The present structure of Nigeria’s federal system of government is dysfunctional, hardly sustainable and will continue to constrain the country from attainment of its political economic potentials, goals and also developmental aspirations. It is simply tailored to sustain a colossal federal government – with heavy wage bill and large overheads – from the proceeds of commodity exports that chiefly come from oil and gas receipts and dole handouts to the thirty-six states, federal capital, Abuja and seven-hundred-and-seventy-four local councils. This disturbing reality is reflected in Nigeria’s revenue sharing formula which allocates 52.68 percent to the Federal Government from revenues that accrues to the Federation Account, 26.70 percent to states and 20.60 percent to local government areas. It is an open-secret that only Lagos State can stand on its feet without the monthly revenue allocation from the Federation Account. The rest of thirty-five states of the federation and FCT, Abuja cannot generate sufficient internally generated revenue (IGR) to cover such basic costs as their expenditure of running government, a clear testimony of their fiscal unviability as vehicles for Nigeria’s political economic development.
The grim reality of the economic crises currently rocking Nigeria due to plummeted oil prices in the past two years has been persistent which led to lost about 60 percent of earnings into the Federation Account and attendant recession taking its toll resulting in most of the states being unable to pay workers’ salaries for months and had to run to the federal government cap-in-hand to beg for bailout funds. This effectively rekindled one of the recurring debates on our political economy: restructuring and fiscal federalism. The revenue sharing and allocation between the federal and other tiers of government has been one of the most contentious issue of our nationhood; but the biting economic hardship aggravated by cash crunch and rising inflation has brought up the question of restructuring and fiscal federalism to the front burner of our national discourse. Actually, revenue allocation has always being the primary issue that is fundamental to the political stability of the country which transcend the purview of economics; and in pluralistic societies such as ours, it assume political, religious and social dimensions. But then, addressing the challenges of Nigeria’s fiscal federalism and its underlying derivation principle is just massaging over the symptoms and cannot be the silver bullet that would deliver Nigeria out of the woods. The crucial issue is the restructuring of Nigeria’s political systems and institutions which serve as the pedestal upon which the political economy was built: big government with expensive presidential system which shoulders gargantuan executive functionaries (ministries, departments and agencies), costly bi-cameral legislature that consumes one-half of the nation’s total revenues; 36 states plus FCT, Abuja (with 35 of the states not fiscally viable) and 774 local governments that are mostly cost centers, unproductive and a major drain on the national resources. Another crucial matter is that of land reforms, through constitutional and legal amendments, which is needed to reverse those obnoxious provisions of the Land Use Act 1978 (still part of the 1999 Constitution as amended) that prohibits Nigerians from having fee-hold interest in land or ownership but fixed term lease tenancy (at mandatory rent) placed at the mercy and control of the state Governors; and limits the leasehold interest to maximum of 99 year period. It is however surprising that land reforms being an important area of restructuring is largely overlooked by most public commentators and policymakers thereby depriving it of the needed transformation to unlock land ownership and use in Nigeria which is urgently required for the development of agriculture and property in the country.
This piece is to be delivered in two parts: i) the need to structure Nigeria’s political system and incorporate fiscal federalism and ii) the imperative of land reforms which is at the center of restructuring of our political economy.
NEED TO STRUCTURE NIGERIA’S POLITICAL SYSTEM AND INCORPORATE FISCAL FEDERALISM
The term restructuring simply means to organize the political systems and power relationships between various levels and arms of government differently from the status quo ante. It entails tweaking the existing structure to accommodate political reforms that would cater for the aspirations of people and ultimately ensure stable union, effective governance/service and efficient resource utilization that promotes healthy competition and development of the constituent units of the political economy. In a federal system such as our, it encompasses adjustment to the extant political architecture depicted by the federal government, 36 states and FCT, Abuja and 774 LGAs; power sharing and relationships between the tiers and arms of government; fiscal federalism on the basis of equitable revenue sharing that ensures application of derivation principle and resource control, etc.
The engineering design concept of pipeline system deliberately created valve points for effective management of pressure within the line-pack that is used to transport liquids and gas. This ensures regulation of excess pressure which is vital in maintaining the integrity of the pipeline system. Nigeria therefore needs to restructure to provide the kinds of safety valves to be used to vent off excessive pressure from the diverse constituent political entities and interests that can potentially threaten its corporate existence. Thus, restructuring is needed to remedy the military legacy (1966 – 1979 and 1984 – 1999) of centralized political system which promotes rent culture on oil revenues which bred corruption and inefficiency with fragmented and financially weak second and third tiers of government. This will enable the establishment of equitable, fit-for-purpose and fiscally sustainable regions/states with powers devolved to the regional governments to address agitations for true federalism and secession.
The federal government as presently constituted is a colossal and obese cost center that consumes 52.68% of the national revenues every year but yet borrows to finance budget deficit. It spent 84% of the 2015 budget on recurrent expenditure (including 22% on debt servicing), 14% on capital investment and ran budget deficit of 17%. The recurrent expenditure was 68% in 2016 (including debt service of 24.3%), capital expenditure was 30% and deficit was 36%. The recurrent expenditure in 2017 budget was estimated at 64% (including debt service of 22.7%), capital investment was 31% and deficit was 32%. Meanwhile, the existing 36 states (with the exception of Lagos) and absolute majority of 774 LGAs are not fiscally viable and relied on FAAC handouts and bail-out funds to function and pay workers’ salaries.
