MARCH 2011

Public Disclosure Authorized Pilot Land Reforms in Nigeria: Think Big, Start ABOUT THE AUTHORS Small, Move Fast! …but Where Do We Start? NOUMA DIONE-MBAYE an Operations Analyst for Access to Finance Advisory When it comes to strategy, the Chinese have a saying: “Think big, start small, Services, previously worked for but move fast.” This has been our guiding philosophy for the pilot land the Investment Climate Advisory Service, focusing on reforms of the World Bank-DFID1 Subnational Investment Climate Program issues affecting land markets. She served as the Nigeria (ICP) in Nigeria. The challenge was to find a “small” reform entry point from Subnational land team leader which to “move fast” on this sensitive and difficult topic, which is more for the Nigeria Subnational ICP project. Nouma has worked in complicated than it might appear. After some research, the ICP team found many Sub-Saharan Africa countries, in particular that the most effective and efficient entry point was the mapping and postconflict countries, streamlining of land procedures. Over the last four years, the team worked specifically on business entry issues. on implementing this approach in four Nigerian states (Cross River, Kaduna, Public Disclosure Authorized

CATHERINE MASINDE Kano, and Lagos). This SmartLesson shares some of our experiences in an Program Manager and Task finding practical solutions for the successful implementation of streamlining Team Leader of the ICP pilot, also manages the Sudan activities at the subnational level. National Investment Climate Program and the Southern Sudan Subregional Investment Climate Program. Catherine has Box 1: The Challenge of Land Reform worked in Africa, Washington (global mandate), and Europe Land reform is a sensitive topic—especially in the developing world, where customary land tenure overlaps and Central Asia on similar with statutory land tenure, and barriers to land titling prevent large sections of the population from benefiting programs. Prior to joining IFC, from full ownership rights. she was a Senior Private Sector In urban areas, where demand for land is increasing, the prohibitive cost of property registration has created Development Advisor with DFID for 10 years. dysfunctional land markets dominated by informal transactions. The result is a growing number of large illegal settlements— “ticking time bombs” from the legal and urban-planning points of view. And policymakers seldom choose to fully address them. Public Disclosure Authorized APPROVING MANAGER David Bridgman, Regional Dysfunctional land markets affect not only investment flows but also access to finance and to affordable Manager, Investment Climate housing for the most vulnerable populations. Advisory Services in Africa, World Bank Group. Background sector associations in the four pilot states (Cross River, Kaduna, Kano, and Lagos) Nigeria has long struggled with the challenging revealed that the primary land market issue of land reform (see Box 1), but without (government land acquisition) was problematic significant success. The issue is complex. It’s and the secondary market was inefficient. The not just about land; it’s also about someone’s central issue was the Land Use Act of 1978. right to build assets and pass them on to (See Box 2.) future generations. This makes the process of land reform long and difficult, and it gives Because the ICP piloted land reforms at the reforms the power to effect dramatic shifts in subnational level, it was not feasible to the balance of winners and losers in a society. attempt an overhaul of the Land Use Act. In fact, the project’s main goal was to use the

Public Disclosure Authorized When the World Bank–DFID Subnational improvements of land administration systems Investment Climate Program in Nigeria was and procedures under the Land Use Act to set launched in 2006, land access and site the reform wheels in motion and advocate for development quickly became one of the top a national dialogue on land-policy reform. reform priority areas, along with tax policy and administration. Consultations with private In order to achieve this goal, it was necessary 1 Department for International Development (United Kingdom), to adopt an appropriate tactic - Think Big, the government department responsible for promoting develop- Start Small, Move Fast. However the challenge ment and the reduction of poverty. was “where to start”.

