THE PRIVATIZATION OF THE FEDERAL GOVERNMENT-OWNED RESIDENTIAL PROPERTIES: A CASE STUDY OF THE 1004 FLATS IN VICTORIA ISLAND, LAGOS

THE PRIVATIZATION OF THE FEDERAL GOVERNMENT-OWNED RESIDENTIAL PROPERTIES:

A CASE STUDY OF THE 1004 FLATS IN VICTORIA ISLAND, LAGOS

                                                                                     BY

                                                   KUYE OLUSEGUN & AKINTADE S. AKINYEMI

ABSTRACT

The sale of public residential buildings which seemed impracticable especially with the associated high prices placed on them as well as protests by the residents (public servants), with Government totally backing off and transferring acquisition, management and maintenance of her residential properties to the new emerging owners. This move has its advantages and disadvantages. This paper reviewed/appraised the justification (or otherwise) of the privatization policy by the Federal Government. This paper examines the monetization/privatization policy by the Federal Government with particular emphasis on property management structure within such properties before and after privatization using the new 1004 Estates Limited as case study. Some of the findings include post sale problems such as perfection of title document and the management of individual sub-lessees in privatised estate. Finally, the paper recommends that the privatization programme in the area of public housing should be made to continue as it will help housing market in the foreseeable future, minimize fraud cum the mismanagement of public funds as well as wastage. Furthermore, Estate Surveyors and Valuers should be ready to confront the resultant challenges of the new policy, as their professional competence during the sale process, renovations as well as the  eventual transfer of these privatised properties  to their respective new owners.

KEYWORDS: Privatization, public assets, monetization policy & property management

INTRODUCTION

The Privatization and Commercialization Act of 1988 and the Bureau of Public Enterprises Act of 1993 defined privatization as “the relinquishment of part or all of the equity and other interests held by the Federal Government or any of its agencies, in enterprises whether wholly or partly owned by the Federal Government”. Megginson & Netter (2001) defined it as “the deliberate sale by a government of state- owned enterprises (SOEs) or assets to private economic agents”. Privatization can therefore be seen as the transfer of ownership and control of enterprise from the state to the private sector.

Privatization is the variety of measurers adopted by Government to expose a public enterprise to competition or to bring in private ownership or control or management into a public enterprise and accordingly, to reduce the usual weight of public ownership or control or management. In the opinion of Kikeri & Nellis (2002), privatization has become a central element of the structural reform agenda in developed and developing countries alike for over two decades to the extent that it is now quite difficult to find a country that has not embarked on a program to divest some or all of its state-owned enterprises (SOEs) or to involve the private sector in their management, ownership, and financing. However, in a strict sense, privatisation as an ideological concept means the transfer of ownership of production and control of enterprises from the public to the private sector. With the transfer of ownership from the public to the private sector, there will be impacts on the housing stock, the management of the privatized property, and also on the previous occupiers of the privatized properties.

In recent times, the concept of privatization has evoked sharp political reactions and sharp criticisms from many angles and the subject has been a subject of intense global debate in recent years. In most Africa countries, privatization has remained highly controversial and politically risky. Privatization in Nigeria has not been a popular reform as it has received so much criticism from the Labour groups, academia and individuals. There have been numerous strikes against the decision of Federal Government to sell-off these houses by unions fearing loss of jobs. While proponents of privatization see that aspect of economic reform as an instrument of efficient resource management for rapid economic development and poverty reduction, the critics argue that privatization inflicts damage on the poor through loss of employment, reduction in income, and reduced access to basic social services or increases in prices. According to Nightingale and Pindus (1997), “privatization is not inherently good or bad, but the poor performance or effectiveness depends on implementation”.

This paper took a cursory look into the types, methods, and challenges of privatization; the reasons for privatization, its advantages and disadvantages. It also examined the effects of privatization on public housing with special focus on 1004 housing estate located in Victoria Island, Lagos.

