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THE ENVIRONMENT

Reforming the Traditional Land Tenure System in Sierra Leone
Posted by Omotunde E. G. Johnson, PhD (econs.) on May 8, 2008, 13:35

One of the major institutional reforms that appear to be in the minds of many influential persons as well as policymakers, in Sierra Leone, is reform of the traditional land tenure system, so as to unleash the vast economic growth potential of the country in tourism, agriculture, and industry. Such a reform will need to address issues related to customary law itself as well as the question of statutory strangers introduced in the Protectorate Land Ordinance of 1927. I shall deal with the latter first, because, in spite the enormous attention given to this question, it is to me the easiest one to resolve.

 

Namely, the 1927 Ordinance could simply be repealed and other laws related to it amended as appropriate. We would then be left with the fundamental issue of what to do about customary law related to land rights in Sierra Leone, which, at the end of the day, raises more difficult challenges. I would like to offer my views, to the stakeholders and policymakers, on this extremely important area of possible institutional reform in Sierra Leone.

 

The Protectorate Land Ordinances

 

According to the basic law relating to statutory strangers mentioned above, all land in the Provinces—formerly the Protectorate—of Sierra Leone “is vested in the Tribal Authorities who hold such land for and on behalf of the native communities concerned.” The Tribal Authority is there defined as comprising the “paramount chiefs and their councilors and men of note, or sub-chiefs and their councilors and men of note.” The important provisions of the Ordinance, for our immediate attention, here, include the following:

 

•A non-Provincial must first obtain the consent of the Tribal Authority in order to occupy any land in the Provinces.

•A non-Provincial may not acquire a greater interest in land in the Provinces than a lease for 50 years, but renewal is allowed for up to 21 years.

•A non-Provincial residing in a chiefdom and who is other than a leaseholder of land within the chiefdom, shall pay a settler’s fee. This is in lieu of the customary tributes or labour services, due from all strangers, to the Chief. This fee may be wholly or partly waived in the case of a non-Provincial, who by his profession or trade “is in the opinion of the Paramount Chief, conferring a benefit on the chiefdom”, or who “is employed by a person engaged in an industrial undertaking.” By the Protectorate Land Amendment Ordinance of 1935, this waiver privilege is extended to all those engaged in any industrial enterprise.

 

In retrospect, it is difficult to discern the British rationale for some of the stranger provisions in these Land Ordinances. It was against customary Law to sell land to strangers of any origin, but land could be leased, rented, or pledged. Perhaps the British wanted to impose a ceiling on the duration of leases and to ban pledging to non-Provincial strangers. As a practical matter, though, the stranger provisions did have an economic effect, at least in those days, via the distribution of rents from leases. When land was leased to non-Provincials, part of the rent was normally distributed to the Chief and Tribal Authority and to District Councils. There was no such distribution of the incomes yielded by the land when allocated to other uses. This was tantamount to imposing a tax on income from one source while not taxing or taxing at a lower rate the income from other sources. Other things being equal, the land-owner’s return from leasing to non-Provincials was thereby reduced relative to other uses. The economic impact is quite obvious.    

 

One can understand, of course, why the British made explicit the obligation of settler fees, namely, so that non-Provincial strangers would not be subjected to traditional tribute obligations. In any event, it would seem that the simplest way to start land tenure reform in Sierra Leone is to repeal these ordinances. In that case, until reforms are instituted, regular customary law would apply.

 

A related advantage of repealing the Ordinances would be that, apart from communal/state lands, the law would now be clear that land belongs to the extended families. There would be no question of land being held in trust by the Tribal Authorities. The issue would then become what rights do the landowners (the extended families) have to use and transfer their family lands.

 

Land Tenure Systems and Wealth Creation

 

The ultimate motivation of land tenure reform is to put in place institutional arrangements that enable, as best as one can, each parcel of land to be put to its most economically valued use at any time. I shall mention three criteria that a tenure system should meet if it is to facilitate economic efficiency and wealth creation. A fuller and more formal discussion of these criteria could be found, among other analyses, in an academic paper that I published in April 1972 in the prestigious Journal of Law and Economics, edited at the University of Chicago—a paper which is quite well-known and widely-referenced in relevant academic literature. The paper itself is entitled “Economic Analysis, the Legal Framework and Land Tenure Systems.”

