Osidi: Driving FMBN’s Affordable Home Ownership Delivery

About 10 months after President Bola Tinubu appointed a new management team for the Federal Mortgage Bank of Nigeria (FMBN), led by Shehu Osidi as its Chief Executive, Emmanuel Addeh writes that  some significant positive changes have taken place. 

With a deficit estimated in the region of 20 million units, the task of even scratching the surface of Nigeria’s housing challenge remains a daunting one. This problem is further worsened by the rising cost of building materials, inflation, and general low incomes. With these in mind,  the task ahead for the man appointed to lead the new era was clearly daunting, if not intimidating.

This enormous challenge was acknowledged by the Managing Director in one of his earliest speeches, but quickly followed by a plan to make the FMBN more impactful and responsive to the housing needs of Nigerians. As he has always observed, Nigeria has houses it doesn’t need, but needs houses it doesn’t have. This was a clear pointer to the fact that the challenge of housing in the country is characterised by the need for what is considered affordable housing for low- and middle-income earners.

But less than a year since that appointment, Osidi is showing a clear understanding of the challenge, engaging and partnering with critical stakeholders and leading a transformation at the bank. He has since initiated and pursued crucial reforms to strengthen the bank’s capacity to perform, optimise its processes, enhance customer service delivery, and generally increase its impact on Nigerians.

FMBN’s Role in Affordable Housing Delivery

The FMBN boasts of standing in a pivotal position due to its structure and mandate. It is today seen as one institution with the capacity and design to provide the kind of housing solutions that Nigerians need. 

For example, the FMBN is the only institution in Nigeria that offers housing loans and mortgages at single-digit interest rates, mostly between 6-7 per cent, while also offering a repayment tenor of up to 30 years. It says this is why it has done more in the provision of mortgages than any other mortgage or commercial bank in the country.

It is the institution mandated to oversee the National Housing Fund (NHF) Scheme, a contributory scheme set up to provide a pool of funds through monthly contributions from Nigerian workers. This includes economically-active Nigerians from both the public and private, formal and informal sectors. 

Once an individual has contributed 2.5 per cent of their monthly income to the scheme for up to six months, such an individual qualifies to apply for a mortgage loan of up to N50 million depending on affordability, and for up to 30 years, depending on age or number of years left before their 60th birthday.

With mortgage products like the NHF Mortgage Loan, Individual Construction Loan, Rent-to-Own, Home Renovation Loan (HRL), Estate Development Loan (EDL), Cooperative Housing Development Loan (CHDL), as well as the soon-to-be-launched Rental Assistance Loan, and NHF Diaspora Mortgage Loan, the FMBN insists that it’s strategically positioned to cater to the varying needs on both the demand and supply ends of the housing industry.

In the last 10 months, Osidi, backed by other members of the executive management and the supportive staff of the bank, the FMBN says, has embarked on transformative initiatives that are spurring it to greater impact.

As of September 2024, barely seven months after Osidi’s takeover, the bank had delivered 1,033 housing units out of the 39,425 recorded since the FMBN’s inception. With these efforts sustained, according to the bank, the task of decimating Nigeria’s housing deficit would witness significant positive results and restore the lost dignity of many Nigerians, especially those within the low and middle-income segments. 

Similarly, a total of N10.477 billion in NHF refunds have been recorded within this short period of Osidi’s administration. Total loans disbursed within this period isplaced at N28.328 billion out of a total of N453.954 billion disbursed since the bank’s inception. While these milestones have been recorded, the bank boasts 6,853 ongoing housing projects in 106 locations across the country, with a potential of creating 171,325 jobs for Nigeria’s teeming unemployed populations.

Deepening Process Automation 

According to the FMBN, the importance of technology in driving business growth in today’s fast-paced business landscape cannot be overstated. Aware of this fact, the Osidi-led FMBN, said it had at the top of its seven-point agenda, “deepening process automation” to enable it stay ahead of the business curve. 

To this end, the bank said it has been working on concluding the deployment of the Core Banking Application to usher in a new era of automated service delivery to its corporate and individual customers. By deepening process automation, the bank streamlines operations, reduces turnaround times, and improves service delivery. This will enable the bank to respond more swiftly to market demands and better serve its customers, ultimately repositioning FMBN as a leader in the mortgage finance industry.

Expanding Strategic Partnerships

FMBN says it’s cognisant of the fact that no organisation can achieve its goals in isolation. To this end, the FMBN adds that it has continued to leverage and expand strategic partnerships with key stakeholders, both within the public and private sectors. By building and nurturing these partnerships, the Bank leverages synergies, accesses new resources, and expands its reach.

Accordingly, the FMBN currently engages with institutions like the Ministry of Finance Incorporated (MOFI), Central Bank of Nigeria (CBN), Shelter Afrique Development Bank, Federal Housing Authority (FHA), Nigeria Labour Congress, Trade Union Congress, Nigeria Employers’ Consultative Association, Family Homes Fund, as well as other key stakeholders in the housing and mortgage sectors, including REDAN, NiDCOM, CIBN, ANAN and a host of other private organisations and civil society groups.

“As a direct result of these engagements, the Bank was able to recover N12 billion out of the N19 billion trapped 40 per cent deductions from NHF by the Office of the Accountant General of the Federation (OAGF) through the intervention of the Minister of Finance and Coordinating Minister of the Economy, Wale Edun. Through these engagements also, there are positive indications that the pending issue of the Single Obligor Limit and the approval of our pending annual accounts would be completely resolved soon. 

