Attempts by the Federal Government of Nigeria to give the citizens affordable housing appear to be lip service, as research indicates that certain legal frameworks stand on their way to reality, writes NKASIOBI OLUIKPE
Humongous dead capital
The term, dead capital, is said to be coined by Hernando de Soto, a Spanish economist, for assets that cannot be converted to economic capital.
Unnecessary legal frameworks have reportedly put Nigeria’s dead capital in the housing and agriculture sectors at $900bn. Out of this figure, the real estate market segment is said to hold around $230bn. These include accruable income on abandoned property such as the National Stadium (since 2004), the Federal Secretariat at Ikoyi and over 90 per cent of property in Nigeria, which are said to be lacking titles. No thanks to the Land Use Act of 1978, which weakened the customary land tenure system and makes it tough for people to use their lands as transactable assets.
State as trustee landlord
The legal frameworks vest all lands in the governor, who holds them in trust for the people.
Without the governors’ consent, which is backed by the issuance of a Certificate of Occupancy (CofO), the legality of any landed property in Nigeria is null and void. This has put a lot of limitation on land transactions, especially for the real estate industry, an irony, experts say, for a country with over 20 million housing deficit. This, from all indications, has led to the miserly contribution of the two sectors to the Gross Domestic Product, unlike what happens in other climes.
An analysis of PricewaterhouseCoopers’ research by PropertyGate Limited indicated that 95 per cent of residential buildings in Nigeria have no title or a contestable title, as they rely on commonly unrecorded informal practices. The report states that only the wealthy can navigate the cumbersome bureaucracy to acquire legal titles. In Lagos alone, it is estimated that 97 per cent of the lands are unregistered. The analysis has it that restricted ownership and unregistered landed property create a dead capital, as they are non-collaterable and cannot be validated by banks for any transaction. The restriction has also made it impossible for people to leverage those assets for wealth creation.
Raising dry bones
Some professionals whom Financial Street spoke with believe that the dead capitals in real estate and agricultural sectors can be resurrected, if and if only the government is willing to do the needful.
While agreeing with the research by PropertyGate, Orji Ukpai, the Managing Director/Chief Executive Officer of SARG Group, a real estate and agriculture firm, noted that the land holding condition in Nigeria was very bad because of the dictates of the Land Use Act. He suggested that the customary rights of property owners should be legalised.
His words, “The situation where government claims to hold land in trust for the people, while the land owners authenticate their land ownership by going to the government to obtain a CofO signed by the governor, remains a problem. The cost of acquiring a CofO is not one kobo; in Lagos, it is very expensive. The claim that the process has been digitalised or customised is a hoarse. They have tied the processing of CofO to their revenue.
“I can tell you authoritatively that about 70 per cent of (landed) property in Lagos cannot totally claim that they have a CofO. They are only holding their receipts and survey plans. In law, the receipt of a property is recognised. Purchase receipt is what you can use to contest any property issue that arises in litigation. But the problem lies in the issue of trading with your property.”
The CofO brouhaha
He maintained that the customary right of ownership, which is always quoted in every Deed of Assignment, should be part of the law; then, that the CofO should be included as an addition, rather than as the only condition.
On his part, immediate past president, Nigerian Institute of Town Planners, Lekwa Ezutah, explained that the best way to simplify the rigorous land titling process was to involve the traditional institutions.
The traditional institutions, he explained, would determine who owns what, and, based on that, give title documents from which CofO could be obtained.
However, Director of Research, Yaba College of Technology, Lagos, Olufemi Akinsola, revealed that the banks were the ones hammering on CofO, arguing that everything should not be based on the CofO, as the decree that brought about the Land Use Act specified that land could not be taken away from a people within a particular radius of the community.
He said, “What we normally have is the Deed of Conveyance, which is a document used to sell property. Banks do accept that as collateral depending on the registration status. The only thing important about CofO is that if the government comes and takes over your land and you don’t have a CofO, you will not be paid compensation, except if they decide that there will be general compensation for everybody along that line.”
Get real time update about this post categories directly on your device, subscribe now.