The principal research question is whether Nigeria's public-private partnership (PPP) housing projects are alleviating the national housing shortage. The ICRC Framework and state-level PPP housing schemes, which started in 2010, have not attracted enough private sector participation; these account for just 3% of annual housing completions. Most projects target upper-middle-income people rather than the 70% earning less than ₦100,000 monthly. Data from Lagos, Abuja, and Port Harcourt show that PPP housing initiatives focus on an affordability range of ₦15 million to ₦45 million, making it difficult for more than 8% of urban families to buy these houses.

There is a huge gap in understanding why PPPs fail to deliver housing efficiently in Nigeria, especially compared to sectors like roads and ports, where they work. Previous studies examined the housing problem's size. However, few have elaborated on the governmental and institutional designs that have become bottlenecks in Nigeria's PPP housing framework, resulting in unscalable projects. The current investigation will determine the structural disconnect between the PPP operational models and affordable housing economics. It will also assess their performance using three main indicators: unit delivery volume, price accessibility based on median household income, and geographical equity in project locations.

Currently accessible data stipulate that between 2015 and 2024, there was approximately 12,000 completed units qualifying as such because they represent the outcome of the so-called registered PPP housing projects—this is an exceedingly small figure that amounts to merely 0.04% of the country's total housing deficit. Such a minimal outcome when compared with the number of projects undertaken and the estimated national housing shortage, even after government support and regulatory arrangements have been put in place, calls for a systematic inquiry into what is proving to be a policy failure that can indeed be quantified.

Short-term Implications (2025–2030)

The continual failure of the Public-Private Partnership (PPP) housing schemes in Nigeria not only causes immediate urban economic losses but also results in enormous housing demand exceeding supply, which is the main reason for the rental price increase that is over an average of 18% yearly in the largest cities of the country. Moreover, rentals consume 40-60% of the median family income, so poor people cannot buy consumer goods and, hence, are not participating in the economic activities that might lift them out of poverty. At the same time, the property market is still in the hands of speculators who buy land only to hold it or to build luxurious apartments, thus resulting in a distortion of capital allocation of about ₦2.3 trillion every year—money which could theoretically be utilized to construct 460,000 low-cost houses by using modern construction methods.

The housing deficit intensifies urban shortcomings as it forces cities to use parts of their territories that are uninhabited and substandard, just like in Lagos, where, for example, in 2020 and 2024, 23% of the total housing stock was informal, and new settlements were without water, sanitation, and road facilities. Similar scenarios can be seen in Kano, Onitsha, and Benin City, and these cities will have to bear the burden of long-term liabilities, which will again make their finances worse due to the situation they are in now.

Long-term Consequences (2030–2040)

If the present trends continue without modifications, Nigeria will have a housing deficit of over 35 million units by the year 2040. This can be attributed primarily to a yearly population increase of 3.2 per cent, along with a gradual urbanisation rate of 70 per cent by 2050. The inability to evaluate the efficiency of public-private partnerships (PPP) will ultimately result in a split housing market where a small formal sector caters only to the rich, while an informal sector that keeps on growing will provide 120 million urban dwellers with impoverished and unhealthy living conditions.

The economic consequences are, however, not limited to the housing sector. The mortgage market, which has less than 1% of GDP as its penetration rate, as opposed to 80% in developed nations, is the primary cause of the curtailment of household wealth as well as the narrowing of the banking sector's areas of operation. Despite the construction industry being capable of generating up to 15 million jobs if housing delivery were done perfectly, it is still underfunded and thus unable to enjoy the benefits of large-scale production in terms of reduced costs.

Housing insecurity may not be the principal reason for socio-political unrest, but it does exacerbate the situation. It has been demonstrated that social conflict is a more common phenomenon in places where housing is not secure. A survey done by the Nigerian Institute of Social and Economic Research (NISER) concluded that poor housing, the high rate of youth unemployment in urban slums, and crime are all interlinked. The existence of these factors for more than 15 years has posed a threat to the potential of Nigeria's demographic dividend, thus converting urban population growth from an economic opportunity to a governance problem.

Nigeria's housing problem is being accelerated by macroeconomic factors such as unstable currency, high inflation (2023 to 2024 average rate of 24%), and budget deficits, which have all resulted in little government investment in social housing. The Federal Mortgage Bank of Nigeria (FMBN) and National Housing Fund (NHF) together issue less than 8,000 mortgages a year, which is very little for a country with a yearly population growth of 5.3 million.

The country has the 2012 National Housing Policy, the ICRC Act 2005 governing PPPs, and the various state housing corporations that give housing policy guidelines. However, the disunity among the institutions hampers the implementation of such policies, resulting in the housing responsibilities being pushed to the Federal Ministry of Housing and Urban Development, state housing corporations, and urban development authorities having overlapping jurisdictions, and doing very little coordinating with each other. The 2016 National Affordable Housing Delivery Programme targeted 500,000 units but was only able to pass 15,000 units due to slow procurement and lack of funds.

Urbanisation is one of the primary factors putting the housing sector under stress; Nigeria's urban population has risen from 70 million in 2010 to 142 million in 2024, and it is believed that by the year 2040, there will be 210 million urban residents in Nigeria. Lagos has a population of 24 million spread over an area of 1,171 km²; thus, the density in central neighbourhoods is already above 20,000 people/km². A greater number of people in a small area means less land for other uses, thus the price of land goes up to an extent where the financial viability of greenfield housing project development without substantial subsidies becomes impossible.

