Research & Publications

Bridging Nigeria's housing Gap: The role of the Nigerian Capital Development Fund (NCDF) in affordable housing initiatives

Written by Fiona Nanna, Media Public Affairs Officer


Nigeria faces a staggering housing deficit, with an estimated 28 million units required to meet the needs of its growing population. This deficit has been exacerbated by factors such as mortgage inefficiency, urban expansion, overpopulation, slum demolition, increased poverty, and urban migration. To bridge this gap, the real estate sector needs a substantial investment, estimated at N21 trillion. This article delves into the comprehensive analysis of the affordable housing landscape in Nigeria, focusing on the Nigerian Capital Development Fund (NCDF) Group's initiatives.

The evolving housing deficit

The housing deficit in Nigeria has witnessed a substantial increase from 7 million in 1991 to 28 million in 2023, marking a 300% surge. This alarming trend has outpaced population growth, highlighting this complex problem necessitates a nuanced and comprehensive solution that goes beyond merely constructing structures but involves addressing the intricate web of socio-economic factors contributing to the crisis.

Contributing factors to the housing deficit:

1. Mortgage Inefficiency: Initially, mortgage inefficiency was the primary cause of the housing shortage.
2. Urban Expansion: Rapid urban expansion has led to increased demand for housing..
3. Overpopulation: The population growth rate of 3.2% annually exacerbates the housing crisis. .
4. Slum Demolition: Efforts to eradicate slums have displaced populations, contributing to the housing gap. .
5. Increased Poverty: Growing poverty rates further limit access to affordable housing.
6. Urban Migration: Migration to urban centres intensifies the demand for housing.

Financial imperatives and real estate dynamics:

Fulfilling the housing deficit requires a monumental investment of approximately N21 trillion, an amount far beyond the average annual credit of N7.47 trillion to the real estate sector. This financial gap implies a 3-year timeline to fill the deficit under the assumption of a constant population—a condition not met given Nigeria's population growth rate of 3.2% annually.
While credit to the real estate sector fluctuates, a historical analysis reveals a significant credit investment peak of N10.08 trillion in 2010. This underscores the urgency of exploring alternative financial models and partnerships to bolster the real estate sector's capacity to provide affordable housing.

Affordability challenges and socioeconomic impact:

Affordable housing remains an elusive dream for millions of Nigerians, especially the low and middle-income earners who constitute the majority of the population. Despite numerous governmental programs aimed at tackling affordable housing challenges, the problem persists particularly for low and middle-income earners, housing affordability remains a critical socioeconomic issue. These groups often find themselves living in densely populated or informal 'slum' areas due to the unaffordability of housing options. The high-income earners, constituting 1% of the population, occupy a small percentage of the housing stock, leaving newly built homes in city centers unoccupied.
With over 170 million people, the country has more than 70 million low-income individuals. The minimum wage for Nigerian workers is N30,000, and the disposable income of many fresh graduates falls below N60,000 per month. The challenge of affordable housing becomes evident when considering examples like the Lagos HOMS Project. Which raises questions about their affordability for the average Nigerian worker, especially considering the price tags on these units are beyond the reach of low-income earners, contradicting international standards that recommend spending no more than 30 percent of income on housing. For instance, someone earning N150,000 per month would find it challenging to afford a 30 percent down payment from their salary after deducting expenses on other essential needs.

NCDF's role in affordable housing initiative, A paradigm shift:

In response to this complex housing crisis, the NCDF Group introduces the Affordable Housing Initiative as a beacon of hope. This initiative is a synergistic collaboration between NCDF, the Nigerian government, and development partners, including the African Housing Group (AHG), with a mission to provide homes to millions of Africans in the Diaspora.
Extending its impact beyond Nigeria, the initiative encompasses Ghana, Kenya, South Africa, Ethiopia, Angola, Tanzania, and Uganda. This global perspective demonstrates a commitment to not only address national housing challenges but to contribute to Africa's collective pursuit of sustainable development.

