Assessment of the operations of Nigeria National Housing Fund

Abstract

Housing constitutes a single largest expenditure item in an average household budget. While the provision of houses through the creation of mortgages is taken for granted in developed countries, it remains a major challenge in developing countries. Federal Government’s observation that majority of Nigerians may not be able to utilize borrowed funds from the private sector necessitated the establishment of National Housing Fund (NHF). The goal of NHF is to provide a cheap source of long-term funds that would make it easy for all Nigerians to own houses. However, the development of housing through NHF has remained a challenging process. As at the end of 2013, the Federal Mortgage Bank of Nigeria (FMBN) had disbursed mortgage loans worth around N100.5bn ($633m) under the NHF programme. In 2015, out of the four million registered contributors to the NHF, only 60,000 (1.5%) have been able to access mortgage loans. which has resulted in the construction of about 40,653 houses in different part of the country. The overall housing demand (17.5 million) is so enormous that the impact of NHF is minimal. The major challenges facing the utilisation of NHF are the eligibility criteria of Primary Mortgage Institutions (PMIs), cost of perfecting title documents, absence of clear property rights, inefficient land management system and high cost of property transaction. To improve the environment for mortgage lending, there is need for the removal of all regulatory barriers that discourage Nigerians from seeking NHF and efforts should be made to extend opportunities for unconventional mortgages so that low-income households can own their own homes.