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In 1978, The Military Government of Nigeria passed the Land Use Act that abolished all freehold land in Nigeria. The actual text is below:

An Act to Vest all Land compromised in the territory of each State (except land vested in the Federal government or its agencies) solely in the Governor of the State, who would hold such Land in trust for the people and would henceforth be responsible for allocation of land in all urban areas to individuals resident in the State and to organizations for residential, agriculture, commercial and other purposes while similar powers will with respect to non-urban areas are conferred on Local Governments.”

(27th March 1978)

The Land Use Act (LUA) nationalizes all lands in Nigeria and places a government official between a legal contract of sale of land between two parties. It places all land in Nigeria in “trust” of the Government and specifies that future transfers or sale of land must be confirmed by a government official, in writing, irrespective of the value of the transaction. To be specific, the Land Use Act says…

“It shall not be lawful for any customary right of occupancy or any part thereof to be alienated by assignment, mortgage, transfer of possession, sublease or otherwise howsoever –

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(a) Without the consent of the Governor in cases where the property is to be sold by or under the order of any court under the provisions of the applicable Sheriffs and Civil Process Law; or

(b) in other cases without the approval of the appropriate Local Government.”

Repeal the Land Use Act

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The negative effect of the LUA is that it transfers rights to title of land from individuals and communities to the Government which approves ownership and subsequent transfer of such land, in writing.

For example, Section 22 of the LUA prohibits any person to whom the Governor has granted a statutory right of occupancy from assigning, mortgaging, transferring, subleasing or howsoever adversely dealing with the land against the terms of grant, without having first had and obtained the consent of the Governor. What this clause means is that equitable mortgages cannot be created and enforced without a sign off by the Government.

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Let’s paint a scenario

The Pension Commission has issued draft guidelines that allow contributors to allocate 25% of their Retirement Saving Accounts as deposit to Deposit Money Bank/Developers. Under the LUA, each transaction will need to be signed off by the Governor, to approve land for the developers.  What happens when there is a delay or denial from the Executive mansion? Also, should those RSA holders seek to mortgage their titled property as collateral to obtain loans, they will need to get their assignment signed off by the Government. This makes Home Equity Line of Credit as a financing option very expensive in Nigeria. Consider that if a client wanted to buy or sell a Government Bond or an oil refinery, the transaction would involve both private parties’ legal teams, but crucially, it would not need the consent or accent of any government official before the sale is approved.

The LUA was intended to standardize the administration of land across Nigeria, and remove bottlenecks and high costs associated with land. The Government felt that land could not be easily acquired, for instance by investors to say engage in large scale agriculture, as they would have to buy land from various families and communities. However the LUA has not made land approvals and registrations as equitable as promised, in 2014, the Chairman,  Presidential Technical Committee on Land Reform (PTCLR), Prof. Peter Adeniyi, said:  “Since formal land registration commenced in the country over 100 years ago, less than 3% of land nationwide has been registered.” 3%!

The LUA leads to transaction bottlenecks, is cumbersome, tiresome and creates  “negative wealth” as all land without C of O cannot be brought into any formal transaction.

[READ ALSO: Nigeria, miles away from financial inclusion goal – FT Partners]

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Another contentious issue is the changing of the legal status of the Nigerian land “user” from ownership to that of statutory occupancy. In effect, no Nigerian owns any land, we simply have a statutory right to use it. This limits the rights of the “user” i.e., your proprietary interests are extinguished.

The argument against repeal of the LUA will rest with the issues government has in securing land from private citizens for the greater public good e.g., building a road over private land. These concerns can be addressed by passing a bill to give the Federal and State Government the power to acquire land under the Right of Eminent Domain, i.e. the superior dominion of the sovereign over individual property rights. The Land Use is, in fact, a universal application of this Eminent Domain right.

The repeal of the Land Use Act will immediately give millions of Nigerians “equity”. They can own, transfer and/or sell the land they live on, put up that land as collateral, bring the land into the formal marketplace and make property transactions easier to finance via financial institutions. The repeal of the LUA will boost Nigeria’s mortgage market. It will create jobs as realtors, surveyors, estate agents, and builders will have more opportunities and more property to bring into the market.

 

Repeal the Land Use Act

Most importantly, the repeal of the Act will instantly empower rural landholders, eliminate “dead capital” (Capital tied up in land without title) and open agricultural land otherwise “locked” up in administrative red tape in the Local Governments. Farmers can negotiate directly with the local community for sale or lease of hectares of arable land to grow food, considering that 70% of Nigeria’s labour is agriculturally based. The bottleneck of ownership of land, if removed, will instantly increase the acreage of land available to agriculture.

Without land, there is no wealth.

It’s our problem, we will fix it.

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