CHAPTER ONE INTRODUCTION

1.1           Background to the study

Performance of a corporation whether profit or non-profit making is of great importance as it

serves as an indicator of a healthy economy of a nation (Almajali, Alamro & Al-Soub, 2012).

According to Iswatia and Anshoria (2007), performance is the function of the ability of an

organisation to gain and manage its resources in several ways to develop competitive

advantage. The performance of Primary Mortgage Banks (PMBs) in the economy is usually

of major concern to most governments, because PMBs play a significant role in the mortgage

sector by serving as the primary lenders in the sector. The sector’s contribution to Gross

Domestic Product (GDP) stood at 0.5 percent (Kumo, 2014). Furthermore, stakeholders in the

housing finance sector are of the view that the sector can contribute up to 10 percent of GDP

if more attention is given to mortgage market (Azuh, 2013).

Primary Mortgage Banks (PMBs) are licensed by Central Bank of Nigeria (CBN) and

Federal Mortgage Bank of Nigeria (FMBN) to operate as a mortgage outfit that will

collect deposit and support individuals and corporations in meeting their housing needs

(CBN, 2007). In addition, it serves as financial intermediaries in housing finance sector.

These banks operate under the coffers of the National Housing Fund (NHF). NHF (now

National Housing Trust Fund) was promulgated by Decree No.3 of 1992, and conferred

with the responsibility of facilitating the constant flow of low cost funds for long term

investment on housing, to nurture and maintain a stable base for affordable housing

finance and to provide incentives for the capital market to invest in property development

(Latinwo, 2002 and Sanusi, 2003). According to Adedokun, Akinradewo, Adegoke and

Abiola-Falemu (2011), it is in recognition of finance in housing delivery that warrants the

setting of PMBs to facilitate the delivery, being the sole intermediary between the FMBN

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(apex lending institution in housing matters) and the mortgagors in disbursing the

proceeds of NHTF.

Housing plays a pivotal role in growth and national development as it directly affects not

only the well-being of the citizenry, but also the performance of other sectors of the economy

(Adedeji, 2005). Housing has been universally accepted as the second most important