The NHF (National Housing Fund) is a Nigerian government savings scheme for housing: contributors pay 2.5% of their basic salary into the fund, managed by the Federal Mortgage Bank of Nigeria (FMBN), and in return can access low-interest housing loans.
Here's the part many payroll spreadsheets get wrong: since the NHF Act of 2018, contributing is voluntary for private-sector employees. It's only mandatory for federal public-sector workers. So if you run a private business, you should not deduct NHF from anyone's salary unless that employee has chosen to opt in, ideally in writing.
For employees who do opt in, the deal is: 2.5% of basic salary (not gross) is deducted monthly and remitted to FMBN. Contributions are tax-deductible, so opting in slightly reduces your PAYE too. After contributing for a qualifying period, you can apply for an FMBN mortgage at concessionary rates, historically the main reason people join.
Nigerian example: Emeka earns ₦300,000 a month at a private firm in Abuja, with a basic salary of ₦150,000. He opts into NHF because he's saving toward a mortgage. His employer deducts 2.5% × ₦150,000 = ₦3,750 monthly and remits it to FMBN. His colleague who didn't opt in has no NHF line on her payslip at all, and that's perfectly legal.
See how NHF sits alongside PAYE and pension in statutory deductions in Nigeria, or model a salary with and without NHF on the free calculator.