Access to affordable housing remains a major challenge for millions of Nigerians, despite the existence of substantial funds meant to facilitate homeownership, JOSEPHINE OGUNDEJI writes
With over N3tn lying idle in the National Housing Fund and N22.51tn in pension funds, housing stakeholders have raised concerns about the underutilisation of these resources.
According to these operators, instead of being channelled into social housing, these funds are largely directed toward non-housing investments, leaving many potential homeowners stranded.
Established through Decree No. 3 of 1992, the National Housing Fund is managed by the Federal Mortgage Bank of Nigeria, designed to mobilise long-term funds to provide accessible mortgage loans for workers.
Under this scheme, employees contribute 2.5 per cent of their monthly salaries, and after six months of continuous contributions, they become eligible to apply for a low-interest mortgage of up to N15m repayable over 30 years.
Section 4 of the National Housing Fund Act, Cap N45, provides for contributions by Nigerian workers.
It states, “A Nigerian worker earning an income of N3,000 and above per annum in both the public and the private sectors of the economy shall contribute 2.5 per cent of his basic monthly salary to the Fund.
“An interest rate of 4 per cent shall be payable on contributions made under subsection (1) of this section.”
However, despite decades of contributions, a significant portion of these funds remains unutilised, raising questions about the fund’s management and transparency.
In April 2023, the government revised the NHF scheme, making it voluntary for private-sector workers. While this move provided workers with more financial autonomy, it also limited the inflow of funds into the housing sector, reducing its potential impact.
In an exclusive interview with The PUNCH, the Managing Director of Fame Oyster & Co. Nigeria, Femi Oyedele, said money collected under the National Housing Fund and money being collected as pension funds were dormant deposits of customers in banks supposed to be used for social housing, which is a guaranteed investment, adding that, unfortunately, corruption is a big challenge in Nigeria.
He said, “Act 3 of 1992 established the National Housing Fund to manage 2.5 per cent of the monthly salaries of all workers who are over 18 years old. A subscriber who has contributed 2.5 per cent of his salary for a minimum of six months can apply for a loan to buy or build his home. Qualified individuals can get up to N15,000,000, which can be repaid for 30 years. As of April 3, 2023, the government made it non-mandatory for the private sector workers but voluntary to contribute to NHF. The total amount that has been contributed by workers to date and is not accessed is in excess of N3tn.
“The money is still in the coffer. Between 1992 and the present date, how many workers were able to access housing loans through NPF? Very negligible. If the programme were successful, we wouldn’t have so much of a housing deficit in Nigeria.
“Also, the National Pension Fund had, as of the end of the third quarter of 2024, N21.14tn in its purse. This amount is being invested in non-housing products. Lastly are the dominant deposits of Nigerian bank customers, dead and alive, that can be invested in affordable housing. In 2024, the number of dormant accounts in Nigeria was 19.8 million. The amount of money in this account, which the banks see as a cheap fund for their transactions, can be invested in affordable housing instead of allowing the Central Bank of Nigeria to mop it up.”
Speaking on how he got the N3trn figure, Oyedele noted that Nigeria has about 13,000,000 workers registered with the National Housing Fund.
He posited, “We have about 13,000,000 workers registered with the National Housing Fund that is being managed by the Federal Mortgage Bank of Nigeria. From 1992 to date, 13,000,000 people contributed 2.5 per cent of their salaries, while their employers also contributed 2.5 per cent making a total of five per cent of salaries every month, which cannot be less than N3trn now. You can call the Federal Mortgage Bank of Nigeria to get the exact figure.”
In a similar vein, the Executive Secretary of the Association of Housing Corporations of Nigeria, Toye Eniola, said the administration of the funds obtained by the National Housing Fund was shrouded in secrecy.
He asserted, “The statement of money being collected under the National Housing Fund and money being collected as pension funds and dormant deposits of customers in banks supposed to be used for social housing is a guaranteed investment. Unfortunately, corruption is a big challenge.
“This is a reality of our experience in the housing sector: the administration of those funds was shrouded in some secrecy without clarity and laid-out processes that will simplify accessibility. The conditions for meeting the requirements of accessibility are outdated and could only be met by a few upper classes at the expense of low-income earners who really need social housing.”
The treasurer of the Nigerian Society of Engineers, Victoria Island branch, Babatunji Adegoke, said, “NHF should be used for the purpose that it is meant for. Deviation from this purpose may further widen the housing deficit in the county.”
NHF investing in fixed deposits
An expert in the built industry, who pleaded anonymity, said asset management companies were investing workers’ funds for returns.
He said, “The thing I know about that level of corruption, with facts and figures, is that I do not just want to talk about it; I want my peace. If you know what they have done, the money has been distributed to most of the assets and management companies, and these companies are fixing the money and getting returns on it, whereas the end users are not getting returns on it.