SMARTLESSONS — MARCH 2011 1 In Nigeria, for the mapping and streamlining subcomponent, Box 2: Operating Under Nigeria’s Land Use Act a team of four local consultants covered different states. They had world-class expertise and a good rapport with the According to the Land Use Act of 1978, all land belongs to the states’ counterparts. And once the local team understood [military] governor of the state, and “such land shall be held in the methodology introduced by the international trust and administered for the use and common benefit of all consultant, they customized it to suit the local context and Nigerians.” By replacing existing land laws, the Act intended to moved quickly to implement it over several months. remove corporations, families, and chiefs (especially in Southern Nigeria) from the management of land and to replace them with 2) To transfer ownership, get your government the state governor. counterpart involved in the mapping process. Although the intention behind the Act was noble, it ended up depriving Nigerians of the benefits of the land’s economic value, It is easier for the process owners to experience the because it grants statutory rights of occupancy only, and not of constraints investors face when they are standing on the ownership. Because ownership interests in land are restricted to other side of the counter. As they participate in the data improvements made on the land, the Act provides for collection, they can see the range of difficulties and gain a compensation only on unexhausted developments on the land.2 comprehensive view of the approval process. The result is But more important, it limits land transactions by imposing a greater momentum for change, which is necessary during requirement for a mandatory letter of consent from the the solution design and implementation stage. governor. The situation has been further aggravated by systemic corruption. In October 2008, we launched the mapping of four key land It’s not uncommon to wait six to nine months to register property, procedures in Kano. These procedures dealt with: obtain a building permit, or acquire government land. Also, land prices can be extremely high—for example, $216 per square s the direct grant (government land acquisition) meter in Lekki, a new developing area of Lagos State, or $243 per 3 square meter in Kano State’s financial district. Land transaction s assignment of the Certificate of Occupancy fees also are prohibitively high, especially in Lagos State, where they average 15 percent of the property value. s mortgage of the Certificate of Occupancy, and

s conversion of the customary title to Certificate of The objective was clear but the “where to start” part was Occupancy. more difficult. Ultimately, the best entry point was the mapping and streamlining of land procedures, and the Initially, an international expert conducted the mapping, results have been positive. All four states have registered using Microsoft Visio software. The results—a detailed some measurable improvements in dealing with land- flowchart and a report with streamlining recommendations— related procedures—achieving reduction of processing were presented at a workshop attended by the senior time, of steps, and in many instances of transaction fees. officials from the Ministry of Lands and Physical Planning. Figure 1 summarizes the main results registered for this However, there was a buy-in issue. Although they were component. grateful for the report, they didn’t understand the need for the mapping. One official said, “We already know we can Lessons Learned do better. Why can’t the Bank provide us with the technology [computers and networking capability] to automate all 1) Always use local capacity for mapping. these processes?” Consequently, the counterparts didn’t adopt any of the report’s recommendations. The approach Using local capacity has several advantages. For example: was not working.

s It builds sustainable reform momentum and local In February 2009, we relaunched a mapping exercise, but expertise. this time the government counterparts were involved in the data collection. The team successfully organized a closed- s It cuts down on travel expenses and high fees for door meeting with all department heads and completed international consultants—some of the biggest costs the mapping of all four procedures. The results were associated with our projects. astonishing—with numbers going up to 196 working days and 54 steps, for example, for the conversion of a customary s Local counterparts bring country-specific experience. title to a Certificate of Occupancy. The directors were shocked when they saw the details of their own work. s Local counterparts can be dispatched quickly to assist clients. 3) Identify the barriers that limit the motivation for reform—and adapt the mapping methodology. s More onsite presence helps the team build rapport with the clients and maintain the dialogue—thus avoiding Flexibility in the mapping approach is necessary—the “cookie the “out of sight, out of mind” rule, which can be cutter” approach should be the exception, not the rule. translated to “nothing is done until the following However, in practice it can be difficult not to follow a proven mission.” 3 The Certificate of Occupancy provides authorization from the local government for 2 Developments that are not in an obsolete state. a building to be used as a public edifice or as a private residence.

