Property rights must be protected

Jo-Maré Duddy – Namibia should take care that its land reform action plan doesn’t deter investors and come at the expense of economic growth, development and jobs.

The presentations of both the Bank of Namibia (BoN) and the Namibia Chamber of Commerce and Industry (NCCI) at the second national land conference on Tuesday contained this plea.

“Well-defined property rights are the most basic necessity for a functioning economy and a lack of it can be the biggest drag on the economy,” said the deputy governor of the BoN, Ebson Uanguta.

The absence of well-defined property rights “can draw us back”, Uanguta warned.

Talking on behalf of the NCCI, businessman and a former chamber president, Leake Hangala, said: “In today’s competitive world, Namibia does not need to send land reform messages that create doubt and uncertainty.”

“We also do not need to throw out the baby with the bath water,” Hangala continued.

Competitive edge

Up to now, property rights in Namibia has been one of the country’s few competitive edges in the international investment arena.

Whereas Namibia’s overall ranking on the World Economic Forum’s Global Competitiveness Index (GCI) has been sliding, it has maintained its spot as one of the 40 most competitive countries in the world since 2012/13 as far as property rights are concerned. It has consistently scored between 5.1 and 5.2 out of a possible 7 for property rights.

Namibia was ranked 32nd out of 137 countries worldwide on the latest GCI. With a score of 5.2, it was the second most competitive country in Africa as far as property rights are concerned.

Overall, Namibia could only secure the 90th spot on the competitiveness ladder.

Markets develop because of property rights and without, there can’t be actual markets, Uanguta said. “Similarly, there will not be any investor coming from somewhere to commit investment in an enterprise where property rights are not secured,” he said.

Without clearly defined property rights, contracts won’t be enforced. Without it, it is very difficult to plan ahead, the deputy governor said.

“The less secure property rights, the poorer the economy gets,” Uanguta told the audience.

Spill-over

Disrespecting property rights in one sector has the ability to spill over to other sectors, he said.

Namibia should recognise that the ultimate objective of land reform is not just mere access to land, but the ability to address the national challenges of poverty, inequality and unemployment. Land reform should help Namibia to stimulate growth and development, Uanguta maintained.

“So, whatever we are doing in terms of land reform, we should keep that at the back of our minds,” he said.

“We should know that the agricultural sector or land is not the only thing, but there are also other equally important sectors in our economy as well. So whatever we do in this one sector should not upset the other sectors as well,” he continued.

Tale of two green schemes

Uanguta demonstrated the importance of well-defined property rights and secure land tenure comparing government’s green scheme in the //Kharas Region to those in Kavango East and Kavango West.

The green scheme in //Kharas is striving, there are a lot of economic activities and many jobs are created. In addition, the scheme generates foreign earnings through the export of its products.

Kavango East and Kavango West have the same potential, but it remains to be reached. Although other factors may play a role, Uanguta believes the lack of well-defined property rights and secure land tenures are key contributors.

“If we want to attract investments, investors want security. You cannot just give land to an investor but tomorrow he won’t know whether you’ll take that land away,” he said.

Once an investor decides to invest in that land, it will take him between 5 to 10 years to get his money back. Only then he will start making profits, Uanguta explained.

He pointed out that clear empirical evidence exists in various studies which show that the absence of clear property rights or a secure land tenure system can inhibit investment, can retard economic activities and will affect economic growth.

“We need to underline that,” Uanguta said.

The respect for and promotion of property rights and secure land tenure continue to remain the central element of economic growth and development, he stressed.

Critical

Hangala said predictable and transparent land reform programmes will lead to equitable ownership, productive and efficient usage of land which will create a good basis for the country’s economic growth, industrialisation and job creation. “This is critical for business Namibia,” he said.

The NCCI strongly support equitable ownership and access to land for all Namibians, Hangala said.

“However, for the NCCI, access to and ownership of land, as important as these are, is not an end in themselves, but means to an end. Access and ownership of land will only become meaningful if it constitutes a foundation for wealth creation and economic prosperity for all our people,” he added.

According to Hangala, long bureaucratic delays, indecisiveness and non- transparency in terms of access to land, ownership and transfer especially in urban areas frustrate business people and prospective investors.

“We would like to urge this conference addresses the issue of eliminating those bottlenecks as they are delaying the urgently required job creation opportunities,” he said.

Hangala said business was “delighted” that local top lawyers assured the conference and that the land reform programme will be done within the confines of the law. “This assurance gives certainty and predictability to the investor community,” he said.