Nigeria: N85m Mortgage Targets Informal Workers, Boosts Access

• The Nigerian Federal Government plans to raise the maximum mortgage loan to N85 million as part of a major housing finance reform.
• A significant focus of the reforms is to target informal-sector workers, reserving 30-40% of mortgage bookings for them.
• The Federal Mortgage Bank of Nigeria (FMBN) is set to deliver 5,000 mortgages annually by 2028 and channel 70% of NHF contributions into mortgages.
• A new National Housing Finance Authority will be established to enhance coordination, regulation, and accountability in the housing sector.
• The reforms also include a Diaspora Mortgage Programme to enable Nigerians abroad to invest in domestic residential properties.

The proposed reforms aim to significantly expand access to homeownership by raising the maximum mortgage loan to N85 million while specifically targeting informal-sector workers, who have historically faced barriers to conventional financing.

The Federal Government of Nigeria is embarking on a substantial overhaul of the nation's housing finance framework, with a central proposal to elevate the maximum mortgage loan available to N85 million. This initiative, unveiled by Engr. Dr. Muttaqha Rabe Darma, the Minister of Housing and Urban Development, also sets an ambitious goal for the Federal Mortgage Bank of Nigeria (FMBN) to facilitate 5,000 mortgages annually by 2028. The announcement was made during the 15th Meeting of the National Council on Lands, Housing and Urban Development, held in Sokoto.

A critical component of these planned reforms is the deliberate inclusion of informal-sector workers, a demographic that has traditionally encountered significant obstacles in accessing standard mortgage products. These challenges stem from irregular income streams and stringent lending criteria. To address this, the government intends to allocate between 30 and 40 percent of all new mortgage bookings specifically for individuals such as traders, artisans, and other self-employed Nigerians. The FMBN is also tasked with delivering 2,000 mortgages in 2026, scaling up to the 5,000 target two years later, and channeling at least 70 percent of the previous year's National Housing Fund (NHF) contributions directly into mortgage facilities each year to ensure contributors benefit more effectively.

Beyond the increased loan limits and targeted allocations, the proposed reforms aim to strengthen the Federal Mortgage Bank of Nigeria and enhance the conversion of National Housing Fund contributions into tangible homeownership opportunities. The Minister also revealed plans for the establishment of a National Housing Finance Authority, which is envisioned to bring improved coordination, regulatory oversight, and accountability to the housing sector. This new body would play a crucial role in streamlining processes and ensuring the efficient functioning of the market.

Furthermore, the government is introducing a Diaspora Mortgage Programme, designed to enable Nigerians residing abroad to invest in residential properties within their home country. Minister Darma emphasized that the nation's housing deficit cannot be resolved solely through the construction of new estates; instead, robust and accessible financing mechanisms are essential to empower ordinary citizens to acquire completed homes. He pointed to Rwanda's successful experiences with mortgage refinancing and institutional reforms as a potential model for Nigeria to emulate in its efforts to expand homeownership.

The discussions at the Sokoto meeting also incorporated broader perspectives on housing development. Governor Ahmad Aliyu Sokoto highlighted the state's 500-unit Sokoto New City Housing Project and a collaborative effort with the United Nations to provide shelter for internally displaced persons, particularly vulnerable citizens and low-income households. Concurrently, Hon. Awaji-Inombek Abiante, Chairman of the House of Representatives Committee on Urban Development and Regional Planning, advocated for more extensive reforms.

Abiante's recommendations included the implementation of single-digit mortgage interest rates, a comprehensive review of house prices, the establishment of transparent land registration procedures, and stronger development control measures. He further suggested the creation of a National Housing Identification Number and a greater reliance on locally sourced building materials to mitigate construction costs. The council meeting, attended by a wide array of housing stakeholders, considered recommendations from the Permanent Secretaries' meeting, with its resolutions poised to influence future housing policies. The ultimate success of these proposed mortgage expansions, however, hinges on effective implementation, improved access to finance, and their capacity to render homeownership affordable across diverse income groups in Nigeria.

Lawyers advising financial institutions or real estate developers should monitor the proposed increase in mortgage limits to N85m and the focus on informal sector workers, as this expands the potential market for housing finance products. Compliance officers should anticipate new regulations or oversight from the planned National Housing Finance Authority.

Source: Original reporting via Leadership newspaper