Nigeria - Amendment to the National Housing Fund Act

Nigeria - Amendment to the National Housing Fund Act

The Nigeria president Muhammadu Buhari, signed the Business Facilitation (Miscellaneous Provisions) Act 2023, (“the Omnibus Act” or “the Act”) into law in February 2023 as part of the Federal Government's initiatives to foster an enabling environment for micro, small, and medium-sized enterprises (MSMEs) in Nigeria.
One of the key changes of the business Facilitation Act relates to the National Housing Fund Act:

Section 4 of the National Housing Fund Act, has resulted in the following changes:
 
1. Employees earning the national minimum wage* and above are liable to make NHF contributions. The previous Act, provided for employees earning basic salary of N 3,000 per annum and above to contribute.

* Currently the National minimum wage is N 30,000 per month as per the National minimum wage Act of Nigeria.
 
2. The contribution is based on 2,5% of monthly income. Previously, the contribution was based on 2,5% of monthly basic salary.

Although the Act does not provide a definition of monthly income, case law provides that recourse is to be made to the ordinary dictionary meaning of a word or phrase that is not defined in a statute.

The online Oxford Advanced Learner’s Dictionary defines “income” as “the money that a person … earns from work.” In reliance on this definition, it is our opinion that “monthly income”, as used in the NHF Act,

means all the monthly earnings of an employee, inclusive of any bonus payment and any payment that is not a reimbursement.

As a result the base of the calculation will be on monthly gross income excluding reimbursements.

3. Public sector employees and self employed persons shall contribute to NHF should they earn the national minimum wage and above. The NHF contributions are now voluntary for private sector employees.

Previously, the contributions were applicable to Nigerian employees irrespective of sector.
 
Extract of the Amendment from the Business Facilitation Act of 2023:

Substitute for section 4 of the Principal Act, a new section “4” —

“4. (1) Any employee earning the national minimum wage and above in the —

(a) public sector in Nigeria shall contribute 2.5% of his monthly income to the Fund ; or

(b) private sector in Nigeria may contribute 2.5% of his monthly income to the Fund.

(2) Any self-employed person earning the equivalent of the national minimum wage and above shall contribute 2.5% of his monthly income to the Fund.

(3) An interest rate of 2% per annum, or as may be determined by the Bank, shall be payable on the contributions made under subsection (1) and (2).

(4) The Federal Government may make any grant of money to the Fund.”

 
Amendment of section 9

Section 9 of the Principal Act is amended in subsection (1), by substituting for the expression “a basic salary of ¦ 3,000”, the words “the minimum wage”

 
The above change was effective from February 2023. The system will be updated soon!