The role of fmbn in the development of the nigerian mortgage market
Sponsored Links
This presentation is the property of its rightful owner.
1 / 25

THE ROLE OF FMBN IN THE DEVELOPMENT OF THE NIGERIAN MORTGAGE MARKET PowerPoint PPT Presentation


  • 52 Views
  • Uploaded on
  • Presentation posted in: General

THE ROLE OF FMBN IN THE DEVELOPMENT OF THE NIGERIAN MORTGAGE MARKET. A PAPER PRESENTED BY MR. GIMBA YA’U KUMO, MD/CE, FMBN AT THE 1 ST ASO HOUSING EXHIBITION & CONFERENCE 17 TH – 18 TH MARCH, 2011. INTRODUCTION.

Download Presentation

THE ROLE OF FMBN IN THE DEVELOPMENT OF THE NIGERIAN MORTGAGE MARKET

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


THE ROLE OF FMBN IN THE DEVELOPMENT OF THE NIGERIAN MORTGAGE MARKET

A PAPER

PRESENTED BY

MR. GIMBA YA’U KUMO, MD/CE, FMBN

AT THE

1ST ASO HOUSING EXHIBITION & CONFERENCE

17TH – 18TH MARCH, 2011


INTRODUCTION

  • Housing sector plays a critical role in the development of an economy. It not only affects the welfare of the citizens but also the performance of other sectors of the economy.

  • It is one of the three most important basic needs of man, the others being food and clothing.

  • Consequently, greater attention is being given by governments in the delivery of affordable housing to its citizenry, through

    -Assistance in finance (via aid, subsidy or grants or combinations)

    -Assistance in provision of infrastructure

  • The focus on housing finance has been very prominent, because housing provision requires huge capital outlay which is often beyond the capacity of the vulnerable medium/low income groups.


OVERVIEW OF HOUSING IN NIGERIA

  • 720,000 housing units required yearly to meet MGD Goal on housing

  • Huge housing deficit estimated at 16m units

  • Estimated mortgage financing gap of over 56 trillion Naira


OVERVIEW OF HOUSING IN NIGERIA

  • Low homeownership rate of 25% compared to 70% in the USA, 63% in Brazil, 61% in Benin and 56% in South Africa


OVERVIEW OF HOUSING IN NIGERIA

  • Real estate sector in Nigeria contributes only about 0.5% of the total GDP, while in developing countries contribution is about 60% and between 30-40% in emerging economies

  • CHART 1: Real Estate sector contribution to GDP has stagnated over time

  • CHART 2: Real Estate sector growth has underperformed real growth and non-oil growth rates

    Source: National Bureau of Statistics Nov 2010

CHART 1

CHART 2


THE MANDATE OF FMBN


FMBN MANDATE

FMBN was established to -

MANDATE 1:Encourage the emergence and growth of a viable secondary mortgage market to service the needs of housing delivery in Nigeria

MANDATE 2:Link the mortgage market to the capital market for sustainable long tenored funding and become a prominent capital market operator through issuance of debt and Mortgage Backed Securities (MBS)

MANDATE 3: Mobilize domestic and foreign funds into the housing finance subsector

MANDATE 4: Collect and manage the National Housing Fund (NHF) in accordance with the NHF law


PERFORMANCE ON MANDATE

  • MANDATE 1:

    Encourage the growth of a viable secondary mortgage market in Nigeria

    -Successful refinancing of 9,525 mortgages valued at N26 billion created by Mortgage Loan Originators in the 1st tranche of the N100 billion Mortgage-Backed Bond programme to sell FG non-essential residential houses in the FCT in Year 2007

    -The expected refinancing of about 6,533 outstanding mortgages valued at N14 billion in the 2nd tranche


PERFORMANCE ON MANDATE

  • MANDATE 2:

    Link the Mortgage Market to the Capital Market

    -The Federal Mortgage Bank of Nigeria is registered as an issuing house by the Securities and Exchange Commission (SEC)

    -FMBN is recognized as an issuer of mortgage-backed instruments by the Federal Government of Nigeria

    -FMBN’s mortgage-backed bond (MBB) continued to retain its ‘AAA’ rating


PERFORMANCE ON MANDATE

  • MANDATE 3:

    Mobilize foreign and domestic funds

    -FMBN is recognised as a first-choice investment conduit by foreign investors

    -FMBN is exploring opportunities of issuing debt instruments in local and international capital markets in collaboration with international financial institutions

    - Investor profile include global banks, international investment firms, conglomerates, foreign housing corporations, etc.


PERFORMANCE ON MANDATE

MANDATE 4:

Collect and manage the National Housing Fund (NHF)

-Significant increase in the number of registered participants which reflects growing confidence in the Scheme

+ 26 states now participating, from only 3 in Year 2002

+ all 24 banks participating, etc.