Moreover, land administration processes and poor land management have made the problem worse. The Land Use Act 1978 gives ownership of land to the governor of the state, who has made it a lengthy and bureaucratic process by asking for 12–36 months just for the processing of the Certificate of Occupancy (C of O) and for many agency approvals to be obtained. This uncertainty causes the timelines to be long, the costs of development to be high, and it makes it impossible for the private sector to invest in the area of affordable housing, where the returns are not enough to cover their costs.

There is a big difference in the distribution of the housing deficit among regions. The southern states have more formal housing supply but with a higher price, while the northern states have a very low supply: it is said that, for instance, 1.8 million units are missing in Kano State, which only receives about 400 units annually from the formal sector.

Institutional and Legal Barriers

In Nigeria, the PPP housing project is a problem of mismatched incentive systems. The ICRC Framework places enormous weight on the economic side of affordable housing, wherein unit prices must by default not exceed ₦5 million to obtain the mass market accessibility. Meanwhile, the private developers that are expecting a return of 15-20% on their investment demand prices over ₦12 million, which is already more than double the maximum limit for 80% of the projected users.

The still vague ICRC regulation on land transfers, taxing of PPP companies, and ways to settle disputes are, at the same time, complicating the investment process and making it very risky. Between 2019 and 2020 the Lagos State of Nigeria, one of the most densely populated, cancelled opening an arbitration center to resolve disputes between the investor and the government, because one of the parties does not comply with an unfavorable ruling.

Financial System Limitations

The cost of mortgage financing remains very high, and consequently, it is still out of reach for most people. The interest rates at the primary mortgage institutions range between 18 and 25%, thus it is practically impossible for the customers to purchase their homes: for instance, if an individual borrows ₦10 million at 22% for 20 years, the total amount he will pay back at the end of the loan period will be ₦52 million (the loan principal plus interest). More than 3,000 people who take out loans every year will find that the up to 6% reduction by the National Housing Fund is only available for an extremely strict qualifying standard and red tape, which will never claim this rate as their own.

The capital market is still very reluctant to accept bonds or real estate investment trusts (REITs) that are not exclusively focused on the affordable housing segment. The 2023 Nigerian Housing Bond issuance of ₦50 billion was only 40% subscribed, and that is a clear signal of investors’ doubts about the returns and the liquidity in the affordable housing assets market.

Infrastructure Deficits

The establishment of trunk infrastructure—water supply, electricity, sewage, and roads—is a prerequisite for the large housing project, but still, such amenities are often missing in the reasonably priced lands located on the outskirts of the cities. The infrastructure cost per housing unit averages ₦2.5-4 million, which is 35-50% of the total development budget. The governments realize that it is very hard for them to make infrastructural investment up-front, and on the other hand, private developers do not want to take on such costs since their profits from affordable segments are very small.

Data and Transparency Issues

The dispute over the quantification of the housing deficit has gone on for a long time. The minimum and maximum estimates of the required housing units are 17 million and 28 million, respectively, which thus indicates that there is no uniform application and that the housing databases are not centralized. The lack of reliable data is a major setback for the evidence-based policy-making process and also complicates the situation for investors who are trying to conduct their due diligence.

Recalibrated Risk-Sharing Mechanisms

The Kigali Housing project has given proof on the right way to set up the Public-Private Partnerships, which is One of the signs of a country’s PPP project is that the government will provide the land and essential facilities; this will be able to make the cost of the private sector 40% and at the same time the developers will have the company that carries the financial and technical know-how for the projects. If this pattern is realized in Nigeria, the state authorities will set up Special Purpose Vehicles (SPVs) through which they will raise money from infrastructure bonds. This SPV will take care of everything from land buying to granting construction rights. The private contracting companies would then bid for the construction contracts based upon the performance specs (e.g., number of units, price, quality standards) instead of controlling the entire process, which would then lead to less bureaucratic friction.

Land Banking and Reform

Create Land Banks in each state with government-owned lands that are only allotted to affordable housing, and through proactive C of Os, get rid of the Land Use Act limitations. The states of Kano and Kaduna are said to have initiated land banking projects, which have already resulted in a 12% reduction in cost in the trial projects by putting aside 5,000 hectares of land for the purpose.

Fiscal Incentive Restructuring

The fiscal measures that ought to be rolled out include a 10-year corporate tax exemption for builders who provide more than 500 affordable units per year, total VAT exemption on affordable housing construction materials, and capital gains tax exemption on the sale of units priced below ₦7 million. The fiscal analysis infers that the establishment of housing assets worth ₦540 billion will be aided by the retreat of ₦180 billion in annual revenue, which, in turn, through the multiplier effect in the construction sector, brings a return of 3:1.

Mortgage Liquidity Enhancement

FMBN plans to extend its operations in the secondary mortgage market by purchasing performing mortgages from lenders at a discount rate of 8%, thereby injecting ₦300 billion annually into mortgage liquidity. This is one of the methods the National Housing Finance Corporation in South Africa has utilized, and it has succeeded in relaxing the capital constraints of the primary lenders and thus in having a wider range of lending.

Technology Integration

The use of Building Information Modeling (BIM) and prefabrication technologies will be made mandatory when dealing with the PPP housing contracts, and the construction cost can be reduced by 25-30% which has already been validated in the Idale Housing Estate pilot of Lagos State in 2022. Traditional designs and modular construction can reduce the delivery time from 36 to 14 months, thus rendering the capital more efficient.

Policy Implications

Nigeria has to change the ICRC Act concerning the definition of Affordable Housing PPPs by relaxing the Thresholds of commercial viability and extending Public Sector commitment as a specific category. For housing infrastructure, State Governments should allocate 15% of their annual capital budgets, thus creating a constant and predictable funding pipeline, which is crucial for the private sector to plan their activities accordingly.