PRIVATIZATION/COMMERCIALISATION OF PUBLIC ASSETS

The basic economic arguments given for privatization is that governments have few incentives to ensure that the enterprises they own are well run. According to Kikeri & Nellis (2002), the reasons for the rise of privatization are that state-owned enterprises (SOEs):

• performed, and continue to perform, poorly;
• they proved wasteful and inefficient, tending to produce goods and services of low quality and high cost;
• they became seriously overstaffed as governments used them to generate and maintain employment;
• the continued financing of SOE losses through the state banking system increased intermediation costs, reduced the private sector’s access to credit, and threatened overall financial sector viability; and
• Increasingly constrained governments also became incapable of providing capital to their SOEs, even the profitable ones, for maintenance and repair, much less badly-needed network expansion and re-tooling.

Although privatization efforts differ substantially from country to country, there is a strong common economic rationale underlying the various decisions to privatize state resources. For many countries, privatization has become the only effective method of raising investment capital on favourable terms. High levels of past public-sector borrowings have saddled many countries with large levels of debt. As a result, these countries have had to sell state assets to reduce their debt, generate revenue, raise investment capital, reducing the role of government in the economy, increasing efficiency and exposing firms to market discipline.

One major challenge of publicly run companies is the lack of comparison in state monopolies thus making it absolutely difficult to know if an enterprise is efficient or not without competitors to compare against. Furthermore, it may be extremely difficult to evaluate the efficiency of numerous and varied business endeavours. Whereas, a private owner, often specializing and gaining great knowledge about a certain industrial sector, can evaluate and then reward or punish the management in much fewer enterprises much more efficiently. Privatization advocates were of the view that private investors can more efficiently deliver many goods or service than government due to free market competition. In general, over time this will lead to lower prices, improved quality, more choices, less corruption, less red tape, and quicker delivery. Privatizing a non-profitable company hitherto government-owned may force the company to raise prices in order to become profitable thus removing the need for the government to provide taxpayers money to bail out such moribund companies (Wikipedia, 2008).

On the other hand and despite the extensive adoption of privatization by governments worldwide, it has from the outset been highly controversial and politically charged for the following reasons (Kikeri & Nellis, 2002):

• There are those who claim that privatization does not produce financial and operational benefits, or at least not enough to offset the social dislocation it causes.
• There is an acute and pervasive fear that privatization leads to layoffs, first in the short-term in the firms divested, and then in the longer-run and in the economy at large.
• There is a widespread belief that even if privatization enhances efficiency, the bulk of its benefits accrue to a privileged few—shareholders, managers, domestic or foreign business interests, those connected to the political elite—while the costs are borne by the many, particularly workers and consumers.
• Lastly, many are concerned that lack of transparency and corruption in the privatization process itself has minimized the intended gains and led to or deepened broader problems of governance.

Table 1: Arguments for, and against Privatisation

Source: Wikipedia (2008)

According to Megginson and Netter (2001), the key decision to be made by government with regard to privatisation is the method through which the state-owned asset is transferred to private ownership. The duo alluded to the fact that privatisation decision is a difficult one and this is because of the necessity for “economic factors such as valuing the assets, privatizations are generally part of an on-going, highly politicized process”. Some of the factors that influence the privatization method as outlined by Megginson and Netter (2001) include the:

a. history of the asset’s ownership,

b. financial and competitive position of the state-owned enterprises (SOEs),

c. government’s ideological view of markets and regulation,

d. past, present, and potential future regulatory structure in the country,

e. need to pay off important interest groups in the privatization,

f. government’s ability to credibly commit itself to respect investors’ property rights after divestiture,

g. capital market conditions and existing institutional framework for corporate governance in the country,

h. sophistication of potential investors, and,

i. the government willingness to let foreigners own divested assets.

