Mr. Madu Hamman is the Managing Director of Abbey Mortgage Bank. In this interview, he speaks elaborately on mortgage banking, bringing to bare his 35 years of banking experience across commercial, merchant and mortgage banking. Enjoy it!
Why is it so difficult across Nigeria to access National Housing Fund (NHF) loans?
I will explain the process for application of NHF. The Federal Mortgage Bank is the custodian of the federal housing fund. So, for a contributor to be able to access facilities for national housing funds, he or she has to approach a primary mortgage bank, who then processes the request and forwards it to the Federal Mortgage Bank for approval.
The process is cumbersome because the applicant has firstly ensured that all his required documentations are complete and proper. Then the processing at mortgage bank level can then commence. This process includes checking the property that is involved in the transaction. Does it have a proper title? For the applicant; what is his source of income ? Would he be able to meet repayment of the loan? All these processes are done by the primary mortgage bank level before it is forwarded to Federal Mortgage Bank for approval.
Subsequently, the Federal Mortgage Bank also goes through its own process of checking, so, that is why the process is long. However, in terms of pricing I won’t say it is expensive because the initial cost of all these checks might be high but eventually the rate at which you get the facility is just 6 percent interest. This rate is the lowest fiscal facility you can get in the Nigerian market right now.
What about partnership with the private sector providers?
Most of our partnerships are with real estate developers who provide the houses for us to be able to grant mortgages on. So, most of the partnerships might start with credible developers who have housing types that will meet the requirements of our customers. If such real estate developers approach us with such a project we might be able to give funding for such projects and eventually grant mortgages to people who will buy into such projects.
We have partnerships with credible institutions. We also have partnerships with notable cooperatives whose members want to access housing finance. This is how we work with other private sector partners.
In tackling the government end of the issue, can the players in this sector come together to propose a bill or constitution amendment with respect to improving the system?
The issue of addressing various problems with the mortgage sector started as far back as 2001. I think that was when the then president Olusegun obasanjo formed a presidential committee to review the various legal frameworks around the mortgage sector.
At that time, there were legislations that were presented to the National Assembly like amending the Land Use Charge, trying to change some of the legal framework around defaulted loans and many other issues concerning the smooth operation of the mortgage sector.
However, with the life-span of each assembly before the approval for such an amendment could happen there would be a change in assembly and when that happens you have to start from scratch. Our advocacy from the industry as we have the Mortgage Banking Association of Nigeria which propels all the members and also takes care of most of these issues of advocacy.
We also have institutions that have come up recently like the Nigerian Mortgaging Finance Company which is partly owned by the participating bank and partly owned by the federal government through the federal ministry of finance and the Central Bank of Nigeria (CBN) is also involved.
CBN has also been doing a lot of advocacy in trying to address the issue of the challenges within the sector. They have been talking to State Governors to see how each state can amend some of their laws to make it easier and smoother for mortgage transactions to be concluded. There are some proactive states like Lagos State that have been very cooperative. In the north, Kaduna state has shown a lot of interest in assisting the sector and the engagement continues with various other states that are willing to participate in provision of housing for their citizens.
Looking into the future, where do you see your mortgage business in the next 10 years?
Abbey has a very good pedigree, having been in the market for almost 29 years. Currently, we are the oldest and arguably the largest mortgage bank in Nigeria. We would continue to build on that platform and we see ourselves in the next few years 2 to 3 years setting the pace as industry leaders within this sector.
We’re currently doing the right issue which opened on 4th of January for our existing shareholders to invest more in Abbey. We’re trying to reposition the bank for growth in the next 3 to 4 years. Already in 2020, we have been able to grow our balance sheet by up to 80 percent and we will continue to move in that trajectory for the next 3 to 4 years. In the next decade, we see Abbey being the largest mortgage bank in Nigeria.
Do you agree that it is really difficult for Nigerians to access the NHF?
I would say it is not difficult but the process is cumbersome. It’s cumbersome because of what I explained the process to be. If it were at the mortgage bank level for it to get approved, then it would have been faster but it has to go through the Federal Mortgage Bank that manages the funds.
The Federal bank has to exercise extra caution in making sure that the mortgage banks that are submitting have done a proper job for accessing. So, it is this double checking that stretches the process longer, but if you have the right documents to start the process the turnaround time would be much shorter.
Is there a quote or mantra that guides you as a person, what would that be?
What I like about mantras is that they act as a guide to propel somebody for greater achievement. I particularly like the quote by Nelson Mandela that says “It always seems impossible until it is done”. This shows that one should continue to persevere and never give up.
We have seen lots of changes coming up within every sector in the country. Few years ago, I’m sure nobody would have thought tele-communication companies would be competing with banks for payment solutions. Telcos are playing that role because they’ve invested in technology and they have seen an opportunity within the market for them to play a role. So, if one gives up too early on his or her plan, then there would never be success. However, if you continue to persevere and continue to invest in innovation, then there is no impossibility.