The NHF is a pool which mobilizes long-term funds from workers, banks, insurance companies and Federal Government to advance loans at a single-digit interest rate to its contributors. The Federal Mortgage Bank of Nigeria (FMBN) initiated the National Housing Fund (NHF) scheme to facilitate the provision of houses in the country and bridge the housing deficit.
According to the scheme, workers are to contribute 2.5 percent of their salary to the fund, while the funds are supposed to be used for mortgage loans only to the workers at concessionary terms for the purchase, building, expansion or renovation of their houses. Apart from the workers’ contribution, the NHF also mobilizes domestic and offshore long-term funds from banks, insurance companies, and the Federal Government, which are supposed to be used as soft loans to its contributors.
The FMBN is, therefore, constitutionally empowered to facilitate the growth of viable primary mortgage institutions that would serve the housing needs of Nigerians but while some civil servants have benefited from the NHF scheme, others have yet to benefit, prompting many people to clamor for the review or outright abolition of the scheme.
On this premise, some stakeholders in the housing sector express concern about the operations of NHF and call for stiffer penalties against violators of the NHF Act. Mr. Ayuba Wabba, President of the Nigeria Labour Congress (NLC), rather called for a realistic housing scheme that would enable workers to afford houses. In his words, for us to address the issue of housing deficit, we must have an agreeable interest rate that is affordable to citizens and workers, if not the houses will be built and will not be affordable. He also decried the violation of the NHF Act by some stakeholders, observing that failure of commercial banks to contribute to the fund had the retarded progress of the scheme.
In his opinion, Mr. Oluseyi Lufadeju, a trustee at Real Estate Development Association of Nigeria, accused the Central Bank of Nigeria and some commercial banks of not contributing to the fund. According to him, Section 5 of the NHF Act stipulates that commercial or merchant banks shall invest in the fund 10 percent of its loans and advances. The loan or advance will be at an interest rate of one percent above the interest rate payable on current account by banks. Every registered insurance company shall invest a minimum of 20 percent of its non-life funds and 40 percent of its life funds in real property development; of this, not less than 50 percent shall be paid to the fund through the FMBN. He also explained that Section 11 of the NHF Act provides that the Central Bank of Nigeria shall collect from commercial and merchant banks at the end of every year and not later than one month after, the percentage of their contribution to the fund. Lufadeju said without full capitalization, the bank could not fulfill its obligation of providing affordable houses to Nigerians.
In the same regard, Mr. Mohammed Khalil, a consultant, said since the enactment of the NHF Act, deposit banks, and insurance companies had not invested in the fund.He observed that an analysis of total loans and advances by the commercial and merchant banks in 2016 was N15 trillion which at the rate of 10 percent, the CBN pursuant to Section 11 is supposed to have credited the NHF with the sum of N1.5 trillion by March 2017. Khalil said that if the Federal Government was to create at least one million new homes through a national mortgage single digit interest rate, it would require N6 trillion. Therefore, that at the current official figure of 17 million housing deficit, the Federal Government will require N102 trillion.
The Chairman of the Committee, Sen. Barnabas Gemade, listed the shareholders to include the Federal Government, Central Bank of Nigeria and Nigeria Social Insurance Trust Fund. He said CBN should sanction commercial banks that defaulted on remitting 10 percent of their loan portfolio to FMBN as the investment to the development of a virile mortgage industry as required by the law. He also promised that the committee would also ensure amendment of both the FMBN and NHF Acts to make the bank function effectively.
Source: Sundiata post
