The Big Housing Drainpipe

The National Housing Fund, NHF, has failed to help solve Nigeria’s housing problems


Emmanuel Akinola Omoyeni, is an angry man. A retired civil servant, he served his fatherland for 35 year. In 18 of his years of active service, he made monthly contributions to the National Housing Fund, NHF, through the Federal Mortgage Bank of Nigeria, FMBN.


By the time he retired from the ministry of internal affairs – now renamed ministry of interior – Omoyeni probably thought he would have saved enough money to qualify to obtain a loan to build a house.


But to his chagrin, the retiree who is also the national chairman, Association of Retired Federal Public servants, has not been able to get a loan from the mortgage bank to build a house.


But what has got the man really riling is the fact that, having denied him access to a loan, the NHF and FMBN have also refused to refund the money he contributed over the years.


He, along with thousands of others Nigerians, has been told that he cannot collect back his money until he is 60 years old. That is what the law says, they have been told.


“What is more terrible about the scheme is the fact that the government and the people managing it are not ready to pay the retired workers even their contributions,” he moaned.


“We have written several letters to the institution concerned to no avail. The last time we went to FMBN, they told us that until one clocks 60 years in age, one is not qualified for even one’s contributions,” Omoyeni lamented further.


“My candid opinion therefore is that, this scheme should be scrapped as it has no benefit for the workers. Rather it is a way of siphoning money from serving officers,” he concluded in anger and frustration.


Like Omoyeni, Pius Ukeji, a retired school principal, is also a perceptibly bitter man. He is bitter against a Nigeria he served for years which now appears to have left him in the lurch after sucking him dry of the energy of his productive years.


The embittered educationist, who contributed N600 to the NHF every month for close to 10 years, is lamenting that he is unable to raise a N4 million loan to build a house because no viable primary mortgage institution, PMI, exists in his area to grant him a loan.


Cornelius Moedi, also a retiree, cannot understand why all of a sudden, he is being told that he cannot access his contributions to the NHF until he is 60. He retired from the federal civil service in 2007 after working and contributing to the scheme for five years.


However, having left service he has asked for a refund of his total contributions only to be told he has to wait until he is sixty years old.


“This is unfair because we were contributing to the scheme in the hope of getting houses, but since that failed they should refund our money now that we are retired and still alive,” Moedi pleaded.


But he asks an important question when he queries: “What happens to those who do not reach 60 and die? Will their families be able to collect their contribution when they are dead when the retired civil servants themselves could not do so when they were alive?


The story of Caroline Abang is not any different. As a serving level 9 officer in the federal civil service, she too is not impressed by the Federal Government’s Housing Scheme for its workers.


Having been a contributor to the NHF for over a decade, she told our reporter that when she applied for a loan to build a house, she was told that she must have a certificate of occupancy, C of O. After struggling for months to get one, she went back for her loan but has been unable to get it even after a year.


Abang is mystified and at a loss explaining what really is going on.


“As a grade 09 officer, my money is supposed to be N3.5 million. The question I keep asking myself is ‘when are they going to give me the money?’” she wondered, adding listlessly, “I need the money”.


Although housing is not one of the millennium development goals, MDGs, it is accepted all over the world, along with clothing and food, as one of man’s basic needs without which he cannot survive.


But in Nigeria, providing housing for citizens has always been a problem that has defied solution. The country currently suffers from a deficit of 16 million houses, which requires no less than N56 trillion to finance at an average cost of N3.5 million per house.


Nigerian governments since independence in 1960 have vowed to make the best out of this very ugly housing issue without success. Each government, either military or civilian, has set panels, commissions, or agencies to recommend ways of improving and highlighting it as a major priority, yet in over 52 years, Nigeria has not developed a vibrant housing policy.


Houses have continued to be provided through the rigorous traditional method of buying land and building over some years, which could be in an individual’s entire life time. In most cases, the buildings are left uncompleted, becoming a burden for children and family of the deceased.


It was in an attempt to deal with the housing problem that the FMBN was set up in 1956. The bank has the overall mandate of promoting the delivery of affordable and modern houses to Nigerians.


The bank started the management and administration of the contributory savings scheme, the NHF, established in 1992 as a pool that mobilises long – term funds from Nigerian workers, banks, insurance companies and the federal government to advance loans at low interest rates to its contributors.


