FHFL Experience with Delivering Affordable Housing in Nigeria

June 21, 2023

According to a 2021 study by the World Bank, Nigerian cities are now home to about 53% of the population, approximately 110 million people. By 2050, this number, according to the UN Population Migration Division will double. The adverse impact of this significant rural-urban migration is already with us. With this push, existing infrastructure has become inadequate, and the overall situation for this huge urban population, especially in housing is quite uncomfortable.

A 2019 UN Special Report on the right to adequate housing in Nigeria painted a clear picture of the situation. It stated that housing conditions remain grossly inadequate for the millions of Nigerians who are excluded from the formal housing sector. As a result, informal settlements are growing, with inhabitants lacking the most basic services and facing forced evictions.

Where homes are available, they are usually unaffordable for the majority, who are struggling with limited income and access to home ownership opportunities like affordable mortgages.

In 2018, the Family Homes Funds Limited (FHFL) – an establishment of the Federal Government of Nigeria – became fully operational, kickstarting the mission to provide affordable homes for families on low-income, with the complimentary responsibility of creating jobs and promoting local production of building materials. Despite the significant need for affordable housing in Nigeria, the market has few local developers with the technical and financial strength to build large-scale projects.

Getting off the mark, FHFL had to contend with obvious barriers to affordable housing including high inflation, access to land, cost of construction, and limited purchasing power on the demand side. Nonetheless, the first initiative was the development of 2,304 homes across five states – Ogun, Kano, Delta, Kaduna and Nasarawa, which are today referred to as the FHFL Legacy Estates. Few years down the line, through partnerships with several state governments, FHFL has financed the development of 15,792 homes, creating 83,883 direct and indirect jobs in the process, with a pipeline of additional 20,000 homes due in 2024. With the ambition of creating spaces of modern living, the homes are with necessary amenities and within areas of easy access.

Now with footprints across every region of the country, FHFL can look back and see the difference it has made, but not without losing focus of the massive need ahead, and how challenging it really is. However, lessons from the past will now prove vital in confronting the future.

Prominent among the challenges FHFL had to deal with, and still deal with is the issue of income for those who need homes but cannot afford them. One of the recent reports by the Nigerian Bureau of Statistics have poignantly revealed that 83 million Nigerians earn less than N137,430 per annum. With a reality like this, even homes that are adjudged below the current market pricing remain quite unaffordable for many families.

In the early years up to 2020, despite the development of homes with prices as low as N3 million, there were limited number of low-income families that could purchase the homes. While interest for the homes were always high, a lot of people needed some support to fulfill their home ownership dreams.

With the study of this pattern, FHFL began to support the low-income families by partnering with selected mortgage banks to introduce payment options like installment and flexible long-term mortgages. The result was a spike in sales. Despite the unique challenges presented by the COVID-19 pandemic, resulting in a national lockdown for the most part of 2020, FHFL completed 2,304 homes in the five legacy estates, with 2,133 of them already sold. With the current pattern of sales, the homes will all be occupied by the end of 2022.

FHFL is continuously looking forward, determined to always live by its mantra of changing lives through strong partnerships, knowledge sharing and innovation. Today, the challenges with delivering affordable and decent housing are well known, and only a few are ready to invest time and resources. Despite this, FHFL wants to be recognized as a leader in that respect, helping Nigeria fight poverty and inequality through the delivery of affordable housing, job creation and supporting the growth of the local economy.