The current proven oil reserves of 37.2 billion barrels at the prevailing exploitation rate of 2.2 million barrels of oil per day (bopd) would last 46 years unless new oil discoveries are made to increase the reserves. However, the dominance of oil as international commodity is being challenged by renewable energy race, specifically the electric car revolution and proposed ban petrol-powered cars by Norway in 2015, UK and France embargo on diesel and petrol cars by 2040. China – a market where 23.6 million cars were sold in 2016, translating into one-third of global car production for 2016 put at 72 million – announced its plan to bar fossil-powered cars.
There is need to restructure to carry out urgent land reforms to enable ownership of lands by individuals, groups, local governments, regions/states and federal government in order to address agitation for resource control. This entails removal of the Land Use Act 1978 from the 1999 Constitution (as amended) and repealing of those obnoxious provisions in the Act that prohibits Nigerians from having fee-hold interest in land or ownership but fixed term lease tenancy (at mandatory rent) of 99 years or less placed at the mercy and control of the state Governors.
The 18 year old revenue sharing formula which allocated the federal government about 53% at the expense of states and LGAs needs review. This will enhance equitable application of the derivation principle in revenue allocation to regions/states; ensure fairness to residents of the revenue generation areas who suffered opportunity costs, pollution, disruption of both social and economic life arising from economic activities such as oil exploitation, mining etc.
Lastly, it is better to jaw-jaw than war-war.
The Devil is in the Impaired Structure more than Fiscal Federalism
The political structure of Nigeria evolved from equitable, fit-for-purpose and fiscally sustainable with powers devolved to the regional governments from 1946 to 1966 to a top-heavy, obese, unrealistic and dysfunctional with awesome powers centralized at the federal level created by successive military regimes that came to power from 1966 to 1999. This is obvious if we look back at Nigeria’s political/constitutional history. The quest for an acceptable political union that meets with the yearnings and aspirations of Nigerians effectively started with the annexation of Lagos in 1861 by the British Crown.
The country had 6 constitutional instruments under the colonial or pre-independence period namely:- Frederick Lugard Constitution 1914, Sir Clifford Constitution 1922, Arthur Richard Constitution 1946, Sir John Macpherson Constitution 1951 Lyttleton Constitution 1954 and 1960 Constitution. The pre-independence constitutional instruments were enacted through an order-in-council of the British monarch. The Macpherson Constitution 1951 was applauded as the first constitution that had input from the indigenous people of Nigeria; it avoided the mistakes of the past constitutions which were apparently the imposition of the British colonialists. The 1951 Constitution was enacted after an unprecedented process of consultation with the peoples of Nigeria through meetings and discussions held at Village, District, Divisional, Provincial and Regional levels before a national conference. Regional conferences were held at Ibadan, Enugu and Kaduna, respectively and produced a general consensus in favor of a federal system of government. The post-independence Nigeria was governed by 3 constitutional instruments viz:- 1963 Constitution, 1979 Constitution and 1999 Constitution. These Constitutions were enacted in two ways: an Act of Parliament (1963 Constitution) and military decree (1979 and 1999).
The violent but successful putsch in 1966 supplanted the First Republic with military dictatorship and set aside the 1963 Constitution. The suspension lasted for about 13 years ending only in 1979 when the Second Republic was ushered with the promulgation of the 1979 Constitution which set up Nigeria under a presidential system of government with a federal government, 19 state governments, a federal capital territory, three arms and three levels of government. The military incursion resulted in centralization of power and financial means at the center at expense of fiscal federalism, undermining and fragmentation of the once powerful regions which enjoyed relative political and judicial autonomy and were in control of its financial resources. It also led to Nigerian Civil War (1966-1969) with a death toll of over one million people. Again, the 1979 constitution was abruptly terminated in 1983 through coup d’état and successive military juntas ruled until May 29, 1999 when the civil rule was restored.
The rendition of brief historical narratives of Nigeria’s constitutional development in this article was given in order to underscore the various attempts made from 1946 to 1963 by the British colonialists and indigenous peoples of Nigeria to fashion out the evolution of a viable political union that met the expectations and aspirations of our socio-political diversity which also guaranteed the functioning of ‘true’ federalism between the tiers of government in Nigeria. The 1963 Constitution, which was the last constitution with broad inputs from the cross-section of Nigerians, reiterated the delineation of powers into exclusive, concurrent and residual and granted relative autonomy to the four (4) regional governments in respect of subjects and legislative powers allocated to them. It recognized the regional public services and reaffirmed the powers of regional judiciaries to adjudicate on items in the concurrent and residual lists. The regions also maintained local police and prisons for effective law enforcement. The military dictatorships that took over power on the promise of salvaging the country from disintegration due to regional/ethnic rivalries implemented controversial and unpopular policies such as replacement of federalism with unitary system through the Unification Decree No. 34 of 1966 – precursor of the current defective political structure – and a counter-coup was staged to remedy the initial putsch perceived to be targeted against other regions culminating in the bloody thirty-month Civil War. The subsequent military regimes that seized power after the civil war carried on with the fragmentation of Nigeria’s federalism by creation of more states and local governments, while consolidating the grip on political and economic powers at the center, thereby bequeathed to us the current impaired political structure.
