Real estate in Nigeria is a paradox, a sector brimming with potential yet plagued by systemic inefficiencies, financial mismanagement, and a persistent failure to meet the housing needs of its people. At the heart of this conundrum lies the National Housing Scheme(NHS) and its implementing arm, the Federal Mortgage Bank of Nigeria(FMBN). Established with the noble aim of providing affordable housing to Nigerians, these institutions have struggled to deliver on their mandate.
As of March 2025, Nigeria’s housing deficit stands at an estimated 20 million units, a figure that underscores the urgency for reform. This piece explores whether the NHS and FMBN are meeting Nigeria’s housing needs, why they are falling short, and why the sector demands a comprehensive overhaul.
The National Housing Scheme and Federal Mortgage Bank: A Vision Unfulfilled…
The National Housing Fund (NHF), enacted under Act No. 3 of 1992, forms the backbone of the NHS. Managed by the FMBN, it mandates a 2.5% monthly contribution from the basic salaries of Nigerian workers earning ₦3,000 or more annually. The goal ? To pool funds and provide low-interest mortgage loans, at a fixed 6% per annum, for contributors to build, buy, or renovate homes. With a maximum loan cap of ₦15 million and tenors stretching up to 30years, the scheme was designed to democratize access to housing, particularly for low- and middle-income earners like civil servants, traders, and artisans.
On paper, the FMBN has made strides. As of August 2023, it reported facilitating 24,654 mortgages worth ₦140.125 billion (approximately $184.29 million at the time). By January 2023, the bank commissioned 1,071 housing units under the National Affordable Housing Delivery Programme, with additional projects like 404 units in Enugu, 257 in Katsina, 180 in Anambra, and 72 in Ogun. The Federal Ministry of Works and Housing, between 2015 and 2023, delivered 8,938 units, while the FMBN’s sister agency, the Federal Housing Authority(FHA), has contributed to mass housing efforts. More recently, the Renewed Hope Cities and Estates program, launched under President Bola Tinubu’s administration, targets 10,112 energy-efficient units across 14 locations, signaling ambition.
Yet, these numbers pale against Nigeria’s housing crisis. The World Bank estimates that Nigeria needs 720,000 new units annually just to keep pace with population growth and urbanization, which exceeds 4% yearly. With a population of over 200 million and a deficit of 20 million units, the FMBN’s output, averaging a few thousand units annually, barely scratches the surface. Why, despite decades of operation, does the scheme fall so short?
The Cracks in the Foundation: Why the NHS and FMBN Struggle.
1. Chronic Underfunding.
The FMBN’s ability to finance housing is crippled by a lack of resources. The 2.5% NHF contribution, while mandatory, yields a shallow pool of funds. In a country where the minimum wage is ₦70,000 (as of mid-2024), a worker’s monthly contribution is just ₦1,750—hardly enough to sustain a robust mortgage system. Commercial banks, mandated to invest 10% of their loan portfolios in the NHF, and insurance companies, required to channel 20% of non-life and 40% of life funds, often fail to comply fully. The Federal Government’s contributions, meanwhile, are inconsistent, dwarfed by budgetary demands elsewhere. In February 2025, FMBN Managing Director Shehu Osidi lamented that funding shortfalls limit the bank’s role in affordable housing, a sentiment echoed by industry watchers.
2. Bureaucratic Bottlenecks and Corruption.
The NHF loan process is mired in red tape. Contributors must save for at least six months, navigate accredited Primary Mortgage Banks(PMBs), and submit extensive documentation (application forms, proof of income, title deeds) only to face delays or outright rejection. Reports of mismanagement and corruption within the FMBN have surfaced over the years, eroding trust. In the early 2000s, the Nigeria Employers’ Consultative Association(NECA) and Nigeria Labour Congress(NLC) halted participation in the scheme, citing inefficiencies and lack of transparency. Though a 2013 Memorandum of Understanding revived cooperation, skepticism lingers.
