National Housing Fund Act – On the cusp of another statutory deduction


The National Housing Fund (NHF) Act No. 3 of 1992 (NHF Cap. N45 Laws of Federation of Nigeria (LFN) 2004) commenced operation on January 31, 1992 with the broad aims and objectives to facilitate mobilization of funds for housing development. A new Act is being enacted known as NHF (Establishment) Act, 2018 to repeal and replace the NHF Act Cap. N45, LFN 2004.

The contributions shall be by workers earning minimum wage and above, in both public and private sectors, of the economy including banks, Insurance companies as well as Pension Fund Administrators.
A statutory deduction of 2.5% of the monthly income of the employee is expected as contribution to the fund. The same is applicable to all self-employed persons.

The banks, registered insurance companies and Pension Fund Administrators are required to invest a minimum of 10% of their Profit before Tax at interest rates not exceeding 1% above the interest rate payable on current accounts by Banks.


The Act is not new to the body of Nigerian laws. A difference between the new Act and the former is the shift in the bases of the deduction from basic monthly salary to monthly income. It is also a statutory deduction the same way the Pensions Reforms Act of 2014 repealed and replaced those of 2004, placing a higher savings burden on employees and employers and requiring Employers to enforce the Act. Its comparison with the Nigerian tax system is, at best a choice denominator, for analysis of one deduction over another, from a worker’s salary.

The new Act however requires the Federal Inland Revenue Service (FIRS) to impose and collect 2% levy of the value of imported and locally produced cement. This is rather misplaced, as a Sister agency of the FIRS i.e. Nigeria Customs Service collects import levies (including levies other than import duties, as prescribed from time to time) and excise duties in Nigeria on behalf of the Federal Ministry of Finance. To request the FIRS to collect the levies is surplus to requirement.


The Nigerian worker is faced with the stark reality of complying with this statutory deduction that had hitherto remained comatose, before now.

A potential issue for this new piece of legislation is the definition of monthly income. This was loosely used by the Act when compared with the provisions of the Pensions Reforms Act, which made better attempt to define emoluments.

Full implementation of the new Act would expectedly mean workers, especially those on the lower rung of the ladder, being impacted the most in terms of their spending power and their welfare, ultimately. If implementation is not properly calibrated, it forebodes weaker consumer spending in an already fragile economy that needs sustained stimulus for accelerated growth. On the bright side, their contributions would include the prospects of starting out early in the hope of owning a home someday which would be repayable over a long period of time.

There is scope for the government to amend the Personal Income Tax Act with a view to bringing succour to the Nigerian worker who has witnessed decline in welfare overtime. Government’s infrastructural tax incentives to Corporate Nigeria should have a household counterpart.

4.0       CONCLUSION

The nature and tenure of funding housing development and most of the sources of fund in the Act are no strange bedfellows. Except for deposit money banks that offer shorter tenor loans in the Nigerian financial space, others are longer fund holders that could therefore, be channeled towards real estate development.

Government must also not be remiss to the fact that it can solely provide housing to the over 17 million households in need of one in Nigeria. The Public-Private partnership for development and delivery of housing units should also apply here, on terms that are not materially different from those being directly provided by the government.

More importantly too is the need to fix our Land Use Act of 1978 in order to address the ease of land acquisition and use.

Finally, government must use its obligation to contribute to the scheme as a lever for accelerating fund mobilization and delivery of the housing as a means of redistributing and relieving ordinary Nigerians of the burden of welfare.

Adefisayo Awogbade, M.Sc, FCTI,
Registrar/Chief Executive,
Chartered Institute of Taxation of Nigeria
Tax Professionals’ House, Ikeja Lagos, Plot 16, Otunba Jobi Fele Way,, Central Business District,, Alausa Ikeja Lagos, 23401, Nigeria


In case of questions or further enquiries, please contact any of:
Kenechi Obele (k.obele@localhost; 08166756383),
David Agagu (d.agagu@localhost; 08074800886),
Oyeyemi Oke (o.oke@localhost; 08082004040), or
Bidemi Olumide (b.olumide@localhost; 07081948647).

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