Among many agencies of government, good financial accounts are known to be necessary, but hardly employed or leveraged for the growth of the business side of such agencies.
Some agencies, however, stand out and among these is the federal mortgage bank of Nigeria (FMBN), the country’s apex mortgage bank, which oversees the operations of the National Housing Fund (NHF).
The management team of the bank acknowledges the business imperative of having up to date financial statements, which explains why they moved with speed to correct the past and has now succeeded in re-setting standards for the bank’s financial accounting going forward.
In the business world, financial statements are important because they provide a snapshot of an institution’s status at a particular point in time, giving insight into its performance, the status of the business, debt position, result of its operations, cash flow, and overall conditions.
This explains why the ‘new’ management of the bank under Ahmed Dangiwa as the MD/CEO has elected to keep good, audited financial accounts or statement. However, like many other public institutions, FMBN has had its fair share of periods when it failed to comply with financial regulations.
As of April 2017, when the current management team came on board, the bank’s financial statements for the period 2013 to 2016 were outstanding. Those who ran the bank during this period failed in their statutory duty of rendering annual audited accounts to the regulatory authorities as required by law.
“What has set FMBN apart from other public institutions with similar history of inherited unaudited accounts rests on the prompt and positive action that it took to fix the problem,” John Ikyaave, an Abuja-based housing policy analyst, explained to BusinessDay.
“In what can be termed a good contrast, the new FMBN management recognized the importance of complying with the financial regulations and set in motion an institutional machinery towards clearing the backlog not long after it came on board. This was the right thing to do,” Ikyaave added.
Essentially, shareholders need information to make informed decisions about their equity investments.
This also applies to the FMBN as a publicly owned housing development finance institution. The bank’s shareholders include the Federal Government of Nigeria (FGN), which holds a 50 percent shareholding valued at N2.5 billionn; the Central Bank of Nigeria (CBN), which holds a 30 percent shareholding valued at N1.5 billion and the Nigeria Social Insurance Trust Fund (NSITF) with a 20 percent shareholding stake valued at N1 billion need to be kept abreast of facts regarding the bank’s operations.
Nowhere is this information more critical than the drive by the FMBN management for the N500 billion for its recapitalization. Housing industry stakeholders including FMBN owners agree that its current N5billion capital base is grossly insufficient for an apex mortgage institution.
According to Ikyaave, this gives the bank little financial roots to leverage funding to drive its affordable housing delivery mandate, pointing out that the financial books are a critical foundation for acting. It is promising that the FMBN management understands the necessity to tidy up its finances as a prerequisite for doubling the pressure on government to act.
As a development finance institution with the mandate to seek for funds from the capital markets – local and abroad – potential FMBN partners and investors also require this information as a baseline for their decision to invest or not to engage.
In pursuit of its business growth strategy, the Dangiwa-led management team has cleared the 4-year backlog of unaudited accounts for the period 2013 – 2016, signaling a sharp break from the past.
The team has also demonstrated a willingness for financial accountability by preparing and submitting its financial accounts for 2017 and 2018 to regulatory authorities, while that for 2019 is already approved and awaiting sign off. With work already started on the 2020 financial, FMBN now appears set to have up-to-date financial statements within this year.
It is, perhaps, on the back of this confidence that the bank was quick to issue a public rebuttal to some news reports that misconstrued what transpired when its CEO made a presentation to the House Committee on Public Accounts.
Some of the news stories inaccurately reported that FMBN had five-years of unaudited accounts and wrongly claimed that the House Committee “chided” FMBN over the unaudited accounts.
In the rebuttal, FMBN said the reports were wrong and inaccurate, explaining that the management had upon resumption of office in 2017 set up a Financial Accounts Taskforce with the mandate to clear the four-year backlog, which it inherited, to ensure that the bank’s financials are brought up to date as part of its strategic turnaround plan.