3. Mismatch Between Supply and Demand.
The FMBN’s housing projects often cater to a narrow segment, missing the broader low-income population. Units priced at ₦50 million under the Estate Development Loan(EDL) window (intended for mass production) are unaffordable for most NHF contributors, whose loans max out at ₦15 million. Meanwhile, luxury developments proliferate in urban centers like Lagos and Abuja, leaving rural areas and informal sector workers underserved. The Nigeria Mortgage Refinance Company(NMRC), set up in 2013 to bolster mortgage liquidity, refinanced ₦24.02 billion in loans by December 2022, but its reach remains limited.
4. Economic Realities and Loan Accessibility.
Nigeria’s economic volatility, high inflation (over 30% in 2024), naira depreciation, and stagnant wages undermine the NHF’s viability. A ₦15 million loan, even at 6% interest, is a stretch when monthly repayments cannot exceed one-third of a contributor’s income (e.g., ₦23,333 for a ₦70,000 earner). Rising construction costs (cement hit ₦10,000 per bag in 2024) further inflate housing prices, rendering “affordable” units out of reach. The Central Bank of Nigeria(CBN) reported a 4.4% non-performing loan rate in April 2023, reflecting a broader financial strain that deters lending.
5. Regulatory and Structural Weaknesses.
The legal framework governing the NHS (last updated in 1992) is outdated. Land tenure issues, exacerbated by the Land Use Act of 1978, complicate property acquisition, while slow-building plan approvals and certificate of occupancy issuance stifle development. The CBN’s revocation of licenses for four PMBs and 179 microfinance banks in May 2023 highlights regulatory instability in the mortgage ecosystem.
Does It Meet Housing Needs? The Verdict… !
The NHS and FMBN are not meeting Nigeria’s housing needs, not by a long shot. While they provide a lifeline for some formal sector workers with steady incomes, the vast majority of Nigerians, especially the 60% in the informal sector, remain excluded. The scheme’s output is a drop in the ocean compared to the deficit, and it’s focus on ownership over rental options ignores the realities of a population where renting dominates(over 80% in urban areas). Initiatives like the FMBN’s Rent-to-Own scheme or Diaspora NHF Mortgage are innovative but lack scale. In short, the system is a patchwork, not a solution.
Why the Sector Needs an Overhaul … !
The real estate sector, including the NHS and FMBN, demands a radical rethink for several reasons:
– Funding Reform: The NHF’s contribution model is unsustainable. Increasing government investment, enforcing private-sector compliance, and tapping international funding(e.g., from Shelter Afrique Development Bank) could deepen the resource pool. Public-private partnerships (PPPs), like those driving the Renewed Hope agenda, need expansion beyond the current 50% private funding level.
– Streamlined Processes: Digitizing NHF applications, loan disbursements, and land registries would cut bureaucracy and corruption. The FMBN’s *219# USSD code for checking contributions is a start, but the entire system needs modernization.
– Affordability Focus: Housing units must align with income levels. Subsidies, alternative building materials (e.g., compressed earth blocks), and rental schemes could bridge the gap. The current ₦50 million EDL cap is a disconnect from reality.
– Legal and Regulatory Updates: Overhauling the NHF Act, Land Use Act, and related laws would unlock land access and incentivize private developers through tax waivers and faster approvals. A national land depository, as proposed in past policy reviews, is overdue.
– Inclusive Reach: Extending the NHS to informal workers via cooperatives and microfinance, as piloted in some states, could broaden its impact. The current formal-sector bias alienates millions.
A Path Forward.
Nigeria’s housing crisis is not intractable, but it requires bold action. The FMBN could learn from Kenya’s National Housing Corporation, which blends subsidies and private investment to deliver 50,000 units annually, or Rwanda’s use of local materials to slash costs. Without an overhaul, the NHS and FMBN risk remaining relics, noble in intent, impotent in practice. As of March 5, 2025, the clock is ticking on a deficit that grows by the day. Real estate can fulfill Nigeria’s housing needs, but only if its stewards rise to the challenge.
