March 2009

Day March 13, 2009

Land titles are now useless in Uganda

It is the truth.  I repeat the market for land collapsed long ago. And it collapsed because the govt messed up with the incentive structures.  Actually several things are happening simultaneously in the land sector.  The land bill Act of 1998 or 1997 offered full insurance to land squatters/bibanja holders/and so called bonafide land tenants (read land grabbers). I equate land to insurance. Once the laws was passed things fell a part literally. There has never been order/certainity in the land sector ever since.  I invite you to wonder why it is that insurance firms discriminate on the basis of age, gender, and even race.

For some strange/stupid reason the cabinet of Uganda wanted to treat every one in the land sector the same. Actually tenants were treated better than mailo land owners which in the insurance industry would be like treating young male better than middle aged women drivers. In other words, the land bill should have taken into consideration quality. Quality of land/location/size etc but also quality in terms of ownership.

To privilege the tenant/bonafide tenant over the mailo land owner was the biggest mistake the bill made. It may be the case that tenant/bibanja holders have groups that represent them but not mailo land owners  because the regime hates them even as the big men in the regime have become the largest land holders in Uganda not by birth, but through land grabbing, okay blackmail purchases. Anyone who cares to know knows that the President Museveni is now the largest land holder in Uganda (that is why he and the twatera embuddu clique eschewed efficient tools such as land taxation).  The consequences are there for all to see: the opposite has happened to the land sector. The order the bill wanted to introduce is no no more.  Truth of the matter is tat the land sector is characterized by chaos and uncertainty.

That chaos and uncertainty has led to the second problem: multiple land titles. Mailo land owners have the original copy which by law-gazette notice -has never been annulled. The crooks with the right connections have duplicate copies.  Mark you, the ministry of lands is a den of thieves who create land titles for the NRMO crowd.   under such an environment, land buyers can never be sure that the land they are buying belongs to the person selling it in the first place.  That is where the lemon problem comes in.

What you saw the IGP doing is the equivalent of what buyers of second hand vehicles in the West do: demand a certificate from govt licensed garage to verify that indeed the car is not a lemon.  It is costly.  With the crime levels in Uganda, the IGP is now in the business of verifying land titles.  How did things get to that level?

Things will get worse not better. I suspect that as Kony terrorized parts of northern Uganda, some ‘bonafide’ tenants may have taken over people’s land.  Mark you the Land Act does not take such developments into consideration. If someone takes over your land and can prove that they have been on that land since 1986 (notice the cut off year) for 10 years, they can invoke the law to protect them.

Basically, the Land Act assumes that if you let -never mind whether you were aware or not-someone on your land for 10, you are deemed to have slept on your rights and therefore out of luck. The bonafide tenants has all the rights to be issued land titles.

The insight I want to emphasize on Ugandans is that if NRMO really wanted to create efficient land use in Uganda, it should have used taxation. All holders of  mailo land holders/other forms of land would be subject to a land tax.  It would have served multiple goals. a) it is more efficient than the current land Act. b) there would be no such uncertainty with regards to land titles and therefore  minimal chaos in the land sector. C) It would have been more equitable in the end.  The logic is that you tax heavily something you do not like(NRMO hates land owner). Those unable to pay the tax on the expansive land would sell to return portions they can afford to pay the tax on.  It is possible the govt could have generated bilions in taxes since land can’t be hidden to vade taxes. I told why taxation was not considered: it would hit the new kids on the land block.

As Justice Wendel Holmes famously observed, taxes is what people pay for civilization. YKM wanted to avoid land taxes for personal reasons and created the current chaos in the land sector.  Similarly, he hoodwinked Ugandans when he abolished the only taxes most people paid so today they have no voice. How can Ugandans complain that YKM is hiring only his relatives when they pay no taxes? If they want that voice they have no choice but pay taxes.

Let the embattled  land holders counter YKM’s land reform with a proposal to be taxed instead on their land holders. NRMO would then have to explain why a revenue starved nation would leave money on the table. As they say kyoyagala kikusezza (you pay dearly for what you treasure). Imagine if the land holders were to call a national press conference and announce that they are willing to be taxed on their land holdings.  Things would interesting would they?

This the what Akerlof talked about. The land market is full of lemons hence the uncertainty. No one can be certain of the land title they hold. It has now become so costly to a level where the IGP checks land titles. The picture of IGP in the NewVision with scared Katoto checking land titles said it all: the land market is Uganda is no more. That is the uncertainty  Akerlof talked about.   The govt offices are responsible for the lemon business. No one can be sure of the land titles they hold.  Former Finaces ministers are not pared and so is NSSF

The point is this, the land sector can be reformed without fragmenting land any further. But to do so, the govt must come up with an upper limit on the amount of land the landless qualify for under the subsidy/land fund.

Let me wade into a controversial region. By all indications, Bunyoro seems to have plentiful of land. But the presence of plentiful land does not mean that Bunyoro’s land should be fragmented or grabbed.  Large scale/’modernized agriculture’ could take place in Bunyoro and in regions where land has not been fragmented.

The people of Bunyoro have a legitimate point when they complain that new arrivals have more land than the indigenous Banyoro.  Should individuals who were landless elsewhere own more land than indigenous Banyoro? That is wrong period.  It is happening because the govt out of stupidity has promised such individuals to access the land fund and buy themselves out.  It is the perfect case of moral hazard. They continue to take over  more and more Bunyoro land and complaining-imagine-that the govt is not doing what it promised: to give them funds from the land fund, my foot, to buy their luxurious lifestyles.

Again the Baganda have a saying that “eyali affude bwalemaara (sp)/he who was all given up for the dead, when he ends up disabled is fine. I equate the almost dead to the landless who should be grateful for whatever little the govt can help them afford.  But they are foolish and would rather live like kings on expansive land holdings.

And let me be clear again. If the land fund is going to be operationalized, priority should go to the indigenous people. In the case of Bunyoro, priority should go to the Banyoro to buy back some of the land but not to finance luxury. That is why the govt should come up with an upper limit. How much land should the landless be facilitated/subsidized to acquire through the land fund? That is perhaps the mother of all questions and to my knowledge no one has asked it yet.

And in the case of Buganda, priority should go towards bibanja holders and not bonafide tenants/aka 1986 creations. But once again, the question is how much land should they be able to buy from the land owners?  Should bibanja holders be able to force the mailo land owner -the land act forces the land owners to sell at Ugs shs 1, 000-to sell them against his/her wish 20, 30, 50, 70, 100% of his/her land? How much should be given up under the law/land Act?  Yes, the incentives have to be properly aligned (emphasis added). The last I checked the land reform is silent on these issues.



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