inefficient and uneven benefits in the public servant's pay package. Consequently, over the period
between 2004 to 2006, virtually all ‘official’ government cars (with the exception of pool cars and a
few sensitive, utility or essential vehicles) were withdrawn from individual officers and sold by
public auction, with the previous assignees being granted a right of first refusal in most cases. The
second, larger and more important, item was that of housing in the form of numerous residential
properties, scattered across the country that had over the years been built or purchased by various
federal agencies for the use of their staff or as investment items.
The replacement of the government’s flawed, inefficient and woefully inadequate staff housing policy,
which accommodated less than 10 per cent of its staff, with the policy of the monetisation of housing
benefits, left the Federal Government with a considerable pool of residential properties. These vary
in form and quality (from marble and stone stand-alone mansions to plywood barrack-style single
rooms), but which now had to be properly disposed of. Disposing of them necessarily requires
putting in place a mortgage system to enable the purchasers to finance the acquisitions in what would
turn out to be the largest single transfer of wealth from the government to its citizens on the African
continent.
These residential facilities constituted a major government investment and were a significant drain on
scarce resources. Furthermore, they had proven grossly inadequate for the purpose of providing fair
and affordable housing to the Federal Government’s 600,000 civilian public servants, as there were
only about 40,000 government-owned houses across the country, with an estimated 32,000 of these
located in Abuja.
We set about disposing of this stock of houses in a manner designed to balance the need to recoup
some of the government’s investments with the desire to provide affordable permanent housing to as
many public servants as possible in an even, fair and efficient way. The programme aimed to cause
minimum dislocation and inconvenience to existing residents and beneficiaries of the old system. In
addition to reducing waste and empowering public servants, additional benefits expected to emanate
from the sale exercise included the creation of a viable mortgage system in the country that had
hitherto been non-existent. For the FCTA, the sale would also assist in restoring the Abuja Master
Plan, as over the years many houses in residential areas had been converted to offices by MDAs. By
retrieving and selling these offices as houses, the land use would therefore be partially restored.
At the end of 2003, the latest addition to the government's housing stock in Abuja was the Games
Village, built to accommodate African athletes for the All-Africa Games we hosted in October 2003.
Early in 2004, President Obasanjo approved a memo we wrote to dispose of Games Village facilities
as a dry run for the sale of all the government houses in Abuja. The MFCT then mandated Abuja
Investment & Property Development Company Ltd., to handle the sale. With Tijjani Abdullahi as
CEO and his competence in privatization, we all thought it would be a piece of cake. We were
wrong.
As soon as the sale guidelines and conditions were advertised, several ministers, senators and
politicians made representations to Obasanjo to take the responsibility away from AIPDC and
transfer it to a more flexible body. Obasanjo had either forgotten his approval for MFCT to handle the
sale or did not link AIPDC to my ministry and promptly queried the steps taken. I was incensed, and
responded in writing attaching his earlier approval. In the end, he decided that I should hand over the
sale of Games Village to the Minister of Housing, Mrs Mobolaji Osomo. This decision made no
sense at all since it was MFCT that had the details of the land, design and construction of the Village,
and would issue survey plans and title deeds to any purchaser. We let it go, knowing that Osomo
would have to approach us for title documents and other geospatial data.
In July 2004, the President directed me to proceed with the sale of all Federal Government
residential facilities in Abuja. He also instructed that I should be the vice chair of the committee to
sell all other residential buildings outside Abuja with the Minister of Housing as chair. I reminded
him of the Games Village debacle, and obtained his assurance that on this occasion, he would not
reverse his decision. By then the Games Village sale had floundered and become mired in
controversy.
We immediately assembled a team chaired by Jimi Lawal to develop a strategy and framework for
the sale, followed by detailed guidelines, which I sent to the President as a memo on 17th January
2005. After waiting more than a month without receiving a response, I sent a reminder dated 21st
February, 2005 which returned approved vide a State House letter dated February 22, 2005. A
cabinet memorandum was then presented to ratify the president's anticipatory approval, which
substantially modified the earlier approved guidelines, in March 2005.