-Willingness to expand access channels to NHF mortgage originations e.g. PFAs, insurance companies, MFBs

-Steady increase in total annual collections and disbursements

(see next slides)


MANDATE 4: Collect and manage the NHF:NHF Collections

NHF collections of N31.8b realised between Jan ’08 - Dec ’10

That is, 49% of cumulative collections from Jan ‘92 to Dec ‘10


MANDATE 4: Collect and manage the NHF:NHF/PMI and Estate Development Loans


OTHER ACHIEVEMENTS AS AT DEC 2010

  • NHF CONTRIBUTIONS REFUND:

    • Cumulative ofN942,662,263.88 refunded to 50,522 contributors

  • LOAN RECOVERY:

    • Total of N4,063,480,982 recovered on classified facilities in past 24 months

  • RESEARCH & DEVELOPMENT:

    • To bridge the knowledge gap on the housing situation, in 2010 FMBN’s Research & Documentation Unit carried out -

      • a survey on housing delivery in the FCT and

      • a market survey of building materials in all geopolitical zones of the country.


  • FMBN: STRATEGIC FOCUS & PLANS


    • Consolidate on capital market activities

      • with issuance of subsequent tranches of its N100 billion bond to refinance sale of FG non-essential residential houses in FCT

      • To issue mortgage bonds based on FMBN’s financial strength and/or government guarantee

        -To take advantage of investor appetite for bonds

    • Support legal and regulatory framework review

      • Amendment/replacement of unfriendly housing-related laws

      • Collaborating with National Assembly Committees on Housing

    • Consolidate NHF collection and funding operations

      • Increase in NHF collections by compliance of non-participating state & local governments, the organised private sector & the self-employed

      • Creation of 8 Zonal Offices for more effective coverage

      • Introducing NHF e-collection platform pilot scheme for FCT MDAs


    • Commencement of Commercial Lending Operations:

      -using capital market resources applied as market-determined, risk-based priced loans

    • Expand mortgage financing to non-salaried informal sector

      -whichcontributesas much as 65% of GNP, 90% of new jobs in the country, 80% of all non-agricultural employment and 60% of urban jobs [Vanguard, Sept 2008]

      -Service delivery channels are trade groups, unions and housing cooperatives, microfinance institutions

    • Encourage formation of housing cooperatives

      -To expand mortgage finance to target groups (teachers, nurses, mission groups (e.g. Catholic missions, organised Islamic organisations), trade groups, etc.


    • Attract foreign funding & investments

      -Interests by American, Chinese, Korean & Saudi Arabian investors

      -Strategic advantage as a FG-Sponsored entity for investors to channel investments into local economy

    • Introduction of Innovative Mortgage-related Products

      -Mortgage and Title Insurance

      • to mitigate mortgage-credit risks for lenders

      • Increases/stimulates mortgage originations

      • Advantage of lower costs of mortgages (affordability) based on higher volumes

        -Real Estate Investment Trusts (REITs)

    • Covered Bonds

    • Rental Market Development Products

    • Securitisation


    FMBN:THE CHALLENGES


    1. INADEQUATE CAPITAL BASE:

    Low capitalization in comparison with similar secondary mortgage institutions worldwide

    -FMBN’s capital base is currently equivalent to US$16m compared to an average of US$158m held by similar secondary mortgage institutions


    Cost To Register Property – Administrative Fees Vary

    2.HIGH COST AND DELAY IN MORTGAGE PERFECTION

    WB: Doing Business Report


    Governor’s Consent – Bottleneck To Registering Property

    2.HIGH COST AND DELAY IN MORTGAGE PERFECTION CONT…

    WB: Doing Business Report


    3.NEED TO REVIEW CBN PRUDENTIAL GUIDELINES FOR REAL ESTATE LENDING

    • To be more conducive to the long-term nature of mortgage lending

      4. POOR INFORMATION STRUCTURES

    • Investment in information infrastructure to improve lenders’ capability to assess risk

      • Credit Bureaus

      • Real Estate Information Agencies

      • Property Valuation Companies

        5. COMPLIANCE WITH THE NHF ACT

    • By banks, insurance companies and organisedlabour

      -only 3.5m out of 50m workers are registered

      -employers not remitting deductions to FMBN or not deducting at all


    THE WAY FORWARD…

    FMBN commends Aso Savings & Loans Plc for the initiative to organise a forum for stakeholders to showcase products and services

    FMBN appeals to stakeholders in the housing industry to work together towards the collective goal of ensuring that every Nigerian owns a home at affordable prices

    “…everyone deserves a home”


    THANK YOU

    FEDERAL MORTGAGE BANK OF NIGERIA

    PLOT 266 CADASTRAL AO

    CENTRAL BUSINESS AREA

    ABUJA

    www.fmbnigeria.org


  • Login