Employees in the private sector of the economy have been exempted from contributing to the National Housing Fund of the Federal Government.
The Nigeria Employers Consultative Association, the umbrella body for private sector employers, made this known to its members last week, a copy of which was obtained by our correspondent.
NECA’s directive was contained in a letter dated March 24, 2023, to all companies with reference code: NECA/LRT/D.1 and titled: “Amendment of the National Housing Fund Act and contribution into the National Housing Fund.”
The letter signed by the association’s Director General, Adewale Smatt-Oyerinde, stated that the newly signed Business Facilitation Act exempts members of the organised private sector from making a mandatory monthly contribution to the Federal Government’s housing scheme designed to make housing loans available to its subscribers.
The NHF, domiciled with the Federal Mortgage Bank of Nigeria, is a government scheme aimed at mobilising and providing long-term housing loan facilities for Nigerians gainfully employed in the public and private sectors. Workers enrolled under the scheme remit 2.5 per cent of their monthly salary and can only obtain the loan once in their lifetime.
However, many workers have accused the bank of failing to live up to their core mandate of delivering affordable and modern houses.
The FMBN in an interview with The PUNCH revealed that only 17,886 contributors accessed loans in 2022.
However, NECA comprising 328 companies in its latest letter made it clear that workers were now at liberty whether to contribute to the fund or not.
It, however, clarified that public workers earning the national minimum wage and above in the public sector were still mandated to pay the stipulated percentage.
The letter read in part, “The newly signed Business Facilitation Act provides that any employee earning the national minimum wage and above in the public sector or that is self-employed earning the equivalent of the national minimum wage and above “shall contribute 2.5 per cent of his monthly income to the Fund”.
“However, employees in the private sector “may contribute 2.5 per cent of his monthly income to the Fund” (section 45 of the Business Facilitation (Miscellaneous Provisions) Act 2022).
“In view of the above, contributing to the National Housing Fund is now voluntary for employees in the Private Sector. This, therefore, implies that your employees may decide to continue with the scheme or choose to opt out completely.”
It added, “For those who choose to remain contributors, as is so far the practice, you are required to deduct the prescribed rate at source and make remittances to the Federal Mortgage Bank of Nigeria (FMBN), while those that decide to opt out of the NHF Scheme can process their refund as stipulated in the extant NHF Act. Feel free to contact the Secretariat for further clarification (if any).”
Reacting to the development, a housing expert, Festus Adebayo, noted that the withdrawal of private sector workers from the scheme would reduce the pool of funds available to the bank, adding that it was coming at the wrong time in view of the numerous challenges faced in the sector.
He, however, opined that the FMBN leadership should see it as a wake-up call and find alternative solutions.
He said, “The withdrawal of the association from housing is coming at the wrong time. I wish they could collaborate with Housing advocacy in solving the problem currently faced in the sector.
“At this present time, FMBN is facing many challenges with the limits the CBN has introduced on mortgage banks who are withdrawing huge amounts. The bank has to restructure. I can’t see the problem of inflation, cost of building materials, enabling environment, but the effect of NECA making it optional will reduce the number of funds that the bank is generating.
“The FMBN should see the action of NECA as a wake-up call to look for an alternative way of funding to enable them to deliver on their mandate.”