The centrality of land in our development has made the land sector a key contributor to political pressure.
The sector has profoundly captured our national psyche and continues to dictate the pulse of our nationhood. It is a crucible of myriad identified land problems that we have not managed to gather adequate political will to address them through land reforms.
However in recent times, we have witnessed a series of land related episodes that keep reminding us about the urgency of land reforms.
A case in point is the ongoing the Karen land saga on ownership, which has gripped the country. Without going into the merits of the case, it raises a fundamental policy issue of the sanctity of the title, which is at core of the functionality of the land market.
The primary purpose of land laws is to define and protects the land rights to promote vibrancy of land market. Absence of a well-functioning system of protecting land title has been cited as a single major impediment of growth in many developing countries.
Accordingly, ownership is represented in formal legal documents like title deeds. And depending on the jurisdiction, the protection of the ownership is governed by two competing protective systems.
First, the recording system entails maintaining public records of all consensual transaction of a piece of land. The record serves as evidence to the prospective buyer that the current possessor has good title, but it does not establish the title.
If a flaw due to theft or recording error in the line of title is discovered, the current owner is at risk of losing the property to the last rightful owner.
While the recording system has a higher search costs, the systems is not susceptible to corruption. As protection against the possibility of losing the title, the property owner would purchase title insurance to indemnify from such possibility.
Second, the title registration system is predominately employed to protect land titles. Under the registration, government certifies ownership at the time of a transfer thereby protecting the owner against all claims.
The government guarantees title ownership by ensuring that the possession of certificate of title is conclusive evidence of proprietorship. Any claimant can at most seek compensation from government funds provided by Parliament.
The registration system minimises search cost by eliminating the need to search the title history of property with each sale. Low search cost in turn promotes efficiency of transfers of property.
However, elimination of risk of the title makes the system susceptible to corruption. In the past, government efforts to ensure the sanctity of the title have been compromised by lack of integrity of the institution of land administration, including the Judiciary.
Increased threat of the sanctity of title deed that is seemingly driven by a combination of increased land values and poor record keeping call for re-evaluation of title registration system.
While the system takes credit for promoting efficiency by minimising search costs, it nevertheless unintentionally resulted in a moral hazard problem.
To restore credibility of the systems, we need to improve record keeping by digitising the land registry. To mitigate the moral hazard problem, the government should scale up the recording system to run concurrently with the registration systems.
Such action would give land owners options of choosing the systems of their choice. Use of recordings would have an added advantage of increasing penetration of insurance in the land market, which has been conspicuously missing.
Prof Kieyah is a principal policy analyst at KIPPRA. Views expressed are personal.
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