Freehold title essential

Make land tenure rules simpler: Expert

Financial Gazette by Tabitha Mutenga, Features and supplements Editor

May 24, 2018

 

BB&T Distinguished Professor of Economics at Winston-Salem State University, in Winston-Salem, North Carolina Craig Richardson.

ZIMBABWE has been urged to tighten rules governing land ownership to attract much needed foreign investment.

Speaking to the Financial Gazette on the side lines of the public lecture  on Property Land/Rights: Economic Growth Potential for Zimbabwe hosted by the US Embassy,  BB&T Distinguished Professor of Economics at Winston-Salem State University, in Winston-Salem, North Carolina Craig Richardson called on government to make land tenure more secure.

“In order for foreign direct investment to pour into Zimbabwe, the rules in the economy must be simple and direct as they are in other parts of the world. Freehold land titles are clear and simple to understand. Leases lasting 99 years appear more complicated to foreign investors, and as a result, many will take their business elsewhere,” said Richardson, who was in the country last week to help explain what investors required for them to trust the new government before investing their money.

Since November last year, Zimbabwe has been telling the world that the country is open for business.

“Trust on the part of foreign and domestic investors that their investments are safe from potential expropriation is critical,” he added.

Richardson is the author of The Collapse of Zimbabwe in the Wake of the 200-2003 Land Reforms and many other publications on land rights and the Zimbabwean economy.

He acknowledged that the 99-year lease was an improvement over the five-year lease previously suggested.

The damage done to property rights by the 2000 land reform programme caused a series of ripple effects throughout the country’s other economic sectors. In trying to rectify the issue of security of tenure, government introduced the 99-year lease.

“However, the devil is in the details. In the language of these 99-year leases, government may break the lease with only 90 days notice. The breaking of the lease may happen because of subjective conditions such as the farm not being productive enough.

“This gives particular government employees significant power to threaten to break 99-year leases unless certain conditions are met. If government employees are not of sterling character, corruption and bribes may arise,” he said.

In addition, the 99-year lease prevents the land from being potentially sold for other future uses, such as housing developments, factory sites or even solar panel energy farms as is being done in the United States.

“As a result, the constraints from the 99-year leases mean that the value of the land will be far less. So while it may attract some investment in agriculture, it represents significant risk and missed economic growth opportunities compared to a freehold land title,” Richardson added.

Everywhere in the world there is a cost of having complicated property rights and for Zimbabwe, the cost has been lack of development, noted Richardson, adding that according to World Bank 2018’s Doing Business Indicators, doing business in Zimbabwe was complex and tasking compared to Rwanda.

In Rwanda, it takes four days to start a business while in Zimbabwe it takes 61 days and for the rest of sub-Saharan Africa it takes 24 days. It also takes 36 days to register property in Zimbabwe while it takes seven days in Rwanda.

“Reports from abroad indicate that market analysts are changing their tune from a pessimistic one to neutral or guardedly optimistic.  The tone of the new government is certainly far improved. There is no longer fear of speaking out, and my personal feeling is that the country feels far more relaxed than during my visit 10 years ago.

“The actions suggested in the national budget statement about cutting the number of ministries, changing the indigenisation laws and improving the business environment are all being welcomed. But now we will see if words are followed by real action. That is where the trust-building begins. Action is what international investors are waiting for after years of dashed expectations,” Richardson said.

newsdesk@fingaz.co.zw

http://www.financialgazette.co.zw/make-land-tenure-rules-simpler-expert/

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