Also, as part of these strategic engagements, the Bank said it has concluded arrangements to sign a Memorandum of Understanding (MoU) with Shelter Afrique Development Bank to explore lines of funding for its new initiative like rental housing and the development of student hostels.

Additionally, the Bank is also strategically engaging with the International Union for Housing Finance (IUHF) with a view to improving access to mortgage financing in Nigeria. Recently too, Shehu Osidi highlighted the pressing need for the Bank and other mortgage finance institutions in the country to pursue engagements with FinTechs and PropTechs. The Bank is mulling this kind of engagements, all geared towards easing business processes and enhancing customer service delivery. 

Enhanced Customer Service Delivery

FMBN notes that under the leadership of Osidi, it has reinforced its commitment to delivering exceptional customer service. With customer-centricity as a pillar of the Bank’s core values, the current management has consistently emphasised professionalism and a customer-first approach. 

One such measure, it said, is the introduction of mystery shopping as a strategic tool to improve customer service delivery and enhance customer experience and satisfaction. This initiative is expected to ensure that staff conducts are properly monitored and a culture of excellent service delivery is enthroned.

For optimal results, the management said it consistently encourages employees to uphold professional and courteous behaviour, supported by a determination to enforce strict consequences for any unprofessional actions. 

Accordingly, it noted that the drive for outstanding customer service is a collective responsibility, and all staff are urged to adopt a customer-first mindset. This, it pointed out, is hinged on the recognition that ensuring a positive experience at every touchpoint is critical to the Bank’s long-term success and customer satisfaction.

New Products Development 

In the bid to tailor solutions to specific housing needs of Nigerians, the Bank has continued to develop products to cater to different segments of the Nigerian population, both within and outside the country. The Bank has demonstrated this recently with the introduction of the Rental Assistance Loan and the Diaspora Mortgage Loan.

The FMBN Rental Assistance Loan was introduced in response to the need to engage a more inclusive and equitable housing finance system for Nigerians. The product, meticulously designed to alleviate the financial burden of rental payments for eligible Nigerians, is a testament to FMBN’s commitment to ensuring that all Nigerians, regardless of their income level or employment status, have access to safe and affordable housing. 

According to the FMBN, this commitment which draws inspiration from the Bank’s mandate of providing mortgages for affordable housing delivery to low- and middle-income earners, resonates with the vision of Ahmed Dangiwa, the Minister of Housing and Urban Development, which is drawn from President Bola Ahmed Tinubu’s Renewed Hope Agenda for the housing sector.   

This micro-housing product has been thoughtfully crafted to ensure accessibility, affordability and flexibility, making it a viable solution for many who have found it challenging to secure housing finance through other traditional financial arrangements.

Similarly, in order to cater to the housing needs of Nigerians living outside the shores of the country, the Bank, in collaboration with the Nigerians in Diaspora Commission (NiDCOM), introduced the NHF Diaspora Mortgage Loan.

The Diaspora Mortgage Loan, it explains, is designed in such a way that a Nigerian subscriber living abroad, who has contributed to the National Housing Fund (NHF) for a period of at least 6 months, can access up to N50 Million to buy or build their own home in Nigeria.

“This product is critical to addressing the plight of Nigerians living abroad who have always found it difficult to acquire property in Nigeria, as well as those who have fallen victim to fraudulent individuals. The scheme provides an easy way for them to own homes in Nigeria while plying their trade abroad,” it adds.

In order to ensure a perfect product,  Osidi, alongside other members of FMBN management, have been engaging with NiDCOM and the Central Bank of Nigeria to finalise processes on the product.  

N100bn Off-taker Guarantee for Karsana

Driven by the vision to provide affordable housing for Nigerians of average income status, the FMBN recently provided N100 Billion in Off-taker guarantee in support of the Renewed Hope Cities and Estates Programme of the Federal Ministry of Housing and Urban Development. This is in addition to the Bank’s commitment to provide mortgage loans to the off-takers upon completion of the houses, which would be spread across the nation. 

While at these efforts, Nigerians who are NHF subscribers continue to access products and services from the Bank through its various product offerings. This is apart from the Bank’s direct funding of some projects in the Renewed Hope Cities and Estates Programme, particularly in Lagos.

Reduction of Non-performing Loans

Few weeks after resuming at the FMBN, the Shehu Osidi-led management revealed seven priority areas that would guide their operations in repositioning the Bank. The third item on this agenda is “Enhancing Credit Quality/Reducing Non-Performing Loans (NPLs).”

To reduce the Bank’s Non-Performing Loans (NPLs) which rose to a disturbing point, thereby hindering the Bank’s capacity to effectively deliver on its mandate of providing access to affordable mortgages, the FMBN inaugurated seven Loan Recovery Task Teams to drive the recovery of the Bank’s delinquent loans across the country’s six geopolitical zones and the Federal Capital Territory (FCT). 

This was a significant milestone in the Bank’s ongoing efforts at enhancing its financial stability and operational efficiency, given that it would ensure the availability of funds for disbursement to new beneficiaries, while maintaining the integrity of the Bank’s lending operations.

Inaugurated about six months back, the loan recovery task teams have successfully recovered N5.7 billion as disclosed by Osidi recently. By implication, N5.7 billion that was earlier tied down somewhere has been released within this period for the benefit of Nigerians desiring access to mortgages. This also translates to a reduction in the housing deficit, having ensured the emergence of new beneficiaries to the NHF loan.

In all,  the FMBN under the leadership of Osidi has made significant strides in driving affordable homeownership delivery in Nigeria, helped by his clear understanding of the challenges facing the housing sector and how to go about solving them.