After an initial effort that eventually turned out to be a ‘false start’, a fresh move to facilitate the mobilization of fund for the provision of houses for Nigerians at affordable prices may be in the offing. The move would rejuvenate mortgage sector as part of the wider plans of overhauling housing financing institutions in the country.
Coming under the National Housing Fund (NHF) bill 2017, which attempts to repeal Act CAP 45 laws, before the National Assembly, the scheme is aimed at ensuring the constant supply of loans to Nigerians for the purpose of building, purchasing and improvement of residential houses as well as providing incentives for the capital market to invest in property development.
NHF is a Federal Government scheme, which entitles all Nigerians above the age of 21years in paid employment to a low interest, government funded loan. Members of the scheme contribute 2.5 per cent of their monthly salary to the fund through Federal Mortgage Bank of Nigeria (FMBN).
Currently, the maximum amount obtainable under the NHF used to be N5 million but has since been increased to N15 million. The borrowed capital is repayable over a maximum of 30 years at the rate of 6 per cent interest.
Statistics show that the fund reached N191.9billion in March 2016, from 4.14 million registered contributors under the NHF scheme. About N5.9bn had been refunded to 118,284 individuals, while over 70 per cent of the cumulative collection was recorded in five years. NHF has financed the construction of about 25,606 housing units and advanced 16,506 mortgage loans.
Under the bill, FMBN will continue to manage and administer the fund, but the Mortgage Banking Association of Nigeria (MBAN) recommends that the National Assembly restructure the NHF into the National Housing Trust Fund (NHTF) scheme, to enhance the fund’s integrity, making loan access easier and more affordable.
Specifically, MBAN wants the role of the FMBN to be limited to managing the fund for a fee while overall policy formulation and supervision of NHF scheme rests with the board of trustees. This is proposed to capture, retain and maintain the continued confidence of stakeholders, particularly contributors.
MBAN Executive Secretary, Mr. Kayode Omotosho confirmed the development. He told The Guardian that the proposed NHTF board of trustees should be different from the board of the FMBN to allow proper accountability and achieve the goal of affordable housing for Nigerians.
The Guardian learnt the mortgage banks also want the fund to be under the Presidency who appoints chairman of the NHTF board instead of the Minister of Power, Works and Housing.
In the proposed bill, the minister will determine terms and conditions for loans from the fund as well as specify the conditions and the terms of repayment of any loan obtained under the NHF.
The law says that any loan granted by FMBN to a mortgage institution will be secured by a block of existing mortgages under cover of sales and administration agreement to be executed between the supervisory bank and mortgage institutions.
The bill stipulates that a Nigerian worker earning an income of N10, 000 and above per annum in both the public and the private sectors of the economy will contribute 2.5 per cent of basic monthly salary to the Fund. An interest rate of 4 per cent will be payable on the contributions.
The law also makes it mandatory for every commercial or merchant bank to invest in the fund 10 percent of its loans and advances at an interest rate of 1 per cent above the interest rate payable on current account by banks.
Similarly, every registered insurance company will invest a minimum of 20 per cent of its non- life funds and 40 per cent of its life funds in real property development of which not less than 50 per cent will be paid into the fund through the FMBN at an interest rate not exceeding 4 per cent.
Likewise, every registered Pension Fund Administrator will invest a minimum of 10per cent of its pension funds and assets in real estate development investments, while the Federal Government will make adequate financial contributions to the fund for the purpose of granting of long term loans and advances for housing development.
Failure by any commercial/merchant bank to pay to the bank any amount to pay to the Bank any amount due will be regarded as a contravention of this bill and constitute one of the grounds for the Central Bank of Nigeria to cancel the registration of any commercial or merchant bank in default. The same applies to insurance companies.
Meanwhile, the penalty for failure to deduct contributions is to be increased from N50,000 to N5 million in case of corporate bodies while the staff responsible for the NHF deductions and remittance will be liable to a fine of N50,000 (instead of the existing N20,000) and a prison term of five year or both.
For self-employed persons who fail to make deductions or deduct and fail to remit to the Bank will be liable to a fine of N50, 000 (instead of the existing N5,000) or to imprisonment for a term of one year or to both.
The proposed law also criminalises obstructing the deduction and remittance of NHF. The penalty for this will be increased to N20, 000 (from current N5,000) or imprisonment for one year.
The bill imposes a penalty of N1 million for a corporate body (currently N50,000) and N50,000 for an individual (from current N5,000) for producing false documents or to imprisonment for a term of one year or to both such fine and imprisonment. The Federal High Court have jurisdiction to try all offences under this bill.