Implementation Framework - the Ad-Hoc Committee
By this decision, the Federal Executive Council mandated the FCTA to oversee the disposal of all the
32,000 non-essential federal government-owned residential houses in Abuja, and an Implementation
Committee to that effect was set up. The President-in-Council (FEC) constituted the highest authority
with regard to the sale exercise and all major policy decisions had to be sanctioned by him and the
FEC as circumstances dictated. The FCTA executes its mandate to conduct the sale exercise through
the Ad-hoc Committee on the Sale of FGN Houses in Abuja, made up of representatives of the FCTA,
Presidency and mortgage institutions. In November 2005, the first person running the sale secretariat,
Jimi Lawal, left the country, and the operations and leadership of the Ad-hoc Committee were
reorganised. This led to the introduction of a special Auction Monitoring Group to oversee the public
auction and bid opening exercises in order to improve its integrity and transparency. The sale
exercises were handled by a team of consultants based in my office under the supervision of one of
my special assistants, Dr. Abdu Mukhtar.
I have gone to some length to outline the approval process from the president and the cabinet, the
elaborate steps we took to make the sale as neutral and transparent as possible. The guidelines were
published in the Official Gazette, Vol. 92, No. 82 of 15th August 2005 .70 In December 2006, the
Cabinet expanded the mandate of the FCTA to include the disposal of a balance of 49 houses in the
Abuja Games Village remaining from the earlier sale exercise carried out by the then Federal
Ministry of Housing and Urban Development. However, only 37 of these houses were eventually
handed over to the FCTA for disposal.
Database for the Sale Implementation
Prior to the commencement of the sale exercise, the Secretary to the Government of the Federation
had commissioned a group of private real estate firms as consultants to carry out an extensive audit of
all the FGN houses in Abuja. The firms were to create a database of all the information, including a
census of the buildings, tenants, specifications and status of the individual houses, property values,
maintenance
and repair requirements and the like. The original idea involved the subsequent
provision of organised facility management services to these properties by professional facility
management firms. However, these steps were overtaken by the introduction of the monetisation
programme. Therefore, the incomplete initial results of the consultants’ work on the database were
transferred to the FCT Administration together with the burden of settling the consultants’ claims as
earlier negotiated with the SGF. The information acquired by the SGF's office together with the
existing data with the FCDA and the allocation records from the Office of the Head of Civil Service
of the Federation was to form the bedrock of the sale exercise, as they provided the principal
database on which the entire exercise was based.
In addition, the FCTA and the Implementation Committee variously wrote and invited all government
agencies to submit detailed information on all the houses they may have bought, built, been assigned
to or occupied by their staff, in Abuja over the years. Not all of them responded. During the course of
the sale exercise, the Abuja Geographic Information Systems (AGIS) came in handy in compiling
additional information on FGN houses in the FCT that had not already been captured in the
committee’s database. In a number of cases FGN houses were discovered (including whole estates)
only when the occupants expressed interest in buying them. Furthermore, the FCT Committee on
Street Naming and House Numbering also discovered several undisclosed FGN houses that were then
added to the database.
Valuation of the Properties for Sale
As explained above, the Secretary to the Government of the Federation had originally commissioned
a group of 26 private real estate/facility management firms as valuation consultants to conduct an
extensive audit of the FGN houses in Abuja. The 26 Firms eventually submitted their valuation
reports to the Implementation Committee after the mandate for the sale was granted to the FCTA. In
addition, copies of the valuation reports were later passed to the Federal Mortgage Bank of Nigeria
(FMBN) for assessment, towards floating a Federal Government bond to ease the provision of loan
and mortgage facilities for the public servants.
In all, 32,581 housing units were identified and valued based on the list of houses disclosed by
Federal Government MDAs. This figure included houses not disclosed to the Valuation Consultants
by some MDAs but were captured via information from AGIS reconnaissance and other independent
FCT sources. It is pertinent to note that the houses valued also included 515 houses occupied by
public servants in areas outside the FCT such as New Karu and Mararaba in Nassarawa State and
Suleja in Niger State. These were handed over to the Federal Ministry of Housing and Urban
Development to take further necessary action.
In line with the guidelines for the sale of houses, two methods of valuation were employed for each
individual property using the Current Replacement Cost method, and then Open Market Value
approach. The Current Replacement Cost (CRC) valuation or the Quantity Surveying approach
ascertained the estimated cost of replacing, or rebuilding the entire property again at the prevailing
cost of labour and construction materials. This method excluded the cost or value of the land and the
differential effects of location on value, and therefore usually produces a lower price than market
value, for the building in question. However, in some of the Satellite Town locations the reverse may
be the case as replacement cost may be higher than market price of property in the particular location.
