What are the key components of a fully functional property system and what dysfunctionalities limit fair access to property? How can property systems be reformed in a way that enables the poor to access and secure property? This chapter suggests that a pro-poor reform strategy for effectively functioning property systems should be based on land tenure security, the creation of opportunity for investment, and adequate management of risk.
The absence or insecurity of property rights undermines economic development, hinders governance and is a primary cause of poverty in low and middle-income countries. Women, indigenous communities and urban slum dwellers tend to be excluded from formal property systems and to suffer from weak property rights not adequately recognised by law. Where the poor do have assets, their rights are not adequately recognised or enforced, and are vulnerable to being lost.
A fully-functional property system operates in four ways: 1) As a system of rules that defines the bundle of rights and obligations between people and assets; 2) As a system of governance – a central facet of state functionality; 3) As a functioning market for the exchange of assets; and 4) As an instrument of social policy – for example, public housing, low interest loans and the distribution of state land can endow citizens with assets.
Unfair or limited access to property and insecurity of assets are caused by dysfunctionalities in the property system:
- Misalignment of social practice and legal provision: Such misalignment can undermine state legitimacy and accountability, and weaken ties of citizenship. For example, the imposition of colonial property systems on land previously regulated through customary rights results in a gap between formal law and people’s daily practices.
- Misuse of rules governing property: Property rules are open to abuse by those in power. For example, corrupt governments have been known to seize private property and confiscate the assets of the poor.
- Lack of access to information and justice: This reduces the transparency and efficiency of property transactions. Misuse of eminent domain: Corrupt governments can use the inherent power of the state to seize private property in the name of the public good.
Protecting women’s property rights should be central to reform efforts. Additionally, the global reform of property rights regimes is necessary to allow the formal recognition of customary land rights. The expansion of property rights in a coherent manner requires understanding of trends and a tailoring of provisions to context. However, it is also important to address deep-rooted cultural norms that perpetuate inequality even where legal provisions exist. A reform strategy for effective property systems that empower the poor should:
- Promote legitimacy by making property information available to the public, promote public debate on property rights and improve the sharing of knowledge on these issues.
- Support parallel institutions such as those that facilitate access to technology, credit and markets. Examples include land banks and land-for-credit schemes.
- Facilitate private sector involvement by setting the parameters within which private sector investment can take place and ensure that land taxes and farming subsidies do not disadvantage the poor.
- Promote property rights through individual and corporate ownership. Property law should offer clear and simple options of legal personality and corporate ownership for small businesses and corporative associations of the poor.
- Enhance the asset base of the poor by enabling community ownership and management of natural resources.
