Land, not oil, is the real stolen wealth of Nigerians

IT shocks almost everyone when they learn, that in order to get a mortgage on a piece of land in Nigeria you need the individual consent of that state’s governor.

In Nigeria’s Land Use Decree, which removed land from the legal custody of the Nigerian people and placed it in the government, my country has codified economic madness.

In 1978, Nigeria’s military government seized all land in the country. We have never revoked this decree and this has stunted the development of the country drastically, causing what the McKinsey Global Institute coyly describes as Nigeria’s “historical weaknesses in the agricultural sector and a poorly functioning urbanisation process.”

It is for this reason that in a country of about 170 million people there were fewer than 50,000 mortgages in 2014. The average payback period is five years, principal and interest, and a requirement of 25 per cent – 30 per cent down payment; interest rates start at 18 per cent.

We must repeal the laws that empowered our government to seize all the land if Nigeria has a hope of growing its way out of poverty.

Nigeria is rich in fertile and arable land, and agriculture is often touted as the key to the country’s future.

The consequence of our laws, however, is that if agriculture is supposed to be the key to Nigeria’s future then – under our present land regime – we are finished.

Growth in Nigeria’s agricultural sector is not just desirable; it is a brutal demographic necessity. However, Nigeria’s agriculture sector is growing at approximately 2.6 per cent yearly, about a third of the real economic growth in the rest of the economy and only just keeping up with population growth; at this rate Nigeria will never feed itself.

Farming is constrained by the inaccessibility of land, and the financing secured against land, that farmers need to buy crucial inputs, invest in irrigation, better seeds, and farm equipment. These lacks are the direct consequence of the government legally owning all the land in the country.

The most crucial input, land itself is the most difficult, because of weak title and non-existent substantive property rights. As a result 52 per cent of non-forested arable land in Nigeria is under no sort of cultivation at all.

In order to get what formal title to land is available in Nigeria, the applicant must go through a tortuous process constituting a national average of “11 procedures over 78 days, and pay 15.8 per cent of the value of the property” to register or transfer a property, according to the World Bank.

This makes Nigeria one of the most difficult and expensive places to register property in the world. They note that, “this time is largely dependent on a single requirement: The state governor’s consent, which accounts for 65 per cent of the total time on average.”

Fewer than 18 countries in the world require the consent of a high-official for property transfers and collateralisations. Only six other countries in sub-Saharan Africa have lengthier and more burdensome processes – so we can pride ourselves on being ahead of Angola.

Nigeria’s fees are more than double the sub-Saharan African average and stand in contrast to the 2 per cent that agricultural juggernaut Brazil charges. In Saudi Arabia it is free.

These are typical examples of Nigerian governments’ focus on short-sighted rent seeking at the expense of economic development. It is therefore not surprising that out of the 189 countries that the World Bank studies, only five have more expensive property registration fees.

Furthermore, as land and buildings account for between half and three-quarters of the wealth in most economies lending for construction and agricultural inputs is ordinarily secured by the land. If land is a secure asset it is valuable and robust collateral which usually means low rates of interest. But if the farmer or homebuilder cannot secure his lending with his land he will find few willing to lend to him, even fewer who will do so cheaply.

The sector died because of a lack of financing; the financing dried up because in 1978 the government nationalised nearly every scrap of land in Nigeria. It is no accident that according to the FAO Nigeria’s agricultural exports grew until 1978 when they reached a peak that they would attain again until 2009.

Nigerian cereal yields are a third of those of Indonesia because the average Nigerian farmer uses just 6kg of fertiliser per hectare, about 3 per cent of the fertiliser of the Indian or Indonesian farmer and only a third of what the Ghanaian farmer would use to cultivate her equivalent farm. The national bureau of statistics notes that fewer than 20 per cent of farmers can borrow to buy seeds or fertiliser.

Agriculture employs 60 per cent of Nigeria’s work force but is the beneficiary of only a grudging three per cent of commercial bank lending in the country – this is in contrast to the oil and gas sector which is a whopping 25 per cent of the loan book of local banks’ lending. This is because in modern Nigeria an oil licence is a securely held legal title, giving international oil companies a security of property denied to the ordinary Nigerian citizens on their homes or farms.

If people cannot own land in truth, reasonably secure in their title and free of government interference in financing or title transfer they will not be able to invest large amounts of money in the improvement of expansive and immovable property.

Almost 40 years ago the Nigerian government seized the land in the country and every successive government has demanded the people pay them to lease back what their forefathers owned – the most important thing that a new government can do is give it back. Our land, not oil, is the real stolen wealth of the Nigerian people – can we have it back, please?

• Soleye, company executive, lives in Lagos.