Nigeria’s pension industry, now valued at over ₦20 trillion, has the potential to reshape the country’s housing sector if a portion of the funds is redirected into affordable housing projects, housing and financial experts have said.
Industry analysts note that Nigeria currently faces a housing deficit estimated at between 20 and 28 million units, largely due to limited long-term financing, high construction costs and a weak mortgage market. They argue that pension funds, which are designed for long-term investment, could provide the patient capital required to support large-scale housing development.
According to data from the National Pension Commission (PenCom), pension assets crossed the ₦20 trillion mark by the end of 2025. However, less than three per cent of these funds are currently invested in real estate-related instruments such as housing finance, infrastructure or real estate investment trusts.
Most pension investments remain concentrated in Federal Government securities, money market instruments and equities, reflecting conservative investment mandates and regulatory constraints that have historically limited exposure to alternative assets.
Experts say even a small shift toward housing-focused investments could unlock significant capital for developers and mortgage lenders, enabling the delivery of more affordable homes.
One of the major challenges in the housing sector is the high cost of borrowing, with commercial lending rates often exceeding 25 per cent. This makes it difficult for both developers and prospective homeowners to access financing.
Pension funds, however, operate on longer investment horizons, making them suitable for long-term instruments such as mortgage-backed securities, housing investment funds, development trusts and other structured products.
Housing analysts recommend a carefully managed allocation of pension assets into the housing sector, supported by strong regulatory oversight to protect contributors’ savings while encouraging capital market growth.
They also note that such investments could stimulate economic activity by creating jobs in construction, boosting housing supply and strengthening related industries.
For this approach to succeed, experts say clear regulatory guidelines, improved housing-linked financial instruments and a stable macroeconomic environment will be required to attract institutional investment into the real estate sector.
They add that channeling a fraction of pension assets into housing could help reduce reliance on expensive financing, attract private investors and accelerate efforts to close Nigeria’s housing gap.
