The federal government has exempted employees in the private sector of the economy from contributing to the National Housing Fund of the Federal Government.
This directive was given by the Nigeria Employers Consultative Association, (NECA), an association under which the private sector employers in the country operates, to its members last week.
NECA’s directive was issued in a letter dated March 24, 2023, to all companies with reference code: NECA/LRT/D.1 and titled: “Amendment of the National Housing Fund Act and contribution into the National Housing Fund.”
The letter was signed by the association’s Director General, Mr Adewale Smatt-Oyerinde, where in it stated that the newly signed Business Facilitation Act exempts members of the organised private sector from making a mandatory monthly contribution to the Federal Government’s housing scheme designed to make housing loans available to its subscribers.
The NHF, domiciled with the Federal Mortgage Bank of Nigeria, is a government scheme that has the purpose of mobilising and providing long-term housing loan facilities for Nigerians gainfully employed in the public and private sectors. Thus Workers enrolled under the scheme are mandated to remit 2.5% of their monthly salary and can only obtain the loan once in their lifetime.
Following this many workers have been accusing the mortgage bank of failing to live up to their core mandate of delivering affordable and modern houses.
In a recent interview with The Punch, the Federal Morgage Bank of Nigeria revealed that only 17,886 contributors accessed loans in 2022.
NECA in its latest letter noted that workers under the private sector were now at liberty whether to contribute to the fund or not.
The letter read in part,
“The newly signed Business Facilitation Act provides that any employee earning the national minimum wage and above in the public sector or that is self-employed earning the equivalent of the national minimum wage and above “shall contribute 2.5 per cent of his monthly income to the Fund”.
“However, employees in the private sector “may contribute 2.5 per cent of his monthly income to the Fund” (section 45 of the Business Facilitation (Miscellaneous Provisions) Act 2022).
“In view of the above, contributing to the National Housing Fund is now voluntary for employees in the Private Sector. This, therefore, implies that your employees may decide to continue with the scheme or choose to opt out completely.”
“For those who choose to remain contributors, as is so far the practice, you are required to deduct the prescribed rate at source and make remittances to the Federal Mortgage Bank of Nigeria (FMBN), while those that decide to opt out of the NHF Scheme can process their refund as stipulated in the extant NHF Act. Feel free to contact the Secretariat for further clarification (if any).”
Reacting to the letter a housing expert, Festus Adebayo, explained that the withdrawal of private sector workers from the scheme is a wrong decision at this time as it would reduce the pool of funds available to the bank.
He said,
“The withdrawal of the association from housing is coming at the wrong time. I wish they could collaborate with Housing advocacy in solving the problem currently faced in the sector.
“At this present time, FMBN is facing many challenges with the limits the CBN has introduced on mortgage banks who are withdrawing huge amounts. The bank has to restructure. I can’t see the problem of inflation, cost of building materials, enabling environment, but the effect of NECA making it optional will reduce the number of funds that the bank is generating.
“The FMBN should see the action of NECA as a wake-up call to look for an alternative way of funding to enable them to deliver on their mandate.”