NCDF Group overview

The Nigerian Capital Development Fund (NCDF) Group is a premier development and investment institution committed to fostering economic growth, empowering communities, and driving impactful change. Their goal is to lead in impact investing for a sustainable future, particularly in climate action.

NCDF Group's mission and holistic approach:

Positioning itself as Nigeria's premier development and investment institution, the NCDF Group is dedicated to fostering economic growth, empowering communities, and driving impactful change. The Group adopts a holistic approach, supporting social innovation, job creation, improved living standards, and institutional growth. Through sustainable capital for community development, the NCDF Group adopts a patient, mid-to-long-term approach, delivering tailored capital solutions to accelerate community development. It aims to raise N100 billion Naira ($100 million USD) from various sources, including the capital market, philanthropic investments, public investment, and climate change initiatives.

NCDF affordable housing initiative objectives:

The NCDF Affordable Housing Initiative is a comprehensive endeavor with the following key objectives:
1. Addressing Housing Shortages: Aiming to provide a robust solution to the shortage of affordable housing in Nigeria. it is part of the measure to ensure that the sector contributes the expected 20% of the nation's GDP.
2. Decent Affordable Housing Ownership: Committing to offer decent, affordable housing ownership to low-income households in Nigeria. Leveraging on the resources available in the private and public sectors, while encouraging foreign investment. NAHI has come to bridge the gap with the mandate of making life much more meaningful and worth living for Nigerians most especially those at the lower echelon of the economic mobility scale. NCDF Affordable Housing Initiative NCDF Affordable Housing Initiative formed a synergistic relationship by entering into a partnership with government and development partners to develop and deliver affordable housing that are cost effective, of good quality and accessible to those in greatest need. 
3. Youth Employment: Intending to create direct and indirect employment opportunities for the youth.
4. Technological Innovation: Focusing on alternative technologies to enhance house quality while reducing construction costs.

NCDF's unique modus operandi:

NCDF operates under a social mission, re-investing the majority of any surplus generated into its mission. The Group's business model consists of three pillars, with the Nigerian Capital Development Fund acting as an incorporated holding company responsible for resource mobilisation and project facilitation. This model facilitates public/private partnerships and investments in Special Purpose Vehicles (SPVs) commissioned by NCDF and partners for project implementation.

Track record and evolution of NCDF's initiatives:

NCDF has a rich history spanning over 14 years, marked by various initiatives and partnerships to address Nigeria's development challenges. Some notable projects include:
1. Kuje Housing Project (2012): A Public-Private Partnership providing 50 units of 3 and 2-bedroom bungalows at the Federal Housing Estate, Kuje, Abuja.
3. FCT-VIO Housing (2012): Delivery of 3 units of a 3-Storey multi-family building containing 24 units of 2 and 3-bedroom apartments in Abuja.
4. Imo State (2013): A partnership with the Imo State Government to develop 3000 units of low-income housing estate.
5. Benue State (2013): A Public Private Partnership with the Benue State Government to construct 1,000 units of homes on 100 hectares of land.
6. Lagos State (2016): A partnership with Lagos State Government to develop, construct, and deliver 2,000 units of standard housing.

Conclusion: Toward a sustainable future

The housing deficit in Nigeria is a multifaceted challenge that demands a comprehensive and sustainable solution. While the factors contributing to the crisis are complex, the efforts of the Nigerian Capital Development Fund (NCDF) Group, particularly through its Affordable Housing Initiative, signify a step in the right direction. As the nation grapples with the challenges of providing affordable housing for its citizens, collaborative efforts between the public and private sectors are crucial. NCDF's commitment to impact investing and climate action positions it as a key player in Nigeria's journey towards a sustainable future. Bridging the housing gap requires not only financial investment but also innovative solutions, policy reforms, and strategic partnerships. The NCDF Group's approach, addressing housing challenges through a multifaceted lens, sets a positive precedent for sustainable development in Nigeria's real estate sector. As the NCDF Affordable Housing Initiative continues to evolve, its impact on the lives of Nigerians and other African communities could be a transformative force, ushering in a new era of inclusive and affordable housing for all.