Rising demand, limited supply
Nigeria’s housing crisis worsens daily as population growth and rapid urbanisation outpace supply. Lagos illustrates the problem vividly: construction is booming, look around you, new buildings are rising everywhere, yet rents are exploding, and affordable housing remains elusive. The issue is not the absence of buildings but the lack of a properly organised property market.
Institutional weakness
Agencies such as the Federal Mortgage Bank and state housing corporations like the LSDPC are failing in their mandates. Instead of enabling affordable housing, they are bogged down by inefficiency, bureaucracy, and misplaced priorities. The craze for luxury developments, especially by state housing agencies, undermines their responsibility to provide affordable homes for workers. This is what they did in the past, LSDPC was very effective in providing affordable housing. Lately, they have allowed private joint ventures, which is the right direction to bring in private capital but have derailed by being sucked into the luxury housing craze. While the private sector can be allowed, because of its need to make profits, affordable housing is the remit of LSDPC and its likes in other states.
Regulatory bottlenecks
The regulatory environment remains cumbersome. Multiple taxation, undefined levies, and poor land administration discourage investment. Some progress has been made with Geographical Information Systems offices, in some states, which streamline land titling and unlock property as collateral. Still, reforms are slow and fragmented.
Lessons from the past
Nigeria has precedents for success. The federal government once developed estates like Gowon Estate in Lagos, providing infrastructure and plots for individuals to build. The Lekki Estate was reclaimed and prepared by Lagos State, enabling today’s thriving community. Affordable projects such as Jakande Housing Estates, Dolphin Estate, and Abraham Adesanya Estate were all products of LSDPC’s earlier focus. These examples show that when the government provides land and infrastructure, private developers and individuals can deliver housing.
The finance gap
The greatest limitation is finance. Nigeria lacks a functioning mortgage market. Housing is a unique asset class requiring long-term financing, yet current structures are fragmented. The Federal Mortgage Bank has tried to act as land agency, developer, and financier all at once, an inefficient model that wastes budgetary allocations. No amount of government funding will suffice under this approach.
The Federal Mortgage Bank is supposed to act as a housing enabler, not a lender. We already have several mortgage banks and lending institutions that can do the lending more efficiently. What these institutions lack is capital that is organised and directed at housing. The money already exists in the public space, as investment – instruments looking for outlets.
It needs an agency like the Federal Mortgage Bank to provide the institutional structure to activate it.
A new financing model
The solution lies in circular financing through housing bonds. A reformed Federal Mortgage Bank should:
- Raise housing bonds from capital markets.
- Provide guarantees to banks, pension funds, and other institutions to lend to developers.
- Enable the public to invest in housing finance through these instruments.
Mortgage beneficiaries would then repay loans over 15–20 years, recycling funds back into the system. This creates a self-sustaining financing structure, ensuring continuous capital for housing development.
Role of government vs. private sector
The government’s role should be enabling, not building. It must:
- Provide access to land. Governments already hold all lands in trust for their citizens.
- Deliver infrastructure (roads, water, electricity).
- Simplify regulation and land titling.
Private developers and individuals should handle construction, while financial institutions provide mortgages. This segmented value chain ensures efficiency and scale.
Why housing matters
Housing is more than shelter; it is a wealth engine. In every major economy, housing represents one of the largest sectors. Unlocking Nigeria’s housing market will:
- Create jobs in construction and allied industries.
- Deepen financial markets with new instruments.
- Expand the middle class by giving workers appreciating assets.
- Boost government revenues through property taxes and land administration fees.
Nigeria is in a race to develop. Housing will be central to this race, but only if proper structures are put in place. A functioning mortgage market, supported by housing bonds and efficient institutions, is the key to solving the housing deficit. Without focusing on affordable housing and simplifying financing for housing, millions of Nigerians will remain without affordable homes.
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Victor Ogiemwonyi, a retired investment banker, is a former Governing Council member of the Nigerian Stock Exchange (NSE), now Nigerian Exchange Group (NGX Group). He sent this contribution from Ikoyi, Lagos. He can be reached via comment@businessamlive.com and marketconversations.substack.com
