Around 2021, in a flash, the ex-governor of Zamfara State, Bello Matawalle, annulled some land ownership documents in the state and mandated landowners to reapply. Soon after, Governor Inuwa Yahaya of Gombe State also revoked land titles in the state’s metropolitan area to pave the way for “new developmental layouts.” The arbitrary revocation of land titles highlights the concerns about property rights in Nigeria, which are often at the mercy of the state government. This uncertainty in property rights could discourage potential investors. As a result, major investors are likely to develop cold feet and are unlikely to commit to large-scale investments, thereby hindering economic growth and wealth creation.
Before 1978, Nigerians had customary land tenure, which allowed families and individuals to use land that could be passed down to their descendants. In 1978, the Land Use Act was introduced to make land more accessible, prevent speculation, and simplify land management. Rather than outright ownership, the Land Use Act granted individuals a 99-year lease on the land, which means the government can terminate the lease for the public interest.
On the Property Rights ranking, Nigeria ranks 117th globally and 22nd in Africa. The Land Use Act was intended to make land accessible to Nigerians and resolve land disputes. But it has failed to achieve these goals. Instead, power is concentrated in the hands of state governors and creates uncertainty about land ownership rights.
There are claims that some governors are bound to misuse the authority granted by the Land Use Act. There are reported cases of land acquisition without due process and even acquisition of land for supposed ‘overriding public interest’ like roads, government buildings, and utilities that were converted to a private housing residence rather than the intended public use.
Read also: Property rights in Nigeria
Former President Buhari once announced a proposal to establish Rural Grazing Area (RUGA) settlements towards managing the farmers/herders crisis. But, out of curiosity and suspicion, the proposal sparked wide speculation that the government was attempting to dispossess farmers of their lands—through the backdoor. As a result, they stopped the RUGA settlement scheme in 2019.
Nigeria has arable land of roughly 910,800 square kilometres, with about 80% suitable for farming. However, 95 percent of homes in Nigeria lack land titles, resulting in an estimated $300-900 billion in “dead capital.” This implies that a significant portion of Nigeria’s real estate and agricultural land is not being utilised to its full potential. More wealth will be unlocked when these assets are properly utilised.
Andrew Carnegie, a billionaire industrialist, famously said about 90 percent of millionaires owe their success to property ownership. No doubt, land has been a cornerstone of economic development throughout history. Property rights protection, effective land use policies, confidence in investment returns, and ease of land transactions will have impacts on individual and business success. One beauty of property rights is that landowners have the liberty of using their land as collateral.
In rural sub-Saharan Africa, land ownership enhances income generation through land rents and household wealth by enabling agricultural production and access to loans for non-agricultural ventures. For instance, Ethiopia’s introduction of property rights led to a 40 percent increase in productivity per acre over three years.
Nigeria’s real estate market presents a compelling opportunity for individuals to build wealth over time. Land acquired in strategic areas is likely to appreciate in value, thereby reaping substantial profits. Moreover, it provides a sense of financial security, a hedge against inflation, and makes it a valuable asset for long-term wealth creation.
As part of strategies to unlock property rights and attract investors, it is imperative to take a critical look at the Land Use Act, embrace transparency and digital land administration, strengthen town planning, curb corruption, and significantly minimise land-related conflicts and litigations.
Leaving on a high note, Russell Sage famously stated: “Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.” Nigeria’s real estate market is hindered by various challenges, including property rights insecurity. This makes it a risky investment. To fully unlock this dynamic sector, we must address these issues.
ODEWALE Abayomi, a lecturer, public affairs and policy analyst and researcher tweets @ODEWALEAbayomi
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