2 SMARTLESSONS — MARCH 2011 Figure 1: Mapping and Streamlining Results in the Four ICP Pilot States

Mapping and Streamlining : Results Kaduna Cross River  Reduction of time from 23 to 17 days for the governor’s  Reduction of time from 29 to 23 days for the consent for assignment. governor’s consent for assignment.  Reduction of time from 20 to 9 days for the governor’s  Reduction of time from 23 to 16 days for the consent for mortgage. governor’s consent for mortgage.  Reduction of time from 24 -39 to 14-16 days for the issuance of a development permit.  Reduction of time from 271 days to 100 days for the  Reduction of time from 271 days to 100 days for the Government Land allocation Government Land allocation  Reduction of time from 398 to 87 days for conversion to  Reduction of time from 250 to 83 days for statutory title conversion to statutory title  The fees to register property dropped by 8.6% from 23.6% in DB 2008 to 10.8% of claim in DB 2010. Kano  Reduction of time from 11 to 3 days for the governor’s Lagos consent for assignment.  Delegation of the governor’s consent to 7  Reduction of time from 6 to 1 days for the governor’s Commissioners consent for mortgage  Elimination of the pre-inspection for the development  Implementation of a market based government land permit (with a cost reduction of N50,000) allocation  Reduction of in take of incomplete files (with adoption  The fees to register property dropped by 1.1% from of checklist) 11.9% in DB 2008 to 15% of claim in DB 2010.  Reduction of time for confirmation of payment receipt  The time required to deal with construction permits  Same day stamp duty dropped by 19 days from 75 days in DB 2008 to 56 in  The cost of dealing with construction permits reduced DB 2010 by 435% from 1016% of property value in DB 2008 to  The cost of dealing with construction permits reduced 580.3% in DB 2010. by 138.8% from 233.4% of property value in DB 2008 to 94.6% in DB 2010. 8

DB=Doing Business. approach or methodology. The need is not always to redefine For example, the Doing Business Report and similar diagnostic the mapping approach; sometimes we just need to recognize reports had conducted extensive studies of the regulatory early on when it deviates from the expected outcome and cost of doing business in Lagos State. So, we already knew make the necessary design changes in the approach or that Lagos State, the economic hub of Nigeria, had a difficult methodology to quickly get the mapping back on track. investment climate, especially when it came to land access and site development.

It is important to note that, by 2007, the state government had already made headway with some remarkable initiatives, such as computerization of the land registry and the online records search. In fact, the Lands Bureau would routinely cite its own client survey results as evidence of improved performance. However, consultations with the private sector revealed many constraints that still needed to be addressed. When we proposed the standard mapping approach to the Technical Committee, we encountered resistance; they just handed us more copies of their client-satisfaction survey results.

Ultimately, in 2008 we refocused our approach and methodology. We scaled down the scope of the mapping to the mortgage registration procedure, given the low Workshops, such as this one in Abuja, disseminated information transaction volume, and added a statistical component to the and provided opportunities for peer learning. (Photo by Obi mapping with a file review. The team, working in collaboration Ilhonor). with the IFC Housing Finance team, conducted the standard mapping and also reviewed 52 random mortgage consent

SMARTLESSONS — MARCH 2011 3 client proposes a different approach we can discuss the eventual impact of that proposal to test its rationale.

One key example was in Kano State, where the team attached a list of recommendations to the first mapping report. The government didn’t implement any of these recommendations. However, after the more inclusive second mapping, senior state government officials started to propose their own simplification strategies—steps to be eliminated, staff to be added, staff to be delegated authority. The team worked with the counterparts to evaluate the impact of each proposal to ensure reform effectiveness. The same approach was also successful in Kaduna and Cross River.

