Development and investment require credit and a credit economy is strongly based on a system of registration and title of the land. Consequently, land ownership must have a more definitive and explicit character if we wish the land to be worked, [but] agricultural land will not be sold to foreigners, unless there is government approval.
African Socialism and its Application to Planning in Kenya, Nairobi, 1965.
The issue of land as guarantee for agricultural credit is as old as the decades of independence on the Continent. However, then and now, even when the land is privately owned, credit continues to be scarce and the desired investment is not taking place except in special cases which, normally, entail strict conditions for the protection of the products by the government13 .
For what reason is the land alone not sufficient to attract agricultural investment? Furthermore, knowing that everywhere there is a market in non-registered land which is developing among the poor, in parallel with savings and credit systems which are equally not registered, why then does the market in registered land not acquire the same dynamics14 ? Because a bad formulation of presuppositions took place, whereby the exclusive determining factor was the land, in the assumption that the abundance of land would lead to an increase of the product per worker (as happened in the New World), and assuming that in the areas where land would become scarce there would be an increase of the product per hectare (as happened in Asia). However, neither option materialised. This is because work, and not land, is the main constraint for the economy of the rural family.
Arthur Lewis already made the same mistake in believing that work was abundant and capital scarce; but later it was established that when capital investment is not accompanied by technological transformation, rapidly decreasing marginal returns will be experienced. The question of time and quality of work are crucial for agricultural development and, in consequence, for the evolution of the land tenure system in Africa, not the other way round. It is not the definition of land ownership that determines the development process; it is the latter which will be demanding ever more complex forms of definition of land tenure and ownership15 .
The seasonal sparsity of time for agriculture together with the opportunity cost in the utilisation of working time available to the family on the basis of gender and age, added to the conditions of technological stagnation and the deterioration of terms of exchange between agricultural and industrial products and services are determinants for rural development from which an endogenous development of the land market can unfold.
The scarcity of time in the face of technology being used led to the appearance of the imperfect substitution of working time for the production of food by working time for production for the market; this applies not only to agricultural produce, but also to the sale of other goods and services, for example, male labour. For this reason, in the absence of external constraints, such as working time, the land which constitutes the guarantee of consumption is neither salable nor replaceable by any other asset. That explains why among the poor the land cannot be used as guarantee for credit and a market can develop in the marginal lands. Access is intimately related to consumption, whilst tenure is related to the market; and these are not interchangeable. One can also understand why around a community territory, from the lineage lands to lands of enlarged and nuclear families, a myriad of relations take place. These move easily between the symbolic and the economic, which are the centres of the functions of distributing the plots and the wealth. Last, it explains why empirical evidence has shown that family agriculture has more economic efficiency than any agriculture of scale carried out on the Continent.
Work, in its full extent, from availability of time allocated in the privacy of the family in function of the technologies being used, up to quality in function of vocational training and level of schooling, going through organisational forms, as Reynolds said, arises as the determining variable in the rural development process, in the Continent's specific conditions16 . In other words, the growth of human capital and social capital are conditions sine qua non for development to take place17 . Technical progress cannot be exogenous to local dynamics, as claimed by Sollow; instead, it must derive from an endogenous accumulation of human and social capital, as shown by the endogenous growth theories. However, the production of rural wealth does not only result from internal conditions of the family and community economies. The international situation has its share of responsibility for the current situation of generalized poverty in Africa18 . The deterioration of the international terms of exchange and the terms of exchange between urban and rural products, as well as subsidies to agriculture by the countries of the North, are the two factors which the neo-liberal model ignored or pretended to ignore when formulating the land policy which ushered the structural re-adjustment in the African countries. The mainstream created two wrong presuppositions: first, that the markets for agricultural products have an endogenous self-regulatory capacity and, therefore, incline towards perfection19 ; second, that demand is unlimited and, therefore, it is the dimension of the supply and not the structure of the demand that is in question.
In the real world, markets are neither self-regulating nor is demand unlimited. These are the reasons given to justify the high subsidies to agriculture in the OECD countries. At a time of globalization and in the face of poverty in Africa, it is important that the North accepts that it must negotiate the structure of the international market for agricultural products; it is equally important to already start creating compensation funds for barriers to access to international markets making them available as risk capital for the agricultural sector.
