Musa Ahmed Dangiwa, managing director of Federal Mortgage Bank of Nigeria (FMBN) is a man whose experience covers the academia, real estate, infrastructure development, banking and design consultancy, with over three decades experience. He has brought efficiency and transparency into the operations of the FMBN and housing delivery in Nigeria. In his quest for this, he has been making the FMBN relevant to Nigerians. For the first time, the public have begun to see what role this agency is meant to play within the Nigerian real estate space since its creation in 1977.
Of recent is the introduction of a two-week ultimatum time for processing mortgage loan applications of NHS subscribers. The second and equally important thing is the deployment of Fintrak Software Solution to help ease operations of the Federal Mortgage Banks ( FMBN).
On December 3, 2020, Mr. Babatunde Fashola SAN, the Minister of Works and Housing announced the approval of the Federal Executive Council (FEC) for the FMBN to procure and deploy a core banking software application at the cost of N487.39 million from Messrs. Fintrak Software Solution
The implementation of the banking system would be significant and far-reaching. Once operational, it would help the FMBN to create an integrated technology-driven platform to activate its operations. On the back of the digital service provisioning eco-system, the bank would then tackle the many systemic challenges that it has had to contend with over the years due to the largely manual nature of its operations.
Top on the list is fixing the longstanding inability of the bank to update, in real-time, subscribers’ monthly contributions to the National Housing Fund (NHF) Scheme. As manager of the NHF scheme, a pool of funds comprising 2.5 per cent of subscribers’ monthly salaries is deployed towards the delivery of affordable housing.
For quite a while FMBN has attracted much criticisms from workers, stakeholders, and the general public over how it is handling the scheme. However this is due to the multi-stakeholder structure of the NHF operations. Employers in the public and private sectors are expected to deduct 2.5per cent of the monthly income of workers who are registered with the NHF scheme and remit this to the FMBN.
Many of the subscribers have complained severally that they are not getting adequate response from neither the NHF or the FMBN over the years.There have been several cases of workers, who after years of working and seeing the monthly deductions from their paychecks, are heartbroken to discover that only a paltry sum had been credited to their accounts with the National Housing Fund because their employer had either failed to remit or remitted only a portion of what was deducted
These have resulted in instances of subscribers complaining that deductions made by their employers from their salaries are not reflected in their NHF accounts due to non-remittances by their employers to FMBN as well as the inability to promptly access details and information on the status of subscriber’s accounts.
Disappointingly, investigations have shown that many employers are quick to remove the 2.5per cent of worker’s monthly salaries but are unwilling to remit the same to the FMBN.
Fortunately, with the introduction of FinTrak technology all these issues have come to an end with the software fully functional. The FinTrak subscriber management component of the application is specifically designed to fix them to ensure a smooth subscriber and customer experience for all workers that contribute to the NHF Scheme.
Two things happen with this technology. One is that there is now seamless back-end integration with employers in a way that makes deductions from workers’ salaries and remittances to the FMBN more transparent to all stakeholders. NHF subscribers will now get real-time alerts on all transactions on their NHF accounts and stay informed on the status of their accounts.
Second pertains to usefulness to FMBN. It is vital to the operations of the FMBN because the core banking system would help shorten the time it takes for subscribers to access credit from the bank. This process will help upgrade the overall customer experience of NHF subscribers.
Before 2017, when the Ahmed Dangiwa-led management of the bank took office, it used to take as much as twelve months or more before eligible NHF loan applications were fully processed, approved, and disbursed to applicants to enable them to purchase their homes. Much of the delays were caused by the manual process of documenting and performing due diligence on loan applications that defined the relationship with Primary Mortgage Banks (PMBs), which FMBN, operating as a wholesale back-end mortgage finance institution, uses as fronts to lend to NHF subscribers.
These are some of the systemic issues that the FinTrak Credit Risk Management System, an integral component of the core banking system, is designed to resolve. The FMBN management projects that the software application would streamline the multi-layered mortgage loan process steps and eventually crash the time it takes NHF subscribers to access credit to less than two weeks when implemented. This implies faster mortgage loan application processing and disbursements as well as enhanced customer satisfaction and experience.
Besides that, the attainment of a two-week turnaround time for processing mortgage loan applications would be an outstanding addition to the progress already made by the Dangiwa-led management in this direction over the past three years.
Besides improving turnaround time, the FinTrak Credit Risk Management System by eliminating laborious manual documentation in the credit application and processing brings several other operational improvements to FMBN operations. This includes aiding digital credit scoring and appraisal for improved accuracy; improving the visibility of NHF subscribers’ credit performance in the records of PMBs; as well as ensuring early warning to the banks where the likelihood of delinquency is observed on specific subscriber loans.
Even before now, it is on record that Dangiwa has injected a lot of efficiency into the operations of the bank. Part of the efficiency improvement effort is shortening the process of NHF refunds, as already observed. Consequently, NHF retirees can now complete the refund processes easily, which is seen as one big step ahead Dangiwa and his management of the bank has taken towards delivering affordable housing for retirees.