 

A tenure system facilitates wealth creation if the institutional framework meets three basic criteria. First, there must be clear definition and allocation of property rights in land.  Second, the method of distributing wealth resulting from using land must be such as to create an incentive for economic agents to use land in its most-valued uses net of transaction costs. This important criterion means that the system of distributing wealth created from using land in production must manifest a high degree of what economists call “internalization” of costs and benefits. For example, the value created by any particular activity on the land will accrue to those who bore the cost of undertaking the activity. A system of private property rights, for example, meets this criterion. The third criterion for a land tenure system to facilitate general economic efficiency is that the system ensures freedom and legal enforcement of contracts which do not impose physical damages on third parties for which the contracting parties are not made to compensate. Restrictions on transfer via sale, renting, or leasing, according to this criterion, can seriously reduce economic efficiency.

 

Possible Short-Term to Medium-Term Reforms

 

I would like to differentiate the short-term to medium-term period from the long term. In our present context, the former period in my view should last at least five years and could (via consensus) last up to ten years. In this section, I will discuss reforms during the short term to medium term, and address long-term reforms in the following section.

 

It is possible to make immediate reforms to the current traditional system in Sierra Leone, in a way that goes a long way to satisfying the criteria mentioned in the previous section, while still leaving ownership of land at the level of the extended families. The four most important immediate reforms would be:

 

• repeal of the Protectorate Land Ordinances;

• establishment of explicit legal right of all Sierra Leoneans to live anywhere without permission of some local authority and being individually responsible for their own actions under national and local laws;

• clearly defining and allocating property rights in land to extended families and to individual members of such families; and.

• granting the right to rent and lease to all comers, under terms that are freely negotiated between the contracting parties.

 

Among these reforms, establishing clear definition and allocation of property rights in land to extended families and to individual members of such families will be, in my view, the most difficult element in the above reform agenda. Clarity and certainty of rights are among ultimate objectives here. The issues are crucial to economic development and political and social stability, and include the following.

 

• What does family ownership mean?

•What are the rights of individuals within the family?

•Who, in fact, are members of a family with rights to some particular parcel of land?

•Does the extended family have the right to sell land? If so how does the family decide?

• In contracting to lease or rent family land how does the family make decisions?

• Do all the rules on ownership and individual rights have to be uniform throughout the           country?

• If diversity of rules is permitted, what rules will be uniform and what are the limits    on local autonomy?

 

These are some of the questions that will need answers. Factors such as traditional intra-family power structure, existing decisionmaking procedures within families, public interest in equity and equal worth of all persons, and diversity in existing traditions across the country, must all come into play as the experts and stakeholders deliberate to decide on answers. The rules must then be codified and made statutory.

 

There are other reforms that would be needed as well, following diligent investigation and analysis of current customary law and practices in the country. Among these, two are noteworthy.

 

First, the application of customary law has, since the days of the British, been subjected to “natural justice, equity, and good conscience.” This leaves wide discretionary powers to the law-enforcement agencies. This issue will need to be addressed so that the status and scope of this statutory authority of the judiciary and/or oversight agencies can be clarified.

 

Second, the authorities should promote a culture of written contracts. Many bush disputes and other problems have arisen because many (if not most) agreements (pledges, etc.) are unwritten. When the authorities get down to the details, they will discover that, because of the unwritten nature of property rights and contracts over several generations, the ownership of many parcels of land are not clearly prescribed and known, and boundaries also are too often unclear. I read transcripts of many Native Court Cases and reports in Commissioners’ files, in the early 1970s, when I did intensive research on traditional land tenure system, in which bush disputes were a consequence of unwritten agreements. In those days, it was not uncommon for serious inter-family and inter-village disputes to ensue from bush disputes between individuals of two different families. I will be surprised if the situation is not worse now.

 

In the modern world, many types of profitable agreements for all sides will be discouraged, if there is a fear that word of mouth agreements are too risky or that the rights of a person claiming ‘ownership’ of  a parcel of land are uncertain. This also means that contracts must be resolutely enforced by the legal system. The reforms will therefore need to clearly specify and publicize the nature and scope of enforceable contracts. The oversight agency mentioned below could no doubt play a leading role in this process.    

 

The Long-Term Evolution of the System

 

If, as part of the short-term to medium-term reforms, extended families are allowed to sell land, then the decision makers would, in effect, have decided that they want the system to move towards individual ownership. For I do not believe it would make sense to restrict sales of family land only to other extended families.

