Customary land registration will boost farmers’ access to credit | Land Portal
Florence Nakazi
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While more than 75 per cent of Uganda’s population is engaged in agriculture as their main form of livelihood, they have limited access to credit due to lack of authentic land documents to be used as collateral. And yet access to credit is fundamental to start and boost any agricultural activity (cover cost of planting, weeding and harvesting; invest in improved planting materials).
Collateral requirements by formal financial institutions present a major obstacle to affordable credit by the farming population. Well-documented land is the preferred form of collateral for many formal banking institutions in Uganda, yet, only 23 per cent of the land is formally titled. Moreover, most titles authenticate urban land or commercial farms, not customary land mostly held by the rural population. This makes securing loans problematic as banking institutions require titles for land to be eligible as collateral.
Lack of adequate documents to validate ownership has been one of major outcries for farmers’ access to credit. This is especially the case for customary land tenure (which comprises more than 80 per cent of Uganda’s land), and yet the land rights here are vested in individuals, families or clans, which makes it hard for such land to be used as collateral to access credit from formal financial institutions. Without well documented land to use as collateral, more than 80 per cent of the population on customary land will be denied the chance of using Customary Certificates of Occupancy (CCOs) as collateral and hence are less likely to borrow money from formal financial institutions.
The acquisition of land titles will contribute to economic empowerment of beneficiaries who use the land title as collateral to obtain a loan from the bank to invest in farming activities. A land title also reassures owners that they will not lose ownership of their land and this encourages farmers to make long-term investment on the land, which can yield more profits.
Through Ministry of Lands, Housing and Urban Development, there have been some efforts to have land registered. According to the ministry’s 2016 annual report, more than 23 per cent of Uganda’s land is registered.
However, this registration is mostly common with freehold, mailo and lease land tenure systems. Land held under customary system, which constitutes more than 70-80 per cent of Uganda’s total land size, generally lacks formal documentation.
Government efforts through the Lands ministry to issue CCOs offers farmers an alternative to have formal documents for their land and, therefore, will increase the chances that farmers will use CCOs to acquire loans from formal financial institutions.
In a bid to facilitate customary land registration, the Lands ministry has implemented a number of interventions. These include, among others, creation of a customary land registry and establishment of ministerial zonal offices in districts of Jinja, Mukono, Masaka, Mbarara, Wakiso, Kampala, lira, Kibaale and Kabarole.
Although registration of customary land has been enabled in Uganda for many years, very few customary certificates of occupancy have been issued. It is estimated that more than 150,000 CCOs will be issued in 2019/20. This situation suggests that there are impediments preventing progress in Uganda’s attempt to issue CCOs to land owners and users. Such impediments could be attributed to the populace not being aware of the procedures for acquiring CCOs. There is need to invest in massive sensitisation of the procedures to close the gap.
Despite the aforementioned achievements in registration of customary land, the proportion of customary land that is titled is still limited given the fact that more than 80 per cent of Uganda’s land is under customary land tenure. This implies more initiatives are still needed to ensure that customary land that forms a major resource for agricultural production is titled to ease farmers’ access to credit.
By the fact that customary land tenure remains the most predominant form of land tenure, government efforts through CCOs offer better solutions to land registration in Uganda.
By the fact that the Land Act section 8 (7) emphasises that CCOs shall be recognised by financial institutions as a valid certificate for purposes of evidence of title, it means that CCOs are authentic documents that can be used to acquire loans from financial institutions. Measures through government and NGOs (World Bank) to improve documentation of customary land should be scaled up to increase the chances that customary land can qualify as collateral for loans.

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