Cablegate: Status of Reforms in the Nigerian Housing Sector

VZCZCXRO5771
PP RUEHMA RUEHPA
DE RUEHUJA #1344 1770859
ZNR UUUUU ZZH
P 260859Z JUN 07
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 0017
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 7233
RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS ABUJA 001344

SIPDIS

SIPDIS

DEPARTMENT PASS TO USTR AND OPIC (ERB)
TREASURY FOR LUKAS KOHLER/DAN PETERS
USDOC FOR 3317/ITA/OA/KBURRESS
USDOC FOR 3130/USFC/OIO/ANESA/DHARRIS

E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV NI
SUBJECT: STATUS OF REFORMS IN THE NIGERIAN HOUSING SECTOR

1. Summary. Key elements of the Land Use Act, which are major
obstacles to housing reforms, will require a constitutional
amendment to change. President Yar'Adua is eager to create an
enabling environment for the housing sector. Key amendments
proposed to housing-related legislation were not passed by the last
parliament and will have to be re-introduced. While no
cabinet-level appointments have been made yet, there are supporters
of housing reform already in the Yar'Adua administration. A key
contact, Tanimu Yakubu, an advocate for housing and the head of the
Federal Mortgage Bank of Nigeria (FMBN) is a confidant of the
president and might get a senior position in the new administration.
End summary.
.
Land Titling Reforms
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.
2. Key elements of the Land Use Act of 1978 are included in
Nigeria's constitution, covering title to all land in Nigeria. The
Act vests all land in the government, and requires a state
governor's approval before land transactions can be concluded, which
has been a major obstacle to creating mortgages, hindering growth in
the housing sector. Amending the Land Use Act/constitution would
require a two-thirds majority in the National Assembly (House of
Representatives and the Senate) and in each of the 36 state houses
of assembly for approval. The new president recognizes the problems
with the act, and has indicated he plans to seek amendments that
would make land ownership much easier.
.
Status of Reform, Foreclosure, Securitization Bills
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3. Proposed amendments to other housing-related legislation such as
the Federal Mortgage Bank of Nigeria Act, Mortgage Institution Act,
National Housing Fund Act, Land Use Act, Investment and Securities
Act, Trustee Investment Act, Insurance Act, Nigeria Social Insurance
Trust Fund Act, and the Federal Housing Authority Act were not
passed before the new administration took office and will have to be
re-introduced to both houses of the National Assembly. Foreclosure
and securitization were to be covered by new bills that have not yet
been introduced. The Honorable Osita Izunaso, a champion of
legislative reforms for housing, was in the House during the last
administration and is now in the Senate. Izunaso is likely to
re-introduce the bills and gather support for them.
.
New Housing Policy Direction
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.
4. A strong supporter of the bills, Tanimu Yakubu, Managing Director
of the Federal Mortgage Bank of Nigeria (FMBN), is a close associate
of President Yar'Adua, and is likely to elicit the president's
support. Yakubu took leave from the FMBN to assist the president
during his election campaign and has remained with him since. The
President has yet to appoint a new cabinet, however, Yakubu is
likely to be appointed to a senior position. Based on Yakubu's past
efforts, we expect him to champion housing reform and improve the
mortgage situation.
.
State Focus
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.
5. Land issues are handled mainly by the states. At the moment the
states where there is a dire need for housing because of rapid
urbanization are Lagos, Rivers (Port Harcourt) and Abuja. Rivers
State which is in the Niger Delta is experiencing high levels of
violence including regular kidnappings of expatriates. Official USG
travel is prohibited to the state, except in exceptional
circumstances.

6. Currently, because of the costs involved in titling, banks and
borrowers often come up with "creative solutions" that sidestep the
necessity of transferring title to the bank (at a cost of 15% or so
of the property value) and transferring the title back to the owner
once the mortgage has been paid. A practical solution for most
transactions becomes problematic when borrowers are in default.

CAMPBELL

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