Federal Mortgage Bank returns N12bn in erroneous deductions

The Federal Mortgage Bank of Nigeria, has returned N12bn to National Housing Fund contributors, partially offseting N19bn in erroneous deductions.

The deductions were incorrectly classified as revenue, stemming from a misunderstanding of the 40% revenue sharing policy for federal agencies.

Mr. Shehu Osidi, Managing Director/Chief Executive of FMBN, announced this at the 18th Africa International Housing Show 2024 in Abuja, during the FMBN Day event on Wednesday.

The Federal Government, in 2023, commenced the implementation of an automatic 40 per cent deduction of Internally Generated Revenues of federal universities and other partially funded institutions across the country.

The auto-deduction policy of gross IGR is in line with the finance circular with reference number FMFBNP/OTHERS/IGR/CRF/12/2021 dated December 20, 2021.

It, however, in a circular, limited the annual budgetary expenditure from IGR of the partially funded federal agencies.

Osidi stated, “We initiated constructive engagement with the Federal Ministry of Finance to secure refunds of the wrongful deductions of NHF contribution misconstrued as revenue under the 40 per cent deduction regime of the revenue accruing to the Federal Agencies which led to the recovery of N12bn out of the outstanding N19bn into the Bank’s coffers.”

He added that the bank was engaging relevant authorities until the deduction LS is stopped and “we recover outstanding balances trapped by NHF funds.”

Osidi disclosed that the new management of the bank, through the Ministry of Finance, has presented the proposal for the recapitalisation of FMBN at the Federal Executive Council.

“This effort has led to the establishment of an inter-agency committee on the recapitalization of the Bank towards improving its capacity for providing adequate liquidity for the Nigeria Housing Finance sector and affordable housing delivery in Nigeria,” he said.

He stated that the recapitalisation committee included the Federal Ministry of Finance, Bureau of Public Enterprises, Ministry of Finance Incorporated and the Federal Ministry of Housing and Urban Development.

Central Bank of Nigeria Governor, Olayemi Cardoso, stated that the bank began the recapitalization process for banks in November 2023, but later issued a circular in March 2024, instructing internationally authorized commercial banks to raise their capital base to N500bn and national banks to N200bn.

The capital requirements for commercial banks are tiered, with nationally licensed banks needing to reach N200bn and regionally authorized banks requiring a minimum of N50bn by 2026.