On 2 April 2019, the Senate, during its plenary, announced that President Muhammadu Buhari declined assent to the National Housing Fund (Establishment) Bill 2018 ("The NHF Bill").
The NHF Bill, which was recently passed by the National Assembly, sought to provide for additional sources of funding for financing housing development in Nigeria. However, the President rejected the Bill for legal and economic reasons.
Section 58 of the 1999 Constitution stipulates the procedure for law making in Nigeria. This entails the passage of Bills by the legislature and subsequent assent by the President. The National Assembly had transmitted the NHF Bill to the president for signing into law after passing it in February 2019. (Read our tax alert on the passage of the NHF Bill here).
The NHF Bill sought to replace the current National Housing Fund (NHF) Act and introduce a number of changes to the NHF Scheme. These changes include the imposition of a compulsory 2.5% deduction on the monthly income of Nigerian workers, a 2.5% levy payable by manufacturers and importers of cement and a compulsory investment of 10% of profits before tax on banks, Pension Fund Administrators (PFA) and Insurance companies.
However, the President declined assent to the NHF Bill. According to the President, the various levies and obligations imposed by the NHF Bill would be disruptive and punitive to the Nigerian worker and to sectors such as cement manufacturing, banking, insurance and pension. The President also stated that the provisions of the Bill directing PFAs to invest in the NHF undermines the powers of the National Pension Commission and adversely affects the safeguards that protect the pension industry from unreasonable investment risks.
The decline of Presidential assent to the NHF Bill implies that the Bill still does not have the effect of law given that it has not passed through the constitutional process of law making. Thus, the current NHF Act would continue to remain in force pending the signing of a new law repealing its provisions.
However, it is also important to note that Section 58(5) of the 1999 Constitution allows for passage of a Bill into law by the National Assembly, where the President declines assent to a Bill. Under the Section, the Bill would have to be passed again by two-thirds majority of each House of the National Assembly to become law. In such instance, the assent of the President would not be required. However, the National Assembly has not taken such steps to override the veto powers of the President with respect to the NHF Bill at the time of the publication of this document.
While we continue to monitor the process, affected persons should ensure compliance with the current NHF Act and pay their required contributions under the law to avoid undue exposures to non-compliance penalties.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.