 

If sales of family land are barred in the immediate future, then an important question would become whether, over time, the system should be allowed to evolve towards individual ownership, that is, away from extended family ownership, and if so how.

 

Now, economic theory and evidence would support the hypothesis that, if the tenure system is allowed to evolve under conditions of freedom of contract—that is, individuals and groups are not prevented by some central authority (the state) from making institutional changes they deem fit—as the real values of long-term investments in and on land increase, the system of ownership rights will evolve towards individual ownership. This is ultimately because, with individual ownership, the person wishing to make the investment can fully appropriate the net benefits of such investments, without having to contract with some other person who really owns the land. Negotiating and policing costs of contracting, as well as some degree of uncertainty surrounding all contracts, are thereby avoided. For example, if land is leased, the continuity and length of investment planning is disturbed. Investments during the final months of the term of a lease will be less profitable than if, say, the land were owned by the investor, because of the cost of contracting for compensation to be paid if the lease is not renewed and the investments have not given all their yields at the expiration of the current lease term. Very durable investment projects will be especially hampered.   

 

If the Sierra Leone authorities, after due consultation with the other stakeholders of the system, decide that they want to permit the evolution towards individual ownership (fee simple), they must then decide if they want the evolution to take place under conditions of freedom of contract (with appropriate oversight from the authorities) or under authoritarian centralized control. I would myself vote for allowing the system to evolve towards individual ownership and for the evolution to take place in the context of freedom of contract, with official oversight.

 

Major institutional changes of the sort being discussed here are costly, so cost-benefit calculations must influence the process of change. Decentralized decision making as well as internalization of costs and benefits would be two advantages of the freedom-of-contract approach over the centralized authoritarian approach, making efficiency and hence optimal pace of privatization attainable without complex cost-benefit analysis.

 

What would be entailed is straightforward: families would be given the right to make permanent allocation of land to individual family members, who will then regard their individual allocations as their own private property. The agreements would be written, and supported by surveys and registration at reasonable cost. The costs would be borne by the families, who will decide on the distribution of such costs among the family members. Families will decide on individualization moves at their own discretion.

 

I would suggest that the right to transfer by lease, rent, pledge or sale of land be granted immediately upon individualization. But whether this freedom of the individual should be unconstrained immediately the reforms are instituted is a legitimate issue for debate. I see no reason why this freedom should be constrained outside of some minimal oversight requirement as mentioned below.

 

As regards, imposing some minimal constraint on the freedom of the individual to transfer land, the authorities, for instance, could require that for a specified period after an individual obtains sole ownership from the family, all agreements to lease, rent, pledge, or sell by that individual must go through some review by the oversight agency, so as to ensure that the individual receives a “fair” price.      

 

Communal Land

 

Where there is still land that is not family land or designated state land, but rather community or communal land, the governance of such land may need clarification in today’s Sierra Leone. This, no doubt, will be done taking into account traditional practices and the Local Government Act 2004. Again, the conclusions of this review must be written into law.

 

Oversight

 

It is useful to stress the importance of heightened oversight during some transition period until it is rational to leave matters almost totally to the market. For many years, the land market that will be needed to support the new system will remain underdeveloped and inefficient. There will be asymmetries in bargaining power and in information grave enough to lead to undesirable exploitation. Even buyers may be duped if owners are able to sell the same plot of land to multiple buyers and then disappear.

 

Pricing would be a difficult issue for a long time as the market develops. One way to alleviate this problem without strict price control and regulation is through mimicking an auction process: all offers could be made public and counter offers made acceptable over some limited period of time before a deal is closed. This should work for both buyers and sellers. For instance, if someone wants to buy land they could advertise on some bulletin board monitored by the oversight agency. Similarly, a seller could advertise on the board and any offers would be good for a certain number of days while the seller waits for a counter offer. The oversight agency could also collate information and act as a real estate agent would act in a pure market situation. The agency could be authorized to charge commission for such services. It would be important, though, to separate (put a Chinese wall between) the pure overseeing branch of the agency and the real estate branch. This latter branch should have a sunset period earlier than the pure oversight branch.         

 

There will be a great opportunity to get the records straight from the beginning. Proper recording of surveys, titles and sales, these records being computerized, with proper backup facilities, will give these areas of Sierra Leone a blessing that the Western Area does not have. I would re-iterate that the timing of surveys and formal titling procedures should preferably be decided by the families themselves.

 






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