Well-defined property rights a basic necessity for a functioning economy – Uanguta

Home National Well-defined property rights a basic necessity for a functioning economy – Uanguta

WINDHOEK – There is a need to recognise that markets are developed because of property rights, and without these property rights there can be no actual market. Similarly, no one would be willing to commit investment in an enterprise where property rights are not secured. These warnings were from Deputy Governor of the Bank of Namibia, Ebson Uanguta, at the 2nd National Land Conference that took place in the capital last week. 

“Without clearly defined property rights contracts will not be enforced and it would be extremely difficult to plan for the future. Well defined property rights are the most basic necessity for a functioning economy and lack of them is the biggest drag on an economy. The less secure those rights are, the poorer the economy gets. Disrespecting property rights in one sector of the economy may have spillover effects or create a perception that property rights in the other sectors may also not be respected,”Uanguta warned delegates attending the event at the Safari Hotel in the capital. 

He emphasised that ample empirical evidence shows that an absence of clear property rights or secure land tenure, inhibits investment, economic activities and growth. Therefore, he said, respect of property rights and promotion of secure land tenure continue to remain central elements of economic growth and development. “Notwithstanding, we believe that measures and policies to address the problems of those who are dispossessed and affected by inequality in the economy should be considered but still within the ambit of the supreme law of the country,” said Uanguta. 

To demonstrate the impact of secured land tenure system and property rights, Uanguta used the example of the two Kavango regions (West and East) compared to Karas region along the Orange River. “The former two regions also have a perennial river and I believe that the soil over there is even more fertile compared to Karas. But Karas region at Aussenkher, Noordoewer has flourishing economic activities and a significant number of employment has been created and foreign exchange is earned compared to the two Kavango regions. Why is that the case? The answer lies with clearly defined property rights and a secure land tenure system. Therefore, we urge that whatever measures are taken should not diminish the elements that promote a secure land tenure system and property rights, but rather strengthen,” Uanguta stated. 

He continued that one of the major expectations for the land reform programme across the globe has been to increase the investment or bankability of communal land and resettlement farms. 

“We believe land reform cannot be complete and be cited as successful unless the emphasis is also placed on the necessity of communal farmers or resettled farmers to be able to use their land as collateral, hence the need for titling. To the extent possible, a successful land reform programme should strive to enable both communal and resettled farmers to have the option to obtain a form of tenure that will enable them to offer their land as collateral to obtain credit,”Uanguta stated.  He used Vietnam as a good example where individualisation of land rights (land titling) increased access to credit and enhanced agricultural productivity. In that country agricultural land investment was enhanced by land rental and land sales markets, though these markets respond differently to measures that aim to increase resource access to the rural poor and enhance farm efficiency. Land registration and the issuance of land use certificates, improved household access to credit, particularly from the formal banking institutions such as commercial and rural cooperative banks, are critical. 

“Thus, the case for Vietnam proves that title deeds together with financial incentives for land acquisition and development are highly relevant in the performance of land reforms programmes in developing countries,”Uanguta noted.