The important question that should battle the lips of Nigerians is how can this military legacy of bestowed politically and economically powerful behemoth of a federal government and fiscally unfeasible states and local governments as the federating units of coordinate jurisdiction be reversed. Restructuring Nigeria into effective federal system isn’t going to be piece of cake or a tea party; it requires sincere national dialogue – that is motivated by patriotism, empathy and give-and-take and brotherliness – by the people of Nigeria from the constituent parts of the country, driven by the political leadership and elites, with the ultimate goal of entrenching ‘true’ and fiscal federalism that is viable and sustainable which will meet the aspirations of Nigerians under a stable and prosperous political union. There’s no doubt that the Nigerian state forged by the British colonialist through the amalgamation of the Northern and Southern Protectorates in 1914 was a creation of convenience designed to serve the political, economic and cultural interests of the imperialists. The two British protectorates brought together shared a teensy-weensy history, culture, geography prior to the amalgamation; and its indigenous peoples still retain their distinctive nationalities and identities till date, 102 years after. However, despite these differences, the various ethnic nationalities worked together as Nigerians, from 1914 to 1966, to understand and resolve their peculiarities as they evolved a new nation-state – with a system of government that clearly spelt out the arms of government and national institutions, tiers of government and the distribution of powers amongst the federating units – which was geared towards meeting their group goals as they pursued higher national aspirations. This resulted in strong regional governments that were fiscally robust to run the machinery of governance, develop their areas of jurisdictions and make surpluses from which a fraction was paid into the Distributive Pool Account for the purpose of revenue allocation to support the federal government. The power attraction then was the Regions as some of our notable founding fathers elected to stay back in the provinces than take leadership positions at the center. In fact, the Achilles heel of the First Republic was the battle fought between the ruling coalition and the opposition over control of the Regions. It is argued by some commentators that had the military not struck, the political system would have adjusted itself out of the prevailing crises of the mid-60s and Nigeria would have made great progress in terms of development with matured political systems and a diversified economy driven by productive regions each specializing in the productive area in which it has comparative advantage.
But then, Nigeria may not need to reincarnate political structure of the First Republic. However, it definitely require to revisit that golden era of its political history to derive inspiration from the systems, institutions and power distribution that made the difference and ensured ‘true’ federalism which devolved political and economic powers to regions/states and local governments. The big and unreasonably powerful government currently at the center which consumes 50 percent of the national revenues derived mainly from commodity export (oil and gas sales) lording over weak and fiscally unviable federating units that cannot cover the costs of personnel services must give way to a truly federal system of government that is effective, and sustainable which will be in sync with the current aspirations of Nigerians.
A three tier federal structure that consists of the federal, regions and cities/counties should be alternative to the existing three-tier system. The present six geopolitical zones can be made the new regions; with three regions each in the Northern Zone and Southern Zone. The six new regions can be called North Western State, North Eastern State, North Central State, South Western State, South Central State and South Eastern State with headquarters in one of the cosmopolitan areas under its territory that’s both strategic and accessible to all cities/counties under its jurisdiction. The capitals of the extant thirty-six states covering the LGAs that make up their cosmopolitan areas can be made the new cities while the remaining LGAs which have not been subsumed into the new cities should become the counties. For instance, the new Kano City should consist of geographic areas under the existing Kano Municipal, Nasarawa, Tarauni, Fagge, Dala, Gwale, Ungoggo and Kumbotso LGAs. The Federal Capital Territory, Abuja should be given the status of a city with the existing 5 LGAs as local councils under it. Meanwhile, the cities and counties should be political, administrative and geographic subdivision of the six regions with powers of self-government or jurisdiction. The creation, structure, powers and institutions and elections of officials of cities and counties should be derived from the federal and states constitutions.
The federal system of government can be presidential in the fashion of the USA or parliamentary taken from Australia or even Canada; it all depends on practicability, cost of government and sustainability. What’s crucial is the term limit for holding of elective offices, rotation and zoning of political offices, procedures for constitutional amendments and distribution of legislative powers to the federating units to make and enforce laws for the peace, order, and good government of the republic. For instance, if it is to be presidential system, a six-year single term limit can be set as the tenure for holders of elective offices at the federal and regional levels. The President can be elected with two Vice Presidents, one executive VP nominated from any of the three regions in the geopolitical zone (North or South) other than the one which the President is from and one non-executive VP to be picked from the same region as the President who should be sworn-in in the event of incapacitation of the President. The Offices of the President of the Senate, his deputy, Speaker House of Representatives and his deputy should be rotated in the same manner as the President and be distributed based on the zoning principles to ensure balance of power and promote feeling of the belonging amongst the federating entities. The six regions should take their turns to produce the presidents of the country for six-year single term for a period of 36 years. Thereafter, the rotation of the Office of the President should cease and a referendum should be held to re-negotiate the union or chart a new political course for the country.
The regions should have their constitutions that draws from their history, culture and aspirations; elected Governors, their Deputies and appointed cabinet; bi-cameral legislature comprising of houses of assemblies and senate; judiciary with state supreme courts on customary/Shari’ah cases (for states that requires them) and all matters under the residual legislative list and also state police forces and prisons for the maintenance of law and order. The current practice which enables some Justices in the Supreme Court panel, who are not versed in the customary and Shari’ah laws, to sit and hear appeal of cases brought before them that has been decided by the Judges with deep knowledge in the subject of litigation, does not help the course of justice. The constitutions of the regions should establish the traditional institutions, its roles as custodians of cultural heritage, their functions, jurisdictions on customary matters and ceremonial territorial authority.
Each city should be governed by an elected mayor and legislative assembly. In the case of FCT Abuja, this will end the decades old undemocratic practice were a minister is appointed by the president from Borno, Kaduna, Gombe and Adamawa to run the FCT administration without electoral accountability to citizens of the capital territory. The counties should be administered by elected county executives or chairmen and council consisting of elected councilors. Both cities and counties administrations should have powers to enact ordinances for their respective areas of jurisdiction, the executive power to oversee the day-to-day operations of their governments, and quasi-judicial powers with regard to certain limited matters such as hearing appeals from the planning commission etc.
