The Importance of Land Tenure and secure Property Rights

Two historical notes confirm the above statement:

Source: The Importance of Land Tenure and secure Property Rights – The Zimbabwean

1. In the world today only 18 per cent of all agricultural land is privately owned under freehold title. Yet this small area produces over 80 per cent of all world food and other agricultural output products; and
2. In the former Soviet Union where all agricultural land was State owned and organised into large State-controlled farms, the 3 per cent of the land allocated to family plots – in urban and peri urban areas, and this tiny area produced 70 per cent of all the food needs of the people.

The productivity of land held under private, freehold ownership is indisputable.

The question is why? Under freehold land tenure two major influences are enabled:

1. It gives the owner a sense of ownership and this carries with it a sense of responsibility. It also takes on the character of a privately owned asset that can be developed, preserved and protected for future generations. This encourages the re-investment of any surplus revenues in capital development and land improvement; and
2. It gives the land value which can be used as collateral for bank borrowings to facilitate production and investment in land and buildings and fixed assets such as fencing, dams and other forms of immovable asset, all essential to productivity.

All societies in the world started out with land as a “common good”, this evolved most often into a Feudal system of land tenure where Chiefs, Feudal Barons and Kings and other institutions of community leadership, assumed control over land and the people who occupied it were “serfs”, “slaves” and simply peasants or villagers. This served as a means of deriving income or tribute and political power. This was the case in Britain and most of Europe before the Reformation and its associated legal reforms (the Enclosure Acts in the UK). Often recruitment for regional armies was made from the men who were working as serfs within these feudal structures. The massive homes and castles of Europe all bear testimony to the exploitive nature of these sorts of societies.

In Africa, land was always a common good, livestock owners ranged their animals over vast areas of land following water and grazing, Tribes with an agricultural tradition followed a slash and burn culture. Permanent housing was rare and when the land they were using became exhausted and unproductive, they simply abandoned their villages and moved.

Colonial settlement changed all of that and in those countries of Africa which had a significant presence of foreign nationals who took up citizenship and residence, they also introduced the rule of law and with it the concept of title to the land. Fences went up and fixed, commercial utilisation of land for the purpose of establishing urban industry and commerce as well as housing became common. Farms were established and countries like Kenya, Zambia, Zimbabwe and South Africa and Namibia all brought a substantial proportion of the land available under free hold title. Ownership was often on a colonial basis with indigenous people being confined to areas where the land was held under feudal management by tribal Kings, Chiefs and Headmen.

Exactly the same situation applied in Canada, the USA and Australia where the indigenous populations were, and continue to be, confined to tribal areas controlled by traditional leadership and often held under systems that regard land as a “common good” owned by the tribe.

Any review of the state of these areas that continue to be held and managed under these systems will reveal that they, almost universally, remain distinct, poor and degraded with low levels of productivity and high levels of poverty. It’s not a racial issue, it’s not a cultural issue, it is simply a fact that such system cannot generate and hold value. When I was in Glasgow some 30 years ago I was taken to see a housing scheme for the homeless and the poorer members of that society. It was three years old and was already in a disastrous state – in a few years it had to be destroyed as being uninhabitable.

In India some years later I visited a housing scheme on 2500 hectares of land in the Capital city sponsored by an international NGO called Opportunity International. There a community of squatters who had subsisted in shacks and under plastic for 23 years had each been allocated just 50 square metres of land freehold plus a loan of US$500 interest free. You might argue, what can anyone do with that? But what I saw was a community in three storey homes, schools, clinics, industry and roads and other infrastructure and 98 per cent of the original loans repaid. What made it work – security of title.

Closer to home, in South Africa the Government has developed millions of small homes under what they called the Reconstruction and Development Program. They have not allowed the occupants to buy the homes which are leased to their occupants – often on a basis that forces them to support the Party in Government. 40 per cent of those homes today are uninhabitable, when you drive through those areas you see no signs of home improvements, no gardens, no walls – just a different form of slum with the State as the Landlord.

In Zimbabwe, at Independence, we took over a land system that provided 16 million hectares of agricultural land to largely white farmers of settler stock. 16 million hectares of land to the indigenous population that still had rural roots. After 40 years of Independence about 4 million hectares remain under freehold title but the rest is now “state” land. This change was effected by a land reform program designed to give the indigenous population control of the land and some compensation to the former farmers has now been agreed.

The question is what to do with what has been taken over? The Tribal Areas remain impoverished and its people desperately poor, with nearly 10 million hectares of land severely damaged and threatened with desertification. The former commercial farming Districts are in the majority abandoned and unproductive with farm output down 70 per cent except for tobacco which has been supported by the international tobacco companies.

In urban areas several hundred former farms have been used to provide land for urban housing. All such homes have been built with private money, much of it from the Diaspora who dream of one-day returning home. I estimate that 1,4 million homes have either been built or are under construction here. In the past year we have sold 4 million tonnes of cement for construction purposes in a country that has not seen a construction crane in operation for 20 years.

If we gave these urban home owners, title to the land they occupy, it would create capital stock in the hands of our own people of probably near US$100 billion in assets. Half of which is bankable.

If we did the same thing with the 180 000 new farmers who occupy the land previously owned and occupied by the previous generation of farmers here, it would put real capital into the hand of all these families, much of which could be used as collateral to pay for costs and development of the land. It would bring billions of dollars of dead capital into life with a direct impact on poverty, opportunity and growth across the whole nation. It would cost the Government nothing, the stroke of a pen.

In the Tribal areas we have to give the Villages that make up our rural population and where the majority of our people call home, some sort of security over these village areas and to give them control and management of these areas.

It’s what everyone wants to happen, it would transform this country in the blink of an eye. It would transfer real wealth that is completely untapped, to our own people. Why don’t we do it?