Why Nigeria is missing in top 10 countries with efficient land tenure system

For some reasons, Nigeria is not on the list of top 10 countries of the world with efficient land administration. Besides weak land tenure system that has stalled capital formation and economic growth, land ownership in the country is one of the most primitive, rigid and informal.

Unlike the Nigerian experience, countries on this list, by virtue their real estate value, including China, the USA, Japan, Germany, and others, have one thing in common and that is a robust and efficient land tenure system. These systems have enabled these nations to harness the full potential of their real estate sectors, driving sustained economic growth and urban development.

The experience in Nigeria is such that only 10 percent of its entire land is formalised, meaning that only one out of 10 parcels of land is registered and documented with titles such as Certificates of Occupancy (C-of-O) which gives the land legal recognition and security. Co-of-O and other title documents enable landowners to use their property for loans or investments, thereby fostering economic growth.

Informal land tenure system and ownership dominates here, relying largely on customary arrangements, verbal agreements, or inheritance without legal documentation. Untitled land leaves owners vulnerable to disputes, evictions and limits the economic utility of land. Such land cannot be leveraged for financial opportunities or government support.

According to experts who spoke at the second edition of the International Conference and Fair on Land and Development at the University of Lagos with the theme, ’Sustainable Land Management for Inclusive Development in African Cities,’ the poor land administration in the country is troubling as it remains largely inefficient. They lamented how that impacts negatively on the country’s real estate sector and limits investment in other land-based ventures such as agriculture and industries.

“A significant portion of Africa’s real estate wealth is trapped in ’dead capital,’ a term popularized by economist, Hernando de Soto, to describe untitled and unproductive assets. In Nigeria, unresolved issues of land ownership and inefficient administration of the Land Use Act of 1978 have perpetuated this problem,” Timothy Nubi, a Professor and Director, Centre for Housing and Sustainable Development (CHSD),UNILAG, said, stressing that weak land tenure systems have stalled capital formation and economic growth.

In reference to the impact of the poor land administration in the country on real estate, Nubi noted that the global real estate market is truly massive, explaining that “with a staggering value of $379.7 trillion as of 2022, it underscores the economic potential of land and property as the cornerstone of wealth creation.”

Read also: Reinvigorating Nigeria’s economic potential with Dead Capital

“To put this in perspective, it surpasses and is worth more than the combined value of global equity and bond markets and is nearly four times the size of global GDP. Residential property dominates, making up 75 percent of the total, while commercial property and agricultural land contribute 13 percent and 11 percent respectively,” he added.

Nubi pointed out, however, that the regional distribution of real estate wealth reveals stark disparities as Europe and North America which are home to just 17 percent of the global population, hold 47 percent of the world’s real estate value while populous regions like Africa and Asia, despite their rapid urbanization and growing economies, hold significantly lower real estate value.

Ugochukwu Chime, chairman, Ministerial Land Reform Task Team, pointed out that Nigeria has over $300 billion in dead capital which is over 60 percent of the country’s Gross Domestic Product (GDP) because of the country’s inefficient land administration which he traced to the Land Use Act (LUA) of 1978

According to him, various efforts to amend the Act has failed due to fears and concerns about its impact on various interests. “Many laudable programmes and projects in various sectors like agriculture and housing have been severely and adversely affected and/or thwarted by the very outdated, inefficient and opaque land administration in Nigeria,” he said.

Continuing, he said,  “there are no established formal markets in Nigeria wherein land is traded as an asset or a securitized commodity. The current land market lack’s structure and is highly fragmented with various players trading outside government oversight and regulation which creates room for massive land disputes. The GDP of the country and sub-nationals have been severely constrained and capped by the current land administration policies and practices.”

Chime canvassed a number of measures to improve land administration in the country in order to make it economically viable and productive. He reasoned that without reviewing and massively improving the country’s land administration and management systems, every socio-economic development plan will fall short of expectations.

“Over $300 billion that has been lying fallow as dead capital must be liberated and put into the socio-economic development of the country,” he said, adding, “improving the land management without integrating it with the financial sector requirement seamlessly will still leave a gap in our desire for socio-economic development.”

He said that the huge impact which improving land management will have on the economy necessitates that all parties must be together to ensure that policies are put in place to regulate both the private and public sector organizations.