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!