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RR RUEHMA RUEHPA
DE RUEHOS #0255/01 1970816
ZNR UUUUU ZZH ZFR ZFR
R 150816Z JUL 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0015
INFO RUEHUJA/AMEMBASSY ABUJA 9702
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
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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
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PLEASE, ZFR IMI ZFR LAGOS MRN 255 AND BLANK ALL ASSOCIATE MCNS
AND MRN, NEW MSG WILL BE SEND WITH NEW MCN.
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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