“Do you know the volume of houses that have been built by the Federal Housing Authority, and Federal Mortgage Bank of Nigeria, and today they are empty all over Nigeria? What I even suggest is collating these empty houses together, giving them to people at very good prices, and asking mortgage institutions to mortgage them for 10-15 years before the government starts building from scratch. However, the empty ones have been there for five to six years, and they are still building more.”
He decried the disbarment of the Ministry of Finance Incorporated funds to an asset management firm, adding that they do not have anything to do with it.
He continued, “These things are just deceits; get a trustworthy developer, let them build good houses, then mortgage them. There are mortgage institutions that put money in NHF, but they in turn put it in fixed deposits and do not do anything with it. I went to FMBN some years back. I told them that until they clean and sanitise the people, nothing would be sanitised in the housing industry.
“There are staff of FMBN whose money has been deducted in the last years, and the developers they gave money to in collaboration with their top people have not gotten their houses yet; this is three, four, or five years, and none of their management is doing anything to this developer who has not given their own staff members their houses, not to talk of you and me that are not staffers.”
Pension growth
Beyond the NHF, Oyedele argued that pension funds could also be leveraged to drive Nigeria’s housing sector.
He posited, “The total pension fund in Nigeria has been growing steadily. As of June 2024, the total pension fund assets surged to N20.48tn, marking an increase of N256.76bn from the previous month’s value of N20.23tn. This growth is a significant improvement from 2023, when the total pension assets stood at N18.36tn, representing a 22.34 per cent increase from the previous year. The rate of pension paid by workers in Nigeria is eight per cent of their monthly emoluments, which include basic salary, housing allowance, and transport allowance.
“This contribution is mandatory for all employees in the public and private sectors, and it’s deducted from their salaries. In addition to the employee’s contribution, employers are also required to contribute a minimum of 10 per cent of the employee’s monthly emoluments to the pension fund. This brings the total pension contribution to 18 per cent of the employee’s monthly emoluments.
“It’s worth noting that employees can also make voluntary contributions to their pension fund, but these contributions are taxable upon withdrawal if made less than five years after the contribution was made.”
The National Pension Commission stated pension assets rose by N2.4tn in 2024, from N19.53tn in January 2024 to N21.92tn as of the last quarter of 2024; the latest figure was revealed in the 2024 report released by the commission.
In the year, about 320,000 workers joined the Contributory Pension Scheme.
The Nigerian pension industry portfolio grew about 22.60 per cent to close December 2024 at N22.51tn from N18.36tn as of December 2023.
This was disclosed in the latest monthly report from the National Pension Commission.
According to the report, pension assets had grown month-on-month by about 1.15 per cent from N22.26tn to N22.51tn, while the total number of registered Retirement Savings Account holders stood at 10,582,299.
Meanwhile, the Chief Executive Officer of Pelican Valley Nigerian Ltd., Babatunde Adeyemo, said the nation was sitting on a keg of gunpowder; if the issue of the contributory pension scheme is not properly checked, formatted, and managed before it gets out of hand, especially as its effects have begun to hit parts of the armed forces, the academics, and some other public servants.
He asserted, “One of the major setbacks to the contributory pension scheme is hyperinflation. The money contributed by workers, which is referred to as retirement savings, would have been grossly depleted by inflation before the worker’s retirement; even the inflation-ridden retirement savings balance is often totally embezzled, while the leftover funds or the fund’s remnants are often poorly invested or managed by the funds’ custodians and administrators.
He continued, “President Bola Tinubu’s administration has done well in terms of stabilising the exchange rate and inflation in recent times, but the sustainability of his efforts lies in how he can manage the newly contributed funds and maintain the stability of the forex in the long term.
“President Tinubu really needs to immediately intervene in PENCOM with men of business acumen and incorruptible track records to oversee the department for a long time, before the sector can recover from the state of comatose.”
Dormant bank deposits
Oyedele further noted that dormant bank deposits/funds left unclaimed in inactive accounts presented another untapped resource.
He said, “In 2024 alone, Nigeria recorded 19.8 million dormant accounts, with banks using these deposits as low-cost capital for their financial operations. Instead of allowing the Central Bank of Nigeria to mop up these funds, housing advocates suggest that a portion be redirected towards affordable housing projects to benefit low- and middle-income earners.
“Operators within the real estate and mortgage sectors argue that the deviation from using these funds for housing contradicts their intended purpose. Many believe that if these funds were properly managed and directed towards low-cost and social housing, Nigeria could significantly reduce its 28 million housing deficits. Yet, issues of mismanagement, lack of transparency, and weak enforcement mechanisms continue to hinder progress.