With regard to privatisation, some of the methods of privatisation as given by the International Labour Organization’s Bureau for Workers Activities (n.d.) include the following:

a. Direct sale of entire company to public: In some instances, countries have chosen to transfer ownership of industries or companies completely to the private sector. Argentina, the United Kingdom, Chile, and New Zealand have generally undertaken some of the most ambitious privatization efforts by auctioning off companies directly to the private sector thus allowing the market forces to determine the value of these companies through the bidding

b. Partial sale of company to the public: Governments have often sold shares of a state-owned firm while retaining a portion of the company (a “golden share”), thereby maintaining a limited degree of control over the Most privatizations have been gradual, for example, in British Petroleum (BP), partial government ownership dates back to 1914. In 1977, the government reduced its ownership share from 66% to 51%, and then to 46% in 1979, 31% in 1983, under 2% in 1987, and finally to zero in 1995.

c. Sale of company to another company or consortiums: Often governments have chosen to sell state-owned utilities directly to companies – either foreign or domestic. For example, when Bolivia privatized the state electricity monopoly, it was broken into three electricity generation companies and directly sold off to foreign (primarily US) utility companies.

d. Deregulation: Another form of privatization involves Deregulation has been the most prevalent form of energy privatization in the United States, most recently in natural gas transportation and electric power generation and transportation. Electric power generation, transmission, and distribution have long been held up as an example of a “natural monopoly”.

e. Removal of subsidies: The removal of a subsidy can also be viewed as a form of privatization. The removal of subsidies for European coal operations, for example, precipitated the constriction of Europe’s coal mining industry and encouraged a large shift in coal investment from European mines to mines in the United States, Australia, and Latin America.

PRIVATISATION OF GOVERNMENT ASSETS IN NIGERIA

The privatisation of government assets was formally introduced for the first time by the Privatization and Commercialization Decree of 1988 as part of the Structural Adjustment Programme (SAP) of the Ibrahim Badamosi Babangida Administration (1985–1993). One of the main objectives of SAP was to pursue deregulation and privatization, leading to removal of subsidies, reduction in wage bills and the retrenchment in the public sector ostensible to trim the workforce down to a manageable size.

The Privatisation and Commercialisation Decree of 1988 set up the Technical Committee on Privatisation and Commercialisation (TCPC) the mandate was to privatize 111 public enterprises and commercialise 34 others (Igbuzor, 2003). As at 1993, the TCPC had privatised 88 out of the 111 enterprises listed in the Decree. Based on the recommendation of the TCPC, the Federal Military Government promulgated the Bureau for Public Enterprises Act of 1993 which repealed the 1998 Act and set up the Bureau for Public Enterprises (BPE) to implement the Privatisation programme in Nigeria. In 1999, the Federal Government enacted the Public Enterprise (Privatization and Commercialization) Act, which created the National Council on Privatisation under the chairmanship of the Vice President.

The privatisation process

This is a two stage process which involves:

1. Actual transfer of substantial equity stake plus management control of the public enterprise to a strategic/core investor.
2. Initial public offer of another bloc of shares on Nigerian and international capital markets.

The starting point in the identification of strategic/core investors is to place advertisements in Local and International Journals and Magazines inviting strategic investors to submit their expressions of interest to invest in the specified public enterprises. They are then supplied with copies of laws and regulations on privatization of the country and an information memorandum on the affected enterprise. At the same time, they are given a specific period depending on the enterprise within which to undertake due diligence studies on the subject enterprise and submit economic bids to the implementation agency for evaluation. Core investors will be selected in an open, international competitive bidding process followed by negotiations with not more than three best bidders”.

To ensure free participation of all Nigerians in the process of privatization through Initial Public Offers BPE devised the idea of the Share Purchase Fund Scheme. It aims at accessing low interest credit facilities, from participating commercial banks, International Development Agency (IDA), African Development Bank (ADB) and Bureau of Public Enterprises (BPE) for purchase of shares by low–income persons in enterprises being privatized. Besides that a fixed per cent of shares shall be reserved for the staff of the public enterprises to be privatized and the shares shall be held in trust by the public enterprises for its employees (Bureau of Private Enterprises).

