Land – being a factor of production along with labour, capital and entrepreneurship – is a critical and finite resource that plays a pivotal role in a country’s economic development. Designing and implementing an effective system that facilitates and administers the process of acquiring and transferring ownership of land is crucial to unearthing the wealth creation potential of land in any society. Effective land administration is essential for building confidence of land users towards fostering investment and creation of wealth.
In Nigeria, the Land Use Act of 1978 is a key piece of legislation governing land administration. Before the Land Use Act, Nigeria operated three broad land tenure systems which include the customary, non-customary and the special native favoured system. The customary land tenue system basically relied on the norms, customs and traditions of the communities with the Chief, community or family head holding the land in trust for family or community use. The non-customary land tenure system, operational in the Lagos colony, was based on received English Law, vesting land on the British Crown, while also leaving room for either freeholding or lease holding with tenured occupancy. There was also the special native-favoured system of Northern Nigeria which put the land under the control of the Governor for the use and benefit of the Natives of the Region.
One common feature of these tenure systems was that they encouraged land holding without an obligation to develop by the holders, fragmentation and uncoordinated alienation, hoarding speculatively for value appreciation and without precise documentation. In essence prior to the Land Use Act land was held at the discretion of the land holders, leaving room for manipulation and exploitation to the detriment of the common good.
The Land Use Decree was promulgated by the Olusegun Obasanjo military administration in 1978, bring about uniformity in administration of land in the country and ostensibly to make land easily accessible and transferrable for both public and private use. The operationalization of the Land Use Act has however not delivered to expectation as the decline in agricultural production has coincided with the promulgation of the Act, whereas Nigeria today has a housing deficit of over 17million housing units. The cumbersome and time-consuming processes of land acquisition across Nigeria has been a major contributing factor to the inability of Africa’s largest economy to evolve an effective and accessible mortgage system for home ownership.
In a manner of speaking the Land Use Act has grown into a bigger monster than the one it was created to fight. The Act has been bedeviled by a number of entrenched flaws in its lettering that have hindered long-term investment and wealth creation for Nigerians. The act has made land acquisition one of the most corruptible and corrupt systems in a country that has not done itself many favours in terms of the looming image of corruption.
One of the primary provisions of the Land Use Act is that it centralizes control over land administration in each state, with the governor as the chief issuing authority of land titles. This provision, in addressing the inadequacies of the old system, has created a complex and bureaucratic system that impedes efficient land allocation and use. In contrast, many countries have decentralized land administration to local governments or private entities, allowing for quicker decision-making and more efficient allocation.
Under the Land Use Act, individuals and entities in Nigeria do not hold absolute ownership rights over land; instead, they hold a leasehold interest for a maximum of 99 years, which has discouraged long-term investments and has led to land speculation. In contrast, countries with secure land tenure systems, such as the United States, offer fee-simple ownership, which encourages long-term investments and economic development.
The Act’s land acquisition process is cumbersome and time-consuming, involving multiple layers of approval. This has also emboldened officials to demand financial inducement to help fast track the process for intending land owners. This administrative bottleneck has had the effect of discouraging both local and foreign investors, who often seek streamlined processes in other countries. It is hard to see Nigeria competing effectively in attracting long-term capital injection without significant reforms of the Land Use Act to make it a catalyst rather than an impediment to development.
Nigeria faces significant challenges in maintaining accurate and up-to-date land records, which encourages all shades of land fraud and discourages potential investors who require clear information to make informed decisions. The Land Use Act also does not adequately address compensation for landowners in cases of compulsory acquisition, which has led to land disputes and conflicts, further deterring potential investors. In countries like Australia, fair compensation mechanisms are in place, ensuring that landowners are adequately compensated for their loss.
The flaws in Nigeria’s Land Use Act of 1978 have far-reaching implications for investment and wealth creation in the country, being a major driver of the insecurity and inequality that has come to characterize Nigeria, despite enormous economic potential. Insecure land tenure and a complex land acquisition process has deterred foreign investors from committing capital to Nigeria, depriving the country of a vital source of investment that can stimulate economic growth and wealth creation. Domestic investors have also not been encouraged due to the relatively high cost of real estate driven in large part by land acquisition bureaucracy.
Land speculation has become endemic, where “connected” individuals and entities hoard land without developing it, in the hopes of future value appreciation, tying up land that otherwise could have been put to productive use. Underutilization of land has been encouraged by the current system leaving vast tracts of land idle, rather than being engaged for agriculture, housing, and industrial development.
In comparing the Land Use Act of Nigeria to land administration systems in other countries, one cannot help but conclude that Nigeria has committed economic suicide in failing to bring the act in line with realities staring us in the face. Countries with more efficient and investor-friendly land administration systems tend to attract more investment and foster wealth creation.
Rwanda has streamlined land administration through its digital land registration system, making land acquisition and transfer more efficient, thereby attracting foreign investment and boosting economic growth. Sweden’s transparent land records and secure land tenure system have facilitated large-scale investments in real estate and infrastructure, contributing to the nation’s prosperity.
To attract investment and promote economic growth, Nigeria must as a matter of urgency, consider reforms in its land administration system, adopting best practices from other countries. By doing so, Nigeria can unlock the vast potential of its land resources and stimulate sustainable wealth creation and economic development for a population that is growing at a higher rate than the economy.
The Land Use Act of 1978 in Nigeria, while well-intentioned, is plagued by critical flaws that have had severe implications for country in the almost five decades of its operationalization.
To address these challenges, Nigeria must carry out comprehensive land reform, to prioritize security of land tenure as well as transparent and efficient acquisition processes. By doing so, Nigeria can harness the full economic potential of its land resources, stimulate investment, and drive sustainable wealth creation for the benefit of its citizens and the nation as a whole.
Basah Mohammed is the National Coordinator of the Civil Society Alliance for Transparency and Development (CSATD)