FMBN’s STRATEGY TOWARDS PROVIDING AFFORDABLE HOUSING TO ALL NIGERIANS ARC. AHMED MUSA DANGIWA Managing Director/Chief Executive – FMBN REDAN BUILDING EXPO 2018 Shehu Musa Yar’Adua Centre – Abuja 20 March 2018

PREAMBLE FMBN appreciates the opportunity to be part of REDAN’s BUILDING EXPO 2018 The Building Expo organised by REDAN has been providing opportunities to exposed innovative building materials and techniques It is very important to developers as front-users of building materials and techniques and impacts on the products and services that they deliver to the Real Estate Market Globally, the Real Estate market is increasingly becoming more sophisticated as prospective homeowners are not only concerned about the location, cost or how enduring a housing property We see home buyers becoming more sensitive to the aesthetics, environmental friendliness and energy efficiencies of their homes Developers, as home producers, must be focus more on meeting the tastes and preferences of their customers REDAN BUILDING EXPO 2018

PREAMBLE The theme for this year’s Expo, “Enhancing Real Estate Development through Collaborative Effort” is well appreciated It resonates with FMBN’s strategic approach of collaborative engagement with its critical stakeholders You will recall that for about two years we have had the FMBN/MBAN/REDAN Joint Meetings held regularly, to find collaborative solutions to challenges in the industry It is hoped that the forum will extend to the Building Materials Producers Association of Nigeria (BUMPAN) when it is eventually well established Globally, institutions and countries have determined from experience, that a collaborative approach to addressing issues, especially those that impact or can be influenced by parties concerned REDAN BUILDING EXPO 2018

PREAMBLE Other collaborative partnerships FMBN is involved with are: The National Real Estate Data Collation & Management Programme (NRE-DCMP)- with CBN, REDAN and 14 other organisations to develop a robust real estate data base for informed planning and decision making CBN/FMBN/REDAN/NMRC Advocacy Group– a recent offshoot of the NRE-DCMP, which is a collaborative advocacy for State Governments to enact mortgage-friendly legislations and adopt best practice in land registry management NECA/NLC/TUC/FMBN Joint Technical Meeting– a collaborative partnership with employers and labour centres to provide affordable housing to the about 4 million Nigerian workers REDAN BUILDING EXPO 2018

ROLE OF FMBN As the foremost secondary mortgage institution in the country, the role of FMBN is to promote homeownership amongst Nigerians especially medium and low income earners through affordable mortgage financing Mandate of the FMBN is- To link the mortgage finance market with the capital market and develop a viable secondary mortgage market; To encourage the emergence and promote the growth of viable mortgage loan originators to serve the delivery of housing in Nigeria; To mobilize domestic and foreign funds into the housing finance sub-sector and; To collect, administer and manage the National Housing Fund (NHF) in accordance with the NHF Act. The low and medium income segment accounts for about 90% of the Nigerian population Therefore, mortgage finance accessibility and affordability form a major focus of our business REDAN BUILDING EXPO 2018

THE NIGERIAN CHALLENGE OF MORTGAGE ACCESSIBILITY & AFFORDABILITY AFFLUENT 1.7% HIGH INCOME EARNERS 1.8% HIGH MIDDLE INCOME 3.1% LOWER MIDDLE INCOME 13.8% LOW INCOME 79.6% FOR A PROPERTY VALUED AT ~N2.5M Income distribution of Nigeria’s population - NBS, McKinsey, CAHF 2011 Only 1.7% can afford outright cash purchase for a N2.5m Only 4.9% can afford mortgages at market-determined rates to own a N2.5m house 13.8% can only afford a concessionary mortgage (NHF) 79.6% cannot own a house unless through social or low income housing REDAN BUILDING EXPO 2018

THE NIGERIAN CHALLENGE OF MORTGAGE ACCESSIBILITY & AFFORDABILITY 40.1m or 41.6% of the Nigerian population is financially excluded – Enhancing Financial Innovation and Access (EFInA, 2016) Poverty level 70% (2010) GDP per capital (PPP) - $5,900 Which ranks Nigeria at 162nd out of 230 countries Mortgage contribution to GDP less than 0.5% Just about 10% of house construction financed through mortgages compared to average of 30-40 in developing and 50-70% in developed economies PPP –purchasing power parity REDAN BUILDING EXPO 2018

