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Opinions of Friday, 5 December 2008

Columnist: Akosah, Afrikanus Kofi

Election 2008 & Property Rights

BY: Afrikanus Kofi Akosah and Kenli Schoolland

Mickey has been sojourning in the UK for the past 20 years and when the government called to Ghanaians living abroad, he took this opportunity to come home and invest. He returned home to set-up a block and brick factory, which would create jobs for the copious unemployed youth in the country. In order to do so, Mickey purchased a parcel of land for £20,000.

Two months later he was working on the land with his workers when a bevy of thugs known as 'Land Guards' fiercely attacked them with deadly weapons. They had to flee for their dear lives. This happened because another family also claimed ownership to this land and initiated force against him to stake that claim.

Mickey decided to go to court but he learnt with disappointment and shock that the courts are hopelessly slow and back-logged; property cases that had occurred 25 years prior were still being dealt with. The only way for Mickey to keep his land was to pay the other claimants another £20,000. Not being able to afford this, he packed his bags and bitterly returned to the UK.

Article 266 of our 1992 Republican constitution strongly guarantees the right to property ownership. However, clearly defined property rights and their legal protection are woefully neglected. It is barely a couple of days left before the country's presidential and parliamentary elections, and not even a single presidential candidate has raised the issue of ensuring security in land tenure for property owners.

The Lands Commission, Survey Department, Land Title Registry, Land Valuation Board, Town and Country Planning, District Assembly Planning Offices and the Administrator of Stool Lands are the state agencies responsible for land administration and delivery services in Ghana.

The plethora of land administration agencies hinder legally enforceable property rights and create numerous disputes, social tension, inaccessible records and obscure mandates. The process they have created is so frustrating and expensive that many Ghanaians are discouraged from registering their buildings and land.

LAND ADMINISTRATION PROJECT (LAP)

Property registration creates the platform for wealth creation. Ghana's Land Administration Project is part of the country's 1999 National Land Policy, which was intended for the facilitation of land management and delivery services. Its strategy was to replace the existing complex and resource consuming process of issuing land titles with one that is simple and cost efficient.

When property rights are protected, property owners have the incentive to improve upon what they have, which is beneficial for future transactions; they do this as a result of feeling secure that their efforts will not be wasted by the property being stolen. Protection of private property also makes it easier to create physical addresses that can easily be verified, which is vital in modern business.

Many experts wonder if this could be achieved in the stipulated 15-25 years, when in almost a decade since the project took off there has not been progress. Though why must Ghanaians wait for 15-25 years before they can exercise such a fundamental right? The sooner it can be achieved the more it will benefit the people.

PROPERTY RIGHTS AND THE POOR

It is argued that property rights benefit only the rich and it is a tool they use to exploit the poor. Alas, this is false, and neglects facts and reality. The poor are prevented from improving their situation by not having property rights. The wealthy are able to buy protection for their possessions, while the poor have no such defense. With the example of Mickey, if he had been rich he would have been able to keep his property, but since he was not he was forced to give it up. Clearly the poor have the most to benefit from property rights.

The poor are also losing their property through the cumbersome documentation processes as well as the expensive and biased judicial adjudication. In our towns and villages, the poor do own property (houses and farmlands); however, according to Peruvian free market economist Hernando de Soto, because of lack of security, it is "dead capital". Without titles to leverage the poor are unable change their hopeless situation, which is another reason why the poor need property rights more than others.

They have ideas, but without access to capital and the right environment to nurture their ideas into businesses and jobs, the poor cannot prosper. There are cases where those who attempt to improve their situation are jailed and their investments bulldozed. They face this not because they have chosen careers in crime, but for trying to make a decent living on our streets as traders. Their economic life is dominated by uncertainty, arbitrariness and extortion.

FOOD SECURITY

The country's climate-fed agriculture dominates the economy with a 38% contribution to GDP and about 3/4 of export earnings; still it continues to be small-scaled and labour intensive with needlessly high post-harvest losses of between 30-35%. With land titles farmers would be able to access capital from financial institutions and invest in machinery, storage facilities, irrigation and other modern agricultural capital. This would increase productivity and create jobs in the agricultural sector, as well as place enough food on our tables.

The current situation denies farmers the significant right to use their farm lands and buildings as collateral, dragging a majority of them into perpetual abject poverty. So who makes our farmers poor? Evidently the state! Our farmers need titles on their farm lands and properties to change this harmful situation.

When campaigning, politicians promise generous agriculture subsidies. Once in office, realizing these promises would intensify the tax burden, for the subsidies must be funded somehow. In addition, the politically connected farmers enjoy such subsidies most, and not the poor ones who the subsidies are supposed to help.

INVESTMENT FLOW

The general lack of secure property rights discourages entrepreneurs from investing in the economy, thus hindering economic prosperity. When property is protected, both local and foreign investors can make long-term projections and are willing to invest.

The world is filled with capital to be invested, but it only goes where it has a chance to gain a return. The protection of property with transparent rule of law inspires confidence among foreign investors, whom we desperately need in this increasingly globalized world. If even the Red Dragon is now ensuring individual property rights, then we must realise that the world is changing.

Furthermore the restraints on entering in to business discourage people from doings so and thus limit wealth and job creation. The government's promise to create a simpler business registration system was a false campaign promise. The cumbersome process of registering businesses in this country continues to impede progress, making the poor even poorer, while the rich are able to pay their way through. As a result, 80% of our businesses are in the informal sector.

Another violation of property rights in this country is that if gold is found on one's land, the government takes it over. In effect, the real owner not only loses the gold from his property, but also his land is destroyed in the mining process. It is time for the land owners to own shares in our mining companies, which is the true way for the revenues from gold can be used to advance this country. Money in the hands of individuals achieves more than in the pockets of government and their bureaucrats.

Private investment is the way to create sustainable jobs, not the campaign promises of job creation schemes from the government. Central planning does not work and state created jobs are unsustainable.

RULE OF LAW In many cases, land sales have led to disputes and litigation amongst people, as well as tensions it has created between tribes, stools, villages and towns. We are in dire need of a legal code that favours property and ownership, which will in turn promote stability in our communities.

In 2004 the Minister of the Interior at the time feebly declared 'Land Guards' to be illegal after some callously murdered a number of land developers. In a country with weak rule of law, outlawing something has no effect; thus the minister's declaration was unable to ensure property rights and reconcile social tensions disturbed by the actions of these 'Land Guards'. The Land Administration Project can only work with an efficient and transparent judicial system that would enforce the minister's claim.

Property is the essence of capital, and the foundation for wealth creation. Broad-based national development is totally impossible without secure property rights. So, will our presidential candidates please tell us how you are going to enable us to capitalise on our resources and free ourselves from abject poverty? The welfare policies and regulations are fallacies, that will not truly help the people.

The hard-working people of Ghana deserve a leader who believes in consistently upholding the rights of Ghanaians to freely engage in commercial activity. Our next president must understand the significance of secure and clearly defined property rights if he is really serious about eradicating poverty and giving hope to the poor.

*Afrikanus Kofi Akosah is the President of Africa Youth Peace Call, a Public Policy Think Tank, and Kenli Schoolland is an undergraduate at Burkingham University, UK.