Tax & Accounting Blog

Case Study of Cross River State, Nigeria, and Some Observations on Land Administration Reform

Aumentum, Blog April 12, 2013

By Alex Piliptchak
Sr. Director, Product Strategy
Thomson Reuters

This year’s annual World Bank Conference on Land & Poverty drew a record number of attendees and it makes me even more proud seeing results of our work highlighted in front of such a large group of industry experts, activist groups and academia. My Thomson Reuters colleague Nigel Edmead, my former colleague Frank Pichel, now of USAID, and Bassey Ika Oqua and Chiemeka Ngwu, our partners from the Nigerian government and private sector respectively, presented a joint paper that outlines the steps taken by the government of Cross River State, in southeastern Nigeria, to establish a modern system for managing land information. While the paper went into some depth discussing the methods employed in Cross River, I find it interesting to see that the findings presented in the paper expose several often overlooked topics that can potentially undermine results of any land administration reform.
Firstly, it is often assumed that governments will have extra revenue if they increase taxes. However, there is a huge difference between levying tax and then actually getting it collected. There is a high incidence of non-compliance in emerging economies where tax enforcement is extremely costly and legislative and regulatory frameworks often encourage corruption. In this regard Nigeria, which was ranked 139th out of 174 nations in Transparency International’s Corruption Perceptions Index 2012, is hardly the most positive example. It is staggering to see how ineffective the ability of the government is to manage tax and ground rent collection due to high cost of collection relative to the payment amounts. The government, in my view, could have better success in this area by ensuring tax equalization and transparency in government spending of tax revenues in addition to automation and operational efficiencies.

Another interesting highlight is related to the existence and overlap of customary tribal and formal public land tenure. Development agencies and land experts often put a lot of emphasis on establishing and modernizing a formal land tenure framework and environment, which is expected to stimulate land transactions and improve the banking sector by providing the ability to use land as collateral.

However, bringing in foreign investment and allowing larger corporations to buy large tracts of land provides limited benefit to landowners who are struggling with ensuring the security of their tenure and the costs associated with it. Recognizing and documenting informal property is fundamental to allowing landowners to invest their time and personal funds in the upkeep and improvement of land as well as in securing the share of land ownership vested in women and minors.

Recognition of customary tenure and establishing a land reform program that considers all facets of land administration has enabled the success of land reform in Cross River State and other Nigerian states; it enables governments to sustain ongoing evolution of land-related policies and regulations. It is only through such step-by-step programs that a national land policy can be successfully changed, as radical and widespread reforms can be extremely disruptive, infringe upon a large number of political interests, and therefore risk encountering pervasive resistance.

Nigeria is one of the few countries in Africa that, in my opinion, is in the right position between establishing economic independence and still having a huge growth potential. This should make it possible to see immediate positive results from land reform as the government progresses with modernization. Let’s stay tuned for more good news from this country.