Controversy Surrounding N24.6 Billion FG’s Housing Bond

Investigations have revealed controversies surround the payment of the N24.56 billion bond raised to ensure the successful implementation of the federal government’s housing monetisation scheme in 2005.

The Bond issuance programme, according to documents obtained by Daily Trust, was initiated at the instance of the Federal Government of Nigeria by the current Minister of Finance, Dr Ngozi Okonjo-Iweala 10 years ago to ensure the success of the sale of the federal government non-essential residential houses in the FCT to public servants, under the monetisation policy of the President Olusegun Obasanjo’s administration.

At the moment, each of the key facilitators of the bond – ministry of finance, Debt Management Office and the Federal Mortgage Bank of Nigeria trying to wash its hands off the deal.

The document revealed that the maturity date for the bond is May 24, 2015, but there appeared to be no fund to redeem the bond, as contained in the agreements.

The forestall of the deal imposing a crisis on the economy already devastated by the fall in oil price. Bond is where government usually sources fund locally to finance its immediate needs and this failure can make investors not to invest further.

The document showed that most of the mortgage loan originator/servicer and other beneficiaries of the houses defaulted in payments.

Total bond amount was N100 billion to be raised in series with the federal government serving as guarantor while the Federal Mortgage Bank of Nigeria (FMBN) served as transaction servicer.

Other parties, 23 in number, were also involved in the Bond transaction.

The bond was in three series, with series 3 due to mature on May 24, 2015, few days before the present administration vacates office.

The obligation was to pay N24.564 billion to Note holders. Apparently, in view of the lapses witnessed in paying the bond, the Director-General of the Debt Management Office (DMO), Abraham Nwankwo, in a letter dated April 24, 2015, obtained by our reporter, advised the managing director of the FMBN to provide a credible solution for the redemption of the N24.564 billion.

This situation, therefore, led to the intervention by the federal ministry of finance which served as the guarantor in the agreement involving the ministry and UBA Trustees Limited, the Notes Trustee in the Bond agreement.

Meanwhile, as the maturing date for the Bond gets nearer, the Co-coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, recommended to President Goodluck Jonathan to consider directing the minister of lands, housing and urban development, the supervisory ministry of the FMBN, to direct the FMBN to quickly sell some of its assets.

In the letter dated May 5, 2015, she said that the FMBN should be directed to provide any other credible solution to raise funds to pay its maturing obligation of N24.564 billion, but Daily Trust learnt that the source of the money to redeem the bond is not yet ascertained

Source – Daily Trust