But what should be done with this risk capital? It so happens that a distorted demand structure does not exist only at the international level. At national and regional levels the same proves to be true. Contrary to what is presupposed in the neo-liberal model, that the only problem is one of supply, countless case studies as well as daily experience demonstrate that the surpluses are not drained off, that value is not added to raw materials, and that there are many losses in the post-harvest period. The rapid development of small and medium agro-industry arises as a means of assuring demand, of adding value to African agricultural products, and of finding specialisation in function of national and international markets20 . Risk capital would then be utilised as the motive power for the development of small and medium agro-industries, which would effect an 'induced innovation' on the upside for the rural families with the consequent increase of supply, and the increase of aggregate demand on the down side.
I have presented four normative conditions for the alleviation of poverty: induced technological transformation; the growth of human capital in parallel with social capital; the existence of risk capital, and its utilisation in small and medium agro-industries which are directly dependent on the primary product of the rural families. Where does the land come in?
In the first place, credit does not arise out of the land, but from the accumulated savings of agro-industry, from savings deriving from an increase in production due to technological transformation, and from added value owing to specialisation geared for the market. So, credit arises together with the rural family, in function of the product and the savings assurance. Whilst these savings levels have not been achieved, it is necessary for risk capital to be made available with an origin from outside the agricultural sector. So, particularly at this moment, the fictitious argument about the utilisation of the land as credit guarantee is eliminated21 .
In the second place, access to the land by all who need it is an indispensable condition to ensure consumption and the retention of people in rural areas in place of urbanisation at an uncontrollable pace. There are two political consequences of adopting this principle: first, the redistribution of land, provided it is confirmed that a landless situation is occurring in a country where land is abundant; and second, the prevention of concentration of land for speculative ends or for leasing without any re-investment.
In the third place, security of tenure must be guaranteed to all who work and live on the land, whether individually or collectively. In other words, there must be a recognition of occupation rights, provided they do not arise from bad faith, and provided that there is effective use of and usufruct from the land. Sooner or later this security will have to require private appropriation; however, the state must retain the possibility of expropriation when the constitutional rights of the people are threatened by a given landowner or his or her agent22 . But how does one go about such registration, in the knowledge that the quantity of registered land in the whole of Africa is less than ten per cent, and that there are high costs involved with the said registration? However, there is evidence that the systems of land demarcation and division of plots in use are effective in determining the use and even the transfer of property rights among the poor. So, nothing prevents the recognition of registration conveyed by oral means in a framework of common practice, in parallel with the written registration, for the purpose of recognising the rights which have been acquired by the population. So, the two limitations which were found in the last decade in relation to registration have become obsolete because the possibility of recognition of the oral proof is given the same judicial validity as the title (the written proof); and the hypothesis of collective registration (community land) is admitted whenever the collective rationalities are predominant to the individual ones according to the explicit will of the people who reside there.
In the fourth place, the utilisation of the land as capital for the poor, in partnership with investments by third parties. As a result of land relationships established during the colonial period, Africa is the only continent where the dualism in the use of the land is maintained. On all the other continents the division of land use is in function of the area and dimension of the undertakings, comprising small, medium and large enterprises; but on the African Continent the difference between the entrepreneurial and the family (or 'subsistence') system still persists. The rationality of this division is tied to the presupposition that the family or domestic economy is essentially directed towards minimising risks, while the entrepreneurial economy will seek as a primary objective to maximise returns. But it so happens that evermore domestic productive units not only demonstrate a greater efficiency than the great agricultural estates, but also incline towards developing into family enterprises. It is obvious that the agricultural entrepreneurial model of the entrepreneur being the custodian, simultaneously, of capital and land, whilst the poor hold only work as their own, begins to be replaced by a model of the modern enterprise with shares, where the poor have land and labour, and the entrepreneur has capital and technical and marketing know-how; this results in a partnership between the two sectors on the basis of mutual advantage. These advantages become particularly significant when the partnership is related to the industrial transformation of the product (as in the case of industrial cultures), or with an intensive exploitation of the physical space (as in the cases of exploitation of indigenous species of wood, or the exploitation of wildlife for tourism purposes). However, the development of this type of partnership requires that, in parallel, an institutional framework be developed for the establishment of clearly defined contractual relationships, which can be periodically renegotiated between both parties23 . So, an unimodal approach to agricultural development will be adopted; this is the so-called Danish family model, to the detriment of the bimodal approach, also known as the English entrepreneurial model.
