At a time like this in Nigeria when the economy is not only slowing but also performing at a sub-optimal level, the need to take stock of its dead capital and unlock its potential cannot be overemphasized.
Nigeria’s stock of dead capital is huge such that despite some research work already done and several steps initiated to rejig the country’s economic system to cause dead capital to come back to life, it is still tough to estimate the exact value of these assets.
Dead capital abounds in many countries of the world, including Nigeria, and they exist as underutilized infrastructure, machinery, unproductive land, and unclaimed financial instruments.
Experts are of the view that a hypothetical 25 percent increase in titled land alone will potentially increase GDP astronomically by enhancing agricultural productivity, attracting investments and fostering economic development.
In The Mystery of Capital, Hernando de Soto, a Spanish explorer and conquistador, affirms that assets are locked away because of the absence of title which makes it impossible for such assets to contribute to economic development.
De Soto reasons that unlocking dead capital for growth and development is an imperative not only because they are informal and, therefore, not legally recognized, but also because unlocking them holds the potential for significant economic growth for nations of the world with economic challenge.
According to de Soto, 70 percent of global population hold dead capital valued at of $9.30 trillion while PricewaterhouseCoopers study in 2020 says the value of Nigeria’s dead capital is close to $1trillion.
Chudi Ubosi, Principal Partner at Ubosi Eleh + Co, who provided these insights in his company’s quarterly real estate market briefing, cited a 2022 report by the Nigeria Institute of Quantity Surveyors (NIQS) which says Nigeria has over 56,000 abandoned projects owned by states and federal government.
Ubosi said these projects are scattered across the country’s six geopolitical zones with South South having 11,000; South East, 15,000; South West, 10,000; North West, 7,000; North Central, 7,000; North East, 5,000 while Abuja, the federal capital territory, has 2,000 projects abandoned.
“Nigeria has over 300 real estate properties worldwide many of which are abandoned and underutilized; thousands of kilometres of road projects at various stages of construction have all been abandoned nationwide,” he said.
Ubosi who spoke on ‘Reinvigorating Nigeria’s Economic Potential with Dead Capital,’ noted that of Nigeria’s land size of 923,000 square kilometres, less than 10 percent is titled which places it ahead of just Mozambique and Zambia where only 3 percent of land is titled.
“Namibia has 44 per cent of its land titled while South Africa has 72 percent of its land titled,” he said, quoting African Development Bank (AfDB) as estimating that 64 percent of land is owned by the state while 36 percent is in private hands.
Beyond these pieces of information and the research work done by PWC, Ubosi said, there are still reasons or factors making it tough for valuers and other professionals to estimate the exact value or worth of dead capital in Nigeria.
These are lack of clear property rights, informal land ownership, unregistered and un-surveyed land, disputed boundaries, absence of a formal market and the Land Use Act which vests land in state and federal governments who see land more as a revenue head than a factor of production.
Some of the policies and programmes made with the aim of harnessing the country’s assets include the establishment of the Ministry of Finance Incorporated (MOFI) which is expected to domicile all the nations assets, create an asset register and, in the long run, deal with each asset profitably.
The government has also set up a National Land Reform Commission (NLRC) to review land holdings. It is hoped that this will push through the strengthening and streamlining of legal frameworks related to land ownership, provide a more secure environment for property transactions, and encourage investments.
It is expected that governments should see land as a factor of production which has multiple ripple effects and benefits. It should also encourage and ease the process of titling and registration.
Government is also expected to raise public awareness and education on the need to have formal ownership of land just as it should encourage property rights.
Leveraging technology for land administration is needed and this is to be done through digital mapping and blockchain. Lagos State has set the pace by introducing an e-portal for land transactions in 2024.
Government should enhance the capacity of institutions responsible for land administration and governance to ensure effective implementation of reforms.
The need for access to finance cannot be over-emphasised and government has to do this by using formalized land as collateral. Microfinance and alternative lending models can be developed for loan products that utilize informal assets as collateral.
Ubosi said that Nigeria needs a collaborative approach involving governments, communities and stakeholders at all levels to implement reforms that will unlock deal capital.