Monetization Policy: The concept, objectives and implementation in Nigeria

Monetization could be viewed as the quantification of benefits, privileges, services, etc, and their payment in monetary terms. For years, the Nigerian Government has been involved in the payment of fringe benefits to the public servants to enhance their pay packet, boost their morale at work and enhance quality of life. These subsidies touched on virtually all sectors of the Nation’s economy notably covering transportation, meal, furniture, motor vehicle as well as residential accommodation amongst others. This has had the effect of earning huge recurrent expenditures on the part of the Government. Hence, the civilian administration headed by President Olusegun Obasanjo on assumption of office in 1999, through the Revenue Mobilisation and Fiscal Commission, came up with a blue print and an overall reform that would proffer the final antidote to the handling of fringe benefit in public service. Monetization is meant to reduce to the lowest minimum the unnecessary huge amounts/funds being expended in the acquisition and maintenance of houses, furniture, motor vehicles, etc., being used by public servants.

In view of the above, it was recommended by the Commission to quantify all these fringe benefits, and pay the government employees in naira value, hence, the reason for the sale of all Government properties being occupied by public servants to private owners (i.e. privatization). This action created challenges for both the Government (vendors) and the new owners. This paper attempts to study the challenges as well as the foreseeable achievements of the monetization policy impact on housing in Nigeria, using 1004 Housing Estate, Victoria Island Lagos as case study.

Before the introduction of this new monetization policy, Nigerian public service operate remuneration system – a system whereby basic salary and other incomes are in pecuniary forms while accommodation, transportation, healthcare, furniture, etc, regarded as fringe benefits are provided for and maintained by the Government free of charge. Hence, the three tiers of Government (i.e. Local, State and Federal levels) bears all these expenses for their respective workers.

Considering the constant increase in cost of acquisition and maintenance occasioned by inflation and increased overhead cost amongst others, coupled with the high population growth, the Government found herself committing over 60% of her financial resources to maintaining her workers alone, that is, for payment of salaries as well as offsetting cost of the fringe benefits. Whereas, total number of Government employees of every kind (including political office holder) is estimated to be just about 10% of the whole nation’s population. It was as a result of this that the Government came up with a policy that will reform the public service with the particular aim of monetizing the salaries, allowances as well as fringe benefits accruable to the public servants. This will initially cost the Government so such but the resultant effect will be that the Government save a whole lot, as it will reduce to the barest minimum, the huge sums being expended in catering for her employees.

Although the issue of monetization had been on the drawing board for some time now, its effective commencement date was 1^st October, 2003. It started with the legislative and political office holders and was later extended to the public servants in the various government parastatals.

While introducing the monetization policy by the government of President Olusegun Obasanjo in 2003, some of the outlined objectives of the government include the following:

a. To enable Government get the true picture of what it cost to maintain a political office holder or public servant. This will give room for a more realistic budgeting and implementation towards a transparent disbursement of remuneration and fringe

b. To curb excesses of public officers, as Government will no longer provide chauffeur-driven cars to its Ministers are now expected to drive to and from their offices in personal cars.

c. To correct the wrong notion / attitude towards handling of Government utilities such as telephone, electricity and others, as limitless resources which hitherto were used without caution;

d. To stop the practice of providing and furnishing official accommodation for public servants, including political office holders, the only exception being the President, the Vice President, the Senate President, the Speaker and Deputy Speaker of the House of Representatives and the Chief Justice of the Federation;

e. To minimize unauthorized journeys at Government expense;

f. To ensure equity in the allocation of scarce resources;

g. To develop and imbibe culture of discipline and frugal use of public utilities in the public servants.

h. The policy will encourage public officers to own vehicles, houses and furniture, thereby assisting them to plan better for their retirement.

Implications and benefits of the monetization policy

Highlights of some of the implications and benefits of the monetization policy as given by the Federal Government are as follows:

i. Individual pay cheques will henceforth include all monetized benefits, such as housing, transportation, utilities, etc;

ii. Employees are thereafter responsible for all their expenses including accommodation, transport, ; ministries, extra-ministerial departments and federal government agencies would henceforth purchase no new vehicles.

iii. Government will no longer provide chauffeur-driven cars to its officials; rather, they will now use their personal vehicles driven by their respective personal drivers, for private and official In addition, the use of pilot vehicles and siren by political office holders has been discontinued in Abuja; and

iv. Government will no longer rent or build residential apartments for any category of political office holders or public servants, except the President, Vice-President, Senate President and Deputy Senate President, the Speaker of the House of Representatives and the Deputy Speaker, as well as the Chief Justice of the Federation.

