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Business News of Tuesday, 30 November 2021


Experts bemoan FMBN’s analog business model

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Despite positive strides in recent years, experts in the housing sector have raised concern over the analog business model of the Federal Mortgage Bank of Nigeria (FMBN).

Raising the alarm, US-based housing finance advocate, Mr Kunle Faleti, said it was unspeakable that mortgage banks across the country still send loans (physical files) to Abuja for approval, while it could be done online.

Faleti canvassed an improved business model for the nation’s  apex mortgage institution.

Speaking via the social media platform of Festus Adebayo-led Housing  Development Advocacy Network (HDAN), he said: “I am writing this with every sense of responsibility, especially considering my personal and professional relationship with some members of the executive management of the FMBN.

“While it can be argued that the institution has made positive strides in recent years, it is obvious that its business model is still very much analog. As an example, mortgage banks across the country send loans (physical files) to Abuja for approval, while it can be done online.”

He pointed out that in the era of online banking and the fact that the bank procured expensive software, the old ways of doing business should have stopped.

According to Faleti, the regional offices should be able to electronically submit mortgage requests, get approvals, register mortgages and monitor performance online real time, adding that by so doing, it would increase and improve the current 2-5 years approval and funding cycle of the FMBN.

Faleti also expressed concern over the bank’s delay in publishing its annual accounts as at when due, adding that  FMBN is yet to live up to the National Housing Fund’s responsibility

He said: “Furthermore, FMBN has to demonstrate financial transparency.

“As an industry standard, it is expected that an institution such as FMBN would publish its annual accounts in a timely manner. We are almost at the tail end of 2021, but the 2018 report is yet to be made public.”

As part of the World Bank Technical visit and engagement with FMBN in 2015 and 2016, he recalled that there were recommendations around financial reporting made that are yet to be implemented.

“FMBN has fiduciary responsibility in its collection and management of the NHF and is yet to live up to that responsibility as it continues to manage the NHF as a dark pool without any public or regulatory demand to improve its management of the commonwealth of over five million active Nigerian contributors.

“Finally, as painful as it may seem, it is important that FMBN, its regulators, managers and stakeholders (contributors) realise that solving the challenges of housing development and finance largely rest with an efficient and functional FMBN and the sooner we all hold the institution to account the better for the sector,” he said.

In a swift reaction, a  staff member of the apex mortgage bank who did not want his name in print said there were certain issues raised by Faleti that needed clarification, explaining that the bank recently got approval to procure a core banking application (CBA).

“The bank is in the process of deploying the CBA. Its operations will be fully automated after this. FMBN does not have any product whose funding cycle extends between two to five years,” he  said.

The source explained that when the current management came on board in 2017, it set up a Financial Accounts Taskforce  as part of the strategic turnaround plan to clear the backlog and ensure that the bank’s financials were up to date.

The source said: “These backlogs have been cleared, approved by the board and submitted to the relevant regulatory authorities.

“The 2020 financials are in the process of being approved by the board.

“With the introduction of its USSD code, there is an improvement in transparency on the management of the NHF to its contributors.”

“Our financials are ready up to 2019. Once the board approves that of 2020, we will have an up to date financials to present to any investor who wishes to invest in FMBN,” he said.

Another affordable housing expert, Managing Director, Fonahanmi Idris and Associates, Mr Fonahanmi Idris, said the rate of interest wasn’t mentioned in the report of the bank.

He pointed out that the  FMBN’s loan was structured between 6-15 per cent, depending on products.

The FMBN Act, he said, captured the distribution of the six per cent between the three parties but not interest beyond six per cent.

“The tenor of FMBN loan to PMB for onward lending is never “more than 30 years,” he said.

Idris is of the opinion that FMBN management would read through thoroughly and do the needful as soon as possible.

Going forward,  he said the FMBN’s loan applications should be online real-time and the bank’s audited account should not be a problem.

He said: “If an investor wants three years audited accounts (2018, 19 and 20) from FMBN, please what will they present?

“The application turnaround process should also be of concern. 2 -5 years is not ideal. The funds “may” use additional 2-3 years trapped with “few PMB”.

Another expert, Olubayo said he believed the current management  of the bank had made some good strides since coming to office but bemoaned the culture of a lack of financial accountability and transparency, saying such was common in Nigeria at the moment. He said that public/voluntary institutions of all kinds struggled with the issue.

He explained that financial accountability and transparency remained essential parts of stewardship in public office, saying there was a need to address the poor culture as part of efforts to move the country forward.

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