The federal government’s exclusive legislative jurisdiction should be limited to defense, national security, intelligence & investigation, foreign affairs, immigration, transportation, communications, currency standards and provision of general policy framework for governance which the states will act upon by means of detailed legislation. The concurrent powers to be exercised by the federal and regional governments should be expanded to include but not limited to civil law administration, judiciary and criminal procedures, security and prisons, agriculture, taxes and duties, mines and minerals resources, power generation, refugee matters, public welfare, land management and property law, banking and insurance, consumer protection, public health, and the collection of vital statistics, mass media, nature conservation, regional planning, public service regulations, education, regional economic development etc. The residual powers should be exclusive to regions, cities and counties (where applicable) which should comprise basic public services, policing and civil defense, licenses, customary and Shari’ah matters, family law, land use law, building codes, property law, estate and inheritance, water resources etc. The national police/bureau of investigation should have jurisdiction under exclusive matters of the federal government while the regions, cities/counties take in charge of policing, civil defense and law enforcement under their jurisdiction, the perception and allegation. Had the regions, cities and counties been in control of policing under their jurisdiction, the blanket institutional corruption and inefficiency against the national police with be checkmated and addressed. All the regional, city and county police forces in the country cannot be accused of corruption at the same time. And the city/county police officers are in better position to gather intelligence and use their knowledge of the environment and contacts to fight crimes in their respective communities. For instance, if the states of Borno, Yobe and Adamawa had police force in place from the beginning Boko Haram insurgency, they would have been able to combat the insurgents more effectively than NPF and later, the Nigerian military. The local police officers would have nowhere to go if they allow the Jihadi group takeover their ancestral homes; they will fight with their hearts to protect their lands from the grip of insurgents. Perhaps, the formation of Civilian-JTF vigilante group and use of hunters to fight Boko Haram in those states wouldn’t have been necessary. Similarly, the menace of cattle rustlers and bandits in the forests of Zamfara, Kaduna, Katsina and Kano would have been better dealt with if the governments of those states have armed local police and rangers in place.
Seven senatorial districts can be created in each region and one to the Federal Capital Territory, Abuja thus bringing a total of 43 seats in the Senate chamber of the National Assembly. A total of 182 federal constituencies can be established for the House of Representatives with 180 to be allocated to the six states and two to FCT, Abuja. The number of seats to be apportioned to each region should be proportionate to its population in relation to the national population aggregates. However, every region should be constitutionally guaranteed at least twenty seats in the House of Representatives. 51 – 60 seats can be allocated to Regional Assemblies on the basis of population and 21 seats to the Regional Senate. Members of Regional Assembly and Senate should be elected.
Fiscal Federalism is Key to Nigeria’s Restructuring
Prior to military intervention in 1966, Nigeria’s four regions were fiscally autonomous because of the pattern of fiscal arrangements at that time. Revenues from economic crops and produce went to the regions for their exclusive use without any requirement for contribution to a common purse to the benefit of other regions. Groundnuts were available in the North for the sole benefit of the North, cocoa for Western Region, coal and palm produce for Eastern Region while timber and rubber produce for the Midwest Region. Furthermore, regions were fully in control of personal income tax, retained 70 percent of mining rents and royalties and transfer the remaining 30 percent to the Distributable Pool Account, while 100 percent of export duties, tax on motor fuel and excise duties went to the regions. However, this pattern changed after the military putsch in 1966 which ended the First Republic. Immediately after the civil war, the federal military government issued Decree No. 13 of 1970 that made the bulk of federally collected revenue to go to the Federal Government and reduced export duties which used to go to the regions from 100 – 60%; regions share of revenue from duties on motor fuel and excise duties was also reduced from 100% – 50%, while that of mining rents and royalties was reduced from 50 – 45%. Furthermore, Decree No. 9 of 1971 made federal government the sole custodian and beneficiary of offshore petroleum rents and royalties.
Derivation principle was 100 percent in 1953 and 50 percent in 1960. It was reduced to 45 percent in 1969, 20 percent in 1975, 1.5 percent in 1982, 1.0 percent in 1990, 3.0 percent in 1992 and the current 13 percent which was fixed by section 162 (2) of the 1999 Constitution.To ensure effective fiscal federalism in the country, derivation principle, need (population and fiscal autonomy should be employed as principles in revenue sharing system in Nigeria as was the case between 1958 and 1964 (under the Raisman Commission) when derivation principle featured as the most significant of the three. Allocation from the Distributable pool of federally collected revenue was: Northern Region (40.95%), Eastern Region (31.95%), Western Region (24.95) and Southern Cameroun (5.95%). Derivation principle implies that regions should receive allocations from the central pool in stringent proportion to their contribution to the pool. The philosophy behind this principle is that the residents of the area from where particular revenue is generated must have suffered one way or the other in terms of opportunity costs, pollution, disruption of both social and economic life of communities and some other undesirable consequences arising from certain types of economic activity such as manufacturing, mining, drilling for oil etc. Therefore, such people must be compensated by enabling them to benefit from the revenues generated in their community.
With the implementation of proposed six regional structure, accrued revenues under the agreed derivation principle should be distributed to the regions and qualifying cities and counties under their jurisdiction. The percentage of revenue to be allocated to regions, qualifying cities and counties should be within an agreed reasonable range having minimum and maximum points which will be graduated over a period 6 years (maximum). This will enable the federal government sufficient time to complete key infrastructural projects that would connect the regions, allows access to the regional markets and promote trans-regional and international trade. Strategic among these projects is dredging of River Niger (including its extension to Abaji, FCT) and where possible R. Benue to enable passage of ships, establishment of inland ports in Agenebode (Edo), Idah and Lokoja (Kogi), Yenagoa (Bayelsa), Baro (Niger), Aguata (Anambra), Ogbabe (Abia) and Abaji (FCT, Abuja) and rehabilitation of Onitsha River Port. Similarly, dredging of the coastal areas and overhaul/building of ports along the shore lines of Cross Rivers, Rivers, Bayelsa and Delta states will unlock the economic potentials of those places thereby increase its revenues and also enhance coastal security. Furthermore, completion of ongoing rail lines to connect Port Harcourt – Maiduguri, Lagos – Kano and Lagos – Calabar construction of new Kano – Maiduguri, Abaji – Abuja, Abuja – Minna and Kano – Sokoto would provide cheaper means of transportation of goods and services from coastal areas of Nigeria to its hinterland effecting boasting trade and commerce of the regions. In same wise, completion of ongoing expressways across the country that traverse and link the proposed regions and connect to sub-regional highways should be a topmost priority.