However, an overwhelming number of contributors to the scheme, serving and retired, who spoken to our reporters have tales of woe to tell. Many claim that they have neither benefited nor seen any one that has taken a loan directly from FMBN to build or buy a house since its inception.


Many of them also complained that they are made to go through PMIs to access at high interest rate – usually 21 per cent – the funds which they contribute at low interest rates. Thus, they see the scheme as a conduit pipe designed to drain the meagre resources of the civil servants.


Very few people, however, still believe that the NHS has helped to solve some of the housing problem faced by Nigerians. One of them is director of personnel services in a federal ministry who does not want to be named.  He does not agree that the FMBN should be scrapped either.


According to him, the mortgage bank has been able to mobilise funds into a common pool from which individuals, organisations, and state governments can draw through the PMIs to provide affordable houses for the citizens.


He cited the example of Gombe State which he said accessed funds from NHF and has used it to build a housing estate for its civil servants. He therefore advised other state governments to buy into the scheme to provide decent accommodation for their citizens.


Another believer in the NHF initiative, understandably thought, is Balami Yerima, the group head of public sector, home finance division of Aso Savings and Loans Limited. He believes that it is a good way of getting long term funds to provide affordable houses for Nigerians.


“It is a laudable scheme geared towards mobilising long time funds from Nigerian workers and other agencies to advance loans at soft interest rates to its contributors. Given the challenges and huddles that confront the scheme, I would say it has done fairly well,”Yerima stated.


But even in his enthusiasm, he concedes that “The scheme too has its challenging huddles and barriers, adding that “we cannot deceive ourselves that it has been a complete success.”


But none of the supporters of the government housing programme could explain why many civil servants who individually contribute to the scheme cannot access loans to build houses.


Beside this, Nigerians in the informal sector also stand little chance of benefiting from the NHF scheme. This was attested to by Shola Ade, a motor mechanic in Area 1, Garki, Abuja, who lamented that they are neither allowed to contribute to the housing scheme nor draw from it, in spite of their willingness to be part of the scheme if given the chance.


He wants FMBN to design a more inclusive scheme that will take care of artisans and those in the informal sector as they too deserve decent shelters over their heads.


Several attempts by our reporter to speak with Gimba Ya’u Kumo, the managing director of FMBN failed as he, according to Agada Simeon, head, corporate affairs of the bank, prefers doing his work to talking about it.


Simeon, who initially directed our reporter to the housing minister to seek answers to the list of questions earlier sent, later sent three documents which were meant to address the issues raised.


The documents include a paper by Kumo titled: ‘Funding Options for Housing Delivery in Nigeria’ presented at Potomac Workshop on ‘Recharging Government Contract Administration and Project Management Processes,’ held at the International Conference Centre, Abuja in June 2012.


Also included were two press releases, one titled “FMBN Introduces E-Collection Platform for National Housing Fund” and the other titled ‘FMBN Offers N2bn Mass Housing Loan to Enugu State.’


In the paper, Kumo observed that “essentially, the FMBN is statutorily mandated to pool resources for delivery of mass housing in Nigeria.” This responsibility, he acknowledged, is by no means an easy task.


He noted that NHF is a government – backed funding scheme which pools small contributions from workers (2.5 per cent of their basic salaries) both in public and private sectors of the economy for the purpose of delivering decent and affordable houses for the masses. Since inception in 1992, he said, the scheme had registered 3.7 million contributors as at May, 2012.


The MD further stated that under the scheme, a total of N88.43 billion has been collected as at May 2012 out of which N86.93 billion housing loans have been disbursed while 68,712 housing units have been financed.


Listing the challenges faced by the scheme, Kumo said, “One is that some employers of labour do not comply with the law establishing the NHF which mandates them to deduct 2.5 per cent of their workers’ basic salary and remit same to the NHF Account.”


Also, he disclosed, some employers make the requisite deductions but fail to remit the full amount with a schedule of their contributing employees to FMBN, while other employers deduct but fail to make any remittance to the NHF Account.


This, he noted, partly explains why the number of contributors to the scheme has remained significantly low at about 3.7 million persons as against the over 50 million targeted at inception meaning that only 2.46 per cent of the nation’s projected 150 million people are contributing to the scheme.


Another formidable challenge faced by the scheme as identified by the Kumo is that all the banks and insurance companies which are required by the NHF Act to invest a percentage of their funds in the scheme have, over the years, failed to comply with this requirement just as the Central Bank of Nigeria, CBN, which is the regulator of the financial institutions, has also failed to compel the banks to comply with the provisions of the law.


