By Gordon Abiama
Nigeria's Land Use Act of 1978 has remained controversial since its enactment. Its flaws arise from a lack of political will on the part of leaders to implement it. Section One of the act states:
“Subject to the provisions of this Act, all lands comprised in the territory of each State in the Federation are vested in the Governor of the state and all such lands shall be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provision of the Act.”
What this act means is that rather than own land in perpetuity, the citizen is granted a right of use.
Nigeria is a country richly blessed with natural resources, mineral, agricultural and marine. Oil, for example, accounts for over 85% of the country's total earnings. Taxes and royalties accruing from the extractive sector make up this revenue base upon which the entire nation is dependent.
Given the wider definition of land to include all natural resources, Nigeria can ably finance all its development needs from taxes based on land rather than taxes on production which are confiscatory and punitive in nature and therefore counter productive. Values of surface lands in all urban centres in Nigeria continue to increase without a corresponding taxation of this socially created value.
The land law recognizes the need to make land available to all persons irrespective of social status or religion by holding land in trust for the people. This law therefore stands against holding land in perpetuity while making land available at affordable price to all via a land lease agreement.
Upon application a land user is entitled to a certificate of land occupancy issued to him by the Governor of any given state in which he resides for the land he wants to improve. This certificate authenticates his use of that land and guarantees him usage without interference. The certificate states the land is leased to him 99 years, after which it can be renewed.
The same land law also clearly differentiates between the land and improvements by assessing and levying them separately. The property/improvement is assessed and the owner is taxed accordingly. And then the land itself is also taxed separately whose rate used to be 1% of the annual rental charge for such properties in the area. Rental here means the amount a tenant pays annually to occupy or live in a building/property.
The fact that over 85% of Nigeria's total earnings come from taxes and royalties taken from the extractive sector, particularly oil and gas, demonstrates that the country can raise more than enough finance to execute public projects without imposing taxes on production which are punitive and confiscatory in nature.
The law on minerals extraction, which came shortly after the enactment of the land use law, vests all authority to extract minerals in the Federal government. This act thus ensures a common heritage to land for all Nigerians irrespective of state of origin and level of locally available resources. This is why the Federal Government makes statutory monthly revenue allocations to all the states of the federation.
However, the allocations are also based on the principle of derivation. An additional 13% is allocated to every state based on the amount of revenue it brings to the federal purse. This ensures justice and equity as it compensates those states which contribute the most revenue to the federal purse.
The lack of political will on the part of the leaders to implement the Land Use Act, rather than ensure a common heritage to land as indicated in its objectives, has led to the confusion and land distribution distortions being experienced today.
Because the law was made to take effect from the date it was enacted, all those who laid claim to perpetual ownership of lands prior to the 1978 date of the enactment of the law were free to continue to hold onto them unquestionably under the customary land tenure system even in urban center and cities. Land owners whose claim of ownership was linked to patrimonial lineage continued to enjoy the proceeds of socially created land values. This resulted in the commodification of land, leading to intensive land speculation with its attendant negative effect on wealth production and distribution.
It is ironic that even those who were instrumental to the enactment of the Land Use Act do not appear to appreciate the aims of the land law to establish a common heritage to land so everyone could have access to land at an affordable price. Many have condemned the law as being an oppressive instrument meant to edge out the average Nigerian and community in socio-economic terms. This might perhaps be a ploy to continue maintaining the current land ownership status quo until the Land Use Act is amended to give them perpetual ownership legitimacy. It is like giving a dog a bad name in order to hang it.
It is in the light of this that one views President Yar Adua’s reason for wanting to amend the land laws as being fraught with many dangers. He told Nigerians:
“We intend to amend the laws so that investors and individuals will own land and use it raise capital for business. At the moment, government owns all land and it is given to individuals on leases.”
On paper individuals own land on leasehold, but in reality the landlords who form the elite of the society do not see their lands as being on leaseholds. Many have held on to their family lands for more than a century without any government intervention.
The main bulk of public revenue for Nigeria comes from taxes and royalties from land and its resources, which if properly and transparently managed, ought to have translated into vastly improved living standard for all Nigerians. Rather than scrap the land policy of leaseholds as is presently constituted in the land laws, the terms of the leasehold should be strengthened to make the policy effective.
