“While it may be easier to be polite, it is more important to (tell the truth) so that you can make progress.” – Bill Gates on CNN
The incumbent Nigeria Labour Congress (NLC) president, tough-talking Joe Ajaero, is in the news again fighting the cause of Nigerian workers. As reported in This Day of August 24, 2023, Ajero had threatened the manager of the National Housing Fund (NHF), Federal Mortgage Bank of Nigeria (FMBN), “to pull out civil servants from the NHF contributory funds over non-remittance of deductions made.”
The other weighty allegation against the FMBN by Ajero was on the opaque system adopted by the Bank in managing workers’ contributions to the NHF under its care. He queried the Bank’s modus operandi and said, “The FMBN had failed to alert civil servants of how much they have contributed, including their monthly deductions. And despite making statutory contributions of 25 percent of monthly salary to the NHF, many workers could not access the loan due mainly to administrative bottlenecks.”
Again, the stipulated timeframe of 90 days from the date of application for the loan to disbursement was never adhered to because of undue delay in approving the loans, whereby prospective loan applicants got frustrated and abandoned the pursuit of the loan midstream.
Unrealised objective
For those who have been following the history of the NHF from its inception in 1992 when the former military President General Ibrahim Babangida regime promulgated the National Housing Fund, Decree 3 of 1992 (now Act 3 of 1992) to date, one cannot assert that the FMBN managed the NHF satisfactorily. It encountered too many teething problems before it finally took off. The lofty objective of the NHF as a source of cheap funds and means of financing low-income housing for workers in particular and as complementary to other sources in mobilising financial resources for Primary Mortgage Institutions (PMIs) operations in Nigeria is far from being realised.
The story behind the headlines
The story behind the establishment of the NHF by the IBB administration needs recapping here to appreciate the long processes it took the then Federal Military Government (FMG) and the valiant efforts put in by certain dramatis personae that played significant roles in conceptualising/concretising the establishment of the NHF.
The first idea of setting up the NHF complied with policy recommendations contained in the provisions of the 1981 National Housing Policy (NHP) put together by a Committee of Experts under the chairmanship of the late Dr. Santali Karshi, who later became the pioneer chairman of the Housing Policy Council (HPC)- an institution set up by the FMG to monitor the policy implementation and update the government on the progress made during implementation. The HPC was a result born out of the policy implementation.
From the onset, the 1981 NHP recognised three essential issues in formulating housing finance. These are i) mobilisation of sustainable financial resources, ii) institutional arrangements to channel the resources mobilised into the housing sector, and iii) means and conditions to finance housing for the least privileged group (i.e. the low-income group). The housing policy document broadly articulated the fundamental issues in Chapter 5, sub-sections 5.2, 5.11, 5.19, and Chapter 7, sub-sections 7.5.1.
To commence the implementation of the housing policy recommendations, the then Federal Military Government (FMG), in 1991, tasked the Federal Ministry of Works and Housing to come up with a viable and sustainable source of financing affordable housing for Nigerian workers both in the public and private sectors including the generality of low-income compatriots yearning for a low-interest housing loan. The then Federal Minister of Works and Housing, Major-General Mamman Kontagora (now late), whose moniker was doki (the horse) because of his untiring strength for work, was given the national assignment.
Major-General Kontagora assigned the all-important duty to Mr. J.O. Okunfulure to produce a concept paper (memorandum) for executive consideration on the modus operandi of a National Housing Fund using countries such as Kenya, South Korea, and Jamaica with similar housing finance institutions as case studies. Mr. Okunfulure was then a Departmental Director of Lands, Environment, Urban & Regional Planning in the Ministry. A savvy and high-performance technocrat who later served from 2001-2003 as the Chairman of the Boards of Directors of Shelter Afrique and African Housing Fund – a 40-country member continental Housing Finance Company headquartered in Nairobi, Kenya, where the Nigerian government has 25% controlling shares.
Mr. Okunfulure quickly went to work with a three-member team (inclusive of this writer) under his supervision.
After a hectic brainstorming and within a given deadline, the team worked diligently and crafted the seminal document used as a resource instrument to promulgate Decree No.3 of 1992 ab initio. The Decree was the legal instrument that created the Nigerian version of the National Housing Fund (NHF), currently managed by the Federal Mortgage Bank of Nigeria (FMBN).
It is instructive to inform readers that because of FMBN’s lackluster performance in the past and inadequate capability as a housing finance institution, the team recommended in the paper submitted to the FMG that “the government should establish an entirely new institution to manage the NHF. But behind the scenes, the FMBN engaged in high-wire politics and hi-jacked the National Housing Fund despite its heavy workload. The team “saw yesterday” based on the antecedents of the FMBN and recommended otherwise. Unfortunately, the government never heeded the wise counsel.