The reasons for the privatisation of public property and the monetization policy

In the provision and maintenance of residential accommodation for the public servants, the Federal Government has, over the years, been confronted certain hindrances, some of these hindrances are:

1. Poor maintenance culture: This is more or less a Nigerian factor. There is the unfair conception that Government property is nobody’s property and that nobody can arrest you as long as you are a Nigerian and this has caused a deterioration of whatever is tagged “public property”.
2. Stealing of public property: public or Government property including furniture, fittings etc. are easily found missing without proper accountability.
3. Abuse of privilege: Several occupants have resulted in using more than one For example, some transferred officers with residential accommodations will obey the transfer and still refused to hand over possession of such apartment occupied by them they are provided with another accommodation for their new postings. Hence, they end up having different apartments for each of their posting in different locations all at the Governments’ expense.
4. Sabotage: Saddening enough is the facts that some citizen will intentionally because of their selfish interest as well as awareness that no one is interested in accountability, disrupt the functionality of available facilities / resources. For example, how does on explain the stealing of a transformer from its location or components of a lift and hence, making not-functional the facilities meant to complement the existing use of provided
5. Occupancy rate: Too many occupants are sometimes found to be accommodated. For example, one finds that certain apartments were occupied by extended family members, hence over utilizing the available facilities. 
6. Unauthorised sub-lease: Certain allocations are eventually sublet to other occupants especially when the original occupant find themselves reallocated to another apartments, for example, when transferred, they refuse to hand over possession of the old one. It was eventually found out that most occupants of some of the sold / privatized properties were no longer public servants but mere sub-tenants.
7. Non-payment of utility bills: Bills for Electricity, telephone, water, soil effluence dislodgements were rarely paid for. Hence upon the high cost of maintaining this various estates being occupied by her employees, the Government was also expected to offset their utility bills.

CASE STUDY

The 1004 Housing Estate, Victoria Island, Lagos

The monetization policy gave rise to the privatization of all public properties which in turn brought about the sale of 1004 Housing Estate in Victoria Island amongst other Federal Government owned properties nationwide. The 1004 housing Estate is built on 100 hectares of land. It is bordered by Sir. Adetokunbo Ademola Street, Ozumba Mbadiwe and Samuel Manuwa Streets in Victoria Island, Lagos State. The Estate was conceived during the General Yakubu Gowon Administration in 1969 but was completed in 1978.

Though, the 1004 housing estate was originally built for civil servants, it was occupied by Senators and members of House of Representative during the second republic in 1979. The Estate eventually accommodated civil servants and military personnel. The intending occupants had to meet the basic requirement for allocation. He or She collects a form from Federal Ministry of Works and Housing, fill the form and thereafter submit to Head of Department to endorse. Thereafter, the completed form is submitted to the then Federal Ministry of Works and Housing where it is scrutinized before allocation is made.

Description of Housing Types

The apartments in the 1004 housing estate are located on crescents A, B, C, D and streets E and F. The street consists of 14 storey residential blocks while the crescents are made up of several four (4) storey blocks of flats in addition to one 14 storey high-rise which holds 18 number flats, consisting of nine (9) on each side of the centrally located lift/staircase area. These flats are connected by vertically placed service duct, which housed the plumbing, telephone and electrical cables and devices.

Accommodation details: The Estate basically consists of 1004 (one thousand and four) living apartments made up as follows:-

1. 252 : 2 bedroom high rise
2. 504 : 3 bedroom high rise
3. 48 : 3 bedroom low rise
4. 200 : 4 bedroom flats

A typical apartment within the high-rise blocks consists of the following accommodation details:- Kitchen, living room, family lounge, bedrooms (2, 3 & 4), toilet / bathrooms (number varies depending on the type of flats.)

