U.S. COMPANY INVOLVEMENT IN HOUSING HAMPERED BY LACK OF

UNCLAS LAGOS 000076 SIPDIS SENSITIVE BUT UNCLASSIFIED--HANDLE ACCORDINGLY; SIPDIS STATE FOR AF/W COMMERCE FOR KBURRESS TREASURY FOR DPETERS, RHALL, RABDULRAZAK STATE PASS USTR FOR LISER, AGAMA STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS STATE PASS TDA FOR EEBONG, DSHUSTER STATE PASS EXIM FOR JRICHTER STATE PASS USAID FOR NFREEMAN, GBERTOLIN USDOC FOR 3130/USFC/OIO/ANESA/DHARRIS USDOC FOR USPTO - PAUL SALMON USDOJ FOR MARIE-FLORE KOUAME E.O. 12958: N/A TAGS: EFIN EAID EIND EINV ETRD PGOV NI SUBJECT: U.S. COMPANY INVOLVEMENT IN HOUSING HAMPERED BY LACK OF LEGISLATION REF 07 LAGOS 621 SENSITIVE BUT UNCLASSIFIED (SBU)--BUSINESS PROPRIETARY INFORMATION; HANDLE ACCORDINGLY ¶1. (SBU) Summary: While the National Housing Policy (NHP) of 2002 intended to promote private investment in the housing sector, a number of laws (including the Land Use Act and Primary Mortgage Institution Act) need amending to achieve this. An American owned housing development company plans to build a 4,000-unit housing development in Lagos and will offer a Nigerian bank security-backed mortgages for potential buyers. However, this company hopes to offer housing across Nigeria; local partners will lobby the Senate to pass pending housing legislation. End Summary. -------------- --- NHP: Housing Legislation to Privatize the Sector -------------- --- ¶2. (U) Nigeria's National Housing Policy (NHP) of 2002 was designed to promote private-sector driven mass-housing by improving the availability and accessibility of land. However, a federal housing committee found the following legislation needs changes to fully implement the NHP: the Land Use Act (LUA) to streamline the effective use of land; the Primary Mortgage Institution Act (PMIA) to provide mortgage financing and facilitate large scale construction of houses in the country; the Federal Housing Authority Act (FHAA); and the Federal Mortgage Bank Act (FMBA). The National Assembly session that closed in June, 2007 failed to pass nine housing reform related bills before adjourning sine die. The legislation will have to be reintroduced in the current session. Bills providing for non-judicial foreclosure and securitization of mortgages have reportedly been drafted but may not have been introduced in the last legislative session. ¶3. (SBU) Housing experts at Pison Housing Company in Lagos, which was recently approved by OPIC to act as a loan originator for mortgages, said adoption of the NHP withdrew authority from Nigeria's Ministry of Housing to build subsidized housing and gave it responsibility for formulating housing policy and creating an attractive environment for investors. However, the Federal Housing Authority (FHA),a division of the Ministry, is empowered to build houses if it can remain competitive with private builders. -------------- American Company to Build Housing Estates; Facilitates Nigerian Mortgages -------------- ¶4. (SBU) TransAtlantic, a U.S. company, plans to build a 4,000-5,000 housing estate community called Ilasan on Lekki Peninsula's waterfront in Lagos, according to company Chairman Mike Williams (former McDermott staffer and one of two original pushers of AGOA on the Hill). The estate would offer low, medium and high-income townhouses as well as mid-rise apartment buildings, primary and secondary schools, an open-air market, and retail shops. The construction of Ilasan would create approximately 2,000 local jobs, Williams commented. (Note: TransAtlantic originally intended to provide low-income housing in the Niger Delta but was never able to advance beyond the discussion phase of the project (reftel). End Note.) ¶5. (SBU) Williams told Poloffs on February 8 that TransAtlantic partnered with the Lagos Building Investment Company Limited (LBIC), a primary mortgage institution that would offer potential buyers home loan financing. LBIC, a private-public venture supported by Lagos State Governor Babatunde Fashola, is providing TransAtlantic the estate property and would own 30 percent of the project. In light of deficiencies in Nigeria's housing laws, TransAtlantic will utilize Asset Backed Commercial Paper (ABCP) conduits to serve as a "second floor bank" which would purchase individual loans from Nigerian banks, securitize them, and sell them to investors, thereby replenishing the banks' credit line. Williams said Cantor Fitzgerald, a New York investment firm, has agreed to market mortgages originating in Nigeria. -------------- Police Housing to Spur Assembly Action on Housing Bills? -------------- ¶6. (SBU) TransAtlantic has big plans for expanding in the Nigerian market; the company would like to build 100,000 housing units in each of Nigeria's 36 states for the Nigerian police. This would provide badly needed housing and increase nationwide employment. However, TransAtlantic realizes the need for an improved housing framework and actively sought during the National Assembly's last season to inform the House and Senate about benefits that would accrue upon passage of the NHP implementing legislation. TransAtlantic plans to make current House of Assembly members aware of the importance of the legislation and to seek their support. The TransAtlantic group hopes the Nigerian police will also urge the Senate to adopt quickly the housing legislation. ¶7. (SBU) Comment: TransAtlantic sought development opportunities in two Niger Delta states but found political will and the legal framework lacking. Their plan for Lagos appears well developed; they have identified partners, appear to have the Governor's support, and are actively following the legislation, which may bode well for the ultimate success of the project. Although TransAtlantic appears to have found a way around the lack of a proper legislation framework, OPIC and other contacts have noted that the absence of a foreclosure law is a major obstacle to mortgage availability and housing development. End Comment. ¶8. (U) This cable was cleared by Embassy Abuja. Blair