AN ASSESSMENT OF THE LEGAL FRAMEWORKS FOR SHARI’AH COMPLIANT HOUSING FINANCE IN NIGERIA: LESSONS FROM MALAYSIA AND AUSTRALIA

Abstract

Housing provision remains a fundamental responsibility of the state due to its direct impact on human welfare, economic stability, and social development. Achieving adequate housing depends on coherent legal and regulatory frameworks capable of supporting inclusive and sustainable housing finance systems. In Nigeria, however, existing frameworks are predominantly conventional and interest-based, raising concerns about their capacity to accommodate Sharīʿah-compliant housing finance (SCHF). This paper examines the adequacy of Nigeria’s legal and regulatory frameworks for housing finance and their implications for SCHF. Using a doctrinal methodology, it analyses key statutes—including the Constitution of the Federal Republic of Nigeria 1999 (as amended), the National Housing Fund Act, BOFIA 2020, and the Mortgage Institutions Act—to determine the extent to which they facilitate or constrain non-interest housing finance. The study identifies major impediments, particularly mandatory interest provisions under the National Housing Fund, regulatory ambiguity surrounding non-interest mortgage institutions, and the absence of explicit statutory recognition of SCHF. A comparative analysis of Malaysia and Australia reveals two complementary models. Malaysia operates a specialised and comprehensive legal regime with strong Shari’ah governance, institutional clarity, and regulatory support, enabling the growth and standardisation of SCHF products. Australia, by contrast, demonstrates how SCHF can function within a flexible conventional framework through regulatory neutrality, adaptive legal interpretation, and private sector innovation, albeit with some tax and structural challenges. The paper finds that Nigeria’s constraints are primarily legal and structural. It recommends a hybrid reform approach involving targeted statutory amendments, explicit recognition of non-interest mortgage institutions, strengthened Shari’ah governance within regulatory bodies, and alignment of housing policies with SCHF to enhance accessibility and financial inclusion.