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EL-RUFAI ON FRIDAY Why Nigeria Must Revisit Land Reforms
Though pervasive insecurity and the fear of kidnapping means that some Nigerians will be unable to travel ‘home’ for Christmas this year, the millions who are poorly accommodated in the towns and cities where they live and work have little option but to travel to places where they probably have well-built houses that otherwise remain empty for most of the year. And this leads to the posers: Where is ‘home’? How can Nigeria guarantee equal access to land for its citizens? How can we make land available and affordable to all citizens? Can land reforms mitigate Nigeria’s food insecurity and housing shortages?
The history of land ownership, utilization and development in Nigeria dates back to the pre-colonial era when the customary land tenure existed. The customary tenure was considered an impediment to agricultural development due to absence of secure, clearly defined property rights. The fact that agreements were made orally as opposed to in writing meant there was a high risk of parties not upholding their agreements, and disputes arising when time and old age lead to loss of memory or death.
Land reforms can be very challenging since they involve amending laws regarding land ownership, re-claiming land controlled by one group and redistributing same in favour of other groups. That is why the current Land Use Act enacted in March 1978 by the Obasanjo military government marked a defining moment in the history of land development in Nigeria. However, the Act made up of eight parts and fifty-one sections, has become the subject of numerous litigations regarding customary ownership, methods of land acquisition, and resource ownership. The Act was first incorporated by reference into the Nigerian Constitution in 1979, and it has remained there ever since, making it a “Super Act” that can only be tampered with via constitutional amendment. This has had unintended consequences we will dwell upon shortly.
The main tenet of the Land Use Act of 1978 is its omnibus provision which vested the trusteeship of land in the governor of a state or the president in the case of the Federal Capital Territory. Since 1984, the president delegated this trust in land to the minister of the Federal Capital Territory as an amendment to the FCT Act of 1976. Further references to ‘state governor’ in this piece therefore include the minister of the FCT in case of Abuja.
The Land Use Act remains a well-intentioned legislation that sought to reduce inequalities and avarice in acquisition of land. It recognized that urban land would be more valuable and sought to classify and control the process of its acquisition. It differentiated between urban and rural land, while placing a size limit of 5,000 square meters for residential land as the maximum that can be allocated to an individual. The Act delegated the trust in land in rural areas to Local Government councils, but the Court of Appeal in 2001 ruled that the six area councils in the FCT had no such powers to allocate as what was delegated to the minister by the president could not be further sub-delegated in law.
This government cannot overlook the pivotal role the Land Use Act was expected to play in solving Nigeria’s housing crisis. The Land Use Act ought to have enabled the Federal Mortgage Bank and the various state ministries in charge of housing and urban development to work together to create an active primary and secondary markets in housing and a mortgage system. So far, this has not happened.
Rural land is assuming increasing importance due to the future intensity of agriculture and mining activities. It is estimated that 60 percent of the world’s uncultivated arable land is in Africa. In Nigeria, more than 30 million hectares of arable remain uncultivated or untouched by human activity. Our capacity to deploy these for commercial farming and mining is only limited by visionless leaderships at federal and state levels. As a nation that has just witnessed its worst flooding and still has most of its farmland under water, the only indices for measuring our capacity to guarantee food security is our level of land and agricultural development. We should take to heart ways of ensuring that our farmers in particular have easy access to arable land and infrastructure to take produce to storage and markets. The Land Use Act, with some improvements can facilitate these.
The Land Use Act simply converted outright ownership (or freehold, perpetual or ‘fee simple’ titles to land) to Rights of Occupancy which are leaseholds with a tenure not exceeding 99 years. As a result of this, even the ownership rights of ancestral land acquired over generations and passed on as inheritance, were upturned in favour of the state governors holding in trust for all citizens of Nigeria.
The constitution recognizes the right of the state to acquire land where necessary, provided compensation is paid. This ensures an impartial and even handed balance between the constitutional right of the individual and public interest represented by government regarding land acquisition and re-possession. But in a country pervaded by information asymmetry, corruption and abuse of power by public servants like Nigeria, putting all territorial land in the trust of a state governor perhaps is the biggest strength and weakness of the Land Use Act.
The recurrent problem with this simply is: the requirements for compensation when Rights of Occupancy are revoked for overriding public interest are observed more in breach. Worse, where compensation is paid at all, it is always both inadequate and inordinately delayed. The beneficiaries of the confusion arising from the constitutional and statutory loopholes are usually the high and mighty in the society. At times, the complete disregard of due process is brazen – as manifested in the tussle for land in an area of Abuja reserved only for federal and state government buildings - between the first lady and her immediate predecessor! If this kind of scenario can play out at that level, clearly, the ordinary citizen whose title to land is at the discretion of a governor has a lot to worry about.
