The provision of quality, decent and affordable housing to Nigerian workers remains a major challenge for governments at federal and state levels.
This is largely because of the capital-intensive nature of housing delivery, inadequate access to long-term housing finance and longstanding problems with land administration in the country.
Over the years, successive governments have created different housing initiatives and programmes in attempts to ensure that Nigerians own their homes.
While the gap between what these programmes have achieved and the current housing deficit remains wide, it is important to note that some of them have created significant impact. And if properly empowered could boost the Buhari administration’s plans to stimulate rapid development in the housing sector.
One of such programs is the National Housing Fund (NHF) scheme. Recent figures from the Federal Mortgage Bank of Nigeria (FMBN), managers of the scheme, reveal that the housing fund has facilitated the provision of housing loans totalling over N220 billion to over 45,000 Nigerian families so far.
At the heart of NHF’s appeal is affordability. The payment terms of the individual housing loans that the mortgage bank provides are convenient and unmatched in the financial market.
As a contributor to the scheme, a worker is qualified to apply and get a housing loan up to N15 million to build or purchase a home after six-months of continuous contribution of 2.5 percent of his monthly salary.
The second feature of the housing loan is that beneficiaries have a 35-year period within which to pay back in monthly instalments.
Additionally, loans under the scheme attracts a maximum single digit interest rate of 6 percent per annum!
The NHF scheme is also remarkable because of its minimal equity requirements for accessing its housing loans. Recently, the Dangiwa-led management of the FMBN of Nigeria further reduced the equity contribution requirements for accessing NHF loans from ten to zero percent for N5 million and below. Also, loans above N5 million up to N15 million only attract 10 percent equity contribution.
These terms are remarkable especially when compared with those in the open market. Investigations show that on average commercial banks offer housing loans with maximum tenors of 10 years at interest rates of over 22 percent per annum. Additionally, they require high equity payments of up to 50 percent of the required loan amount before they could process.
Another major angle to the argument for the empowerment of the NHF scheme is the unrivalled impact that it has created in the development of affordable housing stock in the country.
As at June 2019, over N101.1 billion from the scheme has been used by the FMBN to finance the construction of housing projects across the country. The result has been the delivery of over 27,500 affordable housing units.
These housing structures consist of one, two and three-bedroom apartments specifically targeting low and medium-income earners with prices that range from N5 million to a maximum of N15 million.
The financing of the construction of these housing units has created thousands of jobs and enable many Nigerians to own their homes.
Overall, in terms of scale, impact and depth of financing, no other government housing scheme at the national or local government level has achieved this much.
Despite its successes, it is noteworthy that within this period of review, several factors have also been identified as impeding the growth and impact of the NHF scheme.
A notable issue has been the scheme’s weak legal framework that makes enforcing of its provisions tough and difficult.
While the law clearly states that commercial banks and insurance companies should invest part of their profits to the scheme, there has been little or no inflows from these sources to bolster its resources. The federal government on its part has not injected enough funds into the scheme as required.
As a result, the scheme has relied mainly on the contributions from workers that have registered with the scheme.
This has reduced the extent and scale of the scheme manager’s affordable housing interventions and impact under the NHF scheme.
As the Buhari administration unfolds its next level plan for affordable housing delivery, it is important for the government as well as stakeholders in the housing sector to support ongoing efforts to review the NHF bill.
A revised housing fund bill with a stronger legal framework will help to increase financial inflows and ramp up efforts to deliver affordable housing to a greater number of Nigerians.
TERUNGWA ISAAC
Isaac is a policy analyst based in Abuja
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