What the government is doing is to implement two conflicting policies on land under one law. By recognizing that all who own lands before the 1978 land law should be respected and given that privilege while all prospective land users after 1978 must be on leasehold for 99 years subject to a renewal has created so must confusion.
What the government should do is to summon enough political will to abolish perpetual land ownership structure by holding land in trust for the community. This way access to land by everyone becomes guaranteed and not just for a privileged few who hold all to ransom.
To really do this, the government must depoliticise land distribution as well reduce drastically the time it takes to get approval and be granted land by the government. For now getting a certificate of occupancy from the governor of a state who is authorised to hold land in trust for the people is like passing through the eye of the needle. This way vast lands that are held down by feudal land lords will be freed up for productive use.
The land law also restricts all with statutory right of occupancy from alienating, transferring, assigning or mortgaging it without the Governor’s approval to do so. While this process should not be cumbersome and long drawn. The government should exclude improvements as they are fruits of labour that rightly belongs to the owners who should be free to assign, transfer or even use it as a collateral to secure loans from any financial institution like the bank.
What this means is that the law should be such that if individual land users needed to raise capital from banks, his should be able to use his improvements and not his land as collateral without recourse to obtaining approval to do so from his Governor.
In view of the astronomical rise in land values, especially in urban towns and cities, the ground rent currently being levied could be substantially increased and should fall upon land value only, not the value of the buildings.
Thus, the existence of the Land Use Act is in fact a tremendous opportunity for Nigeria to move ahead with the implementation of land value capture. Broad based knowledge and education of both the populace and public authorities should proceed apace with the training of people who can be charged with the details of implementation, such as establishing transparent web-based land value maps and determining the incremental stages of increasing the percentage of land rent captured for public benefit.
Because undeveloped lands are never taxed, land speculators have cashed in on this seeming lapse by holding down vast lands out of use until such a time as it would be very profitable to sell on the market. This practice of course hampers development in many ways.
Those involved in this evil act of land speculation in most cases are top government officials who with ill-gotten wealth can afford to buy large tracts of land that they keep out of use. Since they are those in authority that are able to effect changes in laws in support land value taxation, it is unlikely that they would support any form of legislation that would change the status quo in terms of land distribution.
The leaders often exploit the loopholes and weaknesses in the land laws to allocate choice lands to themselves and their political cronies at the expense of the common good.
Ruling family members in communities who control large traditional lands engage in land profiteering. They also create undue conflicts that result in costly land litigations and, in many cases, physical clashes leading to deaths and sacking of villages. These people sell lands to more that one buyer resulting in a deadly clash of interests, claims and counterclaims. Land cases in the law courts take years to be decided. This is because a dissatisfied litigant can appeal an unfavourable ruling first to the High Court, then to the Appeal Court and finally to the Supreme Court.
Legal fees and often very expensive and the aggrieved parties must foot such bills themselves or risk losing the case to the richer opponent while the sellers of the land who created the problem in the first place remain on the sidelines content to play the part of court witness.
Often, cases of such multiple land sales occur when certain members of a family who own land go behind others, without a family consensus, sell the land to interested buyers.
Recognizing such social tendencies with regard to family/native lands, deeds of assignments on lands must be signed by more than one family member and in the presence of several witnesses before the government accepts to give a right of ownership to the buyer.
In urban centres like Lagos where much of land is still held by ruling families, the government requires that a prospective landowner who wants to apply for secure land ownership papers from the government must be able to prove he had the land vested on him before 1978 when the land law came into force. The main acceptable proof is the receipt of purchase which must have a postage stamp affixed to it. Any post 1978 postage stamp is unacceptable.
To meet this legal requirement, most land owners who are known for being land speculators have been able to buy up thousands of such postage stamps which they now use in affixing to lands receipts they issue out to buyers.
This SWOT analysis was written by Gordon Abiama, Director, Africa Centre for Geoclassical Economics, Nigeria with notes taken from Land Value Taxation Around the World, an anthology compiled by Robert Andelson and published by the Robert Schalkenbach Foundation.