By Hassanat Adebowale
The Managing Director of the Federal Mortgage Bank of Nigeria (FMBN), Mr. Shehu Osidi, has stressed the need to review the FMBN and National Housing Fund (NHF) Acts to improve affordable housing financing in Nigeria.
Speaking on Wednesday in Abuja during the anniversary of his first year in office, Osidi highlighted that the review is crucial for addressing challenges in the housing sector and expanding affordable housing options for Nigerians.
He pointed out that the current Acts have limitations that hinder the bank’s ability to fully deliver on its mandate. A review, he noted, would enhance FMBN’s capacity to achieve its objectives more effectively.
“Our biggest challenge in the FMBN is undercapitalization, because even the primary mortgage banks that we fund are more capitalized than we are. The second major challenge is that the NHF Act requires commercial banks to contribute 10 percent of their total output portfolio to the NHF to assist in financing affordable housing. Insurance companies are also required to contribute 40 percent of their life loans and 20 percent of their non-life loans into the NHF scheme to facilitate housing delivery,” Osidi explained.
However, Osidi revealed that since the establishment of FMBN, neither commercial banks nor insurance companies have complied with these provisions. “This challenge and several others are the reasons we have decided to collaborate with the National Assembly to review and amend both the NHF Act and the FMBN Act,” he said.
Osidi mentioned that the bank has engaged extensively with the Central Bank of Nigeria (CBN) and resolved to amend the FMBN Act to include a provision requiring 10 percent of profit after tax from these organizations as a corporate social responsibility contribution. “This is for them to contribute back to the society from where they are also operating and generating huge profits,” he added.
One of the management’s key strategic objectives upon assuming office at FMBN was to recapitalize and strengthen the bank to enhance its ability to effectively deliver on its mandate. Osidi emphasized that, compared to its global counterparts, FMBN is significantly undercapitalized with a paid-up capital of only N2.5 billion.
“We made it a top priority to pursue the recapitalization of the bank through the injection of N500 billion fresh capital. Out of this, N250 billion is to be injected by the Federal Government while we will raise the balance through debt capital,” he said.
Osidi stated that this led to the submission of a memorandum to the Federal Executive Council (FEC) by the Minister of Housing and Urban Development, Ahmed Dangiwa, for the recapitalization of FMBN. As a result, FEC directed engagement between the Ministry, Federal Ministry of Finance, CBN, BPE, and FMBN, along with other relevant bodies, to achieve the objective.
He also disclosed that the bank had completed stakeholder engagements on the draft bills and would soon forward them to its supervising ministry for concurrence and support. Additionally, Osidi mentioned that full automation of FMBN operations is underway to enable contributors to receive transaction alerts and access other operational services, among several new innovations.
The push to amend the FMBN Act and NHF Act aligns with the state’s duty under Section 16(2)(d) of the Nigerian Constitution to ensure accessible and adequate housing for all citizens. This section mandates the government to create policies that promote affordable housing.
Currently, the lack of enforcement of the NHF Act is hindering this responsibility. However, if the proposed legislative amendments are passed, they could establish a sustainable housing finance system. This change would not only meet global best practices but also help tackle the growing housing deficit, providing much-needed relief for millions of Nigerians in search of affordable homes.
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