We recant the genesis of the NHF here to buttress the fact that there were unseen actors who continue to offer profound suggestions and pragmatic solutions on how the government, at all levels, could fulfill their obligations to the Nigerian masses in the provision of affordable housing and low-interest loans, using a gamut of strategies and global best practises.
To such unseen actors, the NHF is an “idee fixe.” It is a noble initiative and desirable institution that must not be allowed to go into sudden extinction because of the sundry public allegations against the FMBN and other stakeholders in the NHF scheme. We list some of the weighty allegations/wrongdoings: Mal-administration, leadership incompetence, corruption, executive extravagance, licentiousness, opaque operation, lack of accountability, poor communication, insufficient data for public consumption, effete public enlightenment, legal infractions, allegation of non-remittance of workers’ contributions by employers, including the Federal Government – the initiator of the housing finance scheme, stringent conditions in accessing the loan, cumbersome loan applications procedure and loan disbursement, non-refund of contributions to retired workers who did not obtain housing loan from NHF among other financial practice irregularities.
Should the baby be thrown away with the bathwater?
The euphoria that greeted the coming on board of the NHF in 1992 had rapidly evaporated because a substantial percentage of contributors to NHF, most especially workers in both the public and private sectors, have lost confidence in the scheme because it did not meet their expectations. The dreams of having a roof over their heads had not been realised or gradually became elusive. Hence, the clarion calls by the Nigeria Labour Congress to scrap the NHF.
Admittedly, the NHF’s performance since its operation began in early 1993 is below people’s expectations. Most private sector organisations had stopped participation in the scheme because of a lack of trust. As the initiator of the system, the Federal Government has not rendered exemplary support to make the NHF inspiring and worthy of participation by private sector workers.
While appearing before the House of Representative Ad hoc committee probing the non-remittance of workers’ contributions to NHF, the incumbent Managing Director, FMBN, Madu Hamman, informed the committee that the Integrated Personal Payroll Information System (IPPIS) failed to remit the sum of N26.6 billion workers’ contributory funds in two years to the coffers of NHF (Punch, August 25, 2023). This is a disturbing revelation. The Federal Government unwittingly starved the NHF of the much-needed capital required for the smooth operation of loan disbursement to qualified applicants.
Need to save the NHF
Because of the foibles above and serial allegations of impropriety by NHF operators, must we allow the NHF to go moribund? The honest answer is NO!
Most housing finance institutions serve the conventional market but seldom respond adequately to the different needs of large segments of the population, particularly the vulnerable and low-income people. To mobilise more domestic resources for housing to address the financial needs of people having limited or no access to credit, it is necessary to develop new instruments as appropriate.
Mandatory savings schemes are ideal for housing financing policy. The search for a new instrument led to the establishment of the National Housing Fund as a child of necessity. If managed efficiently and effectively, it guarantees a source of housing finance on a sustainable basis because it has the potential for mobilising cheap funds for low-income housing finance for long-term lending.
Solutions and actions to take
The NHF is still the best option and should not be allowed to go moribund. The current investigation by the House of Representatives on the operations of the NHF is a step taken in the right direction. It is a saving grace to prevent the collapse of an otherwise laudable housing-related social institution.
Other quick fixes and remedial actions should include an aggressive revenue drive by the FMBN. It should spread its tentacles to capture more subscribers into NHF’s “contribution net” to shore up its working capital for housing loan disbursement. The current net figure of subscribers is abysmally meager compared to the country’s workforce.
We call on the Bank to ensure transparency, accountability, and ethical practices in financial transactions through effective legal and regulatory frameworks. The procedure to access NHF must be seamless, less cumbersome, and customer-friendly, eradicating all forms of discrimination.
Unscrupulous staffers who engage in venality must be promptly reprehended. It should improve and maintain a steady exchange of online information on the FMBN website for NHF subscribers – the current information on the website beggars belief: ambiguous, prose clumsy, and not reader-friendly.
The Bank must devise an instant payment method for retired workers’ contributions (with interest) who did not obtain housing loans while in service. They should not be subjected to unduly long waiting periods and sharp practices by rogue staffers who fleece applicants, as some narratives from retired workers revealed.
Lastly, the purpose of the ad hoc Committee is to investigate and remove any encumbrances militating against the smooth operations of the NHF. The scheme has no other alternative. The government must strengthen the capacity of the FMBN to monitor and control the functions of Primary Mortgage Institutions effectively.
All efforts must be made to salvage the FMBN from going moribund, unlike a few pragmatic and well-intentioned government schemes or societal institutions in the past, such as MAMSER, DFRRI, People’s Bank, and Urban Development Bank that got thwarted and suffered premature death due to deliberate mismanagement, lack of continuity, monitoring, and the failure of visionary executive leadership.
Tpl.Yacoob Abiodun, who is Pioneer Secretary, Housing Policy Council (HPC), writes from Brooklyn, New York, USA
