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By Yinka Kolawole
Federal Mortgage Bank of Nigeria (FMBN) has introduced a new product known as FMBN Informal Sector Cooperative Scheme, in a bid to integrate Nigerians operating in the informal sector of the economy into the National Housing Fund (NHF) scheme.

The NHF scheme was established by Decree 2 of 1992, which mandates all public servants and workers in the organised private sector to contribute 2.5 per cent of their basic monthly salary to into a pool of funds to be managed by Federal Mortgage Bank of Nigeria (FMBN), from where they can obtain mortgage loans at 6 percent interest.

However, the new FMBN product seeks to use cooperative housing structures to enable low income earners, who are not captured in the formal sector, have access to mortgage loans from FMBN to build their own homes.

It would be recalled that the cooperative housing initiative for the informal sector was formally launched in Lagos by the Minister for Housing and Urban Development, Ms. Ama Pepple, in December 2011, and is expected to be replicated in other states of the federation this year.

FMBN Managing Director,  Mr. Gimba Ya'u Kumo, revealed in a document that the product is intended to provide a forum to register and organise informal sector participants using cooperative societies that are duly registered by FMBN. According to him, due to the huge contribution of the informal sector estimated to be 85 percent of the nation's workforce, it has become imperative to incorporate the sector into the scheme.

The FMBN boss highlighted the modalities of how the scheme will work. He stated: 'The Cooperative Society must be registered with the Registrar of Cooperatives in charge of the area within which it is domiciled; The society must be registered with the National Housing Fund (NHF) Scheme; The society must be responsible for remitting the contributions of its members; The cooperative society must be accredited by the Bank; The cooperative society must have been in existence for a minimum of 12 months during which membership dues paid by members have been consistent; The proposed estate must have good title that can be sub-leased to individual allottees/purchasers of the housing units therein; The tenor of the loan shall be  24 months with a moratorium  period  of 12 months; The loan shall be disbursed to a cooperative society at an interest rate of 10 per cent; The cooperative shall identify a Primary Mortgage Institution (PMI) with which it would collaborate for the purpose of processing a Cooperative NHF Loan (CNL) for its members; Housing units for the proposed project(s) must fall within a target selling price not exceeding N5 million; The land upon which the estate is to be built shall have legal title; The security for disbursing each tranche of the loan shall be the title document of the estate land; The loan shall be disbursed in three tranches to complete the sub-structure, super- structure and finishing.'

Ya'u Kumo added that the documentation required to key into the Cooperative Housing Development Loan include but not limited to: the presentation of registration of the Cooperative society; bye laws of the Cooperative Society, detailed profile of the Cooperative Society and Resolution of the Board of Trustees of the Society signed by the chairman and Secretary, authorising it to borrow.

Individual cooperators shall enjoy the housing loan at six  per cent rate per annum with 15 per cent down payment as personal stake in the loan and an evidence of minimum NHF monthly contribution of N450 and a minimum period of six months will be required at the application stage.

He further stated that any monthly contribution in excess of N450 shall be accounted for in favour of the member as part of his personal stake contribution at the time of loan application while members will be required to submit, in addition to evidence of NHF registration/remittance, evidence of membership of the cooperative society (membership card) for a period not less than six months preceding the month of application.