Despite the fact that land is entrusted to the state governors, the extent of that right is limited by the principle of “Eminent Domain” and other which vest control of the skies above the land and minerals resources existent below the surface to the Federal Government. This has brought about some conflict, especially amongst the oil and mineral producing areas of Nigeria when title to land is vested in one person while another has license to mine the land and fly above it!. For land reform efforts to be effective, they must address comprehensively the congruence between land and minerals ownership and control.
There are some provisions of the Land Use Act that have had unintended consequences and negative impact on the utilization of land, development of commercial agriculture, housing and the real estate markets in the country. For instance, even with a Right of Occupancy issued in one’s favour, one cannot sell, transfer, assign, sub-lease or mortgage or otherwise deal in the title without obtaining the prior consent of the state governor.
This “consent’ can take between weeks and several years, is expensive and fraught with corruption. Surely, if something is gifted to me and recognized as belonging to me for the next 99 years, I should be able to sell it without the consent of the person that gave me the gift. These and other “control freak” type of clauses ought to be removed from the Act and eliminate the corruption associated with citizens’ compliance with its provisions.
The Act is therefore long due for appropriate review and amendment. The government’s primary aim should be to bring relative ease to land dealings, delegate some of the powers vested in the state governor to other officials or an independent body and legislate a nationwide, computerized land registration regime that will be open, transparent and accessible to every citizen. It is a well-known fact that in countries like the UAE, Canada and France, where land reforms have been successfully implemented, its impact has been rapid economic growth, improved access to housing, the development of industries that thrive on land like enhanced commercial agriculture amongst others.
Constitutional lawyers believe that it might be better to obliterate the current anti-development thrust and dysfunctions of the Land Use Act either at once or in stages. Doing so at once would require the federal and state legislative and executive arms of government to concurrently consult with one another on the need to harmonize their positions so that the amendment requirements for this Super Act of Parliament could all be done at once.
Other lawyers who believe that the "harmonization" of positions could take many years to achieve under a federal constitutional, and that given the rising economic significance or exchange value of land whose quantity is fixed against an exploding population, advise that the approach be staggered. There appears to be broad consensus on the aspects of the Act that need amendment, improvement and repeal.
An attempt to amend the Land Use Act was made in 2009. Former President Umaru Musa Yar’Adua sent 14 amendments titled Land Use Act (Amendment) 2009 to the National Assembly for debate and adoption, following which the approval of the states’ houses of assembly would be sought. The proposed bill sought to vest “fee simple” ownership of land in the hands of those with customary rights, enable farmers use land as collateral for loans for commercial farming, limit the requirement of the Governor’s consent to assignment only which will drastically reduce bottlenecks, and render such consent unnecessary for mortgages, subleases and other forms of alienation of land. Yar’Adua also proposed that independent land reform commissions be established at national and state levels to exercise some of the powers of state governors under the current Land Use Act. These are commendable first steps, even if considered not bold enough for many lawyers and real estate professionals.
This administration would do well if it critically revisits the proposed amendments, revise and expand them where necessary, with the aim to have the relevant gaps handled in the ongoing constitution review. If this government can effectively implement land reforms, perhaps, our claim to being Africa’s giants would have some substance in it, a generation from now.
So what is the way forward for land reforms?
The first critical step would be to remove the Land Use Act 1978 out of the constitution and make it an ordinary law. Thereafter, it could be changed as an ordinary federal legislation, or better still to allow each state to make its own land use legislation. It is our considered opinion that in competing for investors’ attention, progressive states would align their land legislation with the requirements of a progressive political economy.
Far more important to entrench in the Constitution is a mandated system of digitized land registration that will be graphical, transparent and accessible to everyone upon the payment of a token fee in each state of the federation. It is important that all the 38 land registers be able to seamlessly communicate with one another for the benefit of citizens, bankers, lawyers and real estate professionals.
Once secondary transactions in land are removed from the most highly retrogressive "governors dual statutory consent to assign and mortgage", land related investments would become highly bankable. Such transactions have the potential to increase the share of mortgage loans of the GDP to over 25% and concurrently raise the extant portfolio of mortgages and real estate assets to up to 60% of the consolidated Nigerian banking balance sheet within a decade, from below 0.5% which is the current contribution of land-related asset class to both metrics.
Not a few voices, however, are of the view that what matters is for the new law to attract investments into commercial agriculture and housing finance. Both are needed to stabilize and empower our rural peasantry and the middle classes. For instance, amending the Pension Reforms and Insurance Acts to set aside a proportion of the funds for investments in commercial agriculture and real estate will help a great deal.
Finally, constitutional amendment of the Land Use Act 1978 should not be considered in isolation, but along with new and long overdue foreclosure and securitization laws. The three laws when enacted would make every governing entity in Nigeria sustainable through land-related income and property taxes. Once these reforms are in place, Nigerians will begin to define ‘home’ not as their states of origin, but where they live and work. That is the mindset needed to bring about a new Nigeria.
Nasir Ahmad El-Rufai |