“Corruption remains a significant obstacle in the housing finance system, as operators indicate that cheap funds meant for affordable housing projects are often diverted for other purposes like trade finance, while eligible contributors struggle with cumbersome approval processes. Real estate developers also face difficulties in securing project finance, further slowing down housing supply in the country.”
NHF Act not serving purpose
According to a 2019 report by Aelex, a leading commercial & dispute resolution law firm, titled ‘Examining the Faws of the National Housing Funds (Establishment) Bill 2018,’ the bill sought to increase the contributions from the sources already listed in the Act and also introduce new sources of funding.
It added, “While the idea behind the bill is commendable, the main objective of the act should be creating an enabling environment for the provision of affordable housing and not only making more money available for the provision of affordable housing. In this regard, the provisions of the bill seem counterproductive.
“Though the bill intends to provide more money for the provision of affordable housing, the Nigerian economy, including cement, manufacturing, banking, insurance, and pensions, may adversely impact the average Nigerian worker. Thus, it is a commendable one. The Act was enacted in 1992 with the aim of mobilising funds that would be applied towards the provision of affordable housing for Nigerians. However, that is not the case, as the housing problem in Nigeria continues to worsen. As of 2012, the National Bureau of Statistics estimated that Nigeria has a housing deficit of 17,000,000 houses and requires the construction of 700,000 houses annually to bridge the gap.
“This is in stark contrast to the less than 100,000 houses that are constructed annually. The Act has, therefore, not served its purpose, and this will not be corrected by simply throwing more money at the problem. The focus of the National Assembly should thus be geared towards enacting laws that create an enabling environment for the provision of affordable housing. To achieve this, the government must understand that the private sector is a key stakeholder, as the government alone cannot build affordable housing for every Nigerian. To this end, the government has to seriously consider entering into public-private partnerships for the development and provision of affordable housing on terms that are not materially disadvantageous to those being directly provided by the government.”
The National Secretary-General of the Nigerian Labour Congress, Chris Onyeka, had faulted FMBN’s claim that Nigerian workers were accessing mortgages through the NHF.
Onyeka accused the FMBN of not providing proper accounts of the funds to the intended beneficiaries of the NHF.
Onyeka said, “If people are accessing it, who are they? These funds are kept somewhere, and people who access them are the privileged few. That is always the problem. It is our money. It has to be accessible to us. There should be no impediment to making use of our money.”
Operators demand privatisation
Oyedele argued the private sector was in the best position to manage the mortgage fund.
He advised, “The private sector should create two levels of mortgage banks, which are wholesale mortgage banks that will be dealing with property developers and retail mortgage banks for individual property developers. Mortgage is a pool of funds by people who want to build houses through cooperative means and are ready to accept non-commercial rate interest rates on their deposits so that they will be charged non-commercial interest rates whenever they want to access funds for building their houses as a basic need.
“The first thing to do to these people is to have data so that no single person can access a mortgage loan from the retail mortgage banks more than once. This will be for their basic housing needs. Anybody who wants to build a second house will go to the wholesale or secondary mortgage bank, where there are contributors to access higher interest rate loans.
“Mortgages cannot work in a country where the median of the people are not working or earning living wages, one-third of average people’s salaries cannot procure a home for them, houses in the property markets are not affordable to the people, and where there is no reliable data on the housing needs of the people.”
According to the housing expert, the National Housing Fund has little contribution to housing development in Nigeria.
He added, “Since the government is no longer managing pensions of civil servants, the government should desist from managing housing funds. We need two levels of mortgage banks, which must be private.
“The government has no business running the mortgage business. Let NLC manage their mortgage fund by themselves by creating a trustee like Shell or establishing a property development company like the Nigerian National Petroleum Corporation.”
He further noted that the solution was that civil servants should plan their own method of building houses and choose a primary mortgage bank of their choice.
“National Housing Fund is a failure and has not contributed to housing development in Nigeria. The interest rate on contributors’ funds is too low compared to the procurement cost.”
More so, the Chief Executive Officer of Riel Homes, Dr Kolade Adepoju, said from experience, everything that had worked in Nigeria worked when it was privatised.
He said, “They should find a way to infuse this scheme into the private sector. This is how the scheme can be made effective.
“For the public sector handling the housing funding, nobody can hold them responsible. But if the private sector handles it, they know that they would be held responsible for any misbehaviour. In addition, this scheme has been handled by the public sector for years, and yet with no change. The government should try alternatives by giving it to the private sector to handle.”
FMBN reacts
The FMBN’s Group Head of Corporate Communications, Virginia Jang, denied the allegations against the bank.
She said, “When you read the other stories in the other dailies, you’ll know that what the built sector people are alleging is not true. Take the cue.”
