How underfunding in 2025 housing budget may deepen sector’s crisis

The anticipation for improved housing supply for Nigerians might be a mirage, following abysmally low budget allocation to the sector in the 2025 fiscal plan.
Notwithstanding the proposed N49.74 trillion, the highest in Nigeria’s history, checks by The Guardian revealed that allocation for housing may not meet the required funding to bridge existing gaps in the sector. Nigeria needs to build approximately 550,000 units yearly over the next decade to close the estimated 22 million housing deficit, which requires about N5.5 trillion yearly. The government and private sector supply about 50,000 units of housing yearly.

The total proposed budget for the Ministry of Housing and Urban Development was N98.13 billion, out of which N8.78 billion was allocated for personnel cost, overhead cost; N1.2 billion while capital projects will gulp N88.14 billion. The Guardian finds that N11.5 billion is for constructing 20,000 housing units under the Renewed Hope Agenda housing scheme.

The construction of 13,612 Renewed Hope Cities and Estates housing units has already commenced at various stages of development. The remaining units needed to meet the 20,000-unit target will be financed through the 2025 allocation. The project comprises 250 housing units each, across 12 states, with two states from each geo-political zone.

The states include Yobe, Gombe (North-East); Nasarawa, Benue (North-Central); Sokoto, Katsina (North-West); Abia, Ebonyi (South-East); and Delta, Akwa Ibom (South-South); totalling 3,000 units. The cities are larger urban projects being developed in the FCT (3,112 units), Kano (2,000 units), and Lagos (2,000 units), with additional cities planned in Enugu, Borno, Rivers, and Nasarawa with a significant number of these units are at the roofing stages.

In contrast, the previous 2024 budget had a total allocation of N99.92 billion out of which recurrent expenditure gulped N2.99 billion while capital expenditure consumed a total of N96.99b. The top five capital projects in the budget include the Renewed Hope Agenda housing scheme-N18.20 billion, the Federal Government national housing programme (nationwide) N8.49 billion, construction of a federal secretariat in Abia, Ebonyi and Kebbi States, with N3 billion each.

Before the presentation of the budget by President Bola Tinubu to the National Assembly leadership, Minister of Housing and Urban Development, Ahmed Dangiwa, disclosed that the ministry secured the support of the National Assembly to increase the housing budget to N500 billion yearly, starting with the 2025 budget cycle.

Dangiwa had argued that the appeal became necessary as the N50 billion yearly budget for housing is “grossly inadequate” compared to the yearly N5.5 trillion required to address the housing deficit.

However, many were disappointed that N88.14 billion was approved for the sector despite the escalating construction cost as the government needs to make huge investments, with more than 80 per cent of Nigerians falling within the low-to-medium income brackets that cannot afford homes.

Besides, an average of 25 jobs per house are created in active construction state. At the same time, professionals such as architects, civil engineers, surveyors, skilled workers like masons, carpenters, electricians, plumbers, steel fixers, welders, labourers, security personnel, concrete pourers, excavation workers are also actively engaged.

Built environment experts were worried last week about the budget figures for housing. They called for an improved allocation for housing, transparency, proper audit and accountability on budgetary spending.

The Chief Responsibility Officer, Cromwell Centre for Research in Housing and Urban Development, Mr Sola Enitan, urged the Federal Government and the National Assembly to approve a budgetary allocation of at least N1 trillion for the Federal Ministry of Housing and Urban Development for the 2025 fiscal year.

The centre said such bold and necessary steps would address the critical housing deficit, estimated at over 18 million units, reposition housing as a key economic growth driver, and foster sustainable urban development in line with global best practices.

Enitan said the sector is an engine of economic growth globally, noting that housing investments have generated significant economic and social benefits in countries such as Brazil, Kenya, South Korea and Singapore.

He said: “In Brazil, the “Minha Casa, Minha Vida” (MCMV) programme has been instrumental in reducing the country’s historical housing deficit, delivering more than 4.5 million housing units to the population. Housing construction activities in Kenya contributed 6.3 per cent to Gross Domestic Product (GDP) in 2016, with an estimated direct impact output multiplier of 2.16, indicating that every unit of currency invested in housing construction generated more than double in economic output.

In South Korea and Singapore, they leveraged housing policies to drive GDP growth and enhance social equity. Nigeria must emulate these success stories. A substantial increase in the Ministry’s budget will address the housing deficit, create jobs, improve living standards, and stimulate economic activity across related industries.

He stressed that while there was a need for a significant increase in budget; there should be efficiency, transparency, and accountability in fund utilization, while the ministry must adopt stringent monitoring frameworks, independent audits, and public-private partnerships to ensure that every naira contributes to measurable outcomes.

Enitan argued that there should be periodic performance reviews and audits to ensure the funds are effectively utilised. At the same time, the government must align housing policies with broader economic development objectives, including job creation, poverty alleviation, and urban renewal. He added that the housing and urban development sector is too critical to be underfunded as a well-funded ministry catalyses economic growth, social equity, and sustainable development.

Chief Executive Officer of Northcourt Real Estate firm, Ayo Ibaru, said: “The budget proposal by the ministry indicates that the government will spend N11.5b to provide 20,000 housing units. You can easily say the fund is insufficient, but the ministry did put out a figure to enable us to track it. The fund is behind another N30 billion in the previous budget. It is something we can track, critique and suggest the way forward.”

A past chairman of the Nigerian Society of Engineers (NSE) Apapa Branch, Dr Garba Ombugadu, explained that no government has enough money to fund its budget as there is competition from all sectors. He suggested alternative measures such as more partnerships and foreign direct investment in the sector to bridge existing gaps.

“From the budget figure for 2025, it cannot go anywhere. If you look at the background of housing in the country alongside the deficit, and provision for housing over the years, you will see a wide gap. Government must find alternative means to fund housing,” he said.

The former chairman said there should be a level of consistency in the number of housing units to be provided on a yearly basis. He also decried poor implementation of the budget in the country, noting that the 2024 budget was 40 per cent implemented in terms of capital expenditure.

Ombugadu called for transparency in housing allocation. He said: “Sometimes the houses built don’t get to those who need them and at the end of the day; the government’s aim is defeated. That’s why the government must put good mechanisms in place, with verifiable evidence that houses built get to Nigerians who need them.”

A past chairman of the Lagos State chapter of the Nigerian Institute of Quantity Surveyors, Mr Olujide Oke, observed that although the budget allocation appears like a drop in the ocean, the assistance of the government to the sector must be appreciated. He said the government at different levels, should focus on creating an environment that is enabling for the industry.

“This should entail that the people who are into building material supply have assistance from the government, by way of tax relief. Right now, people are groaning under the excruciating pain of foreign exchange because most materials used in the housing and construction sector are imported.

“How then do you engage in mass housing construction when the costs of imported materials are expensive? Iron rods, cement and other building materials are costly. Tax credit to those involved in local manufacturing of building materials will help,” Oke said.

Oke lauded the government for reviving the mortgage sub-sector, stressing that if it is done, it will assist the housing sector and people can engage in housing construction.

He said the government should listen to the professionals to set up a construction bank for the housing industry. “The government should set up a construction bank, provide N250 billion seed money for the capital base instead of giving loans through the Ministry of Finance or the Central Bank of Nigeria,” he said.