Services and other amenities provided: The following facilities were situated at various locations within the 1004 housing estate:

1. Recreational facilities: Lawn tennis courts were provided in-between the crescents and are strictly for the use of the residents. The courts were managed and maintain by the maintenance unit of the There were open spaces which could be used as children play grounds, but owing to poor planning enforcement and maintenance, most of these open spaces are also used as football pitches for competition for adult games.

2. Place of worship: There were mosque and church built within the Estate for the residents, by the These buildings were in good condition because they are being well maintained by the various religious groups. Although, the mosque surrounding had been converted to laundry purposes by some unemployed people.

3. Water supply: The Estate runs on independent source of water It housed three (3) boreholes whose water is treated and distributed within the Estate. Once in a while, when the borehole breaks down, the residents from the high-rise blocks found it difficult getting water and it was a common sight to find them carrying water from the ground to upper floors thereby contributing to the poor sanitation of the apartments and surroundings.

4. Power supply: Power supply in the estate is from public Mains. The entire estate was connected to one PHCN maximum demand meter. The power supply used to be backed up by four (4) number 1000KVA electricity generating set, but they had broken down long ago and were never repaired.

5. Solid waste disposal: At both ends of the two wings corridor, there are refuse chutes provided (on every floor of the high rise blocks) for disposal of solid waste which slides down into the garbage room on the ground Garbage steel containers were also provided on the crescent lawns for the disposal of solid waste from the low rise blocks. The garbage was supposed to be collected and disposed off daily by the waste disposal unit of the estate, but unfortunately this is no longer the case. Garbage rooms were usually overfilled before emptied, thereby causing air pollution within the Estate environs.

6. Security: The following security arrangements were available in the estate:

• • The estate is surrounded by fence wall with two (2) gates where access was controlled in and out of the
  • A 24 hour security patrol system for which a private security outfit was employed having its staff deployed at strategic locations within the
  • Each resident had security gate pass for their
  • Pedestrians carrying parcels are to submit themselves for security check at the exit point to show that only properties belonging to them are being taken away.
  • Gate pass were given before allowing resident’s properties being taken out of the
  • Residents’ flats allocation papers are checked from time to time to detect unauthorised

7. Lifts: The lifts provided in the high rise blocks were operated by lift attendants. Though the lifts could be out of service for months without being repaired, leaving those at the upper floors with the rigour of climbing through the stairs.

8. Maintenance: This is carried out by the 1004 Joint Maintenance Committee. The Committee was set up by the Honourable Minister of Works and Housing in 1989. It was a recommendation of the Committee to explore the possibility of involving residents in the maintenance and running of the The Committee comprised of selected residents and officials of the Federal Housing Authority. Although, this committee is in place, the residents took part to an extent in the total maintenance of the estate. Their duties included:

• • Cleaning of common parts
  • Waste and refuse disposal
  • Fumigation services within the estate
  • Provision of adequate security in the

In the pursuit of the foregoing, each resident was required to contribute N500 (Five Hundred Naira) per flat while the shortfall in the cost of providing these service was borne by the Federal Ministry of Works and Housing.

Management Problems Encountered

Amongst the several management problems encountered in the housing estate are the following:

1. Government bureaucracy: Although 1004 Housing Estate had a maintenance unit within the Estate, established and put in place by the Federal Ministry of works and Housing and vested with the responsibility of management. Its activities were supervised by the Ministry, such that no work can be undertaken without prior approval by the Ministry of Works and Housing, which in most cases delayed or even disapproved. Hence the cause of the continued obsolescence experienced within the estate.
2. Refuse disposal problem: Heaps of refuse was always noticed at the collection bin of the refuse chutes in the Estate. Refuse was not collected on time; several times it was collected only ones in a month.
3. Shortage of trained personnel: The lack of employment of qualified manpower in the various positions in the public sector also showcased its effect, as the right decisions are delayed or never taken owing to this factor.
4. Inadequate records: The various records including schedules of inventory of available fittings, schedules of maintenance, schedule of dilapidations, etc., was not adequately kept, which was supposed to aid the management and maintenance of the housing estate.
5. Financial constraints: As common with most Nigerian government establishments, capital expenditure including repair works is usually politicized. For example, a fault in the lift usually required the occupants to levy themselves to undertake the repairs else they wait endlessly for the maintenance unit that may never have the money to execute such works.
6. Electricity supply: Electricity supply to the housing estate was not stable and there was non- availability of a good generator to supply electricity to the housing estate whenever there is public power supply.

