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

Mudiaga Onome Umunadi 

1.0       Introduction 

The issue of compensation especially for lands that is compulsorily acquired by the government has become a dominant issue in land governance across Africa. When a state or government acquires land for what is termed overriding public interest (i.e. public use), questions of legitimacy arise, and the process is often judged by how fairly affected people are treated. In other words, the fairness of compulsory acquisition is largely determined by how well the rights of those who lose their land are protected. A right of occupancy is therefore only meaningful if revocation is accompanied by what can be regarded as adequate compensation, yet what is considered “adequate” differs widely across jurisdictions. These differences have real consequences for farmers, customary communities, and investors alike. In many jurisdictions, the absence of standardized valuation criteria often results in prolonged disputes and socio-economic displacement of vulnerable landholders (Lekgori et al., 2020; Tagliarino et al., 2018). Furthermore, reliance on market-value approaches alone may overlook the deeper social and cultural significance of customary land rights, thereby increasing the risk of impoverishment among affected populations (Kabanga & Mooya, 2018). As a result, many compensation systems fail to properly account for environmental and social losses, leaving displaced persons without sufficient means to restore their livelihoods (Isah et al., 2025; Olanrele et al., 2017).

It is also a well-established fact that Nigeria gained independence on 1st October 1960. In the years that followed, several neighbouring West African countries also attained independence and began to face similar post-colonial land governance challenges. Sierra Leone became independent on 27 April 1961, The Gambia on 18 February 1965, Guinea-Bissau on 24 September 1974, Cape Verde on 5 July 1975, and São Tomé and Príncipe on 12 July 1975. These countries, like Nigeria, inherited complex questions around land ownership, state control, investment protection, and the recognition of customary tenure systems.

Beyond West Africa, broader international and regional frameworks also provide important standards for compulsory acquisition and compensation. The African Union (AU) Framework and Guidelines on Land Policy in Africa emphasize that land acquisition must serve the public interest and be accompanied by prompt, fair, and adequate compensation while safeguarding customary land rights (African Union, 2009). Similarly, ECOWAS land policy guidelines encourage member states to strengthen tenure security, ensure meaningful consultation, and adopt fair compensation systems based on replacement value principles (ECOWAS Commission, 2017). Outside Africa, countries such as the United Kingdom, United States, and the Netherlands have developed more structured systems that emphasize market value compensation, strong judicial oversight, and broader recognition of affected interests, including disturbance and relocation costs. These principles are further reinforced at the global level by the International Valuation Standards (IVS), which promote consistency, transparency, and fairness in valuation practice across jurisdictions (IVSC, 2024). Collectively, these frameworks provide useful benchmarks for evaluating national systems, including Nigeria’s.

In response to the post-colonial land question, Nigeria enacted the Land Use Act of 1978, which vests all land within each state in the Governor to hold in trust for the people (Land Use Act, 1978). However, the Act introduced a compensation regime that is largely limited to the value of unexhausted improvements on acquired land, while the land itself is generally not compensated. This approach has been widely criticized as restrictive and inconsistent with contemporary international standards on compulsory acquisition compensation (Omirin, 2002; Udoekanem, 2011). Consequently, Nigeria’s compensation framework is often regarded as narrower than those of several other jurisdictions. In contrast, countries such as Sierra Leone, The Gambia, Guinea-Bissau, Cape Verde, and São Tomé and Príncipe generally provide for compensation that includes both land and improvements at market value, along with provisions for prompt or advance payment and recognition of customary land rights (FAO, 2020; World Bank, 2017).

This paper therefore compares Nigeria’s framework under the Land Use Act of 1978 with selected jurisdictions, including West African countries as well as international standards such as the United Kingdom, United States, the Netherlands, ECOWAS guidelines, the African Union framework, and the International Valuation Standards (IVS). It examines their legal basis, valuation approaches, eligible claimants, and timing of compensation payments. It further identifies areas where Nigeria’s approach diverges and draws out policy lessons that could guide reforms toward greater alignment with regional and international best practices.

