Nigeria’s Housing Deficit and Mortgage Financing: Challenges and Possible Solutions

Onyimadu, Chukwuemeka O. ; Nandi, Livinus A. (2020)

Working Paper

The COVID-19 pandemic is expected to exacerbate Nigeria’s current housing deficit and limit access to affordable housing and long tenured mortgage financing. Social distancing protocols and lockdown rules have exerted tremendous pressures on Nigeria’s fragile economy, with declining productive activities and high unemployment expected to worsen. For low-income households, such pressures have limited their opportunities of improving their housing requirements or accessing loans for mortgage. This assertion is more probable for people in the informal sector and MSMEs who constitute a large proportion of low-income households and the most vulnerable in Nigeria. The Federal Government, in the 2021 – 2023 MTEF & FSP and the 2021 Appropriation Bill, reiterates the government’s policy stance on targeted public spending in the housing and construction sector, which the government recognizes as a productive and growth enhancing sector. In furtherance of the objective of the government regarding reducing Nigeria’s housing deficit, this brief undertakes an assessment of potential challenges that may hinder low-income households from accessing mortgage financing and reducing the housing deficit. The identified challenges in the brief include high interest rates for mortgage financing, a need for longer tenured loans, and high construction costs. The Brief concludes by recommending a complementary mortgage financing methodology that focuses on incremental improvements in housing facilities, expanding the activities of the Nigerian Mortgage Refinance Company (NMRC), and the continuation of existing policy stance regarding Private – Public – Partnerships in the housing sector.