1. 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 March 2018

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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 in developing and 50-70% in developed economies
PPP –purchasing power parity
REDAN BUILDING EXPO 2018

8. 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

9. 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

10. 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

11. 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

12. 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

13. FMBN SCORECARD 22,498 registered organisations
4,653,204 registered contributors
1,078 cooperative societies and
21,320 cooperative members
Total of N 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

14. 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

15. 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
...everyone deserves a home
REDAN BUILDING EXPO 2018