What all these means is that more than N100 billion of the estimated NHF contributions are trapped in government ministries, departments, agencies and other organisations.


Checks by our reporters show that to tackle some of the challenges, the FMBN recently introduced an e-collection platform for the housing scheme. The platform makes it possible for NHF deductions, collections and remittance to be done electronically by all the designated commercial banks in Nigeria through their existing information technology structures.


With this e-collection platform, NHF components of employee’s salaries are not only automatically deducted and instantly channelled into a dedicated NHF account but also a payment schedule indicating the identity of each employee and the amount contributed is automatically generated and FMBN immediately credits each contributor’s NHF account with the corresponding amount remitted for that month.


The e-collection platform is not only designed to curb the sharp practices that enable some unscrupulous employers to misappropriate NHF monies or even embezzle such funds but to also help promote transparency and accountability in the collections as well as make it possible for more eligible Nigerians to access NHF loans for building, renovation or purchase of residential houses.


The platform also makes it possible and easy for contributors to check their NHF accounts using the NHF e-cards on any ATM nationwide, not only to ascertain the amount they have contributed but also to be in a position to know if their employers are making the appropriate remittances as and when due.


Indeed, the system instantaneously sends an SMS alert to the contributor’s mobile phone once the deduction hits the NHF collection account. The e-collection platform is thus embedded with features that seek to secure contributors’ contributions in order to restore their confidence and bring more credibility to the scheme.


The snag, however, still is that no withdrawals can be made from the NHF account until the contributor retires from service and reaches the age of 60 years. This has generated a lot of bad blood between the FMBN and NHF contributors, particularly retired public and civil servants.


While the contributors are keen on collecting back their contributions since they did not benefit from the scheme, the FMBN insists that the contributors must satisfy the requirements for refund as specified by the NHF Act 1992.


While the new management of FMBN has begun the process of cleaning the Aegean Stables through the repayment of contributions with interest and the publication of same in national dailies, many civil and public servants who spoke to this website insist that the mortgage bank should waive the 60 year age requirement for retired contributors to enable them look for their housing requirements elsewhere.


Our investigations however show that one of the greatest problem that work against ordinary Nigerians owning affordable houses is the Land Use Act which vests all land in the country in the government.


This invariably makes state governors the only approving authority to issue certificates of occupancy. This singular fact impacts negatively on citizens’ access to housing in so many ways.


This much Yerima agrees to when he said that “the problem however is with the Land Use Act,” adding, “the land use act as presently constituted makes it very difficult, even near impossible, to transfer title from one party to another and this one party could be a private mortgage bank offering the mortgage or just an individual from whom one wants to buy a property.”


For many experts, Yerima actually hit the nail on the head because many of them identify the difficulty in securing or transferring land title deeds as a major problem facing those who want to build houses. And it does not exclude even civil servants and other NHF contributors who want to obtain loans to build houses.


As Abang observed, one of the conditions of granting housing loans under the NHF is that an applicant must have a C of O, as proof that he or she has a land to build on. However, this condition constitutes a roadblock for many as such permanent land title deeds are not easy to come by.


“The barriers to transferring titles are too formidable and invariably impinge on the cost of housing. It usually takes a long time for even executive governors to sign Certificates of Occupancy (C of O). Even after the signing, there are the problems of stamp duties and payments, which are enormous for any would-be mortgage,” Yerima observed.


He explained further that because of the barriers created by the Land Use Act, many of the titles available for mass housing are development leases which are ad hoc arrangements between developers and state authorities. The snag is that they fall short of the real thing and banks are wary of such temporary titles, preferring the root title, the C of O.


    “Any bank, and this includes FMBN and Aso Savings, would want the root title of any land to be certificate of occupancy (C of O) because that is the only perfectible document that one can hold up in court in the event of a default and when the need to carry out a foreclosure between a mortgage bank and a mortgagee arises,” Yerima noted.


    He said further: “a lot of banks will not touch these weak titles including the development lease. Moreover, we cannot float a bond to raise long term funds for mortgages on these weak titles.”


    More worrisome, he noted is the fact that these imperfect title documents also discourages foreign investors interested in the  housing sector from bringing in needed funds to develop it.


    The Aso Savings and Loans manager’s damning verdict is that “affordable housing will be very difficult to achieve if the present Land Use Act is maintained.”

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