This therefore entails tweaking the existing revenue sharing formula which was enacted in 1982 but came into force at the inception of Fourth republic in 1999. The extant formula is in its 19thyear without amendment effected to align it with the existing realities and respond to incessant calls by some of the federating units, most especially state governments, for entrenchment of fairness and justice in revenue allocation which is the hallmark of fiscal federalism. The Federal Government should be allocated 32%, states/new regions 48% and LGAs/counties 20%; the existing revenue sharing formula should be graduated over agreed period of time to reach the proposed formula.
After transition to fiscal federalism, the federal government will have less business building and maintaining of federal roads; ditto in areas of policing and conventional maintenance of law & order, education, health, law administration and enforcement. The regions, cities and counties will be allocated greater percentage of the national revenues on the basis of derivation principle (principally) and then need, fiscal autonomy and other indices agreed by stakeholders.
IMPERATIVE OF LAND REFORMS AS THE FULCRUM OF RESTRUCTURING OF OUR POLITICAL ECONOMY
Looking back at the history of land ownership and tenancy in Nigeria, we will find that the predominant land tenure system in pre-colonial Nigeria was the customary land tenancy where land holdings were owned by families, communities, villages, towns and kings in which land was deemed not owned by individuals but by communities and families in trust for all the family members. The legal estate under this system is vested in the family or community as a unit; thus, individuals had no such interests as the fee simple absolute in titles to estates been that the actual ownership of land or absolute interest was vested in the community itself. The customary land tenure in the areas comprising the Southern States of Nigeria before colonial rule was held via:- (i) Communal Lands (ii) Stool or Chieftaincy lands (iii) Family lands (iv) Individual or Separate property. The community lands comprised lands which the entire community has an individual or proprietary interest; such lands were supervised and administered by the chiefs and traditional rulers. Land held under customary tenure cannot be sold or alienated – such an act was generally regarded as capable of depriving the future generations of the opportunity to acquire land – which his resulted in infective land use for commercial purposes.
Under colonial rule, the land ownership structure in Nigeria was designed to serve the economic and political interests of the British imperialists. The Land Proclamation Ordinance 1900 enacted by Lord Lugard eliminated the principles of native law and custom inherent in the pre-colonial system of family and communal ownership of land and provided that title to land can only be acquired through the High Commissioner. The Native Lands Acquisition Act 1917 was later promulgated to regulate the acquisition of land by aliens (non-natives) from the people of the southern provinces of Nigeria and vested control over acquisitions and transfers on the Governor. The State Lands Act 1918 was designed to regulate the use, occupation and development of Crown (state) Lands in which the whole public have an interest. The Act did not cover lands acquired and held which were subject to the Lands and Native Rights Act 1916.
The Land and Native Rights Act 1916 was passed to confer in the colonial Governor all rights over all native lands in Northern Nigeria. After Independence, the Land Tenure Law 1962 was enacted to repeal the Land and Native Right Act of 1916 but retained the basic principles of the old law. The Act defined all lands in the Northern Region whether occupied or unoccupied as ‘native lands’ and were placed under the control, and are subject to the disposition of the Minister responsible for land matters, who holds and administers them for the use and common benefits of the ‘natives’ i.e. persons whose fathers were members of any tribes indigenous to the Northern Region. This follows that non-indigenous persons are ‘non-natives’ which under this law, no title to the occupation and use of any such lands by a non-native is valid without the Minister’s consent. The natives of Northern Region were granted right of occupancy to land – title to the use and occupation of land and includes both customary and statutory right of occupancy – for a limited number of years. An occupier enjoys exclusive right to his land against all persons other than the Minister; and he may, with the Minister’s consent, sell, mortgage or transfer any lawful improvement on the land. However, on the termination of a statutory right of occupancy, all the improvements on the land revert to or vest in the Minister without payment of any compensation to the holder. Meanwhile, alienation of a statutory right of occupancy is prohibited without the Minister’s prior consent.
The Land Tenure law of 1962 was repealed and replaced by the Land Use Act of 1978. The Land Use Act regulates the ownership, alienation, acquisition, administration and management of land within the Federal Republic of Nigeria. The Act vests all land comprised in the territory of each state in the Federation of Nigeria in the Governor of that state and such land shall be held in trust and administered for the use and common benefit of all Nigerians in line with the provisions of the Act. It empowers the Governor of a state to grant statutory right of occupancy to any person for all purposes in respect of land, whether or not in an urban area and issue a certificate of occupancy in evidence of such right of occupancy in accordance with the provisions of the Act. The statutory right of occupancy granted by a Governor is presently the highest right to land in Nigeria – the right allows the holder to use or occupy land to the exclusion of all other persons except the Governor and is granted for a maximum holding period of 99 years, subject to the payment of ground rent fixed by the Governor throughout the holding period. The Act prohibits alienation, assignment, mortgage, transfer of possession, sub – lease or otherwise howsoever customary or statutory rights of occupancy in Nigeria without the consent and approval of the Governor of the state where such right of occupancy was granted.
