Untangling the Web

The laws surrounding property and ownership of land have significant consequences for a country. Firstly, and most obviously, title deeds can facilitate investment in property and the growth of the real estate market. Also, in terms of the individual, it is a proven trend internationally that land and home owners are more likely to invest their capital, and are also more likely to be granted credit since they can use their property as collateral. Without this right, access to capital to build a business, for example, is difficult to secure. From an administrative point of view, governments can use land surveys and registration systems to properly assess and even collect tax revenue.

On the whole, Sub-Saharan Africa’s land registration systems do not impress. The Quality of Land Administration index shows that the region comes in last. In Sub-Saharan Africa, the average number of procedures necessary to legally acquire land ownership is high, at 6.2, and the process takes an average of 59.7 days to be completed. Compared to its neighbors, Zambia is slightly above the mean, with an average procedure count of 6.0 and a duration of 45 days.

However, among all the regions, Sub-Saharan Africa accounted for the most land reforms in 2015-16. A total of 28 countries from Southern Africa lowered transfer taxes and over government fees. One of these was Zambia, which decreased property transfer tax from 10 to 5% in 2016, making it more affordable to transfer property in the country. This was the most positive development in land administration the country has implemented since it computerized its land registry in 2009. Following this example, Guinea also reduced its tax from 10 to 5%, Senegal from 15 to 5%, Chad from 15 to 10%, Cote d’Ivoire from 10 to 4%, and Malawi from 3 to 1.5%.
In a conversation with TBY, Managing Director of Knight Frank Zambia, Timothy Ware, revealed that the government was looking at increasing the ability of owners to acquire deeds more quickly. He mentioned a joint project set up between the Ministry of Finance and the Zambia Property Owners Association, which pilots easy access to deeds in Lusaka.

Greater transparency in land administration via a more clear-cut and straightforward title deed system could aid the authorities in their quest to bring more of the population into a formal, tax-based economy. Benefits would include the facilitation of city planning, with urbanization mapping to provide more efficient services and more relevant infrastructure. Finally, better land management could avoid or minimize the effects of environmental or climate-related risks.

Granted, the government will lose out on some fiscal revenue owing to the lowered transfer tax, but this measure will guard against informal purchases born of reluctance to register transactions because of high cost. Informal purchases not only weaken the protection of property rights, but reduce overall potential revenue that can be accrued from property taxes. Thus, in all, the lowered tax could prove a key development in Zambia’s property regulatory landscape.

But what further steps need to be taken to ease access to title deeds and therefore facilitate doing business in Zambia? As the World Bank’s ratings show, the title deed acquisition procedure in Zambia is still unduly complicated. Additional fees and duties apply throughout the process, increasing levels of unnecessary bureaucracy, dissuading potential investors, and negatively impacting ease of doing business in the country.
Some improvements could be to follow in the footsteps of some other African countries that have set up fixed fees for property transfer. A leaf could be taken out of Ghana’s book: the Western African country has pioneered one-stop shops to efficiently minimize interactions between agencies and businesspeople for such procedures. Zambia should also consider making the move to become 100% digital. Currently, 61% of the world’s economies have property registries recorded on electronic files, and this has been proven to inordinately improve ease of doing business.