Wednesday, 25 September 2013

HOW TO ENSURE TRANSPARENCY IN LAND DEALS



For decades, buying property in Nigeria has been a risky investment. Land records, when they existed, were paper documents manually filed in a faraway building whose employees might or might not have had the training to keep the archives straight.
Homeowners in Lagos, Nigeria take to painting "this house is not for sale" signs
on their walls to ward off fake real estate agents that try to sell homes to multiple
buyers without prior knowledge of homeowners.

Stories abounded of fake real estate agents selling homes to multiple buyers while the homeowner was on vacation — so much so that desperate owners began spray painting warnings on their property walls that read, “this house not for sale.”

Nigeria’s economy is booming, driven by oil and natural resources, but the absence of clear land laws have been undermining development, blocking access to finance, and leaving state governments without the revenues that should come from property tax.

“It’s been dysfunctional for many years,” said Nigel Edmead, a land administration specialist who serves as Thomson Reuters’s director of training and documentation. “There have been transfers of land without recording, so no one knows who the real owner is. Someone may have registered a sale in 1970 but it’s been sold 15 times since then without record of the sales. The paper-based registry has lost connection with the reality on the ground.”

In 2009, the Nigerian state of Cross River sought to clean up its land registry mess, passing land reforms that created the Cross River Geographical Information Agency, an independent entity charged with setting up digital land records and making them accessible to the public. Initial results appear good: In the first two months of 2013, the amount the government collected in land rents and fees equaled the amount it had collected in the four previous years — a sign that people trusted the new system enough to register their land. 

Nigerian officials are optimistic.

“Ultimately, the entire state — every inch and every parcel of land — will be documented and registered,” Bassey Oqua, the Cross River commissioner for special projects, predicted in an interview with Thomson Reuters.

Transparent land deals are critical to development in countries that are struggling to move out of poverty, international development experts say. Without clear and verifiable land transactions — and public access to information about sales — investment is stymied and deals are vulnerable to corruption. Those who own or use the land are often at risk of losing it to shady buyers or to large companies that are after the land’s natural resources.

Nigeria is a particularly bad case. The country ranked 180th out of 183 in a World Bank 2012 report titled, “Doing Business in a More Transparent Way,” which compared the ease of registering property in different countries, among other indicators. Others at the bottom of the list included the Marshall Islands, Micronesia and Timor-Leste. According to the report, sub-Saharan African had the weakest legal institutions overseeing property rights and more complex and expensive regulatory processes for registering land.

Ensuring transparency gets all the more complicated in countries where land is communal and recognition of who owns what is mainly oral. The lack of formal land rights makes these places especially vulnerable to large-scale land acquisitions, often derided as “land grabs,” which have been on the rise in Africa and other parts of the world as investors seek cheap land for food, forestry products and resources such as ore.

In these cases, it’s critical to include local populations who lay customary claim to the land or to the resources on it, such as wood, international development experts say.

“If the details of a project aren’t disclosed, then people who have those kind of rights are going to find it exceedingly difficult to assert them,” said Darryl Vhugen, director of special initiatives at Landesa, a group that is working to expand land rights to the rural poor. “Once the tractors come and the fences are put up, it’s pretty much too late.”

The International Land Coalition, a global alliance of organizations that promote secure access to land for the poor, has developed a “land matrix” that shows how prevalent large-scale land acquisitions have been across the globe. It compiled data on 830 concluded land deals, 181 that it says investors intend to pursue, and 71 that have failed.

“That’s just the tip of the iceberg,” said Mike Taylor, program manager of global policy and Africa at the International Land Coalition.

So far, the matrix has logged land acquisitions for projects in tourism, infrastructure and agriculture only — not forestry or extractives, Taylor said, because the latter two often do not involve the displacement of indigenous populations. The land coalition works with partners to track acquisitions for inclusion in the matrix and welcomes input from locals in target countries, he said.

According to the matrix, the United States, Malaysia and the United Arab Emirates are the largest transnational investors, but the top 10 also include Saudi Arabia and China, whose investments include large-scale agriculture production for their own populations, international development experts said. The production of palm oil is another big driver of large acquisitions. Seven of top 10 target countries are located in Africa; the other three are Papua New Guinea, Indonesia and Argentina.

A large number of these acquisitions are domestic, driven by local elites, Taylor and other experts said. But tracking land deals at that level has proven difficult due to their relative small size and the fact that they often happen under the radar.

