‘Banks, insurance firms default on contribution to housing scheme for 24 years’

Managing Director, Federal Mortgage Bank of Nigeria (FMBN), Gimba Kumo, has disclosed that commercial banks and insurance companies have defaulted payment of its contribution to the housing scheme for 24 years.

Speaking while briefing the Senate Committee on Banking, Insurance and other Financial Institutions at an interactive session Tuesday, Kumo revealed that since 1992, the financial institutions had flouted the Act compelled them to contribute to the Scheme.

According to Kumo, Section 5 of the NHF Act provides that commercial banks are supposed to invest 10 percent of their portfolio to the Scheme, while insurance companies are supposed to invest 20 percent of their Life Insurance Funds and 25 percent of their Non-Life Funds.

He said the Central Bank of Nigeria, which is supposed to enforce compliance, had not done enough to ensure the banks paid their contributions to the National Housing Scheme.

“Section 11 provides that where the bank refuses to pay, the CBN is supposed to force the banks to contribute to the fund at an interest rate of 4 percent.

“This has not been complied with since 1992, we have been following up with the CBN, but nothing has been done. So, this is an area that we need your support to ensure that the law is enforced,” he said.

He said the FMBN was in dire need of the contributions to meet the over 16 million deficit in the housing sector.

While calling on the Senate to assist the bank in enforcing other sources of revenue, he said that the non-formal sector was also being encouraged to contribute to the Fund.

He said the involvement would increase the contribution to the fund by 6,000 percent and raise the monthly contribution from N2.5 billion to N3.5 billion.

He called on the Senate to also look into the huge money in the pension funds, which could also be used to fund housing in Nigeria.

He called for the recapitalisation of the Bank from the current N5 billion capital bases to N250 billion to further empower the bank to meet the housing challenge in Nigeria.

The MD added that the bank through the National Housing Scheme is on the verge of completing 67,000 housing units and was currently targeting 72,000 new houses to be spread across the country.

He said one of the major benefits of the 72,000 housing projects would be the generation of jobs, as 17 workers would be needed to