Nigeria’s housing deficit and why Escrow Is necessary but not sufficient.

The Federal Government has proposed something Nigeria’s housing market has long needed. Under the National Housing and Built Environment Regulation Policy announced by the Minister of Housing and Urban Development, Engr. Muttaqha Rabe Darma, developers would no longer be able to sell homes off-plan without a licence.

Buyers’ payments would be held in regulated escrow accounts rather than in the developer’s operating account, with funds released as the project reaches agreed milestones.

This is a genuine step forward, and the Ministry deserves credit for taking it. Anyone who has watched a family pay for a home that was never built understands why licensing and escrow matter.

The failures the policy targets are real, common, and have corroded confidence in off-plan sales, which is the very mechanism that should be financing new supply in a country the Ministry’s own National Housing Data Technical Committee puts short of roughly fifteen million adequate homes.

But as the reforms have been described so far, the entire protection rests on a single phrase: released against agreed project milestones. That phrase raises a question the framework has not yet answered publicly.

Who verifies the milestone?

Consider what actually happens. A developer reports that the foundation is complete. The escrow agent, who is a banker rather than an engineer, receives the report. On what basis does the money move? If the answer is the developer’s own progress report, perhaps with photographs, perhaps with a letter from a consultant the developer appointed and pays, then the risk in off-plan sales has not been removed. It has been relocated. It used to live in the bank account. Under an escrow regime without independent verification, it lives in the paperwork.

Escrow controls where money sits. It says nothing about what happened to it. A buyer whose deposit was released against a milestone that exists only on paper is no better protected than a buyer whose deposit was never ring-fenced at all, except that he now has a regulated institution’s letterhead to mark his disappointment.

This is not a hypothetical concern, and Nigeria does not need to theorise its way to an answer. Every market that has legislated for off-plan escrow has reached the same conclusion, namely that the account is only as good as the verification behind it.

Dubai requires project-specific escrow, with funds released only after construction milestones have been independently verified. India pairs its escrow requirement under RERA with third-party audits and periodic financial reporting, and permits withdrawals only upon certification by the project engineer, the architect and a chartered accountant. Malaysia monitors project progress, financial flows and developer licence status in real time through a single integrated system.

This pattern aligns with a century of practice in construction bonding and project finance: money moves safely when an independent party certifies the event and when the record of that certification is one that auditors, trustees and courts can rely on.

Nigeria does not need to invent this. It needs to incorporate it into the final policy, and three provisions would suffice.

First, licensed independent verification. The professional who confirms the slab was poured cannot be appointed by, paid by, or answerable to the developer whose money depends on the answer. The policy already contemplates licensing developers. It should equally set standards for those who verify construction milestones: their qualifications, their independence, and their liability when they certify that something is not there. COREN, the Nigerian Institute of Quantity Surveyors, and the other professional bodies the Ministry has invited to this consultation are the right parties to define that standard.

Second, release conditions should be tied to verified records rather than claims. An escrow instruction should not read “upon completion of foundation works.” It should read “upon certification of completion by a licensed independent verifier, recorded in a form the trustee can rely on.” The difference between those two sentences is the difference between protection and formality.

Third, an audit trail that outlasts the dispute. When an off-plan project fails today, the first casualty is the record. What was promised, what was approved, what was paid and what was actually built survive only in email threads, WhatsApp messages and files held by the party with the least interest in producing them. The policy should require that milestone evidence, verification certificates and release approvals be kept in a durable record, held so that no single party can alter it, and made available to buyers, regulators and courts when things go wrong. Records that exist only in the developer’s filing cabinet are not records. They are hostages.

The larger prize

There is more at stake here than buyer protection, and the Ministry should claim it.

Nigeria’s real estate market is not short of money. It is short of trust, and the numbers make that plain. Pension assets reached ₦31.48 trillion in July, up fifty-one per cent over two years. Fifty-eight per cent of that sits in Federal Government securities. Real estate accounts for something in the region of ₦170 billion, which is well under one per cent of the pool, and allocations to alternatives as a whole remain below five per cent despite considerably more regulatory headroom than that.

The gap is not a shortage of appetite. PenCom is currently developing a vehicle to channel pension assets into infrastructure precisely because the appetite exists. What Nigerian institutions cannot find is the governance that makes real asset exposure defensible to their boards, auditors and regulator.

This means the infrastructure this policy could create, including licensed verifiers, milestone-gated release and durable records, is not merely a consumer protection measure. It is the foundation of an investable housing market. Get the verification layer right for the homebuyer in Lekki, and the same discipline gives pension funds, insurers and development finance institutions the evidence they need to fund supply at scale. Solve trust once, and capital moves twice.

The Ministry has taken the first step and should be commended for it. The second step, which is to define who verifies, to what standard and on what record, will determine whether this policy protects buyers or merely reorganises their losses. The Minister has opened a formal stakeholder engagement and said the framework is being written now. That invitation deserves a response in specifics rather than applause. These three provisions are what my own firm would include in the consultation, and I would rather see them argued than ignored.

Escrow tells you where the money is. Governance tells you what happened to it. A market that asks families to pay for buildings that do not yet exist owes them both.

• Mayowa Adeosun is the founder and CEO of Assetrica, the governance infrastructure company for African real asset capital markets.