Compensation for Compulsory Acquisition Under Land Use Act 1978: Comparative Analysis With Some Selected Countries

The compulsory acquisition of land by the government for public interest purposes remains a contentious issue in Nigeria, primarily due to the restrictive compensation framework enshrined in the Land Use Act of 1978. This article critically examines the provisions for compensation under the Act, highlighting its limitations, particularly the exclusion of bare land value from compensation assessments. A comparative analysis with selected African jurisdictions—Kenya, Ghana, and South Africa—reveals that these countries generally adopt a more comprehensive approach, encompassing market value, disturbance allowances, and robust judicial oversight. The article argues that Nigeria's current framework falls short of international best practices and constitutional guarantees, leading to significant inequities and prolonged disputes. It underscores the urgent need for reform to align Nigeria's compensation regime with contemporary standards of fairness and adequacy.

The power of the state to compulsorily acquire private land for public purposes, often termed eminent domain or expropriation, is a fundamental attribute of sovereignty. However, the exercise of this power invariably raises critical questions regarding the rights of dispossessed landowners, particularly concerning the adequacy and fairness of compensation. In Nigeria, the legal landscape governing land acquisition and compensation is predominantly shaped by the Land Use Act of 1978 (LUA), a pivotal legislation that vested all land in each state in the Governor to hold in trust for the people.

While the LUA aimed to streamline land administration and promote equitable access, its provisions on compensation for compulsory acquisition have been a persistent source of controversy and litigation. Critics argue that the Act's compensation regime is unduly restrictive, often failing to provide adequate recompense to affected individuals and communities. This article delves into the intricacies of the LUA's compensation framework, scrutinizing its statutory interpretation and practical implications. Furthermore, it undertakes a comparative analysis with the compensation models adopted in Kenya, Ghana, and South Africa, offering insights into alternative approaches that prioritize comprehensive and just compensation, thereby informing potential reforms for Nigeria's land governance system.

Prior to the enactment of the Land Use Act in 1978, land tenure systems in Nigeria were largely diverse, comprising customary and statutory frameworks. The LUA fundamentally altered this landscape by nationalizing all land, vesting its ownership in the state Governor, who holds it in trust for the benefit of all Nigerians. This radical shift effectively converted absolute ownership into rights of occupancy, which could be statutory or customary. The Act empowers the Governor to revoke a right of occupancy for an 'overriding public interest,' which includes requirements for public purposes such as infrastructure development, urban planning, and economic projects.

The LUA's provisions for compensation upon such revocation are primarily outlined in Section 29. This section stipulates that the holder and occupier of a right of occupancy are entitled to compensation for the value of their 'unexhausted improvements' on the land at the date of revocation. Specifically, compensation is assessed for buildings, installations, and crops. For buildings and installations, it is based on the replacement cost less depreciation, while crops are compensated at their market value. Crucially, Section 29(4)(a) of the LUA states that compensation for the land itself is limited to an amount equal to the rent, if any, paid by the occupier during the year of revocation. This provision has been widely interpreted to mean that compensation is generally not paid for the bare land itself, a position that stands in stark contrast to international standards and has generated significant debate and dissatisfaction among dispossessed landowners.

The restrictive nature of compensation under the Land Use Act, particularly the non-compensation for bare land, has been a major point of contention and has led to numerous legal challenges. While the LUA limits compensation to unexhausted improvements, the Constitution of the Federal Republic of Nigeria, 1999 (as amended), in Section 44(1), guarantees the right to prompt payment of compensation for any interest in immovable property compulsorily acquired. Nigerian courts, including the Supreme Court in cases such as *Osho v Foreign Finance Corp.* and *Alhaji Tsoho Dan Amale v Sokoto Local Government*, have often grappled with reconciling these seemingly conflicting provisions. Some judicial pronouncements have leaned towards interpreting 'immovable property' in the Constitution to include bare land, thereby challenging the LUA's narrow compensation scope. However, the LUA's entrenchment in the Constitution (though now considered an existing Act) has historically complicated its amendment and judicial review, leading to inconsistencies in application and perceived undervaluation.

In contrast, other African jurisdictions have adopted more expansive and equitable compensation frameworks. In Kenya, the Constitution of Kenya 2010 (Article 40) explicitly mandates prompt, just, and full compensation for compulsorily acquired land. The National Land Commission (NLC) is responsible for the acquisition process, and compensation is not limited to improvements but includes the market value of the land, disturbance allowances (often 15% of market value), relocation expenses, loss of profits, and damages for severance or injurious affection. Aggrieved landowners have a right to challenge NLC awards in the Environment and Land Court, ensuring robust judicial oversight.

Ghana's framework, governed by its 1992 Constitution and the Lands Act, 2020 (Act 1036), also emphasizes prompt payment of fair and adequate compensation for land acquired for public purposes. Compensation typically covers the market or replacement value of the land, disturbance costs, and other damages. A notable safeguard in Ghana is the requirement for compensation funds to be paid into an interest-yielding escrow account before the acquisition process commences, ensuring the availability of funds. Furthermore, the original owner has a reversionary right, being offered the first option to re-acquire the land if it is not used for the stated public purpose.

South Africa, with its unique historical context of land inequality, has recently enacted the Expropriation Act, 2024 (Act No. 13 of 2024), which aims to align expropriation processes with constitutional requirements. Section 25 of the Constitution mandates 'just and equitable' compensation, considering factors such as the current use of the property, its history of acquisition, market value, and the purpose of expropriation. Controversially, the Act provides for 'nil compensation' in specific circumstances, such as where undeveloped land is held purely for speculative gain or state-owned land is unused, reflecting a policy drive towards land reform. While this provision is debated, the underlying principle remains a holistic assessment of 'just and equitable' compensation, which is broader than Nigeria's focus solely on improvements. The International Valuation Standards (IVS), alongside regional frameworks like the AU and ECOWAS guidelines, consistently advocate for fair, transparent, and adequate compensation based on market or replacement value, encompassing all losses incurred, including disturbance and relocation costs. Nigeria's LUA, by largely excluding compensation for the land itself, remains an outlier in this international context, often leading to social dissatisfaction and project delays.

The comparative analysis underscores a critical divergence between Nigeria's compensation framework under the Land Use Act 1978 and the more comprehensive approaches adopted by Kenya, Ghana, and South Africa, as well as international best practices. While the LUA's intent to rationalize land administration was laudable, its restrictive compensation provisions, particularly the general exclusion of bare land value, have created significant inequities and undermined public trust. The emphasis on 'unexhausted improvements' often results in inadequate compensation, failing to restore dispossessed landowners to a position comparable to their pre-acquisition status.

For legal practitioners in Nigeria, navigating the complexities of compulsory acquisition requires a deep understanding of the LUA, the constitutional provisions, and the evolving judicial interpretations. Advocating for clients often involves challenging the narrow scope of compensation and emphasizing the constitutional right to compensation for all immovable property. Looking ahead, there is a compelling case for legislative reform in Nigeria to align its compensation regime with international standards and the principles of fairness and adequacy. Proposed amendments, aiming to include market value for the land itself, are a step in the right direction. Such reforms, coupled with enhanced transparency, prompt payment mechanisms, and robust judicial oversight, would not only protect property rights more effectively but also foster greater public confidence in government-led development initiatives, ultimately contributing to sustainable land governance across the nation.