Lagos State is an example of urban development gone wrong. It 5) Build a mechanism for monitoring and evaluation into is the smallest state in the country, with the highest urban density, the mapping and streamlining exercise. and its public infrastructure and public services are overwhelmed by demand—a situation complicated by weak enforcement of Once the reforms are launched, it is important to routinely zoning and planning regulations coupled with lack of interagency monitor their implementation. A built-in monitoring and cooperation. (SuperStock photo © Frans Lemmens). evaluation (M&E) component is a good way to continually refine the reform process. Client-satisfaction surveys and benchmarking studies such as the Doing Business Report files from 2005 to 2008 to better understand the severity and are obviously excellent M&E tools. However, depending nature of the bottlenecks. This approach enabled the team on the resources or timeline, extensive M&E may not to provide fact-based evidence to support the private sector always be possible. grievances and to identify the bottlenecks. The research revealed that, on average, it took 240 days to deliver a One simple and cost-effective M&E tool is a periodic file mortgage consent with an average of 16 steps—far from the review to see how the implementation of the simplification government’s 30-day target. strategies is progressing. In our case, we agreed with the clients to complete a six-month file review after the launch It is not surprising that the government preferred a closed- of the reforms and assess their performance. The file door meeting to discuss the study’s results! But from that review consisted of analyzing the approval process for point on, the government renewed its focus on simplifying random applications that were processed after the launch all land-related procedures and requested our assistance in of the reform, documenting the outcomes of the reform, mapping the development-permit approval procedure. and identifying any persisting bottlenecks. Without this necessary shift in our approach, the government would not have fully grasped the severity and nature of the For example, in May 2009 Kaduna was the first state to land procedures bottlenecks. announce simplification strategies, but the first M&E file review revealed a clear gap between the government’s 4) Let the counterparts drive the solution design announced targets and the collected data. In fact, the process. Ministry was undergoing a reorganization, with entirely new senior management who didn’t understand the The process of formulating and implementing reform commitment made by their predecessors. The file review closely resembles that of selecting economic winners and losers, or of shifting the balance of economic power. Since most politicians are in the business of getting reelected, they don’t place high priority on implementing necessary but difficult long-term reforms with dividends that might not be enjoyed during their tenure. Worse, some of our reports’ recommendations may be unpopular in the short term and therefore bring negative publicity to senior government officials. That’s why it is important for the client to be in the driver’s seat during the solution design stage.

Best practices are always preferable, but avoid letting “perfect” become the enemy of “good,” especially in very low-capacity countries or difficult political environments. More important than achieving “perfect,” the client should own the reform process by designing the reforms Participants compare notes during a Peer Learning visit in Kano and implementing them. We can provide a menu of State. (Photo by Obi Ilhonor). reform options for consideration, however, and when the

4 SMARTLESSONS — MARCH 2011 enabled the team to quickly provide the M&E issues. This model efficiently fosters information needed to engage with the new knowledge transfer on national best ministerial team. By April 2010, the practices. implementation was under way, and the team assessed significant improvements in One of the main discussion topics during the the approval procedures. first peer learning workshop was outsourcing. Three of the four states have attempted to The M&E component also will help the outsource the digitization of their land agencies move toward standardization of registry, and the failed initial experiences of reengineered processes—by documenting Kano and Kaduna states showed clearly that them in detail—while providing performance outsourcing such big projects can work only data. when the government has enough capacity to manage the contractors. This was an 6) Incorporate a peer learning component. important discussion for Cross River State, which had just embarked on a request for The ICP Peer Learning component—which proposals for its Geographic Information created a platform for peer learning on System and needed to review the issues Investment Climate issues—allowed for associated with outsourcing such a big task frequent exchanges between Kano and and supervising the selected contractor. Kaduna states. This was especially helpful after the new management took office at Conclusion the Kaduna State Ministry of Lands. The ICP pilot team found the work in Nigeria Both counterpart teams have since conducted fascinating—the topic is emotional and field visits to learn from the other or to sensitive, the objectives were challenging, provide guidance on some technical or and, most important, the wheels of reform institutional issues they have previously have been set in motion. We hope the reform faced. effort will keep on moving the dialogue toward an overhaul of the Land Use Act. As a For subnational projects, we highly bonus, local expertise is now ready to scale up recommend the peer learning model that the mapping and streamlining approach provided the platform for the government without our direct involvement, so that other counterpart teams to know each other and states may also benefit. discuss land-policy and land-administration

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