Credit: Greg Samsa.
OCTOBER 2012. “This Property is Not for Sale.” The announcement is a common sight in Lagos and other urban areas of Nigeria, where it can be seen spray painted in large letters on the walls of homes around the cities. The message is meant as a preventative measure – its purpose is to protect the owners and any potential purchasers from a fraudulent sale, a rampant problem in urban Nigeria which is enabled by the country’s widespread land market informality.
In Nigeria today, there exists a large informal land market, which is both vibrant and riddled with problems. Many commentators claim this is a direct result of the adoption and implementation of Nigeria’s Land Use Law of 1978, which is now under review. The Land Use Law is the country’s foundational piece of land legislation. It aims to achieve a more equitable distribution of and access to land rights for all citizens, while also facilitating greater government control over land use and development, and reducing land conflicts.
The Land Use Law nationalized all land in Nigeria and placed ownership in the hands of state governors “in trust” for the benefit of all Nigerian people (there are 36 states in Nigeria). The Law’s emphasis on allocation of land to the common person enabled significant expropriation and re-allocation by state governments, a pattern that continues to some extent today.
Some land is allocated through direct government grants, but a significant component of the program is the state land “schemes,” in which the state creates a development scheme, installs the needed infrastructure, and then allocates the land to the final users.
In most states, allocation decisions are made by the state governor, and control over allocations of state land has proven to be a significant source of patronage. Recent years have seen growing protests from landholders whose land has been confiscated for government land schemes. Landholders and advocates claim inadequate compensation is paid and argue these expropriations do not fall under the “public purpose” requirement of the applicable laws.
The Land Use Law also established complex land transaction procedures, which have given rise to elaborate land bureaucracies and dubious rights. For example, the procedures for obtaining certificates of occupancy in non-urban areas can require up to 20 separate steps and take more than two years to complete. Total fees for a sale of rights can range from 15 to 30 percent of the land’s value. And while a state leases may extend for 99 years, it may only be transferred with the written consent of the state or local government.
Today, more than 70 percent of transactions take place in the informal market, and widespread informality has brought its own set of problems. These include unreliable land titles and transactions, and widespread fraud. The informal land market has fostered poorly documented and planned subdivisions of land, and undermined the state’s collection of land charges and transaction fees; it may also preclude the development of modern land administration systems.
From the existing evidence, the Land Use Law does not appear to have met its original objectives. Speculation is widespread in state lands; restrictions on accumulation of multiple state land grants are haphazardly enforced; many land grants benefit only the wealthy and well-connected; and the secondary markets, both formal and informal, are strong alternatives to a broad state land program. These outcomes suggest that increased transparency, simplified procedures, and lower costs, along with significant investments in Nigeria’s land administration infrastructure could lead to substantial improvement to the land markets.