This valuation formed the offer price granted to career public servants (CPS) on ‘first right of
refusal’. The open market value (OMV) or the Estate Surveyor's approach is an estimation of the
current market price for the property given the prevailing demand, level of supporting infrastructure,
location and therefore cost or value of land. This valuation constituted the reserve price, or baseline
price, for offers granted to political office holders, POHs on ‘right to match’ and public bid
participants in the Auction/Bid Rounds. The OMV was generally higher than the replacement cost of a
house as it took local conditions, locational advantages, market demand levels and other factors into
consideration. However, in rural locations such as the distant satellite towns where land values were
lower and demand very weak, the OMV could and does fall considerably below the replacement cost
of the property. A total of 980 houses were also captured as “Essential Housing Units” and excluded
from the sale exercise as required by the approved guidelines.
The Sale Process of Government Houses in Abuja - Guidelines and Categorization
The approved guidelines classified the beneficiaries of the sale exercise into three broad categories:
Career Public Servants (CPS) that were eligible for a grant of offer based on the ‘first right of
refusal’; Political Office Holders (POH) that were eligible for a grant of offer based on the ‘right to
match’ a winning bid; and Public Bidders (PB) that were eligible for a grant of offer on the basis of a
‘winning bid’ in a simple public auction/sale.
The sale exercise commenced in April 2005 with the processing of CPS expressions of interest and a
total of 20,661 offer letters were issued to qualifying CPS. Out of this, 1,944 CPS had made full and
final payment, about 17,000 had made payments of a minimum of 10% or more, and 1,361 were
unable to make any payments by 20th October 2006 and consequently those offers were forfeited and
withdrawn. A total of N37.6 billion had been realised from payments by CPS. The second phase of
the exercise, which was the Public Auction/Bids, commenced in September 2005 and the last round
was held in December 2006. A total of seven General Public Auctions/Bids and one Special
Auction/Bid were held, with 4,175 offers being granted to winning bidders who had made payments
of about N10 billion by April 2007. Also dependent on the outcome of the public auctions were the
offers to POH, whose houses had to be advertised prior to consideration for an offer. 722 offers were
granted to POHs, but only 567 had completed payment for their houses by the time we left office.
Gross Revenues from Sale of Houses as at May 2007
In all, about 27,000 CPS, POH and other Nigerians acquired houses under the programme. About N68
billion had been realised from the sale exercise by March 2007, and N25.5 billion had been remitted
to the Federal Government under the terms of the exercise, while some N30 billion in mortgage
facilities originated by different banks were still domiciled with the banks pending their repurchase
by the FMBN.
As part of government’s efforts to facilitate the acquisition of the FGN houses by a large number of
public servants, the Federal Government, through the FCTA, Ministry of Finance, CBN, SEC and
FMBN initiated a mortgage bond that would enable prospective buyers access the mortgage market to
finance the purchase of their houses at reasonable (single-digit) interest rates. This bond was
successfully issued on the 21st May 2007 with UBA Global Markets as the lead initiator.
Pilot Mortgage System
At the beginning of the sale exercise, the administration expressed the desire and commitment to
providing the fund
s required by buyers to pay for the houses on sale through the provision of
affordable mortgage facilities via a bond to be floated by the Federal Mortgage Bank of Nigeria
(FMBN), initially proposed to be about N100 billion. The combined sale and mortgage support
strategy was designed to encourage home ownership through mortgage finance in order to rebuild and
stabilize the middle class in the FCT and Nigeria, particularly in the face of the dismal home
ownership rate of less than 5% and housing deficit of 16 million units in the country.
Under the financing structure, the FMBN issued a N100 billion bond, fully guaranteed by the Federal
Government, which was then underwritten by banks and other financial institutions. These financial
intermediaries were expected to purchase the bond. At the retail end, mortgage originators were to
first create the mortgages with their own funds under the FMBN’s uniform underwriting standards,
while FMBN will subsequently purchase such mortgages from them using the proceeds of the bond
issue, thus providing the liquidity for the creation of further mortgages.
Where an underwriter/investor decided to originate mortgages, the FMBN will accord priority to
acquiring and refinancing its qualifying mortgages up to the amount of the bond underwritten by such
an institution. The flotation of the proposed bond also sought to expand on the overall economic
reform agenda to drive innovation in, and increase the depth and breadth of financial intermediation.
It was our expectation that beyond the bond flotation, which would have the acquirers of the FGN
houses as ultimate beneficiaries, many more Nigerians would become home-owners through a robust
mortgage finance system that evolved from the Abuja pilot and experience. Unfortunately, the bond
flotation was unduly delayed because the Central Bank of Nigeria refused to provide the forbearances
required by the banks to subscribe massively in purchasing the bond. Therefore, we had no time to
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