On March 24, 2023, the Director General of the Nigeria Employers’ Consultative
Association (NECA)1
issued a circular to all member-companies, titled, “Amendment of
the National Housing Fund Act and Contribution into the National Housing Fund (NHF)”
(the “Circular”). The Circular was issued sequel to the signing of the Business Facilitation
Act (BFA) 2022 by President Muhammadu Buhari in February 2023. The Circular seeks to
implement the amendments of the BFA to the National Housing Fund Act 1992,
particularly with reference to the regulation of contributions made to the NHF by private
sector employers of labour in Nigeria.

In this client alert, we summarise the provisions of the Circular and highlight the key
changes that it has introduced.

Precursor to the Circular: Amendment of the NHF Act by the BFA

The National Housing Fund (NHF) was established by the NHF Act of 1992 to mobilise funds
that will facilitate the provision of affordable houses for Nigerians.2 Under the NHF Act,
every Nigerian in the public and private sector earning an equivalent of the National
Minimum Wage3 or above is required to contribute 2.5% of their monthly basic salary into
the NHF managed and administered by the Federal Mortgage Bank of Nigeria (the
“Bank”).
4 The funds mobilized is then made available through the Bank to contributors at
affordable interest rates to own houses. By the Act, employers of labour are required to
deduct, at source, the prescribed rate of contribution from the monthly salaries of qualifying employees and
remit same to the Bank 5

The above requirement has now been altered by section 45 of the BFA which in effect,
amends section 4 of the extant law. By the amendment, only employees earning the
national minimum wage and above in the public sector, and self-employed individuals
are required to contribute 2.5% of their monthly income to the Fund. Consequently,
private sector employees are now excluded from compulsory compliance with this
obligation and may hence forth contribute the requisite 2.5% of their monthly income to
the NHF voluntarily.

The Circular

As a follow-up to the changes introduced by the BFA, the NECA issued a Circular to all
member companies bringing the amendment to their notice. The Circular informed
member-companies that employees can either decide to opt out of contributing to the
NHF or continue to contribute, at their discretion. For those employees who choose to
remain contributors of the NHF, the Circular directs employers to continue to deduct the
prescribed rate at source and make remittances to the Federal Mortgage Bank of Nigeria
(FMBN). For employees who are current contributors but choose to exercise their right to
opt out, the employers are directed to inform such employees to process their refund as
provided under the NHF Act.6

Conclusion

While we expect the Bank to issue subsequent guidance or practice directives on
implementation of the new provisions, especially as regards employees who choose to
opt out of the scheme, in the interim, we recommend that all employers take note of the
Circular, as well as the amendments introduced by the BFA and begin to put in place,
structures, to ensure compliance.

1 Nigeria Employers’ Consultative Association (NECA) is the umbrella organization of employers in the Organised Private Sector of Nigeria. It was formed in
1957 to provide the forum for the Government to consult with private sector employers on socio-economic and labour policy issues.
2 Section 2 of the NHF Act.
3 The minimum wage in Nigeria is currently N30,000 (Thirty Thousand Naira). Section 3 (1) National Minimum Wage Act 2019.
4 Section 4 & 10 of the NHF Act

Souce: https://www.templars-law.com/app/uploads/2023/04/Amendment-of-the-National-Housing-Fund-Act-and-Contribution-into-the-National-Housing-Fund.pdf#:~:text=On