The National Housing Fund (NHF) is fundamentally unsustainable and grossly inadequate in the quest to provide housing finance on a sustainable basis in Nigeria.
Simon Walley, Housing Finance Specialist, World Bank Group, stated at an event jointly organised by the Mortgage Banking Association of Nigeria (MBAN) and the International Finance Corporate (IFC), that the NHF is unable to provide mortgage for 4 million contributors to the Fund, noting that though the National Housing Trust Fund is now better managed than before, it is still fundamentally unsustainable.
Housing finance is generally characterized by granting of long tenured loans to purchase, build and renovate residential or commercial houses. However, given the low level and the short_term nature of their deposit base, PMIs have had serious challenges in fulfilling their mandate of providing housing finance on a sustainable basis.
The NHF was established by Decree No. 3 of 1992 to facilitate the continuous flow of low_cost funds for long_term investment in housing for the benefit of all Nigerians.
The fund is managed and administered by the Federal Mortgage Bank of Nigeria (FMBN), which provides long_term housing loans through wholesale lending to primary mortgage institutions (PMIs) at 4 percent interest, for on_lending at 6 percent to NHF contributors over a maximum tenor of 30years.
According to Walley, a survey of Nigeriaâ€™s housing market shows that only 20_25 percent of Nigerians are home owners while housing deficit is estimated at 12_16m units, requiring about N30 trillion ($200 billion) to finance.
He added that 720,000 new houses are required yearly and that there is an annual growth of 20 percent in housing demand in cities like Lagos while the urbanisation rate in Nigeria is 48 percent, which is the highest in sub_Saharan Africa.
Available statistics, however, shows that long_term funds available to the PMIs apart from equity was a meager N32.8 billion from the National Housing Fund (NHF), as at end September, 2009. This is just over 9.7 percent of consolidated Balance Sheet size of N336.5 billion for all the active PMIs. Total loans and advances were N122.1billion, out of which N61.4 billion or about 50 percent were mortgage loans, while Total deposits including placements amounted to N164.8 billion.
Currently, it is estimated that over 60 per cent of the Nigerian 140 million population need houses. And with home ownership rate put at not more 25 percent of the total population, this translates to over 84 million people (or 14 million housing units at an average of 6 persons per household) that are either not housed or living in unbefitting places.