2.0       Legal Provisions for Compensation 

Nigeria 

According to Section 29 of the Land Use Act 1978, where a right of occupancy is revoked for overriding public interest, the holder is entitled to compensation only for the value of unexhausted improvements existing on the land at the date of revocation (Land Use Act, 1978). In urban areas, compensation for such unexhausted improvements is assessed based on their market value, while in the case of agricultural land, compensation is determined using the replacement cost of economic trees, crops, and buildings situated on the land (Land Use Act, 1978; Udoekanem, 2014). Notably, the Act does not provide compensation for the bare land itself. This position stems from the principle established under the Act that all land within a state is vested in the Governor, who holds it in trust for the use and common benefit of all Nigerians, thereby limiting compensation primarily to improvements rather than the land interest itself (Land Use Act, 1978; Omotola, 1984). This compensation framework has been widely criticized for falling short of international best practices, which generally advocate compensation based on the full market value of both land and improvements (Omirin, 2002; World Bank, 2017).

Sierra Leone 

Under the Public Lands Act (Cap 116), which governs the acquisition of public lands, and the Compulsory Acquisition of Property Act 1961, which establishes the general procedures for compulsory acquisition by the State for public purposes, compensation for acquired property is constitutionally protected under Section 21(1)(c)(i) of the 1991 Constitution of Sierra Leone. These legal provisions require the prompt payment of adequate compensation whenever land is compulsorily acquired by the government (Constitution of Sierra Leone, 1991; Public Lands Act, Cap 116; Compulsory Acquisition of Property Act, 1961). Compensation is assessed by the Minister based on the advice of the Minerals Advisory Board; however, payment may be deferred for up to one year where the claimant is unable to establish valid title to the land (Compulsory Acquisition of Property Act, 1961). Furthermore, the enactment of the Customary Land Rights Act 2022 significantly strengthened the compensation framework by requiring the free, prior, and informed consent (FPIC) of customary landowners before displacement and by mandating the payment of just compensation to affected individuals and communities (Customary Land Rights Act, 2022). These reforms demonstrate Sierra Leone’s commitment to aligning land acquisition and compensation practices with contemporary international standards on land rights and community protection (FAO, 2023).

The Gambia 

The constitutional foundation for compulsory acquisition and compensation in The Gambia can be traced to the Gambia Independence Order 1965, particularly Sections 16(1)(b) and 16(2) of Schedule 3, which guarantee the payment of compensation where property is compulsorily acquired by the State (The Gambia Independence Order, 1965). The detailed procedures for acquisition and valuation are provided under the Land Acquisition and Compensation Act (Cap 57:06), which requires compensation to be assessed based on the market value of the land at the date of the acquisition notice. Under the Act, a Collector is mandated to conduct an inquiry and make an award of compensation, while delayed payments attract interest to protect the rights of affected landowners (Land Acquisition and Compensation Act, Cap 57:06). Furthermore, the National Land Policy 2025 reinforces the country’s commitment to equitable compensation by advocating compensation at replacement value and providing mechanisms for restitution and redress in cases of historical land expropriation. The policy seeks to strengthen tenure security, improve transparency in land administration, and align compulsory acquisition practices with international standards on land governance and social justice (Government of The Gambia, 2025).

Guinea-Bissau 

Article 4 of the Investment Code, Decree-Law No. 19/2016, provides that the acquisition or expropriation of property may only be undertaken for reasons of public interest or public utility and requires the immediate payment of fair compensation to affected owners (Investment Code, Decree-Law No. 19/2016). The legislation further stipulates that compensation must reflect the market value of the property and should not be less than the book value of the assets concerned. This provision seeks to protect private property rights while ensuring that investors and landowners are adequately compensated for losses arising from state action (Republic of Guinea-Bissau, 2016). However, unlike many modern constitutions that expressly guarantee compensation for compulsory acquisition; the Constitution of Guinea-Bissau contains limited provisions on compensation, leaving the Investment Code as the principal legal instrument governing the standards and procedures for expropriation compensation. Consequently, the Investment Code serves as the operative framework for determining compensation, emphasizing market-based valuation and prompt payment in line with internationally accepted principles of fairness and investment protection (UNCTAD, 2018).

