Nigerian Land reforms as a catalyst for growing the economy

It is generally acknowledged that property rights have become one of the greatest impediments to development in many developing nations. Nigeria is no exception and it is therefore gladdening that a key part of President Yar’Adua’s seven point reform agenda is land reforms. The most recent report released by the World Bank puts Nigeria “as one of the most difficult places in the world to register a property.” This classification is by no means flattering.

 

The World Bank Doing Business Report 2008 list practical examples. It states that in  Lagos entrepreneurs must go through 14 procedures, spend 82 days, and pay 22 percent of property value to register—though this is certainly an improvement over the 19 procedures, 9 months, and 27 percent of property value required before reforms introduced in 2005.”

 

  The report notes that “these demands make Lagos the most difficult place to register property among all major Sub-Saharan cities, and the 6th worst in the world.” I must acknowledge the Lagos State government has been implementing a series of reforms recently but there is no doubt that they still have a long way to go to make Lagos Internationally competitive.

 

Take New Zealand which the report rates as the world’s leader on this indicator—property can be registered online in 2 days at a cost of 0.1 percent of property value. Even in neighbouring Ghana, the report notes that registering property requires just 5 procedures, 34 days, and 1.3 percent of property value, and in Botswana 4 procedures, 30 days, and 5 percent of property value.

 

It is not all bad news on Land registration in Nigeria however. The report acknowledges that land title registration is easiest in Abuja where it takes an average 9 procedures, 60 days and costs an average 9.2 percent of property value. In Nigeria, it takes a minimum average of 12 procedures to register a property according to the World Bank report which is nearly twice the Sub-Saharan average of 7.

 

It is interesting to note that even the states with the fewest procedures—Abuja and Bauchi, with 10 each—are far worse than international best practices while the 14 procedures required in Lagos and 19 in Ogun state are the world’s highest, compare this to Norway and Sweden, where property transfers require just 1 procedure, and some other African countries such as Botswana (4 procedures) and Cameroon (5).

 

The implication of these difficult procedures put in place for registering property in Nigeria’s mega cities has been the fact that landed property is not easily convertible into liquid assets like cash thereby reducing its mobility and utility as an asset. The Nigerian Land use act promulgated in 1978 vests the ownership of all properties in the government. The implication is that the “Governor’s consent” has become highly prized in legitimizing the ownership of a landed property in Nigeria.

 

Individuals and corporate bodies are forced to spend thousands in a bid to perfect their titles to properties acquired. A title is only perfected when the elusive Governor’s consent is secured. Lack of transparency in the procedures of getting a governors consent, several layers of bureaucratic obstacles have all increased the cost of getting this elusive consent fueling corruption as touts and middlemen take advantage of the opaque system to enrich themselves.

 

It is even alleged that some governors have also used it as political tool as the titles of political opponents and critics can be unilaterally revoked as punishment or as a means of cajoling them for their support. Also it is not uncommon for governors and their cohorts to use their powers to revoke titles to allocate choice properties to themselves and their cronies.

 

Thus the land use act has become a big impediment for Nigerians seeking to use their properties to acquire vital capital from financial institutions. Millions of Nigerians sit on lands that they cannot convert to capital because of the land use act.

 

Though the present Nigerian government has pledged to reform the land use act, but like all the seven areas the President pledged to tackle during his presidential campaign, it has not been tackled. All indications point to the fact that it will not be reformed before the President Yar’Adua’s first term tenure comes to an end in 2011. This will really be sad as like power sector which has collapsed under the present government, another critical ingredient that will unleash the well publicized potentials of the average Nigerian will be the reform of the Land Use Act. This will happen when transfer of title (ownership) in a property becomes as simple as the transfers of title in stocks. We may then have a property exchange, like the stock exchange, where landed properties can be traded just like any other valuable asset.  I hope the Nigerian government understands.