Regulating The Mortgage Industry In Nigeria
By Wale Suleiman
It is no longer news that Nigeria has a huge housing deficit that experts have put at above 17 million units that would require an annual investment of billions of naira for the next 10 years to bridge. Yet, there is no coherent housing policy in place to suggest the country is matching towards bridging this housing gap. Anyone who drives around Abuja or the Federal Capital Territory would undoubtedly get a false sense of surplus housing in the country. Several residential estates have sprung up in the city in the last five years, but estate agents will tell you many of these houses are vacant because they are unaffordable to the low and middle-income Nigerians who require housing. This is why the recent House of Representatives’ hearing on the repeal of FMBN Act Cap F16 which includes the amendment of NHF Act is coming at a good time. The bill seeks to reform the bank, strengthen its board and ensure better regulation and professionalism in the mortgage industry. The heavy involvement of stakeholders in the attempt to repeal and re-enact the FMBN Act as well as the NHF Act, and consequently reform the bank is particularly instructive, and suggests there is a consensus in the industry and the need for an urgent and comprehensive reform to take the industry to the next level. Credit must be given to the management of the FMBN under the leadership of Arc. Ahmed Dangiwa, the Managing Director, for involving all the critical stakeholders in the push for reform. A lot of hard work and consultation went on behind the scene to secure the buy-in of stakeholders and harmonise positions. Securing the buy-in of the Nigeria Labour Congress, Trade Union Congress, Mortgage Bankers Association of Nigeria, Real Estate Developers Association of Nigeria, Council of Registered Builders of Nigeria, Nigeria Institute of Estate Surveyors and Valuers and the Federal Government Staff Housing Loans Board, among others is a rare feat that must be commended.
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Getting a practical, workable consensus among stakeholders is critical to the success of any reform of the FMBN and the mortgage industry. The management of FMBN have realised this and have gone ahead to ensure proper consultation in the industry. There is no doubt that it was this groundwork among stakeholders in the industry that ensured their active participation at the public hearing conducted by the House Committee on Housing in December 2017. It is cheering news that the report of the Committee was laid before the House on Thursday, 22nd February, 2018. The new bill also seeks the establishment of the Institute of Mortgage Brokers and Lenders of Nigeria (IMBLN) to ensure better regulation of the industry. Such an institute would provide better regulatory framework, eliminate fraudsters, remove speculators, entrench sanity and decency. It will also provide training programmes for practitioners in the sector to promote professionalism. But most importantly, is the provision that would ensure better recapitalisation for the bank and reposition it to be able to provide affordable housing to low and middle-income persons. At present, the FMBN has a meagre capital base of N5 billion despite the fact that the Central Bank of Nigeria and the Nigeria Social Insurance Trust Fund are shareholders. Stakeholders in the industry are demanding that the Central Bank of Nigeria be divested from ownership of the FMBN and that it should be wholly owned by the Federal Government to rid its operation of unnecessary interference and also so that the CBN can concentrate on its regulatory role. Such interference is a clog in the wheel of efficient and effective operations of the bank. If the bank is to deliver on its mandate to provide affordable housing, the stakeholders and the management of the bank are right on track to demand better recapitalisation. While the stakeholders are asking for a recapitalisation of N1 trillion, the MD of the bank is asking for a minimum share capital of N500 billion. Whichever way the pendulum swings, it would be a great leap for the bank and for the housing industry in the country if the bank’s capital gets such a boost. It would increase the liquidity of the bank and it would then be able to provide affordable housing finance at single digit interest to Nigerians, particularly the low and middle-income groups. There is a lot to cheer if the signal from the ruling All Progressives Party is anything to go by. At the recent Abuja Housing Show, National Chairman of the party, Chief John Odiegie-Oyegun said Nigeria was set to commit about N1 trillion to the housing sector through a public private partnership arrangement. He said the scheme was part of the new Social Housing Programme of the government that is part of the Economic Recovery and Growth Plan (ERGP) launched recently. The FMBN that would be re-established if the new bill sails through would be able to play a central role in delivering on this ERGP mandate. Recent events have shown that a stronger government mortgage bank is critical to delivering affordable housing. Private estate developers who borrow funds at commercial bank rates cannot deliver affordable housing to the low and average income Nigerians. All the private estates that litter the FCT are glaring examples of how difficult it would be to deliver affordable housing without recapitalising the FMBN.
There are houses in Abuja which have remained empty for years because they are out of the reach of majority of people needing housing. Recapitalization will afford the FMBN the ability to provide long term credit to other mortgage institutions to deliver affordable housing instead of the current position where the bank can’t even finance its primary customers. Recapitalising the bank as demanded by stakeholders is the surest way to turn around the fortunes of the bank and re-position it for better service delivery. The management of FMBN has done an impressive job of getting all stakeholders to be on the same page on the way forward, and it is the reason why the House hearing was successful. Some of the stakeholders I spoke to commended the management of the bank for its patriotism and professionalism. “It is rare to find the management of a government institution and its stakeholders on the same page on critical industry issues,” said a member of the Real Estate Developers Association of Nigeria after the hearing. If the National Assembly is able to perfect the new FMBN bill and ensure its passage with all the stakeholder input, Nigeria is well on its way to delivering affordable housing.