THE AFTERMATH OF THE SELLING OF 1004 HOUSING ESTATE, VICTORIA ISLAND LAGOS

Upon advertisement, a number of companies sent down their expression of interest with their bid values sealed and submitted, while UAC Property Development Company (UPDC) Plc., being the majority shareholder in a consortium now referred to as 1004 Estates Limited, alongside a number of other companies were involved. 1004 Estates Limited was able to outbid the other bidders and paid N7 Billion naira to acquire the Property. What used to be known as 1004 Flats is now known as 1004 Estates by virtue of its purchase during the recent Privatization of Public properties. A consortium of companies known as 1004 Estates Limited with UAC Properties being the majority shareholder having won the bid to its purchase.

The 1004 Estates Limited is a special purpose vehicle (SPV) formed by the consortium of companies that bought the 1004 flats from the Federal Government. UAC Property Development Company (UPDC) Plc’s holding in the company (which was 20% of the original purchase value of the Estate) was increased to 50.5% in the year through the acquisition of LFS Holding in the company. UAC Property Development Company (UPDC) Plc is therefore the Majority shareholder of the Consortium. The main objective of the company is to acquire land, buildings, and real Estate of any description for holding, improvement, refurbishment and renovation for sale.

Future Use

The Estate is being redesigned into an up-scale affair for higher value. It is to be absolutely residential estate, complete with all its frills. The estate, which is named after its 1004 units of flats, will retain all of the flats, but will now have glass facade for the privacy of residents. The architects and structural engineers, who claim they have a talent for finding new uses for old buildings, practically designed the structures to look shorter than they actually are, but this is just illusory.

Proposed Facilities

a. Beautification of designated green areas and streets: On the outside, the investors intend to retain all the streets and crescents, and all designated green areas used by vacated residents for various purposes will be reclaimed and grassed and planted with shrubs and trees. The pedestrian walkways along all roads and crescents will be well paved and lit to provide living effect and security to both residents and visitors. The residential units are designed to have ample parking spaces for visitors and homeowners, and these would be clearly marked out with the number of each There will be extra parking places for each flat. Besides the perimeter fence, no other type of fence will be permitted and all vehicular traffic will enter the estate through the back entrance and exit through the front gate as presently designed.

b. Installation of security gadgets: The lighting will be complemented by CCTV cameras and patrol personnel.

c. Drainage facilities: The interconnecting pre-cast drainage systems will be serviced and opened for free flow of storm water.

d. Services: The existing telephone cable distribution network and TV/Cable distribution network will be enhanced. Water supply in the estate is through borehole, which is complemented by water treatment plant. Water is distributed from central ground and elevated water tanks through water distribution network to all the residential units, and fire hydrant network. Besides the provision of alternative electricity power supply to be provided 24 hours a day, there is an existing public power supply through high tension PHCN Power at 11KV complemented by step down transformer with output control gauges, panel room/switch room. The available refuse chutes will be enhanced for a more functional refuse disposal system.

e. Internal fixtures and fittings: The interior of each flat will be redecorated to have vitrified tiles in living, dining and kitchen; ceramic tiles in toilets (floors & walls); PVC tiles in bedrooms, complete electrical fittings/fixtures, wooden cabinets and sink; wardrobes installed in master bedroom; security door for main entrance and rear; panel doors for bedroom and internal spaces; flush doors for toilets; fully glazed anodized aluminium windows; and burglar proofing for all The kitchen has been upgraded, all kitchen appliances-cooker, microwave, oven, and refrigerator with icemaker are installed. Air conditioning units in all rooms (per plan), Cable TV outlets in all bedrooms, living room and kitchen, and there is suspended light fixture in dining room.

f. Other  features:   There   are   street   lights   on   all   roads,    and    in    the    green    Other features include recreational facilities/club house including, swimming pool, tennis courts, shopping facilities, 24 hour manned clinic, drycleaners and launderette and 24 hour security patrol. The Security system/patrol is manned 24 hours a day.