Cape Verde

The Constitution which was adopted in 1980, revised in 1992 is the current Constitution as amended and called the Constitutional Law No. 1/VII/2010 together with the Immovables Expropriation Act 1995 require that expropriation serve a public purpose however, it must be accompanied by fair and immediate compensation which reflects market value. The law makes the provision for compensation to be paid in cash and to be based on state-approved valuation or in the form of land-for-land and relocation assistance, (Constitutional Law No. 1/VII/2010; Immovables Expropriation Act 1995

São Tomé and Príncipe 

The Constitution – Constitution of the Democratic Republic of São Tomé and Príncipe, adopted 1975, revised 1990 and 2003. The Article 46(2) deals on requisition and expropriation for public use and may be affected as based on the law. The Constitution doesn’t specify “compensation” in Art. 46, but the procedure and compensation are set in ordinary legislation. The article 98(9) says that the National Assembly has exclusive legislative competence over “Expropriation and requisitioning for the public benefit”. The Investment law i.e. the Decree No. 19/2016 of 17 November 2016 which replaced the 2007 Investment Code deals on matters that governs foreign and domestic investment, incentives as well as treatment of investors. The issues bothering on expropriation and compensation for investments are usually handled under this Code and the general property law, not directly in the Code itself. Summarily, the laws permit expropriation only when it is in the national public interest and only with adequate compensation. Under these laws authorities must provide fair, adequate, and effective payment in advance of expropriation. Although no specific valuation formula is prescribed but in practice international standards for the protection of foreign investment is followed.

United States of America (USA)

In the United States, the legal basis for compulsory acquisition is rooted in the Fifth Amendment to the Constitution, which states that private property shall not be taken for public use without the payment of “just compensation” (United States Constitution, 1791). This provision, commonly referred to as the Takings Clause, empowers government authorities to acquire private property for projects that serve the public interest, including highways, public utilities, schools, and urban redevelopment schemes. However, such acquisition can only occur where affected property owners are fairly compensated. The concept of just compensation is generally interpreted by the courts as the fair market value of the property at the date of acquisition (Meltz, 2012). In addition to compensation for the property itself, federal legislation such as the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 provides support for individuals and businesses displaced by public projects (United States Congress, 1970). Property owners are also entitled to challenge the acquisition process or the amount of compensation awarded through the courts. Consequently, the American compensation framework seeks to strike a balance between the government’s responsibility to provide public infrastructure and the constitutional protection of private property rights (Nichols, 2021).

United Kingdom (UK)

The United Kingdom operates a well-established compulsory purchase system that enables public authorities to acquire land needed for projects that promote the public good. The legal framework is primarily governed by the Compulsory Purchase Act 1965, the Land Compensation Act 1961, and the Planning and Compulsory Purchase Act 2004 (Denyer-Green, 2018). These laws provide the authority for government bodies to acquire land for purposes such as transport infrastructure, housing development, urban regeneration, and environmental improvements. A key principle of the UK compensation system is that property owners should be placed, as far as money can achieve, in the same financial position they would have occupied had the acquisition not occurred (RICS, 2021). Compensation is therefore based on the open market value of the property and may include additional payments for disturbance, severance, injurious affection, relocation expenses, and other losses resulting directly from the acquisition. Furthermore, the protection of private property rights is reinforced by Article 1 of Protocol 1 of the European Convention on Human Rights, which is incorporated into domestic law through the Human Rights Act 1998 (Human Rights Act, 1998). This framework ensures that compulsory acquisition is conducted fairly while enabling government agencies to pursue development projects that serve wider societal interests.

The Netherlands

In the Netherlands, compulsory acquisition is regulated by both constitutional and statutory provisions. Article 14 of the Constitution of the Kingdom of the Netherlands stipulates that expropriation may only take place in the public interest and must be accompanied by compensation determined in accordance with the law (Constitution of the Kingdom of the Netherlands, 2008). The detailed procedures governing acquisition and compensation are contained in the Expropriation Act (Onteigeningswet). Unlike some jurisdictions that limit compensation to market value alone, the Dutch system adopts the principle of full compensation. This means that property owners should be fully indemnified for all losses directly resulting from the expropriation process (Van der Krabben & Needham, 2008). Consequently, compensation may cover not only the market value of the land or property but also relocation expenses, business losses, professional fees, and other related costs. The courts play a significant role in determining compensation and safeguarding the rights of affected landowners. More recently, reforms introduced through the Environment and Planning Act (Omgevingswet) have streamlined land-use planning and acquisition procedures to improve transparency and administrative efficiency (Ministry of the Interior and Kingdom Relations, 2022). The Dutch approach is therefore widely regarded as one of the most comprehensive systems of compensation for compulsory acquisition in Europe.

