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The potential of using Islamic finance for the National Housing Fund (NHF) of Nigeria

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Date
2021
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Abstract
Nigeria's national housing fund is a closed saving scheme that's supposed to mobilise a loanable pool of funds to provide affordable houses for Nigerians at affordable prices. Its operational structure is conventional, and the fund has not impacted Nigerian seeking Sharia-compliant housing financing. The fund is overwhelmed with challenges and has failed to address the difficulty of raising long-term funds and affordable housing loans. The national housing funds' current operational structure has resulted in non-compliance in contributions and lack of trust due to the funds' perceived mismanagement that has impeded its performance. The different housing policies have also failed due to various challenges, including limited access to finance, high interest rates, absence of long-term capital, the rigid process of obtaining title documents, and lack of Sharia-compliant funds. These problems have immensely contributed to the non-performance of the national housing fund. Therefore, our study examined the various constraints of the national housing fund and proffer solutions to Nigeria's endemic housing problems using applicable mortgage financing models. Hence, we identified musharakah mutanaqisah, ijarah muntahiya bittamlik, and ijara mawsufah fi al-dhimmah as a suitable alternative model for the operation of the national housing fund. Despite the limitation in using secondary data and some Islamic housing products' criticisms, our study would help implement a composite national housing fund that will impact Muslims' seeking Sharia-compliant NHF structure. To accentuate the potentials of Islamic housing finance, Sultan Choudhury (2008), reiterated "Our products are open to everyone and customers who aren't Muslims choose the banks products because of its ethics. Because of the nature of our investments, we are an ethical provider, and, increasingly, that's what people want."
Keywords
National Housing Fund , Federal Mortgage Bank of Nigeria , Nigeria Mortgage Refinance Company , Islamic housing finance , Musharakah muntanaqisah , Bai bithaman ajil , Ijara muntahiya bittamlik , Ijara mawsufah fi al-dimmah , Ijara wa iqtina , Istisna , Project paper (MSc)
Citation
Ahmed, M. (2021). The potential of using Islamic finance for the National Housing Fund (NHF) of Nigeria (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/4004
Publisher
INCEIF

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