UGANDANS ARE POOR BECAUSE THEIR LAND IS UNTITLED

Last month a report came out that Rwanda had reached the milestone of titling 12 million plots of land. This accounts for nearly all land in Rwanda.

The interesting subtext to this was that there are more women title owners than men, which will have far reaching ramifications for the distribution of wealth and the way the country will develop. This process of land regularization has been on for the last two decades.

In Uganda it is estimated that between 20 and 30 percent of land is titled.

This is very important for anybody interested in our country’s development.

All wealth is derived from land. Even the tech companies have to locate their administrations and servers in offices or residences or wherever. It therefore follows that to the extent that your land is formally recoginised is the extent of your wealth...

If we are to start from first principles, if our land is formally recognized, that is titled, a land market can be formed around it, unlocking its wealth either by outright sell, lease or mortgage.

So for example you want to invest a billion shillings in an enterprise and need land for the endeavour and there are two land owners, one with titled land and the other whose land is untitled, who would you deal with? The text book answer would be the titled land guy, because you know what you are getting and can establish some indicative price for it, which you will then register on your balance sheet.

Of course the street smart answer would be to deal with the untitled landowner, bargain him down to a meagre sum and organize the titling of the land. The point is that this land owner would not realise the market value of his asset and would be the poorer for it.

Extrapolating this example, the Ugandan land owner is more likely to be shortchanged than his Rwandan counterpart by investors, if the disparity in titled land is anything to go by. It is in the nation’s interest to have all its land titled as a means to fight poverty and also to ensure we get credible investors not fly by night cowboys.

Is it no wonder that whereas we pride ourselves with being an agricultural economy, poverty is most resident among our agricultural communities? Is it any wonder that the greater Kampala region which has the most titles in the country per capita accounts for more than 70 percent of GDP?

Taking the argument further, who are the major beneficiaries on the agriculture value chain? The farmer on his untitled land or the factory or ware house owner who has his enterprise on titled land? Which allows him to mortgage it for working capital or further development from credible financial institutions, while the farmer can only deal with money lenders or smaller institutions that cannot take him to the next level of development.

While it is true that there are also poor people who own titled land, they are poor probably for lack of financial literacy or are risk averse.

Economist Hernando De Soto in his seminal book the “The Mystery of capital” made this point and attempted to regularize land ownership for the poorest in his native Peru with some success. The interest groups that had galvanized around the informal land situation did not take too kindly to his meddling and hampered progress. Is that the case in Uganda?

That being as it may, if all Ugandan land was titled it could be taxed to raise more revenues to finance security, health, education and infrastructure development, improving the people’s capacity to lift themselves out of poverty, creating jobs and bettering access to market and the general  business environment in the process...

People argue that the poor in the rural areas cannot afford taxes, which is not true. There used to be graduated tax levied on all adults and people paid. And because they knew they had to they were more productive. Now our rural trading centers are good for producing ludo experts.

To pay their tax dues, people will either worker harder on their lands – stopping to work when the sun is high in the sky is so 20^th century; lease or sell the land to others who can make better use of it and pay the tax. It serves no one any good to have square miles of land to roam scrawny cows that are not good for milk or beef.

The news that finance ministry was threatening to halve parliament’s budget, while it will not happen, the savings from such an audacious move could be spent on titling all our land as a first step to lifting us into the 21^st century.