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Cablegate: U.S. Company Involvement in Housing Hampered by Lack Of

VZCZCXYZ0009
RR RUEHWEB

DE RUEHOS #0076/01 0571448
ZNR UUUUU ZZH
R 261448Z FEB 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9778
INFO RUEHUJA/AMEMBASSY ABUJA 9504
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC

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

© Scoop Media

 
 
 
 
 
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