SEC, FMBN to Launch Sharia-Compliant Mortgages, Tackle Housing Deficit
By Patience Ikpeme
The Securities and Exchange Commission (SEC) and the Federal Mortgage Bank of Nigeria (FMBN) have launched a strategic collaboration aimed at developing a robust Non-Interest Mortgage (NIM) ecosystem to confront the nation’s massive housing deficit and deepen financial inclusion.
The partnership, unveiled at a meeting in Abuja on Friday, is designed to create and govern viable, Sharia-compliant financing structures. The goal is to allow millions of Nigerians, particularly those currently excluded from conventional interest-based loans, to access affordable homeownership.
With Nigeria’s housing deficit estimated to exceed 28 million units, the initiative is being hailed as a potential game-changer. It directly addresses a key barrier to homeownership: the affordability and religious compliance of existing mortgage products for a significant segment of the population.
Dr. Emomotimi Agama, the Director-General of the SEC, discussed the Commission’s essential role in safeguarding the integrity and stability of the proposed financial instruments. He confirmed that the SEC would supply the necessary regulatory guidance and framework to facilitate the issuance of Sukuk (Islamic bonds) and other non-interest capital market products to fund these mortgages.
“Our collaboration with FMBN is pivotal to unlocking long-term financing for the housing sector,” Dr. Agama said. “By creating a clear regulatory pathway for non-interest mortgage-backed securities, we can attract ethical investors, both domestic and international, to channel funds into this critical area. This will create a virtuous cycle of funding, construction, and ownership.”
In his remarks, Mr. Shehu Osidi, the Managing Director/Chief Executive Officer of FMBN, stated that the collaboration signifies a critical stride in fulfilling the bank’s mandate to provide affordable housing for all Nigerians.
“For a long time, a substantial number of our citizens have been unable to participate in the National Housing Fund (NHF) scheme due to the interest-based nature of conventional mortgages. This partnership with SEC is a strategic response to that gap,” Osidi said. “We are committed to developing non-interest mortgage products that are not only ethical and inclusive but also financially sustainable.”
Housing and finance expert, Mr. Ebilate McYoroki, welcomed the development, describing it as “long overdue.”
“This is a masterstroke in financial inclusion,” he commented. “It taps into a vast pool of potential homeowners and investors who have previously been on the sidelines. If implemented transparently, it could significantly accelerate the pace of housing delivery in the country.”
The successful implementation of this new framework is anticipated not only to reduce the housing deficit but also to stimulate the construction industry, create jobs, and foster greater financial inclusion, ultimately contributing to national economic growth.
Unlike conventional mortgages that charge interest, non-interest financing is built upon principles of risk-sharing, asset-backing, and equitable returns. Three primary models are under consideration:
The first model, Musharakah (Diminishing Partnership), involves the bank and the customer jointly purchasing a property; the customer then gradually buys out the bank’s share through periodic payments, eventually becoming the sole owner.
Under the second model, Ijara (Lease-to-Own), the bank buys the property and leases it to the customer for a fixed period, with a portion of the rental payments directed towards the eventual ownership transfer.
Finally, the Murabaha (Cost-Plus Sale) model involves the bank acquiring the property and then selling it to the customer at a pre-agreed markup, which is then payable in installments.
