The establishment of the National Housing Fund by the Federal Government through Decree No. 3 of 1992 was aimed at providing funds for workers to build their own houses while in active service. It is to provide soft loans for workers with a repayment period of 30 years. Many Nigerians are of the view that the fund is meant only for workers in the public service. However, while these workers have, over the years, made contributions from their salaries to the fund, they have found it difficult to access the money for the purpose it is meant. Ironically, these monies deducted from their salaries have not been remitted to the appropriate quarters. This prompted the House of Representatives to institute an investigation into the matter. TONY AKOWE reports.
In June 2022, the Director-General of the Bureau of Public Service Reforms (BPSR), Dr. Dasuki Arabi put the figure of federal civil servants drawing their salaries through the Integrated Personnel Payroll and Information System (IPPIS) at an estimated figure of 720,000. The BPSR D-G, who spoke at the 42nd session of the media briefing coordinated by the Presidential Media Team said: “We have a one-shot opportunity to look at IPPIS and say, as of today, we have 720,000 public servants working for Nigeria. This is a great achievement which I think we need to encode and we need to get it celebrated by us all.” These figures have not been disputed till date. Rather, the Director in charge of IPPIS in the Office of the Accountant-General, Emma Deko said they were only in charge of those working in the Executive arm of government.
He told the Adhoc Committee on Non-remittances of Deduction from Workers’ salaries for the National Housing Fund that “IPPIS is not in charge of every employee of the Federal Government. IPPIS is only covering the executive arm. So, what I am saying is that, IPPIS is not in charge of every employee of government.” What this means is that the 720,000 figure does not include workers in the legislative and judicial arm of government nor does it include those working in the government-owned corporations.
In addition, available data put the total figure of civil servants in the various states and the FCT at 89,511 with Imo State having the highest number with 5,825, followed by Kogi, Ogun, Delta and Akwa Ibom with 5,186, 4,669, 4,419 and 4,416 respectively. The FCT, Zamfara and Yobe states are at the rear with 533, 543 and 744 respectively. This brings the total number of civil servants, apart from those working in the executive arm of government to 809, 512.
The National Housing Fund requires Nigerians in the public and private sector earning an equivalent of the National Minimum wage or above to make a contribution of 2.5 per cent of their monthly basic salaries into the fund which is to be managed by the Federal Mortgage Bank of Nigeria.
The Fund is a mandatory contributory scheme for all Nigerian workers to create liquidity towards affordable mortgage financing for home ownership. The scheme was introduced to address the problem of shortage of long-term funding for affordable housing delivery in Nigeria, specifically targeted at low and medium-income earners.
The Nation investigation revealed that, apart from the mandatory contribution of workers, commercial and merchant banks are, by law, supposed to invest 10 per cent of their loans and advances portfolios in the fund.
In addition, insurance companies are also mandated to invest 20 per cent of non-life and 40 per cent of life funds in the housing sector with not less than 50 per cent paid directly in the fund through the Federal Mortgage Bank.
Section 6 of the NHF Act states that “every registered insurance company shall invest a minimum of 20 per cent of its non-life funds and 40 per cent of its life funds in real property development of which not less than 50 per cent shall be paid into the Fund through the Federal Mortgage Bank of Nigeria…”
Also, Section 12 of the Act provides for how the funds will be obtained. It states that “the Bank shall, at the end of every year after careful examination of the audited annual accounts of each insurance company, determine the amount due from the insurance company and shall issue a demand notice of the amount due from the insurance company for purposes of investment in the Fund.” It further provides that “the insurance company shall, on the receipt of a demand notice from the bank, pay the amount within one month of the demand into the Fund.” The section also provides for sanctions for insurance companies that fail to comply with the law.
It states that “failure by any insurance company to pay to the bank any amount due under sub-section (2) of this section shall be regarded as a contravention of this Act and shall constitute one of the grounds for which the Commissioner for Insurance may cancel the registration of an insurance company in default.”
However, the National Insurance Commission (NAICOM) debunked that provision of the Act, saying that insurance companies are not statutorily required to contribute percentages of their insurance funds to the housing sector.
An official of the insurance regulatory body told The Nation that “the Insurance Act only authorises general insurance companies to invest not more than 20 per cent of their insurance funds and not more than 40 per cent for life insurance companies.”
According to the official, these investments are sourced from the premium paid by policyholders and must be accounted for. Any insurance company that invests more than the law stipulates, he said, will be sanctioned.
