The National Housing Fund (NHF) was set up in 1992 via a decree to provide a source of funding for Nigerian employees to own a home. Twenty years down the line and only about 60,837 housing units have been financed by the funds via the Federal Mortgage Bank. The NHF claims it needs about N56trillion to finance the construction of 16million housing units.
The National Housing Fund has generated about N77b since inception. By law all employees in Nigeria are mandated to contribute 2.5% of their Basic salary to the fund but very few contribute. It is estimated that Nigeria has over 50million working population who are eligible to contribute to the scheme. However, only 3 million people contribute to it. Based on the above one would wonder why the NHF shouldn’t be scrapped and the law setting it up repealed.
I do believe the concept behind the NHF is still relevant even after 20 years. The problem with it is that of compliance. As such I there is anything that should be done to the act it’s to amend it in such a way as to make it efficient, robust and reliable. According to the act not only employees are expected to contribute to the fund. Banks are expected to contribute 10% of their loan portfolio in financing home constructions, the Insurance Sector is also expected to contribute 20% of its non life premiums and 40% of its life funds with 50% going directly into the funds alone.
If this criteria is met, the impact on the NHF will be humongous. Currently renewed efforts to stimulate receipts has seen collections rise to “almost N1b from a just N200m years ago” according to the MD of FMBN. This amounts to N12b a year on 3m people. If you triple that to 9m people then you can be looking at N36b yearly and N360b over a 10year period.
So how do we get people to contribute? Here is my take;
1. Increase Sanctions on erring companies who refuse to deduct and remit accordingly. This can be achieved by introducing a clearance certificate to be issued by the NHF which must be a mandatory requirement for conducting business in Nigeria (just like the tax clearance certificate)
2. Make NHF contributions a criteria for obtaining scholarship grants, personal loans, accessing Business and Personal Travel Allowances etc.
3. Massive public awareness campaigns of the benefits of the NHF scheme in all parts of the federation.
4. Introduce a transparent measure where contributors can regular receive updates on their contributions just like in the Pension Scheme.
5. Mandate that all owners of self financed constructions and purchase of land and landed property must posses an NHF certificate before Governors consent can be obtained.
I believe with his compliance issued with the fund will begin to be a thing of the past.