The Repressive Laws that Prohibit Private Ownership of Lands in Nigeria
The Land Proclamation Ordinance 1900 was the first enactment that effectively negated the principles of the pre-colonial native law and custom on land matters and placed the colonial High Commissioner in charge of control over land acquisition by the subjugated Nigerians. Subsequent legislations such as the Land and Native Rights Act 1916 and Land Tenure law of 1962 merely transferred the control over land tenure to the Governor and minister in charge of lands in Northern Nigeria. The Land Use Act of 1978 which repealed the previous Laws is obnoxious as it prohibits individuals from having freehold interest in land in Nigeria by vesting of all land comprised in the territory of each state in the Federation of Nigeria in the Governor of that state. For all intents and purposes therefore, right of occupancy on land is a leasehold interest – and for decades, professionals and laymen alike have been dealing in acquisition, sale and transfer of property rights in which they don’t have freehold interests in land within the context of the Act. Furthermore, individuals can only be granted a right of occupancy for a maximum holding period of 99 years, subject to payment of ground rent to the government as fixed by the Governor. This makes Nigeria among regressive countries of the world where citizens are only allowed land possession for a limited period of time but not ownership. Monarchies such as United Kingdom and Saudi Arabia allow freehold ownership of lands by individuals within the ambit of their laws. Democratic republics such as the United States of America have about 60% of its 2.27 billion land acres as privately-owned by individuals or group which is kept for their exclusive use. The amount of acres one owns is unlimited, some individuals and families have ownership to millions of acres. The federally-owned land which is about one-third (28%)of the U.S. territory is own and manage by the federal government pursuant to the United States Constitution. Much of this federal land is in the west coast; more than 50% of the land area for some western states, such as Nevada, Alaska, Utah, Oregon and Idaho are such lands and are used for national parks, wildlife refuges for conservation of fish, wildlife and plants, military reservations, federal prisons, Indian reservations or leased to companies or corporations for commercial exploitation, including agriculture, forestry and mining. About 9% of the US land is owned by state or local governments bringing the total acreage designated as public lands to about 40%.
The 60 million acres of land in the UK is own by the Crown Estate, the wealthy aristocrats, local authorities and individuals or groups. The land including mines and sub-surface things up to a general limit of 500 feet belong to the surface owner and the landowner will have a right to the atmosphere above his land as well subject to limits set by Public policy in both cases. The English law, since 1925, recognizes two estates in land namely the fee simple which is a right to use for an unlimited time and a lease which is an interest for a fixed period of time. In all situations, however, use of the land is constrained by agreements or binding rights with neighbors, and the requirements of the local council and government.
Most land in Saudi Arabia is owned by the government but cultivated land and urban property are subject to individual ownership. There are three categories of land in the Kingdom: developed land, undeveloped land and protective zones. The Developed land covers the built areas of towns and villages and agriculturally developed land; it can be bought, sold and inherited by individuals. The undeveloped land encompasses rough grazing, pasture and wilderness; rough grazing and pasture is owned in common and everyone has equal rights to its use while the wilderness is owned by the state and may be open to everyone unless when specific restrictions are imposed. The protective zone is a buffer between the owned land and the undeveloped land, and is defined, in the case of a town, as the area that can be reached and returned from in a day for the purposes of collecting fuel and pasturing livestock. Saudi law utilizes the religious endowments (Waqf) which is a form of land ownership whereby a Muslim can transfer property to a foundation for long-term religious or charitable purposes; property under this category cannot be alienated or transferred.
Shortcomings of the Land Use Act 1978
It can be safely argued that the Land Use Act 1978 which was legislated to nationalize land ownership in Nigeria as well as facilitate effective state control of the use and development of land has become a clog in the wheel of economic growth and development of country in the 39 years of its implementation. The Act restricts the citizens’ right to occupy land, buy, let or sell their land without obtaining the consent and approval of their Governors as provided in Sections 21 and 22 of the law hence it is therefore unprogressive, oppressive and would not enhance sustainable economic development in Nigeria. It hinders the effective functioning and operation of the property markets in the country and restricts growth of agricultural output through access to financial resources which requires documentary land titles as security interest. Meanwhile, in attempt to harmonize the different land tenure systems previously existing in the country, the Act has created multiple forms of tenure, which range from 33 – 99 years, resulting in insecurity of right of occupancy granted under the Act, excessive bureaucracy in obtaining Governor’s consent and approval for land transactions and issuance certificate of occupancy, among others.
It is disconcerting that compensation is not paid for undeveloped land without unexhausted improvements within the provisions of the Act, except for an amount equal to the rent, if any, paid by the occupier during the year in which the right of occupancy was revoked. Moreover, compensation payable on revocation of right of occupancy by the Governor is limited to unexhausted improvements as provided in Section 29(4) of the Act and does not include other germane claims for severance and injury suffered. The Act does not provide for adequate conflict resolution mechanism with respect to disputes arising from unjust and unfair revocation of rights of occupancy granted under the provisions of the Act. In fact, the courts are excluded from inquiring into any question pertaining to the granting of land rights by the Governor, local government grant of customary rights of occupancy and payment of compensation in cases of compulsory land acquisition in any part of the country by virtue of Section 47 of the Act.
Despite its limitations, the insufferable Act which was sneaked into the 1979 Constitution by the then Supreme Military Council headed by General Obasanjo is retained in the 1999 Constitution (as amended) till date. The constitutional amendment carried out by the Senate in July 2017 also retains the Act in the 1999 Constitution.