OVERVIEW OF THE NATIONAL HOUSING FUND The National Housing Fund (NHF) Scheme Established by Act No.3 of 1992 Provides a pool of long-term funds for mortgage lending Created to address the poor funding structure for sustainable Housing Finance in Nigeria NHF Resources Workers’ savings contributions (2.5% of monthly income) Investments by commercial banks (10% of annual loan portfolio) Investments by insurance companies (20% of non-life and 40% of life funds) Financial contributions of the Federal Government FMBN responsible to collect, manage and administer the NHF REDAN BUILDING EXPO 2018

NATIONAL HOUSING FUND [NHF] PRODUCTS & SERVICES Wide range of loan purposes Purchase, construction, renovation and rent Most affordable interest rate in the Nigerian mortgage market (6%) Market rates are 15%-25%! Convenient repayment terms From monthly income 100% loan for mortgage loans of N5 million and below! No additional collateral required for mortgaged property NHF contributions refundable with interest! NHF NHF MORTGAGE LOAN COOPERATIVE DEVELOPMENT LOAN ESTATE DEVELOPMENT LOAN FMBN HOME RENOVATION LOAN RENT-TO-OWN [Being developed] MINISTERIAL PILOT HOUSING SCHEME REDAN BUILDING EXPO 2018

FMBN EFFORTS FOR AFFORDABLE HOUSING As the apex housing finance/secondary mortgage institution, FMBN has been at the forefront of providing affordable housing through the following: Adoption of a fixed interest rate of 6%, to make mortgages affordable to low and medium income earners Other loan terms such as loan tenor (up to 30 years), limited equity requirement, required security being the subject property – all are aimed at achieving mortgage accessibility and affordability Adoption of mass housing delivery strategy driven by the Estate Development Loan (EDL) To overcome complexities/challenges associated with title and mortgage processing of single unit developments Development of multiple units on a single root title reduces the challenges REDAN BUILDING EXPO 2018

FMBN EFFORTS FOR AFFORDABLE HOUSING Under the EDL, house prices are fixed by FMBN within reasonable limits Developers are however allow a marginal profit mark-up For affordability, mortgage loans of N5m and under do not attract 10% equity contribution 10% is capitalised over 24 months FMBN seeking reduction of equity contribution for higher loan amounts of 30% to 20% for mortgages of N5m-N10m 20% to 10% for mortgages of N10m-N15m Introduction of the Internal Records Office (IRO) To facilitate/speed up mortgage creation FMBN IRO creates equitable mortgages as a stop-gap to conclude homeownership It concludes mortgage perfection (legal mortgage) REDAN BUILDING EXPO 2018

FMBN EFFORTS FOR AFFORDABLE HOUSING On-going efforts by FMBN to improve mortgage creation Automation of the mortgage loan process Goal is to achieve end-to-end automation of the loan process To also interface with primary mortgage banks Expanding access to informal sector This sector accounts for about 80% of Nigerian population and has greatest housing need To address issues of financial inclusiveness, poverty reduction & creating financial opportunities Bankable off-taker guarantees Off-taker guarantees have been reviewed to be bankable – improve construction finance for developers in view of FMBN’s suspension of EDL window Increasing funding for housing finance By expanding NHF resources and FMBN recapitalisation Rent-to-own product being developed by FMBN This product will eliminate the need for equity contribution and make homeownership easier through an initial rental arrangement REDAN BUILDING EXPO 2018

FMBN SCORECARD 22,498 registered organisations 4,653,204 registered contributors 1,078 cooperative societies and 21,320 cooperative members Total of N177.63 billion disbursed Construction of 25,838 housing units financed 18,020 NHF mortgage loans granted 10,324 housing microloans of about N8.41 billion disbursed NHF refund of over N18.63 billion refunded to 197,281 retirees REDAN BUILDING EXPO 2018

CONCLUSION Once again, FMBN appreciates the opportunity to be part of REDAN’s Building Expo 2018 We use this opportunity to congratulate the leadership of REDAN under the able leadership of Surv. (Rev) Ugochime Chukwu on their re-election and upcoming inauguration FMBN wishes all participants fruitful and rewarding event REDAN BUILDING EXPO 2018

THANK YOU www. fmbn.gov.ng info@fmbn.gov.ng FEDERAL MORTGAGE BANK OF NIGERIA PLOT 266 CADASTRAL AO CENTRAL BUSINESS DISTRICT ABUJA www. fmbn.gov.ng info@fmbn.gov.ng ...everyone deserves a home REDAN BUILDING EXPO 2018