The Role Of Financial Institution In Housing Development In Nigeria (a Case Of Enugu Metroplis In Enugu State)

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Housing is one of the three basic needs of mankind and it is the most important for the physical survival of man after the provisions of food. Decent housing is one of the basic needs of every individual, the family and the community in general. As a pre-requisite to the survival of man, it ranks second only to food. It is also one of the best indicators of a person’s standard of living and his place in the society. The housing an individual lives in is a symbol of his status, a measure of this achievement and social acceptance, an expression, an expression of his personality and the barometer that seems to indicate in a large measure, the way the individual perceives himself and how he is perceived by the larger society .It is the measure of all the good (or bad) things in life that will come to him and his family (Agbola, 1995). Also the importance of housing in human development has been well documented by scholars. The positions of scholars varies depending on the aspect of housing each one delve into. Omirin (1998)researched into land accessibility and low income house building in metropolitan Lagos . Based on her analysis of house builder’s behaviour of selected low-income earners of Lagos she posits that it is a wrong notion to continue to rank land accessibility as the greatest constraint of house builders. She Stated that lack of finance and escalating cost now takes precedence over land accessibility. Williams (2002) in his study that access to shelter produced by public agencies continue to elude the urban poor who simply cannot muster the financial resources required to procure these housing units .Jaiyeoba and Amole (2002) examined the appropriateness and socio-economic implications of low-income housing delivery as supportive rather than a provider approach. They stated that what is required is the determination of the extent to which the low-income groups require support. Olusola, Aina and Ata(2002) identified lack of soft loan as one of the major obstacles against urban housing production in Nigeria.According to Oyeyipo (2001) defines housing as  a residential area of similar dwellings built by property developers and usually under a single management; "they live in the new housing development" The world health organization committee on housing (1999) source defines it as “the physical structure  used for shelter including equipment and devices need for physical and social well being of occupant”  such equipment and devices include utilities and services like electricity, water supply, good access roads sewage and refuse damp facilities. The fact remains that Enugu metropolis has been the administrative centre for the then eastern region, Enugu metropolis is occupied mainly by government workers with low income. This position makes it difficult for them to afford the high cost of developing housing estates for their use. They therefore resort to borrowing from both formal and informal sources in other to find money for housing development and also Enugu metropolis is made up of river line area, swamp ground. The question then “Is the existing financial institutions in Enugu metropolis enough to satisfy the demand for residential housing loans of these low income earner residing in Enugu metropolis?” If not how can be situation be improved. This research work therefore intends to the existing financial structure of Enugu metropolis with a view to finding out how efficient it has been performing and proposing how the system could be improved. Housing estates is a fundamental and essential features in the urban environment. Adequate provision of housing estates have a great deal of positive impact on both the economic and social life of the urban citizens and its inadequacy has the reverse effect. The shortage of housing estate is one of the major problems facing the urban centers especially in the developing countries. Thus could be attributed estate development involves large amount of money, which is usually not within the capability of most urban dwellers particularly the medium and low income groups, the rate of housing estate construction often tend to be small and generally depend on financial resources. This institution of financial scarcity is made worse by the rigid attitude of financial institution towards lending for housing development. Their system of granting loan make it very difficult for the medium and low income groups to benefit from the available facility. The bulk of the mortgage loans go the upper class.



In recognition of the importance of the housing sector , and considering that financial institutions have ready access to cheap sources of funds through retail deposits as well as the infrastructure to process real estate loans efficiently and the skills to manage the risks involved, the Central Bank of Nigeria has encouraged financial institutions to support the development of the housing sector in Nigeria. In particular, the CBN has through its credit policies, required the erstwhile commercial and merchant banks to allocate a stipulated minimum proportion of their development to the Housing/construction sector Where financial institutions failed to meet the stipulated target, such shortfalls were deducted at source from the defaulting financial institutions deposit with the CBN and passed on to the housing/construction sector through the Federal Mortgage Bank of Nigeria.

          Most of the problems  financial institutions have in  housing development in Nigeria are.

Low Interest Rate on National Housing Fund

Low Level of Participation in the National Housing Fund

Cumbersome Legal Regulatory Framework for Land Acquisition.

The way forward on this issues is that The financing of national housing programmes should be viewed primarily as a national responsibility. The private sector should be encouraged to provide the bulk of actual

investment funds for housing middle income and upper income groups. For the low income group, however, continued public support, individual initiative and labour movement involvement, will be required for housing and community development. Empirical evidence shows that

private sector participation in housing is the most assured way to induce stability in the market. Indeed, the role of Government should emphasize

creating an enabling environment to stimulate private

sector participation in long-term housing finance.  The housing fund contribution should be integrated into the personal income taxation system such that a defined proportion of taxes paid are allocated to the housing fund pool, as it is done in Singapore. There is need for constant re- engineering of the capital and money markets in order to cope with the renewed challenges of provision of some mortgage financing. In

this regard, the restructuring and strengthening of the FMBN becomes imperative for it to remain a viable financial institution with the capacity to enhance efficient housing finance development in Nigeria.




