot of land to develop houses for allocation to its members.

The parcel of land would have title in the name of the society which would act as facilitator on behalf of its members in the loan transaction and facilitate construction of the housing units. The root of the title of the estate land would be sublease to the beneficiaries,” he said. Managing Director of Trans-Atlantic Mortgages, Preye Ogriki, said the Kumo-led management has done well in the face of daunting challenges confronting the country’s housing finance and delivery.

According to him, “FMBN has done well in the last three years or so. It has increased NHF collections through the e-payment platform and this has contributed to funds available to the bank.” Ogriki also noted that the bank has attracted many states to the NHF scheme.

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