China grew economy on land reform, Nigeria can

Nigeria’s rigid traditional land tenure system and onerous land titling that excludes many from formal land ownership and also discourages investment in productive activities lend it easily to lessons from other countries with efficient land administration.

As done in other countries, Nigeria needs land and property ownership reforms that can unlock its huge stock of dead assets whose value is a significant proportion of the country’s GDP, according to Andrew Nevin, partner, and chief economist at PwC.

Nervin notes that only 5 percent of the country’s housing stock is in formal mortgage, meaning that 95 percent of it is dead assets—neither tradable nor bankable because the land on which the houses sit does not have valid titles and therefore not mortgage-able.

In this instance, the China example, which delineates clearly land use and ownership, comes to play. Recognizing that land is a fundamental cornerstone to unleashing the potential of cities and economy, the Chinese government undertook gradual but significant reforms to land ownership.

According to a report on ‘Can Africa Learn from the Chinese Urbanisation Story’, by 1978, almost all of China’s land, both urban and rural, was either owned by the state or by collectives in which case private property rights were virtually non-existent and land transactions were prohibited.

Unlike Nigeria, which is still stuck with a Land Use Act, 43 years on, one of the early and influential reforms China carried out was the amendment of the 1988 Constitution. That amendment split land ownership and use-rights by officially adopting land-leasing as the basis for assigning use-rights to urban dwellers.

In Nigeria, by the provision of the Land Use Act, every land is placed under the custody of the state, making access to land in the country, even for economic purposes such as agriculture and real estate, not only cumbersome and tortuous but also long and costly.

Read Also: Land administration: Learning from Rwanda’s example

“Even where the time has been reduced as in the case of Lagos State, the cost is prohibitive such that as an investor you will be asking yourself, are all these worth my while and interest,” Jide Ogunleye, CEO, Denaro Properties, confirmed to BusinessDay.

In China, by amending the constitution, which has become rocket science in Nigeria because of political and ethnic interests, the government continued to own the land, but the use-rights could be bought for a specified period of time (typically for 40-70 years) through two types of public auction mechanisms.

These use-rights could further be transacted in accordance with the law. That same system is still in effect today and it has been transformative to China’s urbanisation process.

Experts project that, unless something is done and quickly too, by 2050, Nigeria’s urban population may more than double. Though that will mean significant opportunities in the cities, the challenges will also be huge as is already being experienced in a big city like Lagos.

In the next 30 years, according to the experts, Africa’s cities need to make room for 900 million more citizens – roughly tripling the current urban population. This is because, at their best, cities are engines for economic development and rising living standards, but at their worst, they become sites of congestion, overcrowding and discontent.

China is the only place in the world that has experienced a similarly monumental urban transition to the one currently being faced in Africa. Between 1978 and 2010, China’s urban areas took on approximately 700 million additional people.

But through well-planned and efficient urban land use, the country is able to turn that large population into opportunities and not allowing it to become challenges crystallizing in congestion, overcrowding and stress which all define major Nigeria’s cities.

Coming back home, there is also a lesson for Nigeria to learn on land ownership and use from Rwanda, a much younger and lesser East African country which has used what it calls ‘parcel (land) identification programme’ to improve its ease of property registration and grow national revenue.

The ‘Can Africa Learn from the Chinese Urbanisation Story’ report reveals that Rwanda had a quick and cost-effective approach to the parcel identification such that between 2009 and 2013, the country became the first in Africa to establish a comprehensive, up-to-date and fully digital property registry.

The report notes that two aspects of the programme are particularly significant and these are first, the short time required from implementation to delivery. “In just 5 years, the government systematically demarcated and registered over 11 million parcels. Secondly, the government made the cost of registration low at just $6 per parcel, well below international averages,” the report explained.

The result of these efforts was that, before the parcel identification programme, Rwanda was ranked 137th in the world for ease of property registration by the World Bank’s Doing Business Report, but today, it is ranked 4th. This shift makes Rwanda a much more attractive destination for investment.

Moreover, following formal land registration, land-related government revenues have increased over five-fold from approximately RwF 2bn ($3.3m) in 2011 to over RwF10bn ($15m) in 2013.

The Muhammadu Buhari administration is desirous of lifting 100 million Nigeria out of poverty but seems to neglect the potential of land as a critical factor of production. The China and Rwanda experience is enough catalyst for realizing that dream.

To achieve that, Funso Olusola, a property broker, says the country must come up with a policy that will encourage intensive and efficient development of land, listing key areas for public policy to support unleashing the full potential of urban land.

He said that clarifying land ownership is one such area, explaining that clear and well-administered land ownership is critical for the efficient functioning of real estate markets.

Realistic and proactive urban planning is another area. “With effective planning, land is more likely to be developed in an orderly manner. This helps to coordinate expectations and influence the direction of future investments,” Olusola added.