National Housing Fund (Establishment) Act, 2018: Analysis & Recommendations For Legislative Review

affected financial institutions can be withdrawn after a particular period and the mode of such withdrawal. It is therefore not clear if a bank, insurance company or PFA facing imminent liquidity challenge could resort to making withdrawal out of its stake in the Fund.

Fourthly, the Levy of 2.5% ex-factory price before transportation cost for each bag of 50kg or its equivalent in bulk, will eventually be passed on to consumers by way of increase in price of a bag of cement. A clear unintended consequence of this is that the cost of building a house will further go up, thereby defeating the original purpose of making affordable housing available to Nigerians through the Fund. It therefore appears that the Levy, as proposed in the new NHF Act, will be counterproductive on implementation.

Fifthly, the penalty regime in the new NHF Act is not commensurate with the offences created therein. The amount of fines prescribed and the terms of imprisonment stipulated for persons (individuals and corporates) found guilty of contravening any of the provisions in the new NHF Act are too heavy and stringent and could cripple the affected sectors. Rather than boosting the housing sector and the economy, the excessive and disproportionate penalties would act as disincentive to investment and further stifle the ease of doing business in Nigeria.

In conclusion, whilst we support the need to deepen the mortgage market in Nigeria, the Fund should not be grown at the expense of the other vital sectors of the economy as analyzed. In our opinion, the first step to take in boosting the Fund should be a review of its operation since inception to determine its strength, weakness, opportunity and threat (SWOT analysis) with a view to charting the right path and policy direction for the growth and efficient application of the Fund. To avoid the likely negative multiplier effects on the economy, it is strongly recommended that the new NHF Act be subjected to legislative overhaul through wide consultations with relevant stakeholders including the Bankers Committee, Nigerian Insurers Association (NIA), Pension Fund Operators Association of Nigeria (PenOp), Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), Nigerian Economic Summit Group (NESG), labour unions, civil society groups and the Organized Private Sector. The recommended review should be done and the concerns raised addressed after which the President’s assent can again be sought to the new NHF Act.

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