Post Sale Problems Perfection of title document

By virtue of the Land Use Act, all land in the individual states is vested in the Governor of the State. Most states of the federation are invoking this section of the Act to prove that the Federal Government has no right to alienate the subject properties within the states without the consent of the Governors who serve as the administrators of landed properties within their states.

Lagos State, being the former capital of Nigeria where most of these Federal Government properties were sited has been in and out of court to get these properties into its portfolio. Hence making transfer documentation difficult for the purchasers. 1004 flats is not left out in this problem, hence, after payment to the Federal Government by 1004 Estates Limited, it also had to pay approximately N1 billion (which also translates that all individual buyers has to pay approximately N1 million each for the individual units) for the perfection of the documents from Lagos State.

Management of individual sub-lessees

Upon sale to individual sub-lessees, there may be some difficulties in the administration of services to be rendered especially as some may claim they are landlords in their own right, and therefore cannot be threatened with ejection. Such “owners” may because of this, refuse/delay payment for common services enjoyed.

RECOMMENDATIONS AND CONCLUSION

Recommendations

Within the context of the on-going privatization policy of Federal Government of Nigeria, the following recommendations are made in order to enhance the quality and welfare of the nation’s real estate assets:

a. The privatization programme should continue to be implemented and encouraged, as this will stabilize the economy in the long run, minimize fraud, mismanagement of public funds, corruption as well as wastage.

b. Infrastructural provision should be emphasized by Government so that private sector participation in the provision of housing as well as in the privatization exercise will be a beneficial one.

c. The mortgage institution should be motivated by the Government towards making available facilities for purchasers of the privatized properties.

d. Estate Surveyors and Valuers should always be ready to take the challenge of the new policy, as their professional competence will be required in all the implementation phases of the privatisation policy that is, at the sale process, renovations as well as in the eventual transfer to the respective new owners.

e. Suggested solutions to the post sale problems:

• There should be a resolution with the individual states. That is, the purchasers off the interest from the Federal Government should not disregard the states in which the property they have purchased is located. They will have to harmonize / perfect their purchased interest with the States Governments. This may require payment of some monies to acquire the Governors’ consent to the transaction(s). Otherwise the transaction may be considered void, by virtue of the Land Use Act 1978 which is still the ONLY document that the Nigerian Constitution acknowledges.
• Management of sub-lessees: Services to defaulting users can be cut off for as long as they do not pay the required levied Service Charge. Electronic gadgets can be installed; hence, on default the cards (if it’s in the case of data cards) can be de-activated.

CONCLUSION

Irrespective of how well intended a policy is, its success will largely depend on its proper implementation. The monetization policy which resulted in the outright sale of public properties is a good move by the government towards the effective management of such properties as the private owners will be more mindful of the maintenance needs of such properties as well as respond quickly and efficiently to such needs, as against the mind-set that “government properties is nobody’s property and hence need no care”. The resultant effect of this is that there will be the promotion of the socio-economic life of the country, as well as ensure discipline in use, discipline in personal and public finance and spending, thus making available resources for other sectors of the economy.

In the light of these positive developments on the long run, the privatization programme should be allowed to work if the country is ready to advance economically, as funds will be more equitably distributed to other sectors that require public attention, such as internal security, defense amongst others. Finally, it should be noted that Estate Surveyors and Valuers’ professionalism will be required the more, as supply into the property market is increased by this privatization process.

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APPENDIX

Table 1:

Summary of Empirical Studies Comparing Pre Versus Post-Privatization Performance Changes for Firms Privatized via Public Share Offerings: Non-Transition Economies

Source: Megginson & Netter (2001)

Table 2: Summary of recent empirical studies comparing Public Versus Private Ownership

Source: Megginson & Netter (2001)