Richard Esin at FMBN
One of the things we should do more in the media is celebrate our unsung heroes-those few Nigerians who defy the norm, especially in the public service where commitment, excellence and performance are not sufficiently identified and rewarded. I choose to highlight the example of Richard Esin, until recently the Acting Managing Director of the Federal Mortgage Bank of Nigeria (FMBN). In doing so, I must first declare my interest – FMBN under Esin gave my consulting firm, RTC Advisory Services Ltd, some consulting work in the areas of Strategy and Performance Management. I assure readers that the size of those assignments were relatively modest and certainly not sufficient to affect my judgement!
Richard Esin took over the leadership at FMBN in February 2016, and exited in April 2017 just 15 months later. In that relatively short period, Esin and his colleagues in the interim management team defined four priorities for FMBN – enhancing corporate governance, improving profitability, driving operational effectiveness and debt recovery. He refocused the bank’s strategy for provision of mortgages for low and middle income earners at an average cost of N5-7million for the mass market segment; N7-10million for the middle market; and N10- N15million for the “affluent” segment based on the National Housing Model introduced by Housing Minister, Babatunde Fashola. This was a significant refocusing given that the previous concentration of FMBN’s activities were huge Estate Development Loans to well-connected firms based on a system of patronage and corruption that left most such loans uncollected. The result was a legacy of bad loan portfolio in the institution running into tens of billions of Naira! The historical incentives of a pre-Esin FMBN CEO given the “Nigerian factor” was structured in favour of these types of loans, given the “opportunities” these presented for self-aggrandisement!
Esin collapsed FMBN’s 7-layered structure into 3 layers, flattening decision-making and reducing bureaucracy in the organisation and decentralised authority from the Head Office to business heads in the states, zones and regions; and instituted an objective shift appraisal system. The bank, unusually for an institution in the public sector, adopted a performance-driven culture with half-year performance review sessions in which business and functional heads of states, zonal and regional levels accounted for their performance in front of their colleagues. I designed and facilitated those sessions and I must say it was simply astounding to observe the improvements in both the profitability and efficiency of these business offices and the confidence and presentation skills of the managers in such a short period of time. It is clear to me from the FMBN example that our public sector can be as competent and effective as their equivalents in the private sectors if only they are provided the platforms and resources to do so.
The results of these initiatives were more or less instantaneous! I am told that for the first time in over 20 years, FMBN reported a profit or operating surplus in 2016, after only 10 months of Esin’s leadership. In that year, FMBN reportedly declared a profit of N2.7billion! The ascent to profitability was clear and steady from June 2016 half year, through the third quarter, to full year. Can you imagine the impact if all Nigerian commercialised public sector entities recorded similar dramatic improvements in performance and profitability?
The positive impact of Esin’s leadership on the fortunes of FMBN was not limited to just profitability – FMBN in that 15 months period created 1,300 home owners through mortgages for National Housing Fund (NHF) contributions amounting to N10bn in 2016; the organisation disbursed N2billion to more than 2,200 beneficiaries nationwide as Home Renovation Loans, a product that was introduced under Esin’s leadership; FMBN completed and commissioned eight(8) abandoned or uncompleted estates which injected about 1,300 housing units to the nation’s housing stock within 12 months!
Across many indices, the improvement in outcomes for customers, FMBN and the nation were astounding – states’ resumption of NHF contributions; growth in NHF balances; payments of refunds to retired contributors; debt recovery (FMBN recovered N1.6bn in 2016); improvements in service standards especially clearing backlogs of data entry; automation of operations; introduction of a new Wide Area Network that transformed technology uptime; improvements in procurement transparency and processes; payment of FMBN pensions etc. In the period, FMBN also signed a $2billion credit line ($ 200million annually for 10years) as Housing Construction Finance Facility with Shelter Afrique and Real Estate Development Association of Nigeria (REDAN) for construction of 10,000 low cost housing units, a programme that is expected to create 150,000 jobs nationwide. There were also improvements in governance and institutionalisation-engagement of PWC to implement an Enterprise Risk Management Framework; an audit of corporate governance and design of new corporate governance structure in conjunction with IOD’s Centre for Corporate Governance; ongoing IFRS conversion and audit of 2013 to 2016 accounts; and various ICT transformation projects.
The case study of Richard Esin at FMBN confirms to me that Nigeria’s public sector can function if we appoint the right people and provide them the enabling environment to perform. The tragedy, of course was how Esin and his colleagues were unceremoniously removed in spite of their outstanding performance and results.
Opeyemi Agbaje