The Federal Government of Nigeria is set to establish a N1 trillion ($654 million) housing fund to provide affordable mortgages, a move aimed at addressing the country’s massive housing deficit.
Finance Minister Wale Edun announced the initiative on Tuesday, explaining that the fund will provide single-digit and low double-digit interest rate mortgages to enable more Nigerians to own homes.
The first phase of the project has already secured N250 billion, sourced from a combination of concessional loans and private-sector contributions. A key component of the funding structure includes a 40-year concessional loan from the World Bank’s International Development Association (IDA) at a 1% interest rate. Local pension funds, banks, and insurance firms are also contributing matching funds.
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“Nigeria’s housing finance market needs deep reform to make homeownership more accessible,” Edun said. “This fund will enable Nigerians to access mortgages at single-digit and low double-digit interest rates, making homeownership more attainable.”
A Housing Crisis Decades in the Making
Nigeria, Africa’s most populous country, has struggled with an acute housing shortage for years. The Federal Mortgage Bank of Nigeria estimates that the nation requires at least 28 million new homes to meet demand, a staggering deficit that has only worsened as urbanization accelerates.
Despite this pressing need, mortgage financing remains underdeveloped. Mortgages account for less than 1% of Nigeria’s GDP, a stark contrast to developed economies where housing finance is a key driver of economic growth. High interest rates—often exceeding 20%—have made mortgages unaffordable for most Nigerians, forcing the majority of real estate transactions to be conducted in cash. This cash-based system has fueled corruption, inflated property prices, and made homeownership nearly impossible for low- and middle-income earners.
The new fund is expected to help stimulate a construction boom by providing developers with guaranteed off-takers, thereby ensuring a steady supply of new homes. The initiative is also designed to formalize homeownership by making financing more accessible, which in turn would create jobs and stimulate economic growth.
Road Infrastructure Projects Also in the Pipeline
Alongside the housing initiative, the Federal Government is also advancing plans to upgrade Nigeria’s road infrastructure. Edun revealed that contracts are being finalized with private investors to construct and manage 40 major roads, covering a total distance of 5,000 kilometers (3,100 miles).
The Africa Finance Corporation (AFC), a Lagos-based multilateral financial institution, is among the key investors backing this infrastructure push. The government hopes that these projects will enhance connectivity, reduce transportation costs, and improve access to new housing developments.
Strong Private Sector Participation in the Housing Fund
Last week, the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF) successfully closed its N250 billion pilot fundraising, marking a significant milestone in Nigeria’s effort to address its housing finance gap.
The second series of the MREIF issuance, worth N100 billion, was fully subscribed, signaling strong investor confidence in the fund’s structure. The first series had raised N150 billion, demonstrating robust demand from institutional investors seeking stable, long-term returns in the real estate sector.
“The full subscription of Series 2 demonstrates pent-up demand for structured housing finance solutions and investor confidence in MREIF as a sustainable investment vehicle,” Edun noted.
The initiative is expected to transform Nigeria’s housing sector by unlocking new sources of capital and reducing reliance on government budgets. The success of the pilot phase indicates that private investors see housing finance as a viable sector, which could lead to further investments in mortgage-backed securities and affordable housing projects.
With both housing and road infrastructure projects in motion, the government hopes to address two of Nigeria’s most pressing challenges—affordable housing and poor infrastructure. However, experts note that the success of these initiatives will depend on effective implementation, transparency in fund allocation, and ensuring that the mortgages remain accessible to those who need them most.