He further said that making such investments is entirely at the discretion of the insurance company that wants to do so which they make as an investment decision. He also said that individual insurance companies were mandated by law to make contributions on behalf of their members of staff to the NHF, saying, however, that “there is no law mandating insurance companies to invest in the housing sector. Life companies can allocate as much as 40 per cent of insurance funds to this asset class, whereas non-life companies have a limit of 20 per cent.”
The Federal Government is also supposed to make financial contributions to the fund. However, the Federal Mortgage Bank said apart from the workers’ contributions, other statutory contributors have not been forthcoming with their contributions.
In determining the amount due to the fund from the insurance company every year, the FMBN is supposed to carry out a careful examination of the audited annual account of the insurance companies, after which it will issue a demand notice of the amount due.
Section 12(3) of the NHF Act states that “failure by any insurance company to pay to the bank any amount due… shall be regarded as a contravention of this Act and shall constitute one of the grounds for which the Commissioner for Insurance may cancel the registration of an insurance company in default.”
The 54 registered companies have reportedly failed to remit about N267 billion to the fund, while no punitive measure has been taken against any of them by the law. It is not clear how much commercial banks that are also supposed to make contributions owe the fund.
An investigation by The Nation revealed that the NHF would have amassed trillions of naira from monthly contributions of workers since its inception, but the Managing Director of the Federal Mortgage Bank of Nigeria, Madu Hamman said only N561 billion has so far been remitted to the Bank from 2011.
Calculation by The Nation revealed that with a minimum of N100 deduction monthly, the fund would have about N72 million monthly, amounting to about N864 million annually. On the other hand, with a contribution of N1,000 monthly, the fund would be enriched by N720 million monthly and N8.6 billion in one year.
However, a pay slip of one of the federal civil servants sighted by The Nation revealed that a level 11 step 5 worker on the Consolidated Health Salary Scale with a salary of N258,191 monthly has about N4,889.76 deducted as a contribution to the Housing fund every month.
Incidentally, while saying that deduction from workers’ salaries was automatic as the system is automated, the IPPIS is not able to account for billions of naira deducted from workers as contributions to the NHF. The House Committee was also shocked to learn that the IPPIS that carries out these deductions does not even know how much of workers’ money they deduct monthly neither can they explain why the money is not remitted to the Federal Mortgage Bank as provided in the law.
In response to queries from the committee members, the Director of the Integrated Personnel and Payroll Information System (IPPIS), Emma Deko said: “We cannot talk about evidence of remittance without deductions, because it is only when you deduct that you can remit. I must be sincere that, we have been trying to collate this information because it relates as far back as 2011 to date. We have been on it, but we have one constraint and that constraint is the fact that after deductions, we remit.
“There are instances where the cash backing may not cover the entire salary wage bill for a particular month, and in that instance, we are directed to pay only the net, which means that, all deductions will be stepped down.
“It should be on record that I became the Director of IPPIS in February 2023, and when I assumed duty, I observed from records that, from December 2022 to the point I joined, they’ve already been paying net. And I also went through the and discovered that there were instances like that in the past. It made us understand that, it is not all deductions that were remitted and it is not the fault of IPPIS. IPPIS is meant to deduct and remit. And that brings me to the point that, remittance, payment of salaries is not done in IPPIS, we only process.”
Trying to exonerate his agency from blame, the IPPIS Director said: “There are four payment gateways engaged by the government to do the payment, Nigeria Interbank Payment System (NIPS), E-Transact, Remita and GIFMIS.
“These are not situated within IPPIS. We only process and they have the gateway to remit these monies. Why I am saying this is because the records of remittance are not with us. Since this instruction was sent to me by my boss, we have been trying to reach these people, and till this morning, we, even our members of staff were online till 2:00 a.m. or 3:00 a.m. to get these records so that we can answer this committee. We have been getting them in piecemeal.
“So, we were not able to get everything coherently based on what this committee wants, but we are on it. We are bound to respond to this Committee.”
He also shifted blame to the Central Bank of Nigeria for their inability to reconcile the amount deducted and the amount remitted to the appropriate agencies.
He said: “We are not able to do certain things because we are constrained. For instance, the money is in CBN. When these remittances are done, the CBN is supposed to get us statements. Sometimes when they give you statements, maybe payment was made to 100 people, they will give you a figure of N10 billion and you ask for the breakdown to do reconciliation as an accountant. But, it is difficult, it is not only in IPPIS, it is in all the accounting cadres.
