Nigeria’s Land Use Act Hinders Economic Development
Every time a building in Nigeria displays a sign proclaiming “This house is not for sale,” it serves as a striking reminder of the country’s stagnation in reforming one of the key drivers of economic progress. Since its introduction in 1978, Nigeria’s Land Use Act (LUA) remains unamended, with not even the punctuation revised, underscoring a lack of political will to address essential issues in land management.
Government’s Land Reform Efforts Stall
A briefing paper from the All Progressives Congress (APC), prepared by its transition committee after winning the 2015 general elections, highlighted land reform as a priority. It emphasized the urgent need to present the 2009 LUA Amendment Bill to Parliament. The establishment of the Presidential Commission on Land Reform was expected to spearhead this initiative, but little has materialized. Currently, land reform does not appear to be among the government’s top twenty priorities, raising concerns about its commitment to economic development.
World Bank Report Reflects on Local Business Environment
Recently, the World Bank released its 2018 Annual Doing Business Report (DBR), featuring Nigeria’s Local Business Activity Report (SDBR), which assesses individual state progress since a similar report was published in 2014. The findings indicate that nearly all states have made strides, with the exceptions being Cross River, Gombe, and Nasarawa. However, a deeper dive into the report reveals that these improvements may not be enough to overcome the systemic issues affecting land ownership and management in the country.
Understanding the Challenges of Real Estate Registration
The SDBR categorizes reforms into four domains: starting a business, processing building permits, registering real estate, and enforcing contracts. Among these, Nigeria’s average score for initiating businesses was a commendable 76, highlighting that reform efforts are concentrated here where changes are easier to implement. However, when it comes to real estate registration, the failure is stark; the average score across states stands at a mere 26, drastically below the sub-Saharan Africa average of 51. Kaduna State leads with a score of 45, yet this still falls short of what’s necessary for robust economic development.
The Paradox of Property Ownership in Nigeria
The difficulty of registering real estate has led many property owners to display signs declaring their properties “not for sale.” Some have resorted to unconventional methods, such as using spiritual practices to protect their land from encroachers. Reports recount numerous court cases lingering for decades, with unclear ownership, while less than 3% of landowners have official certificates of occupancy. This figure reflects a dire situation that obstructs both legal legitimacy and economic advancement, as many transactions occur outside formal channels.
Potential Reforms Could Yield Significant Benefits
Even modest reforms can create remarkable change in Nigeria’s land registration landscape. For instance, Kaduna State has made strides by restructuring its land registry—now known as KADGIS—and introducing flat registration fees while streamlining the process. Such improvements have led to a reduction in processing time and costs, marking one of the most significant advancements since the DBR’s inception in 2008. While LUA’s underlying issues persist, these incremental changes demonstrate that meaningful reform is possible and necessary.
The Broad Implications for Economic Growth
A comprehensive reform of land ownership processes stands as a critical opportunity for economic development in Nigeria. By establishing a transparent and efficient system for property ownership, the country could mobilize dormant capital tied up in real estate. Given that approximately 70% of bank loans in Nigeria are secured by real estate, the significance of documentation becomes apparent. With only 3% of landowners having the proper documentation, access to financing for the vast majority remains severely limited.
The Stakeholders’ Dilemma in Land Management
It raises questions about Nigeria’s future when outdated land laws dominate discussions yet remain unaddressed. The LUA grants substantial power to state governors, essentially inhibiting progress as they resist relinquishing control. Acknowledging and tackling these challenges is essential; otherwise, efforts at economic growth will remain ineffective, akin to running on a treadmill without going anywhere.
