NIGERIA: FEDERAL, STATE SOLUTIONS TO ADDRESS NATIONAL

UNCLAS SECTION 01 OF 02 LAGOS 000255 SIPDIS E.O. 12958: N/A TAGS: EINV EAID EIND EFIN NI SUBJECT: NIGERIA: FEDERAL, STATE SOLUTIONS TO ADDRESS NATIONAL HOUSING DEFICIT, BUT MORE REFORM NEEDED LAGOS 00000255 001.2 OF 002 ///////////////////////////////////////////// ///////////////// PLEASE, ZFR IMI ZFR LAGOS MRN 255 AND BLANK ALL ASSOCIATE MCNS AND MRN, NEW MSG WILL BE SEND WITH NEW MCN. ///////////////////////////////////////////// ///////////////// LAGOS 00000255 002 OF 002 shops in Ilasan, a community located about 40 minutes drive outside of Lagos' commercial center. (Note: TransAtlantic uses the Nigerian Federal Government's definition of low-income housing, i.e. housing costing between Naira 2.5 million to 5 million (USD 20,000 to 40,000. End Note) The construction in Ilasan would create approximately 2,000 local jobs, Williams estimated. TransAtlantic will partner with the Lagos Building Investment Company Limited (LBIC),a primary mortgage institution and private-public venture supported by the Lagos State Government. Under this partnership, LBIC would offer potential buyers home loan financing, provide TransAtlantic the estate property, and thereby own 30 percent of the project. In light of Nigeria's housing laws, TransAtlantic will utilize Asset Backed Commercial Paper (ABCP) conduits. In using ABCP, LBIC would purchase individual loans from Nigerian banks, securitize them, and sell them to investors in order to replenish the banks' credit line. Police, Military Housing Programs Stall -------------- ¶8. (U) However, public and private housing projects with promise have faltered. TransAtlantic's Sheen told EconOff that state governments received appropriations from the Federal Government in early 2008 for a police housing program. That program has fallen by the wayside as state governments failed to allocate land and to see through the projects. TransAtlantic had planned on building 100,000 housing units for the Nigerian police in each of Nigeria's 36 states as part of the program, he said. ¶9. (U) The Nigerian military had devised a similar housing scheme for its retirees in partnership with United Bank for Africa (UBA). Under this program, 20 percent of the government's allocation to a retiree's pension would be diverted to payments on a mortgage for a period of 15 to 25 years. Conceived four years ago, the scheme took off in 2007 with the construction of 50 houses in Kogi State, but has been grounded since because the military has not been paying its retirees either pensions or post-service separation incentives. ¶10. (U) Private low-income housing projects in Kaduna, Rivers, and Anambra states have stalled as well, Sheen said. The state governments have allocated the land for the projects, but U.S. investors have not moved forward with the discussion. TransAtlantic hopes to conduct a second housing feasibility study in partnership with the U.S. Overseas Private Investment Corporation to update one done approximately five years ago. Developers Run Gauntlet of Extra-legal Taxes -------------- ¶11. (U) Despite advances in other areas, private developers continue to suffer at the whim of government officials, First Bank's Santuraki said. In Lagos State, government officials frequently add on additional levies, and developers have to absorb some of the costs and hope to pass the remainder onto the customers. This is easier to do with prime property, he noted. ¶12. (U) Comment: State governments need to realize any effort made at reducing bureaucratic bottlenecks and streamlining policies at the state level will be undermined by a lack of accountability and transparency in the system. Moreover, patchwork housing development schemes will only be a drop in the bucket in terms of the national housing deficit. Without real reforms to existing land and housing policies, good business sense will deter private investors and developers from making long-term investment. End Comment. ¶13. This cable was cleared with Embassy Abuja. BLAIR