Property rights
The Sharia discussion is necessary because it shows how low the level of trust is in Nigeria. It also shows the hypocrisy of many of its proponents. How many of them will gladly, today, pack their bags and move to Zamfara, the first state to institute political Sharia in Nigeria?
It is, perhaps, a coincidence that it is this same Zamfara state that has done something this past week that bears a long discussion when the governor revoked all land titles in the state.
This is a most important story because property rights in Nigeria are insecure, and this is one of the banes of our economic development. I stand to be corrected, but the issue of the Land Use Act was not brought up in any of the constitutional hearings this week. That is a problem.
Permit me to quote verbatim, the commentary on this issue in SBM Intelligence’s newsletter this week:
This is a reminder that property rights continue to remain insecure in Nigeria and are subject to the discretion of public officeholders in many cases. In such an atmosphere, it is not unexpected that investors will take the hint and vote with their feet. The 1978 Land Use Act was supposed to reduce land conflicts among citizens, unify land tenure and land administration procedures, achieve a more equitable distribution of and access to land rights for all Nigerians, and facilitate government control over land use and development at a time when the country was rapidly developing after years of political instability and the Civil War. Unfortunately, it has failed to achieve any of this and has instead concentrated a lot of power in the hands of state governors whom the law made the primary land managers in the country. The uncertainty that this legal regime foisted on property rights has been a struggle ever since. Immense wealth remains locked up in land in Nigeria simply because of how insecure property rights are. Transaction costs are significantly higher than they should be and turn around time as well because of this. What is more, the Zamfara governor may just have created the template for other governors to carry out these types of blanket exercises. All round, this represents a step backwards on the road towards economic development.
One of the things that we do at SBM is advisory for potential investors to Nigeria, and one question that compliance departments never fail to ask us is to explain this Land Use Act business. In so many meetings and calls, I’ve heard the gears shifting in peoples heads as this explanation is taking place, and they inadvertently downgrade their exposure to Nigeria. Basically, what they are thinking is, “if a governor can just wake up and revoke my land because some arcane law allows him to, then why should I spend so much money acquiring that land?”
This leads those of them who can work remotely to opt for Ghana, while those who must invest in Nigeria opt for leases. It shows in the numbers.
Below is Nigeria’s rice production from 1960 until right about 2019.
Guess when demand began to irrevocably outstrip consumption?
Around the time the Aboyade Commission began to moot the idea of seizing all the land. Since that bad idea was codified as the Land Use Act (with the exception of the reaction to SAP), we’ve not looked back. You know why? The really big agric investors will not commit to the kind of investment we need to feed Nigeria, because they don’t want someone to come and just seize their investment because he can.
Nigeria needs a total overhaul, and the Land Use Act is one of the things that has to go if this country is ever to make sense.