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February, 2010
Legal Alert –
Housing Laws in Nigeria Part 1
To read this Alert in pdf format, please go to
http://www.oseroghoassociates.com/pdf/2010_02.pdf
In this Issue:-
- Legal Alert for February 2010 – Housing
Laws in Nigeria Part 1
- Subscribe & Unsubscribe to Legal Alerts.
- Disclaimer Notice.
LEGAL ALERT—HOUSING LAWS
IN NIGERIA – PART 1 – FEDERAL MORTGAGE BANK
OF NIGERIA ACT
INTRODUCTION
The rapid growth in global population has
not been matched by a reasonable
availability of safe and affordable houses.
The situation in Nigeria is made more
excruciating by a cumbersome land tenure
system, with an unbalanced short-term and
expensive credit/mortgage structure meant to
fund long-term housing requirements of the
Nigerian populace.
The housing insufficiency in Nigeria is not
only due to defects in the existing housing
structures – i.e. land tenure and financing
as mentioned above - but also exacerbated by
the non-dissemination of information on the
existing structures, with the applicability
of such existing structure to the citizenry
by all the stakeholders in the housing
industry.
This Legal Alert and a few others following
it will provide you with some information on
the existing housing laws in Nigeria, how
they affect you and what benefits you could
derive from taking some action concerning
them.
FEDERAL MORTGAGE BANK OF NIGERIA ACT The Federal Mortgage Bank of Nigeria
Act, 1993 established the Federal Mortgage
Bank of Nigeria (“FMBN”) to among other
things provide long-term credit facilities
to Mortgage Institutions in Nigeria. The
FMBN is also established to encourage and
promote the development of Mortgage
Institutions in rural, local, State and
Federal government levels in Nigeria.
Subject to the provisions of the Land Use
Act, the FMBN is also authorised to acquire,
hold or dispose of property, whether such
property is movable or immovable. For the
purpose of achieving its other objectives,
the FMBN is also authorised to undertake the
following activities:-
OBJECTIVES OF THE FMBN
1. Provide long-term credit facilities to
other Mortgage Institutions in Nigeria at
such rates and on such terms as may be
determined by the Board of the FMBN in
accordance with the policy directives of the
Federal Government of Nigeria. The rates and
terms for the long-term credit facilities
are by statute required to be designed to
enable Secondary Mortgage Institutions grant
comparable mortgage facilities to Nigerians
desiring to acquire houses of their own -
See Section 5(a) FMBN Act.
2. Licence and encourage the emergency of
viable Mortgage Institutions to service the
housing delivery needs of Nigerians.
3. Encourage and promote the development of
Mortgage Institutions in rural, Local,
State, Federal levels in Nigeria.
4. Regulate the activities of all Mortgage
Institutions in Nigeria.
5. Collect, manage and administer all
contributions made under the National
Housing Fund (“NHF”) in compliance with the
National Housing Fund Act.
FUNDS AND REGULATORY AUTHORITY OF THE FMBN
The FMBN is empowered to accept deposits and
savings from Mortgage Institutions and other
Financial Institutions. The FMBN is also
empowered to issue its own securities under
the Federal Government guarantees, with
promissory notes and other bills of exchange
for the purpose of raising Funds from other
Financial Institutions.
To ensure that securities issued by FMBN are
redeemed, the FMBN is required to establish
a sinking Fund for the redemption of its
securities. FMBN provides the contributions
to this sinking Fund.
The FMBN is further statutorily required to
organise and operate, in collaboration with
reputable Insurance companies, a Mortgage
protection system designed to guarantee
liquidity to Mortgage Institutions in
Nigeria, in addition to affording these
mortgage institutions the opportunity of
having long-term credit on liberal premium
terms.
The above liabilities of the FMBN are
re-discountable with the Central Bank of
Nigeria. See section 6 of FMBN Act on the
above powers.
CAPITAL REQUIREMENTS FOR THE FMBN AND TAXATION
The principal sources of capital to the FMBN
are its authorised paid-up Share Capital, a
general reserve Fund into which its net
profits for each Financial year are paid,
with loans from the Federal Government of
Nigeria and other approved bodies or
sources.
The FMBN is exempted from the payment of any
form of tax on its income. The provisions of
the Banks & Other Financial Institutions Act
(“BOIF”) are not applicable to the FMBN.
.
CONCLUSION
Whether the Federal Mortgage Bank
of Nigeria is providing the minimum retail,
supervisory and regulatory support to the
housing needs of Nigerians is a matter of
minimal debate. Allegations of bureaucratic
practices and the inability to ensure the
regular collection of monthly contributions
from National Housing Fund contributors
continue to plague the Federal Mortgage Bank
of Nigeria.
The Federal Mortgage Bank of Nigeria has not
been able to adopt a proactive strategy of
providing affordable long-term loans to a
double digit interest rate short-term
lending economy. Statutory authority
provided under the National Housing Fund Act
to compel banks and insurance companies to
make mandatory contributions appear to be
unimplemented by the Federal Mortgage Bank
of Nigeria.
The unsuccessfulness of the National Housing
Fund as operated by the Federal Mortgage
Bank of Nigeria also has the effect of
jeopardising the various rent control
legislations in Nigeria as most of these
rent control legislation cannot be
implemented in an environment where the
housing demands outstrips the supply of
available houses for rent.
The Federal Government of Nigeria must
therefore restructure and modernise the
Federal Mortgage Bank of Nigeria to meet the
challenges of the twenty-first century.
Should this be impossible, the Federal
Mortgage Bank of Nigeria should be
privatised to operate like other mortgage
institutions while greater tax and
investment incentives should be provided to
mortgage institutions that provide minimum
long-term loans with a tenure of not less
than ten (10) years.
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DISCLAIMER NOTICE: This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm.
Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
EHIJEAGBON O. OSEROGHO
February, 2010.
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