The main objective of this study is to examine the role of financial institution in housing development in Enugu metropolises with a view to

1.     To examine how extent the financial institution has contributed in the housing development in Enugu state.

2.     To find out whether financial has made any contribution in housing development in Enugu metropolises.

3.     To identify the difficulties encountered by financial institution towards housing development in Enugu.

4.     To examine the relationship between financial institutions and housing development in Enugu.

5.     Ascertain the  Low Interest Rate on National Housing Fund

6.     Ascertain the  Low Level of Participation in the National Housing Fund



1.        To what extent has the financial institution contributed in the housing development in Enugu state?

2.     Has financial institution made any contributions in housing development in Enugu metropolises?

3.     Has there been any   difficulties, encountered by financial institution towards housing development in Enugu?

4.     Is there  any  relationship between financial institutions and housing development in Enugu?

5.     Does financial institutions in Enugu  state has any Low Interest Rate on National Housing Fund?

6.     Is there any  Low Level of Participation in the National Housing Fund?



          This topic “The Role of Financial institutions in housing development in Nigeria  (A case study of Enugu metropolises in Enugu state ) is very vast but for purpose of manageability, and financial constraints, it has therefore been restricted or limited itself to financial institutions in Enugu state. In choosing the financial institutions the researcher has limited his research to those areas of the financial institutions or operations of the institutions that helps in the development of housing in the state . This has been so because the research assumes that financial institutions are saddle with the sole responsibility of enhancing even in the development of housing in Enugu state.



A study on housing estate finance is very financial institution of housing estate finance is valuable and could be utilized to achieve certain academic objectives. It can enlighten both the government, students and researchers on the importance of housing estate finance.

The general result obtained from this study is educative, informative and broader the awareness of the public on current sources of housing estate finance in the estate.

Estate surveyors and valuers could apply the result of this research work in their future housing estate finance planning and their advisory role to the public.

The study would be utilized in making new housing estate policies and ensuring their implementation. This is because any housing policy that does not place priority on source of finance would ever remain incomplete. It will also serve as a basic for the allocation of finance for housing estate programmers.



It can be seen from all indications that a research such as this cannot be carried out in one semester.  There are constraints that limit the work of the researcher.  Among these are:

-        Inadequate Time:  The time available is very limited, as a result of this, the researcher is restricted to some places for interviews and questioning during the collection of data.

-        Insufficient Fund:  The funds available to the researcher is not sufficient to carry out this research work.  As a result of high economic hardship as well as high cost of transportation.

-        The inability of some government officials to disclose certain reliable information which they considered confidential may also limit the study.

-        There is also scarcity of current textbooks on tax because tax laws are constantly changed and so many textbooks are obsolete for this topic.

Finally, the academic workload on the campus is one of the limiting factors on this research work.  Despite all these constraints, the researcher is able to carry out a fair and effective study on this topic


Certain terms are used in this work which their definitions are relevant for easy understanding for the study.

Housing estate development : is a group of houses in an area of land, built only for dwelling purpose and not for commercial or industrial purpose.

Financial institution:    Is defined as informational or formal act of providing money. this sense financial planning, the estimating of cash receipt and disbursement. Finance may be defined as the management function of managing the flow of funds in an organization. It is also seen as the provision of money or means of payment at the time it is wanted, Aniagolu (1997). Finance as defined by western” dictionary is the science of managing money” here it concerns the control of money by individuals.

DEVELOPMENT:The term development is mostly applied in relation of land valuers and estate surveyors sees it as a way of embarking on constructional work that will amount or give rise to utilization of land with its improvement or re-improvement of an already utilized one. According to Todaro (1999:78)  Development implies the multi-dimensional process involving charges in structures, attitude and institutions as well as the accelerations of economic growth, the reduction of inequality and eradication if absolute property



There is shortage of adequate housing facilities in Nigeria towns. Enugu,for instance, has an average of 3.8 persons per room and extreme density ranging between 5 to over 7 persons per room has been recorded (Omirin , 1998). Housing problems are exacerbated by the combination of many factors. The bulk of traditional housing available in our urban centres are mainly in dilapidate conditions and unsuitable for habitation . Secondly, more houses are needed to relieve the existing overcrowding in many Nigeria urban centres. Thirdly, natural increase demand additional dwelling units to house the increasing population. Fourthly, rural-urban migration, which has assumed great dimensions during the last three decades, has aggravated housing needs of urban centres in Nigeria . In response to the great demand for houses, unplanned, and sub- standard private housing districts continues to emerge in many towns in Nigeria . These in turn led to emergence of slums. The Association of Housing Corporations of Nigeria estimated on the basis of the 2006 population census that at least 200,000 dwelling units should be provided annually throughout the federation and that government authorities should produce at least 10,000 housing units annually. A report on housing in Africa produced for the United Nations describes clearly the present state of housing in the continent and stated that the situation is getting worse owing to the increasing impact of its causes, population growth and even worse, urbanization. The fifth session of the United Nations Committee on Housing, Building and Planning, held in Geneva in October 2005 also reported that little general progress has been achieved recently in this field (UNCHS, 2001).

In considering the global need for housing in the United Nations Development Decade (1960- 70) it was stated that over 1,000 million people in Africa, Asia, and Latin America, about half the total population of these continents were homeless or living in the housing which is a danger to health and an affront to human dignity . In addition, it was estimated that over 200 million inhabitants would crowd into the cities during the development decade. In recognition of the magnitude of present and future housing needs, the United Nations has estimated that an annual rate of housing construction of from 8 to 10 housing units per 1,000 persons is needed in the developing counties to overcome existing deficiencies and meet future needs.

It is estimated that Enugu population is about 17 million (LASG, 2004). This population results in rapid urbanization and pressure on inadequate infrastructural facilities and deteriorating environment. The World Bank has put the number ofdwelling units required to accommodate the teeming urban population in Nigeria bythe year 2000 at 8 million. Urban centres require new housing units yearly to accommodate the yearly influx of dwellers to urban centres. The problem of inadequate supply of housing in Nigeria stem from the inability of government tobuild the required number of housing units for the population, the inappropriate arrangement given by the National Housing Fund (NHF) to the financial andmortgage institutions providing funds for housing construction, and high cost of building construction. All these make the provision of shelter for the massesdifficult especially in the case of long- term mortgage credit.


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