“We have been facing this problem, we cannot reconcile our accounts because they give you bulk figures, and with those figures, you cannot reconcile. My colleagues from the Auditor-General’s office are aware of this. So, this is our constraint. But, we were able to put down something for now, just to respond to you. We are on it, we will respond fully as the information trickles in.”
The Nigeria Labour Congress (NLC) has, however, accused the Federal Mortgage Bank of Nigeria of collecting money from Nigerian workers and giving the same to private housing developers to the detriment of workers who contribute to the National Housing Fund and yet cannot access the houses built with their money.
The Labour Centre said because of the attitude of officials of the Federal Mortgage Bank, workers in the private sector have since stopped their contributions to the fund, while those in the public sector are considering doing the same.
The NLC argued that in contravention of the law establishing the NHF, the FMBN has failed to send to workers the status of their contributions which they are supposed to do every month as well as the interest in it. The Congress further said that workers in the country cannot conveniently say what their monthly contributions are used for by those saddled with the responsibility of managing it.
It said: “Despite making the statutory contributions of 2.5 per cent of annual salary to the National Housing Fund, it is insensitive that many workers are unable to access the loan due to administrative bottlenecks. While the Act provides for 90 days from the date of application for the loan to be disbursed, the experience by many workers is horrific as the undue delay in approving the loans forces many workers to abandon the pursuit of the loan or resort to third-party agencies to fast-track the loan application, obviously at an unofficial fee; thus creating the perception of corruption in the process of housing loan approval and disbursement to workers who need these funds. There are also issues of statutory bottlenecks that make it difficult for workers to access housing loans.
“Top on this list is the requirement for the provision of land title especially in the form of a Certificate of Occupancy before a worker can access a housing loan. It is public knowledge that the process of getting a Certificate of Occupancy in Nigeria is akin to a camel passing through the eye of a needle. This challenge is endemic given the chaos in land administration in Nigeria as many states are yet to institutionalise fully digitalised geophysical information services to aid the seamless release of Certificate of Occupancy amidst other constraints.”
They also alleged that many of the Houses delivered to Nigerians under the Housing Fund are poorly constructed while workers are forced to source loans from commercial banks or exhaust their savings to renovate such houses.
The Congress also alleged discrimination against Workers’ Housing Cooperatives in favour of Estate Developers in contravention of Section 14 of the NHF Act, adding that “evidence abounds that private estate developers access NHF funds more seamlessly than Workers Housing Cooperatives.
“It is common knowledge that houses built by private developers are commercially oriented and priced for profit maximisation and, therefore, beyond what workers can afford. This is why many private estates in many urban centres in Nigeria are unoccupied years after development.” the NLC said.
However, the Speaker of the House of Representatives, Tajudeen Abbas said: “The House of Representatives is alarmed at allegations of non-remittance of workers’ contribution by employers and in other cases, mismanagement and misappropriation of the hard-earned salaries of Nigerian workers, by the administering institution.”
He, however, said the House will ensure that those who mismanage contributions by workers to the National Housing Fund are made to account for it.
Abbas said the National Housing Fund (NHF) represents a commitment to addressing one of the most fundamental needs of the citizens which is affordable housing. He said the NHF which was established in 1992 was designed to ensure that Nigerians have access to affordable housing with workers in both the private and public sectors contributing 2.5 per cent of their monthly earnings to this Fund.
He further said the House will look into this law establishing the fund which is now obsolete while injecting new ideas that will make it in tandem with the modern-day needs of the people.
He said: “As a noble initiative rooted in the principles of collective responsibility, the scheme identifies the critical need to ensure access to affordable housing by hard-working Nigerians, to bridge the housing deficit gap in the country.
“However, for this to become a reality, we all know it is crucial that the Fund is managed transparently, efficiently, and in strict adherence to the law.”
While expressing disappointment over how the contributions of workers have been managed, the Speaker directed a proper investigation into allegations of non-remittance to the National Housing Fund and critically reviewed the utilisation of the Fund from 2011 to date.
He said: “The allegations of non-remittance are grievous and we must uncover the truth, to hold those responsible accountable and safeguard the interests of those who have diligently contributed to this Fund.”
The Chairman of the Committee, Dachung Musa Bagos said the House will ensure that justice is done to the contributions of Nigerian workers by those saddled with the responsibility to administer the funds.
The Committee, however, asked the management of the FMBN to report back to the House with proper documents of contributions by Nigerian workers and how these contributions have been managed following conflicting information contained in their presentation.