Prohibitive Registration of Property and Absence of Functional Land Registry
This excessive bureaucracy in land registration in the Nigeria has made transactions in land very cumbersome. The World Bank 2014 report stated that Nigeria ranked among the lowest in terms of ease of registration of property title; the country was rated 185th on the Global Rank in Registering Property. African countries like Rwanda and Ghana were placed as 8th and 49th respectively. And while it took between fifteen and thirty four days to register property title in Rwanda and Ghana respectively, it took average of seventy-seven days to register land titles in Nigeria. Our country have the highest number of procedures required for property registration in sub-Saharan Africa with 13 procedures as compared with 3 and 5 in Rwanda and Ghana respectively. Similarly, the cost of property registration in Nigeria was 20.8% of property value which is the highest when compared with those of other countries in the region – it was 0.2%, 1.2%, 4.3% and 5.1% in Rwanda, Ghana, Kenya and Botswana respectively.
It is estimated that only an average of 23.1% of households in Nigeria has Certificate of Occupancy in 2014. None of the 36 states of Nigeria have a functional electronic registration portal or land registry that’s online real-time for ease of property registration. In the UK, Her Majesty’s Land Registry and Registers of Scotland were created to register ownership of land and property in England/Wales and in Scotland. The Registry registers ownership of property and is one of the largest property databases in Europe. It guarantees title to registered estates and interests in land. It also records the ownership rights of freehold properties and leasehold properties where the lease has been granted for a term exceeding seven years. Land Registry receives no government funding; it finances itself from registration and search fees being required to ensure that its income covers expenditure. It provides online access to its database of titles (ownership and charges or interests by other parties) and most plans (maps). People are charged a fee to access certain information. Registration is voluntary for property owners whose property is not registered. Registration of land under the Land Registration Act 2002 affords property owners some protection against squatters as well as avoiding the need to produce old documents each time a property changes hands. As of March 2016, there are 24.5 million registered titles representing 88% of the land mass of England and Wales.
In Saudi Arabia, by law, all land titles must be registered. The First Notary Public Department is responsible for keeping the land register which comprises of the records of registered property including detailed description of the property and any encumbrances thereof.
Land registration is a matter for individual states in the USA, therefore each state maintains a registry and also defines the officials, authorities, and their functions and duties with respect to the ownership of land within that state.
Nigeria should therefore borrow from the best practice on electronic land registry and database to ensure its availability and functionality of online real-time and accessible in order to boost property market in the country and attract investment in land and property development. The proposed six regions can maintain electronic land registries to host database of records of registered land/property – including definition of officials, authorities, and their functions and duties with respect to the land ownership – under their jurisdiction.
Unfair Land Regulation System as a Recipe for Resource Control Agitation by Commodity Producing Communities
In the United States, oil and gas rights to a particular parcel of land may be owned by private individuals, corporations, Indian tribes, or by local, state, or federal governments. These rights extend vertically downward from the property line; unless explicitly separated by a deed, these rights are owned by the surface landowner. Oil and gas rights offshore are owned by either the state or federal government and leased to oil companies for development. However, the tidelands controversy involves the limits of state ownership rights offshore.
A company (the lessee) leases the mineral rights from the owner (the lessor) for a specified term (duration) and the payments to the lessor for a right of reasonable access to leased land to explore, develop, and transport minerals. Payments for oil leases to the lessor (the person who owns the land) typically take three forms i.e. bonus, rental, and royalties, as negotiated with the lessee. The bonus is paid up-front at the time the lease takes effect. The rental is paid annually, usually made until such time as the property begins producing oil or gas in commercial quantities. Meanwhile, royalty is a portion of the gross value of any oil or gas produced from the lease that is paid to the mineral owner. Sometimes, a lessee agrees to pay delay rentals so long as the lessee is not drilling on the property. Regulation of oil and gas drilling and production are largely left to the states, except for federal offshore waters which is the responsibility of the US government.
In Nigeria, the Land Use Act of 1978 reduces the individual interest of Nigerians in lands that was hitherto ownership right to right of occupancy. Moreover, the Petroleum Act of 1969 vested entire ownership and control of all petroleum in Nigeria in the Federal Government of Nigeria and also revised all the terms and conditions under which pre-1969 concessions were granted to Oil Companies (IOCs). The Nigerian Minerals and Mining Act 2007 vests control of all properties and minerals in the State and stipulates that all lands in which minerals have been found in commercial quantities shall be acquired by the Federal Government in accordance with the Land Use Act and provides that use of land for mining operations shall have priority over other uses of land and shall be considered as constituting an overriding public interest within the meaning of the Land Use Act. Section 44(3) of the 1999 Constitution (as amended) also confers the ownership and control of all minerals, mineral oils, and natural gas in, under or upon any land in Nigeria, its territorial waters, and exclusive economic zone on the Federal Government; and the Federal Government is to manage such minerals in such manner as may be prescribed by the National Assembly. The Federal Government of Nigeria therefore takes bonus, rental, royalties and Petroleum Profit Tax (at 85%) and from sole ownership of petroleum mineral resources in the country while state governments collect rent from land leases.
These extant legislations on land and resources beneath it succeeded in alienation of the right of individuals and communities to own land and benefit from exploitation of mineral resources below it. But the question that always pops up is: whose land? While the Nigerian state believes that it owns the land and its natural resources and thus, control exploitation of natural resources to achieve set national development objectives; indigenous communities often attach cultural importance to lands which is beyond economic definition. In Nigeria, the issues around ownership of lands and natural resources underneath it have become one of the most recurring controversies and source of conflicts associated with the effects of exploitation on human livelihood, settlement and sustainability of the ecosystem. This resulted in structural conflict of interest groups, agitation for resource control and related armed militancy that led to mobilization of state power to tackle it. Meanwhile, the agitation for resource control continues unabated – sometimes resulting in violent conflicts that led to loss of lives and properties – notwithstanding the 13 percent derivation provided in the 1999 Constitution (as amended).
