3 February 2013

Nigeria: Why Stolen Funds Are Funnelled Into Abuja - Estate Valuer

In this interview, Udosen Warsaw, who is a member of the Nigerian Institution of Estate Surveyors and Valuers and manager of Country Home Real Estate Company in Abuja, spoke on factors that engender money laundering in Abuja. Excerpts:

You have practised in Abuja for over a decade now. Who would you pinpoint as your major clients?

They are people in government--either present or past governments. Very recently, it's in the news, we heard that one assistant director in the police pension board had over 70 properties and he declared 37. And he still has about N250 million in fixed deposit in a third generation bank. Who else has the money to put into real estate?

Average Nigerians are the ones looking for houses to rent and they are not really investing. The real investors are the property and land owners. And a good percentage of them are those in government, those who have just left government and their friends and immediate business associates.

This assistant director's story suggests that Abuja has become a money laundering capital considering that government officials steal money and then invest the money in the real estate sector.

Apparently! Very very apparent! His case is not the first. We have had cases like this for a long time. We can recall the case of a former Inspector General of Police. We can recall the case of Alameyaseigha when he was governor of Bayelsa State and properties seized from him included the prestigious Chelsea Hotel then. All the properties you see in Abuja are not owned by foreigners. They are owned by our ministers, governors, special advisors and directors in government agencies. Less than 10 percent of property in Abuja is from real normal businessmen. Even the businessmen don't buy them for themselves. We all know it.

What do you think might has propelled this top government officials' penchant for property buying in Abuja?

It's speculation! From international index, Abuja is well up there in terms of property investment, and returns on investment. Until recently, I think Abuja was among the top 10 or thereabouts. In Abuja, once government gets a new layout, it puts in a couple of millions and within months, you're talking of 10 times the amount. So you can see somebody spending N1million to get an allocation--he is an insider in government and that same plot he sells it for N10 million within the week of having the allocation. From N1 million to N10 million!

So because of speculation, many people down south, up north are coming to Abuja, being the new federal government's capital and then you have the workforce. We have so many people in the town--even if you put down one million houses in Abuja today, I assure you that by then end of the year there will be people complaining that there're no houses.

In Nigeria, directors steal this money and put it directly into property. That's the only way they do it. You know, carrying money abroad is getting difficult. That's why you hear cases of people being stopped at the airport with plenty of dollars on them.

Recently, I heard that a governor's son was caught at the airport. This money is not easy to take out. So they just buy, they speculate! Some of them even if they think of making so much, they need to tie down the money because they can't keep N1billion in their houses. So they just buy anything. The common man that is supposed to buy this thing doesn't have the money to buy. Somebody who buys a property for N20million has a billion naira in his account.

There will be a property said to be for mass housing, for civil servants, it's for low income but at the end, one director will come with N20 million, N30 million and buy all those properties. Many will not have N1million or N2 million to pay and go into mortgage agreement; how can they get money for N20 million down payment? That's the main problem that we have. There're people up there that have this money to do down payment and get these houses.

What is the value of average property in Abuja now?

You can have a single house say in Maitama, Asokoro going for N1 billion. Maybe a kilometre away from Asokoro, you go down to Karu, you'll see a similar property for maybe N20 million, N30 million. Location determines value more than cost of construction. Because the same N5 million or N10million you'll use to put up a duplex in Maitama, that same amount is what you'll use just one kilometre down the road in Karu.

When talking of Karu, for an average detached house, it will be between N30 million and N50 million whereas that kind of house in Maitama/Asokoro will be for like N250 million to N400 million.

Have you estate valuers idea of the number of houses that spring up in this city in a year?

I don't have that now. I would have consulted my documents. But it's obvious that properties springing up in the outskirts, in the satellite towns are like 90 percent compared to what's going on inside the town because the town is already full. When I say the town, that's phase one--you're talking of Maitama, Asokoro, Wuse and Garki.

But when you leave phase one, go to phase two, that's Durumi, Katampe and go further to Kasana, Kagini, Life Camp and the rest, these are where you see new buildings. If you really want to count, you're talking of hundreds of thousands. There's no single day that hundreds of foundations are not built up in FCT. If you go to that Karu/Kurudu axis, new estates, individual properties are springing up every day.

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