Effects of Banking Reforms and Government Policies on Real Estate Project Financing in Nigeria

Abstract

Real estate development in Nigeria is capital-intensive with a long gestation period and depends heavily on external finance, yet the market for long-term real estate instruments remains shallow and the mortgage finance system underdeveloped relative to national housing needs. This paper examines the effects of banking sector reforms and government policies on real estate project finance in Nigeria, tracing the evolution of banking reform from the deregulation era of the mid-1980s through consolidation and recapitalisation, post-crisis risk-based supervision, and the current wave of reforms pursued by the Central Bank of Nigeria (CBN) since 2023. Adopting a desk-based, qualitative review of regulatory circulars, official policy statements, and empirical literature, the paper analyses the channels through which banking reforms and government policies affect the availability, cost, and structure of real estate finance; evaluates the effects of the current CBN reform agenda on project financing; reviews alternative financing mechanisms such as Real Estate Investment Trusts, Public-Private Partnerships, and mortgage refinancing arrangements; and situates these findings within existing empirical literature. It recommends a more coherent, predictable, and mutually reinforcing set of policies spanning the monetary, fiscal, land administration, and infrastructure domains. The paper concludes that while banking reform has strengthened financial system stability and is expected to widen long-term access to real estate finance, persistent high interest rates, policy inconsistency, weak mortgage market penetration, and land administration challenges continue to constrain real estate development in the short term.