Potentials of Housing Microfinance Instruments in Achieving Self-Built Housing in Nigeria

Paschal Onyemaechi , Build for Nigeria , Abuja Nigeria


Eziyi  Ibem, Department of Architecture, College of Science and Technology, Covenant University, Canaan Land ,Ota , Ogun  State, Nigeria.



The United Nations predicts that Africa will overtake Asia as the world’s most rapidly urbanizing region by 2025. Nigeria alone is estimated to contribute nearly 10% of the world’s total population growth and will become the third most populated country by 2050 with over 70% of the population living in urban areas. As at 2016, Nigeria’s population was put at 180 million people with 11.7 million houses. Since independence in 1960, Nigeria has implemented several housing policies and programs aimed at improving access to housing decent and affordable for her citizens. However, the housing deficit keeps escalating unabatedly, especially for the low-income. The housing deficit is currently estimated at between 17 million and 20 million units and it will require over 49 trillion (400 billion dollars) to bridge this supply gap. Further, about 80 percent of Nigeria’s urban population make their homes in informal settlements in poor living conditions and as majority of these are low-income earners whose sources of income are small and irregular, and thus have low saving capacity. Although the formal sector in Nigeria contributes only about 15% of the housing market, her mortgage industry is underdeveloped and bias to this sector and has no room for the low-income earners. For instance, statistics from the Ministry of Finance reveals that the contribution of mortgage finance to Nigeria’s gross domestic product GDP is less than 5%, while mortgage loan and advances is 0.57% of GDP compared to 80% in the UK and 33% in Malaysia. However, one of the economic aspirations of the Nigeria government as articulated in the national economic transformation agenda tagged “vision 20-20-20” is that by the year 2020, Nigeria’s housing sector should contribute above 15% of the nation’s GDP. Some of the key challenges have been poor access to housing finance for the low-income in the informal sector, access to land and poor consideration towards the informal market. Therefore, this concept paper seeks to examine the potentials of interventions in the informal market using home microfinance (HMF) instruments to boost supply of self-build housing stock for the low-income and urban poor. It highlights how innovative financing initiatives can be harnessed to create a social and equity capital fund that will provide a suitable funding option for the HMF. The paper will also uncover huge opportunities for home microfinance in the Nigeria housing market. The key argument is the HMF has great potentials in several areas, including, boosting housing supply in the self-built market, generate huge activities for the construction value chain, improve skill in the construction and building industry, enhance access to housing finance, and promote affordability for the low-income. It will also increase government presence in the informal market, generate employment and boost household income, improve standard of living of the urban-poor and enhance the percent contribution of the housing sector to Nigeria’s GDP which is part of the Nation’s economic aspiration.

Keywords: Housing Microfinance; Informal sector; Self-built housing; Low-income earners, Nigeria