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Ideas & Debate

EDITORIAL: Digital land register can help eradicate fraud

digital register
Only a digital register and the proposed collateral register will sort out land fraud. FILE PHOTO | NMG 

Land is one of the most important factors of production anywhere in the world but more so in Kenya where it is much monetised.

As a result of the arguably outsized premium placed on land locally, it has spawned a huge fraud industry that constantly has policy-makers scratching their heads to stay ahead of the crooks.

And it is not just fraud that worries the government and public as social stability and security depends on smooth running of the sector.

Perhaps nothing illustrates dangers in the sector than a story we carried on our front page yesterday.

NCBA’s predecessor, CBA, Equity and Co-operative banks were locked in a contest over a piece of land in Satellite, Nairobi, that was used as a collateral to secure what ended up as Sh490 million. According to the report, the same land was fraudulently used in the three banks.

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To cut a long story short, Coop Bank has been ruled by the court of appeal to be the rightful owner of the tittle deed. While Equity had given up the fight at the high court, CBA took the matter all the way.

There are number of issues to ponder about the matter given the high cost incurred by the parties—and by extension the economy—in this and many other cases.

First and foremost is the obvious issue of cost. The banks will bear the cost, but again capital has been misallocated to the wrong ‘borrower’ to the detriment of the economy.

At the same time, the land has probably not been used for the right economic purpose.

Second, the fraud in the industry is a major put-off to both foreign and local investors, which at the end of the day prevents creation of jobs and capital formation.

This a situation a developing economy should avoid at all cost.

The obvious solution to this is digitisation of land registry. While ministry of Land says digitisation is complete at least in Nairobi, this is yet to go live probably because lawyers think it will throw them out of business by making everyone able to do some of their functions.

However, it is obvious only a digital register and the proposed collateral register will sort out land fraud.

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