The condensed procedure now ensures prompt repayment of funds to the scheme’s contributors. Monthly NHF refunds and disbursement of NHF mortgage and home renovation loans have increased considerably.
Equally, Dangiwa has broadened the NHF base to capture the informal sector with the admission of non-salaried people into the scheme. This means that self employed and others outside the organized private sector now have access to affordable housing products of FMB.
some other initiatives include re-integrating defaulting states into the NHF scheme, as well as aggressive loan recovery. He opened talks with states that dropped out of the scheme and he is quite determined to have them back on board the NHF scheme. Considering the various mortgage financing products on offer, he is determined to ensure that no section of Nigerians is denied access to housing development opportunities.
In the area of loan recovery, he is doing much here. His aggressive loan recovery strategy has improved FMBN loan portfolio quality. The steps taken include engaging debt collectors and automating loan repayment debits from customers’ bank accounts. He has also given priority timely rendition of audited accounts. In fact, he started this as soon as he was appointed in 2017. Then he set-up a task force, with a mandate to clear the backlog of outstanding financial statements since 2013 by end of 2018.
Business process automation is also strong on his agenda. And he has begun this a long while now. Through that he has deployed technology as an end-to-end business process within the institution, which has to do with the adoption of core banking applications and wide area network that incorporates mobile and internet solutions. With these he has given enablement to key banking processes with direct links to primary mortgage institutions and customers, including credit alerts to NHF contributors. In addition to recapitalization, Dangiwa is exploring other measures
To boost the FMBN’s liquidity and capacity to deliver its mandate, Dangiwa moved the idea of recapitalization and other measures. For instance, in collaboration with the Federal Inland Revenue Service (FIRS), he is looking out to enlist all corporate organizations for the NHF scheme. By enlisting non-contributing organizations and enforcing compliance, by doing this, he has increased substantially remittances to the NHF and consequently the bank’s capacity to meet the long-term mortgage financing needs of Nigerians.
Dangiwa is tackling headlong a major drawback for primary mortgage institutions, the Land Use Act of 1978 that vests land ownership in the state governors. Other steps towards elevating the industry include the right to foreclose on delinquent borrowers, easing the creation of legal mortgage, perfection of titles and enhanced regulatory policy framework for orderly development and growth of the industry.
Dangiwa also asserted that the bank would build some housing units in each state and the Federal Capital Territory to address housing deficit in Nigeria.
To draw more investments to the Nigerian Housing scheme, he proposes that banks and insurance companies contribute five per cent of their profit-after-tax (PAT) as mandatory investments into the NHF as opposed to portions of their loan portfolios of life/non-life funds.
“The proceeds are remitted into a Special Purpose Vehicle (SPV) jointly established by these institutions and FMBN to ring-fence the investments. Proceeds accruing to the SPV are to be invested in either real estate capital market instruments or the financing of large-scale residential housing projects on an affordable but economically viable basis, for a specified tenor and at an agreed rate of return.
“As an incentive, the investments could be computed as liquid assets for banks, profit will be tax-exempted, the investments could be computed as part of the loan to deposit ratio for banks and a set housing for the economically-disadvantaged to count as corporate social responsibility.
“Our intention is to see banks and insurance companies to be good corporate citizens in compliance with the law of the land by investing in the NHF Scheme as stipulated by law but under a risk-sensitive, safe and lucrative arrangement. This provides a win-win solution for them and Nigerians who are in dire need of affordable housing.”
“Based on our projections, it is expected that not less than N100 billion will accrue to supplement the resources of the NHF scheme as mandatory investments from banks and insurance companies if this proposal is implemented.
He noted that despite the shortfall, the NHF scheme has improved its performance significantly. For instance, NHF collections grew by 80 per cent within the last three years by N186 billion to reach a cumulative of N418 billion as of September 2020
It disbursed a cumulative of N265 billion, an increase by over N112 billion (74 per cent) over the N152.5 billion and about 8,700 new homes have been added, a growth of 43per cent, to attain a cumulative 29,133 funded housing units. Similarly, about 5,000 mortgages were originated to grow our portfolio by 26 per cent to a total of 21,587 and home renovation micro-loan grew by over 2,000 per cent from about 2,600 to about 56,000 loans over the past three years.
Already, the NHF Scheme has improved its performance significantly. For instance, NHF collections grew by 80 percent within the last three years by N186 billion to reach a cumulative of N418 billion as of September 2020
Overall, with all the innovations brought by Dangiwa have brought heft to the operations of FMBN. And now with the Federal Government’s approval and imminent deployment of the Core Banking Solution at the FMBN, the bank is set for historic preformance. For the first time, the nation’s apex mortgage bank is set to have a world-class technology-driven system that would help optimise its operations and ensure a smooth customer experience for all workers that contribute to the NHF Scheme. This is a big boost for affordable housing delivery in the country on the watch of Mr Musa Ahmed Dangiwa.