Nigeria is preparing to introduce its first nationwide interest-free mortgage system following a new partnership between the Securities and Exchange Commission (SEC) and the Federal Mortgage Bank of Nigeria (FMBN).
The initiative aims to reduce the country’s housing deficit—currently estimated at 28 million units—by creating home-financing options aligned with ethical and non-interest financial principles.
The agreement was announced after a high-level strategy meeting in Abuja, where both institutions outlined plans for a Non-Interest Mortgage (NIM) framework designed to expand access to affordable housing. If fully implemented, the scheme will offer an alternative for millions of Nigerians who cannot access conventional, interest-based mortgage products.
SEC to Provide Regulatory Backbone
SEC Director-General, Dr. Emomotimi Agama, said the Commission will support the programme by strengthening regulations for Sukuk and other non-interest financial instruments that will fund the mortgage ecosystem.
He explained that a clear regulatory foundation is necessary to attract long-term capital from domestic and foreign ethical investors.
“Our work with FMBN marks a major step toward unlocking sustainable funding for housing. With strong structures for non-interest mortgage-backed instruments, we can build a cycle of financing, construction and homeownership,” Agama said.
FMBN Targets Financial Inclusion
FMBN Managing Director, Mr. Shehu Osidi, said the model is designed to serve Nigerians excluded from the National Housing Fund because it is interest-based.
“For decades, many Nigerians—particularly those who follow Islamic finance principles—have been unable to benefit from mortgage programmes. This partnership is a deliberate effort to close that gap,” he said.
Housing finance expert Ebilate McYoroki described the initiative as “long overdue,” saying it could spur housing demand and unlock new investment flows.
How the Interest-Free Mortgage Will Work
The proposed Non-Interest Mortgage system will rely on Islamic finance structures such as:
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Musharakah (Diminishing Partnership): Joint ownership between the bank and homeowner, with gradual buyout.
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Ijara (Lease-to-Own): Bank purchases property and leases it until ownership transfers.
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Murabaha (Cost-Plus Sale): Bank buys the property and resells at an agreed markup payable in instalments.
Expected Economic Impact
Officials say the new mortgage structure will create jobs, stimulate construction, and deepen financial inclusion nationwide. It also aligns with the Federal Government’s broader plan to reform housing delivery and expand homeownership opportunities.