“What we hear is that the pressure locals feel from land grabbing is often higher from the accumulation of small deals by locals than large ones from outsiders,” Taylor said.

Get involved in mapping communal lands

One of the newest efforts to help indigenous populations retain control over their land involves the creation of a global map designating community claims, Taylor said. The project was adopted during a two-day land tenure conference in Interlaken that ended Sept. 20.

At the event, representatives from development agencies, private investors, companies and governments described efforts to map the globe’s communal lands as a concrete step toward helping indigenous communities secure customary rights in the face of large land deals.

A few countries — notably Indonesia — have already begun to draw communal boundaries. It’s a promising step toward ensuring transparency in land deals, experts agree. But the initiative is still very new.

“We don’t have a lot of data in yet,” Taylor said. “We’ll see over the coming years, this data starting to emerge.”  

Creating a global repository of communal land claims is just one measure. There are many other steps that international development organizations can do to increase transparency in land deals, experts said.

Assist governments in adopting policies that require land deals to be made public, in writing, and in local languages

Part of the problem with transparency lies in the prevalence of oral land deals, or contracts that are too short to set forth clearly the rights and responsibilities of the investor — or worse, are written in a language that indigenous populations don’t understand.

“What is the capacity of the community, if they are negotiating directly with an investor, to effectively negotiate on their own behalf?” asked Carole Excell, a senior associate with the Access Initiative at the World Resources Institute. “You have to have the knowledge to comprehend the information given to you and to negotiate effectively.”

Efforts are underway to help governments and elsewhere to create freedom of information acts, especially in Africa, where only 10 of 53 countries currently have some type of FOIA on the books.

“Freedom of information laws are really new in Africa,” Excell said.

Even in places that have such laws, information has often not been available, she said.

“We’ve been looking at whether people were getting responses or being ignored,” Excell noted. “We found that most of the agencies did not comply with the requirements to give out information.”

Work directly with governments to implement the voluntary guidelines on the responsible governance of tenure

In 2012, the U.N. Committee on World Food Security adopted voluntary guidelines for land tenure that have since been encouraged by the G-20, the U.N. General Assembly, and other international bodies.

The guidelines help make land deals more transparent by urging governments to conduct impact assessments of proposed investments in land to determine their impact on local people and land rights, experts said.

Many governments, however, lack the resources and ability to carry out such assessments.

“It’s easy to say, but not that easy to do,” Vhugen, of Landesa, said. “Most governments don’t have the capacity to do it, so helping them build this capacity is important.”

Work with private sector investors to ensure that individual and communal land tenure is recognized

Many international companies seeking to invest in the developing world try to make sure that local residents are not displaced. Sometimes they are motivated by the knowledge that their customer base is paying attention to whether cocoa or coffee, for instance, has been cultivated sustainably using fair trade practices.

At other times, they are being compelled by governmental partners. European aid leaders, for instance, have been putting pressure on their U.S. counterparts to ensure that companies participating in the New Alliance for Food Security & Nutrition are not resorting to “land grabs” that negatively affects the environment and local communities, especially women. The Food Alliance is meant to connect smallholder farmers in Africa and elsewhere to domestic and international supply chains.

Oftentimes, transparency helps companies manage risk — an issue that can affect their bottom line.

“Companies need to know if the government is trying to lease them land claimed by three communities,” said Peter Veit of WRI. “They need to know that this is a high-risk piece of land.”

Vhugen speaks periodically to private sector investors about the need to recognize customary land tenure rights, and most are not interested in displacing people, he said.

“Those people are going to try to find a way to make you fail,” Vhugen said. “So it’s about risk management considerations. Investors are quite responsive to this. So there is a lot the international development community can do.”

Help governments enforce transparency in land deals involving domestic investors

In many countries, the local elite are buying up much of the land in chunks too small to track effectively, land experts say. They generally aren’t susceptible to the kinds of risk management assessments and reputational pressures that many international corporations respond to.

In this case, development experts recommend working with the local governments to ensure that small-scale land deals also comply with laws promoting transparent land acquisitions and open registration procedures.

“Realistically, that’s probably the only way we can do it,” Vhugen said. “Nestle can find a way to ensure that a domestic sugar company complies with certain requirements. But it only works if that company relies on Nestle as a customer. Otherwise, you need the government to create a level playing field.”

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