Why increasing benefits from land assets is critical for Africa's development

Across most of the world, land and associated property tend to account for more than half of people’s assets. Maximizing the flow of benefits from these assets starts with proper registration and transferability of ownership and use rights. Such rights ensure that urban residents can access affordable housing and productive jobs in a safe and healthy environment. They allow farmers and entrepreneurs to invest, insure their harvests against shocks, and diversify their income sources.  They also allow governments to plan land use, tax property to raise domestic revenue, and manage public land to provide sustained local benefits.

Yet, less than 5% of agricultural land and at most 25% of urban land in African countries have documented rights. At least 70% of those rights are held exclusively by men. Registration of transfers cost 7% of property value, and almost two-thirds of Africans believe that the rich can pay to have land ownership records fraudulently manipulated in their favor.

This doesn’t need to be the case. African countries have a unique opportunity to do better through policy reforms, use of new technologies, and better planning.

Digital technologies alone bring multiple advantages. For example, by linking digital IDs and e-signatures, the quality of records can be improved.  Consent from co-owners can be obtained digitally, eliminating intermediaries for contracting or resource transfers in rural markets. Finally, remote sensing imagery can make spatial delineation of use or ownership rights more viable by helping land users establish a track record and allowing private contracts and public programs to be made contingent on land use patterns over time.

Better recording of rights is necessary but not sufficient to harness the benefits of land assets. Our new report on Land Policies for Resilient and Equitable Growth in Africa outlines reforms that countries can tackle to help sustain those benefits. These include:

Mobilizing revenues for development: While property taxation has been an important source of domestic revenue for governments world-wide, it has been least exploited in Sub-Saharan African (SSA) countries.  Revenues from property values accounted for only 0.38% of GDP in the 32 African countries that report property tax data, compared to 3% of GDP on average in industrialized countries. Estimates suggest that SSA countries could raise additional domestic revenue totaling $60 billion per year if they could achieve similar levels of tax collection.

Deepening financial and urban land markets: Africa’s urban population is expected to triple by 2050. Policies need to support active land markets and the establishment of public registries that provide trustworthy information, reliably protect third parties’ rights, and allow transactions to be registered at low cost.

Addressing gender inequality: Even if gender equality is constitutionally guaranteed, failure to document spousal co-ownership rights makes it impossible for women to use land most effectively, with negative effects on their productivity, entrepreneurship, and intra-household decision-making. Improving women’s awareness of their land ownership and inheritance rights and strengthening the enforcement of these rights are a proven catalyst for broader social change in many settings.

Improving markets for rural land, labor, & insurance: Frictions in rural markets already exacerbate poverty and vulnerability by preventing efficient resource allocation. This impact will be more keenly felt as rural areas’ exposure to climate-related shocks increases. Use of geocoded farmer registries can help establish and maintain current information on use rights, target public support towards adaptation, and evaluate/improve effectiveness at farm level.

Drawing on local institutions’ advantages: Centralized management and non-transparent transfers of public land that failed to provide local benefits, exacerbated by more frequent droughts, have already multiplied land-related violent conflict in areas with low agricultural potential. Greater decentralization that empowers local institutions by providing them with data, technical capacity and fiscal incentives has been shown to reduce conflict and resource degradation by helping local institutions make informed decisions on better land and resource management.

The land policy reforms above point to many benefits that are economically meaningful, politically viable, and can be taken to scale.  They give us hope that African governments can leverage land assets to transform challenges of climate change, gender inequality, and urban expansion into opportunities for more inclusive and resilient development, with support from digital technologies and knowledge sharing.