Peruvian economist, Hernando de Soto, has argued that many of the world’s poorest families are so, merely because they do not have legal rights to their property.
According to him, a family may live in the same small shack in the favelas near Rio for years, but because only informal property and legal rights have been developed among the poor, they are at the mercy of criminals and vigilantes (who may attempt to steal or destroy their home) or the government (which may attempt to drive the shantytown dwellers elsewhere).
De Soto argued that the solution is to give those poor people legal rights to their properties. In that way, they will not only have the incentive to take more care of them, but will also be able to borrow cash by using their homes as a guarantee. He said the total value of homes owned by the poor in the developing world is more than 90 times the total foreign aid given to these poor countries in the past 30 years.
De Soto’s perspective is well in sync with a recent report by PricewaterhouseCoopers (PWC), the second-largest professional services network in the world, that in order to hasten the economic recovery process, Nigeria must unlock her dead assets, which is estimated to be valued at $900 billion.
PWC says Nigeria holds as much as $900 billion (N369 trillion) worth of dead capital locked up in residential real estate and agricultural land, including federal government’s abandoned properties estimated at N230 billion.
Dead capital refers to unregistered real property, and is considered lost value because the landholder is unable to transfer or leverage the property to borrow or access capital.
Taking into consideration PWC’s report, $900 billlion is circa two times Nigeria’s GDP. The figure gives credence that Nigeria’s failed ambition of Vision 20, 2020 was achievable. How so?
According to the Economist Magazine, Nigeria was the 31st largest economy in the world in 2020, five positions down from when the country rebased its GDP in 2014, when GDP stood at $506 billion at 26th position. But attaining the 20th position then, would require Nigeria stepping up by just $200 billion.
As of today, Turkey basks in the position of the 20th largest GDP in the world at $795 billion, which presents to Nigeria a more uphill task of attaining that 20th position as she has to rise from a lower position compared to seven years ago.
But assuming Nigeria gave life to her $900 billion dead assets, the country does stand a good chance of doubling her growth in the fashion of the likes of China and India.
Much of the success of that would depend on legislations at the federal and state levels.
Dr. Sam Amadi, Lecturer at Baze University, and former chairman of the Nigeria Electricity Regulatory Commission (NERC), quoting Joe Studwell describes the process in his book, How Asia Works: Success and Failure in the World’s Most Dynamic Region, and argues that “the evidence of what occurred in China, Japan, Korea and Taiwan is powerful: good land policy, centered on egalitarian household farming set up the world’s most impressive post-war development stories”.
Amadi goes on to say, “Nigeria took a different approach that deprived the rural people of their land resources and handed it to nobles through the instrument of the trusteeship of the state governor. The Land Use Act consolidated neo-feudalism, especially in northern Nigeria and frustrated revolutionary pressures through conservative lawmaking. The entrenchment of mass poverty, a result of conservative role of law, is one of the drivers of the current lawlessness.”
It is arguable that Nigeria’s locked up $900 billion dead assets are a consequence of inclement land use laws, laws that have entrenched poverty over the decades.
Many Nigerians who would like to invest do not have access to capital because they do not have the required documents to present as collateral for loans.
The slow issuance of certificates of occupancy (C of O) across the country encumbers property owners from approaching financial institutions to use their property as collateral to access loans for investment.
Finding the political will to act and unlock Nigeria’s dead real estate assets will have a transformative impact on the lives of Nigerians.
This is the time to act.