The International Valuation Standards (IVS)

According to the International Valuation Standards (IVS) issued by the International Valuation Standards Council (IVSC), compulsory acquisition refers to the process whereby a government or public authority acquires private property for public purposes, often without the owner’s consent, subject to the payment of compensation (IVSC, 2024). The standards emphasize that compensation should be fair, transparent, and based on an appropriate valuation methodology that reflects the rights being acquired and the losses suffered by the affected owner. In determining compensation, valuers are required to consider the market value of the property as well as any additional losses arising from the acquisition, such as disturbance, relocation costs, severance, injurious affection, and loss of business where applicable. IVS further stresses the importance of independence, objectivity, and professional judgment in the valuation process to ensure equitable outcomes. By providing internationally accepted valuation principles, IVS promotes consistency and fairness in compensation assessments for compulsory acquisition across different jurisdictions and legal systems (IVSC, 2024).

3.0       Comparative Overview 

A.        Nigeria and other African countries

B.        ECOWAS and AU on Compensation

ECOWAS and the African Union (AU) have developed important regional guidelines that shape how compulsory land acquisition should be handled across African countries. The African Union Framework and Guidelines on Land Policy in Africamakeit clear that governments can only acquire land for genuine public interest purposes and must follow fair procedures. They strongly emphasize that affected people should receive prompt, fair, and adequate compensation when their land is taken (African Union, 2009). The guidelines also highlight the importance of protecting both formal and customary land rights, especially for rural communities whose livelihoods depend heavily on land.

Similarly, ECOWAS land policy guidelines encourage member states to improve land governance systems in a way that reduces disputes and strengthens tenure security. They stress that people and communities affected by land acquisition should be properly consulted before decisions are made, rather than being informed afterwards (ECOWAS Commission, 2017). The guidelines also support compensation that reflects full replacement value, so that displaced persons are not left worse off after losing their land.

Both ECOWAS and AU policies promote a people-centred approach to land governance. They aim to ensure that compulsory acquisition is done fairly, transparently, and in a way that protects vulnerable groups and supports social and economic stability in member states.

C.        Nigeria, UK, US, Netherlands and IVSC

4.0       Key Differences and Observations 

Land versus Improvements

A major difference across the jurisdictions is how they treat land value in compensation. Nigeria is the only system reviewed that largely excludes the value of land itself, focusing instead on “unexhausted improvements” such as buildings, crops, and other developments on the land. This approach has been widely criticized because it often leaves landowners feeling inadequately compensated. In contrast, the United Kingdom, United States, and the Netherlands all include the market value of the land as a core part of compensation. The Netherlands goes even further by adopting a full indemnification approach, which also covers related financial losses beyond the land value. The International Valuation Standards (IVS) similarly support the inclusion of market value and other relevant losses where applicable under national law.

Timing of Payment

The timing of compensation also varies significantly. In Nigeria, Sierra Leone, and The Gambia, payment is often made after the acquisition process, which can lead to delays and financial pressure on displaced persons. On the other hand, countries like the United States, the Netherlands, Cape Verde, Guinea-Bissau, and São Tomé and Príncipe generally require payment before or at the time of taking possession, offering stronger protection for affected property owners. The IVS does not set a fixed timing but stresses that compensation should be timely and transparent in line with national laws.

Recognition of Customary Rights

Another key difference is how customary land rights are treated. Sierra Leone and The Gambia have made progress in recognizing customary ownership and community interests, with reforms that encourage consultation and consent before land acquisition. Nigeria, however, still treats customary occupiers as secondary rights holders, often limiting their compensation to improvements on the land rather than the land itself. In contrast, the UK, US, and Netherlands do not operate customary land systems in the same way, but they do recognize a wide range of legal interests such as tenancy and occupation rights when awarding compensation. IVS also supports the inclusion of all legally recognized interests in valuation.

Judicial Oversight and Delays

Access to justice and remedies for delayed payment also differ. The Gambia and Cape Verde provide clearer legal channels for dispute resolution and even allow interest on late payments, which encourages faster settlement. The United States, United Kingdom, and Netherlands also have strong court systems where property owners can challenge both the acquisition process and the compensation amount. Nigeria, however, relies heavily on administrative bodies such as the Land Use and Allocation Committee, and access to courts is often more difficult. In addition, the absence of interest on delayed payments reduces pressure on authorities to act quickly.