Land Use Act 1978, Petroleum Act of 1969 and Nigerian Minerals and Mining Act 2007 should be reviewed to remove the obnoxious provisions which alienated of the right of individuals and communities to own land and benefit from exploitation of mineral resources below it. This will enable regions endowed with mineral resources to benefit from payment of bonus, rental and royalties on petroleum operations carried out in their area. The Petroleum Host Communities Fund proposed at 10 percent of IOC’s net profit on operations (excluding offshore activities) in PIB drafted under President Yar’Adua should be revisited.
The present structure of Nigeria’s federalism was a creation of the military – an institution that prides itself as the custodian of the country’s unity – from 1966 to 1999 with the principal objective of power centralization to serve the interest of the ruling elites and their associates and beneficiaries of the lopsided system which is unsustainable and will hamper the country from attainment of its developmental aspirations. It was designed to sustain a big and ineffective central government with over bloated recurrent expenditure (personnel costs, overheads and interest on debts) from commodity export revenues at the expense of unviable thirty-six states (with the exception of Lagos state) and 774 LGAs which are bottle-fed through revenue allocation. The federal government currently consumes 52.68 percent of the federally collected revenues leaving the remaining 47.32 percent for states and LGAs to share. There has always been calls for fiscal federalism, devolution of powers to states, review of revenue allocation formula and with increased priority to derivation principle. However, the economic crises rocking Nigeria as a result of sharp fall oil prices in the past two years have intensified the calls for restructuring and fiscal federalism in the country.
A three tier federal structure that consists of the federal, six regions and cities/counties can be explored as alternative to the existing three-tier system with the regional headquarters in one of the cosmopolitan areas/cities within their jurisdictions. Both the cities and counties should be political, administrative and geographic subdivision of the six regions with powers of self-government or jurisdiction. The creation, structure, powers and institutions and elections of officials of cities and counties should be derived from the federal and states constitutions.
A presidential system with six-year single term for heads of the Executive and members of the Legislative branches can be explored at the federal, regional and city/country levels. The President can be elected with two Vice Presidents, one executive VP nominated from any of the three regions in the geopolitical zone (North or South) other than the one which the President came from and one non-executive VP to be picked from the same region as the President who should be sworn-in in the event of incapacitation of the President. The six regions should take turns to produce the presidents of the country for six-year single term for a period of 36 years. Thereafter, the rotation of the Office of the President should cease and a referendum should be held to re-negotiate the union or chart a new political course for the country.
The regions should have their constitutions that draws from their history, culture and aspirations; elected Governors, their Deputies and appointed cabinet; bi-cameral legislature comprising of houses of assemblies and senate; judiciary with state supreme courts on customary/Shari’ah cases (for states that requires them) and all matters under the residual legislative list and also state police forces and prisons for the maintenance of law and order. The constitutions of the regions should establish the traditional institutions, its roles as custodians of cultural heritage, their functions, jurisdictions on customary matters and ceremonial territorial authority. Each city, FCT, Abuja inclusive, should be governed by an elected mayor and legislative assembly. The counties should be administered by elected county executives or chairmen and council consisting of elected councilors. Both cities and counties administrations should have powers to enact ordinances for their respective areas of jurisdiction, the executive power to oversee the day-to-day operations of their governments, and quasi-judicial powers with regard to certain limited matters such as hearing appeals from the planning commission etc.
Devolution of powers to the regions should be achieved with some of the federal government’s exclusive legislative list transferred under the concurrent list. The regions, cities and counties should be charge of police, civil defense and law enforcement under their jurisdiction. Seven senatorial districts to be allocated to each region and one seat for FCT, Abuja thereby bringing the total to 43 seats in the Senate chamber of the National Assembly. A total of 182 federal constituencies for the House of Representatives with 180 to be allocated to the six regions and two to FCT, Abuja using defined criteria with at least twenty seats to be constitutionally for each region. 51 – 60 seats can be allocated to Regional Assemblies on the basis of population and 21 seats to the Regional Senate.
Derivation principle should be used to equitably allocate federally collected revenues to regions and qualifying cities/counties in proportion to their contribution to the pool. However, the percentage of revenue to be allocated to regions, qualifying cities and counties should be within an agreed reasonable range, and should be graduated over a period 6 years to enable the federal government sufficient time to complete key infrastructural projects that would connect the regions, allows access to the regional markets and promote trans-regional and international trade. This requires adjusting the existing revenue sharing formula that came into force 18 years ago in order to align it with the existing realities by allocation of greater percentage of the national revenues on the basis of derivation principle and then need, fiscal autonomy and other indices to be agreed by stakeholders. The Federal Government should be allocated 32%, states/new regions 48% and LGAs/counties 20%; the existing revenue sharing formula should be graduated over agreed period of time to reach the proposed formula.
To achieve meaningful restructuring of the Nigeria’s political economy, the Land Use Act of 1978 is an obnoxious law that needs to be expunged from the 1999 Constitution (as amended) and subsequently amended to enable Nigerians have ownership of lands, boost the property market and enhance land utilization and investment. There is also the urgent need for amendment of Petroleum Act of 1969 and Nigerian Minerals and Mining Act 2007 to compliment land reforms, revenue sharing formula and institution of derivation principle for equitable revenue allocation to the federating entities: Petroleum Act of 1969, Nigerian Minerals and Mining Act 2007 and Section 44(3) of the 1999 Constitution (as amended). This will enable regions endowed with mineral resources to benefit from payment of bonus, rental and royalties on petroleum operations carried out in their area. The Petroleum Host Communities Fund proposed at 10 percent of IOC’s net profit on operations (excluding offshore activities) in PIB drafted under President Yar’Adua should be revisited.