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 20th
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 21st century.