Scope of Compensation

The scope of compensation is much broader in developed jurisdictions. In Nigeria, compensation is mainly limited to physical improvements on land. By comparison, the UK, US, and Netherlands include a wider range of losses such as relocation costs, disturbance, business losses, and other related damages. The Netherlands is particularly comprehensive, as it aims to restore affected persons to their original financial position as much as possible. IVS also reflects this broader approach by encouraging valuers to consider all compensable losses allowed under law.

Alignment with International Practice

Overall, the UK, US, and Netherlands systems are more closely aligned with international best practice due to their emphasis on market value, broader compensation coverage, and strong legal protections. IVS reinforces these global principles by promoting fairness, consistency, and transparency in valuation. While Nigeria has a structured legal framework under the Land Use Act, its exclusion of land value from compensation and limited recognition of customary rights continue to raise concerns about fairness and alignment with modern international standards.

 5.0      Lessons for Nigeria 

Based on the comparative analysis, several key reforms emerge that could help Nigeria align more closely with regional and international best practices in compulsory acquisition and compensation:

1.            Compensation should include both land and improvements

Nigeria would benefit from shifting away from the current approach that limits compensation mainly to unexhausted improvements. Paying compensation based on the full market value of both land and improvements would reduce disputes, enhance fairness, and provide better protection for customary landholders. This approach is already widely applied in countries such as the United Kingdom, United States, and the Netherlands – they are consistent with broader international valuation principles.

2.            Payment should be made before or immediately after acquisition

The current system, where compensation is often paid after revocation of rights, can expose affected persons to financial hardship and displacement without adequate support. Moving towards advance or immediate payment would help prevent impoverishment, improve trust in government acquisition processes and this aligns Nigeria with international standards that prioritize protection of property owners and investment security.

3.            Stronger recognition of customary land ownership

Nigeria’s framework should give greater legal recognition to customary landholders, similar to reforms in Sierra Leone and The Gambia. Strengthening customary rights and ensuring meaningful community participation in acquisition decisions would promote fairness and reduce conflicts, especially in rural areas where customary tenure remains dominant.

4.            Introduction of statutory interest on delayed compensation

To discourage delays in payment, Nigeria should introduce statutory interest on late compensation. This would encourage timely settlement and reduce the tendency for administrative delays that disadvantage affected landowners. It would also strengthen accountability within the acquisition process.

5.            Expansion of judicial oversight and access to remedies

There is also a need to improve access to independent judicial review in compulsory acquisition cases. Allowing affected persons to more easily challenge both valuation and acquisition decisions would enhance transparency and accountability, similar to the systems in the UK, US, and Netherlands where courts play a central role in protecting property rights.

6.            Alignment with international valuation standards (IVS)

Nigeria should more explicitly incorporate International Valuation Standards into its compensation framework. This would ensure consistency, professionalism, and transparency in valuation practice, while also promoting investor confidence and reducing disputes arising from inconsistent or undervalued assessments.

6.0       Conclusion 

The Nigeria’s Land Use Act 1978 was designed to simplify land administration and curb speculation; however, its narrow compensation regime has created persistent conflicts and has actually undermined the security of customary landholders. The experience of the United Kingdom, United States, and Netherlands, alongside International Valuation Standards (IVS), demonstrates that effective compulsory acquisition systems are anchored on fullovo market value compensation, inclusion of consequential losses, prompt or advance payment, and strong legal safeguards for affected persons. Similarly, Sierra Leone, The Gambia, Guinea-Bissau, Cape Verde and São Tomé and Príncipe show that compensation for full land value, prompt payment, and recognition of customary rights are feasible and consistent with constitutional and investment protection standards. Therefore, an amendment of Section 29 of the Land Use Act to incorporate these principles would align Nigeria not only with ECOWAS and African Union land policy guidelines, but also with globally accepted best practices in the UK, US, Netherlands, and IVS framework. In addition, it would reduce land-related disputes, improve fairness, and strengthen confidence in Nigeria’s compulsory acquisition system.

* Umunadi, an Estate Surveyor & Valuer and Managing Partner at Emokiniovo Umunadi & Partners, writes from Warri, Delta State