The fifth and last point on what to do with the land is how to incorporate local institutional mechanisms in the administration of physical space with the objective of guaranteeing the maintenance of inter-generational returns in the utilisation of the resources. The issue of administration of physical space is far from being a merely technical problem, which can be solved by means of a zoning of land use on a drawing board or computer screen. The complexity of planning is related not only to the bearing capacity of the soils, the productive potentials in function of the markets and of the technology applied, but also with a strong unpredictable component which has to do with human behaviour and technological innovation in areas such as new materials, or organically grown food. Furthermore, experience has shown that the institutional framework through which the physical space administration is processed is the Achilles heel of this activity. The fragility of institutions in the African states regarding the setting of norms and control, added to the deterioration of ethical values in the public service, manifesting itself in corruption, indicate the necessity to empower the already existing persuasion mechanisms at local level with the purpose of having them institutionalised into the system for registration law24. The incorporation of the local persuasion mechanisms will have as a consequence a greater and more responsible intervention by the citizen in the definition of the physical space where he or she resides or works. Consequently, it will be less and less probable that there will be a compulsory creation of villages in the rural areas, in the name of plans that are alien to the actual communities, and which continue to contribute towards the political, social and economic instability of the Continent.
To sum up: first, the land needs public and private investment and, under current conditions, it cannot be transformed into goods that can be perfectly converted into capital. Second, access to land must be guaranteed to all persons who wish to work. Third, security of land tenure begins by recognising occupation rights and may be terminated by private appropriation with social limitations by the consubstantiated in the state's institutions. Fourth, the land may and must be used as the poor people's capital. Fifth, the persuasion mechanisms of the local institutions must be institutionalised into the administration of the physical space.
Footnotes:
- Moreover, the same happens in the OECD countries. In 1999 the OECD countries spent US$ 360 billion in agricultural subsidies; that is the equivalent of approximately 1 billion dollars per day in subsidies. in OECD, 2001, Agricultural Policies in OECD Countries: Monitoring and Evaluation.
- I make use of the concepts 'registered' and 'non-registered' in place of 'formal' and 'informal', in the understanding that there is a series of formalities of institutional character in the so-called informal sector or market, making them undeserving of that designation.
- So the neo-institutionalistic postulate, in North's version, is inverted. According to it, priority is given to the definition of private property as an indispensable element for development to take place.
- Reynolds, Lloyd, 1971, The Three Worlds of Economics, London: Yale University Press.
- As Barros and Akiko have demonstrated, in order for human capital growth to have direct effects upon the development process at local level it is necessary that there be a parallel growth of social capital, as one cannot dissociate private returns from social returns in cases of extreme poverty (Akiko, Abe, 2002, "Social Capital, Institutions and Participation", mimeo, Maputo; Barros, Carlos et al. 2001, "Human Capital and Social Capital in Mozambique", mimeo, Lisbon).
- Mellor Johnston said that rural development could take place in an inward orientated economy and, depending on the situation of the moment, with external markets; however, empirical evidence shows that, because of historical reasons, as well as reasons pertaining to the nature of economic behaviour of the family units, relations with external markets tend to have a structural character (Hayami, Yujiro & Ruttan, V, 1985, Agricultural Development: an international perspective, Baltimore: The Johns Hopkins University Press; Negrгo, Josй, 2001, Cem Anos de Economia da Famнlia Rural Africana, Maputo: Promedia.
- Strangely, an identical presupposition was adopted by OXFAM UK in its international campaign of 'fair trade' - remove the subsidies from the North and the international agricultural produce market will regulate itself!
- Hayami, Yujiro & Ruttan, V. op. cit.
- There is no Commercial Bank in Africa which will accept giving credit to the poor having the land as collateral. For the simple reason that, in cases of non-payment, administrative costs are so high that they do not justify the risk.
- This formulation is not only valid for entrepreneurial land speculators (as is the case, for example, in Egypt), but it is also valid for community leaders who despotically eliminate the persuasion mechanisms of the local institutions in function of individual interests (as has happened, for example, in Malawi and Tanzania).
- Alessandro Marini makes detailed reference to the theoretical framework of the partnerships, defending the neo-institutionalistic approach which fundamentally supports the advantages resulting from the minimisation and the sharing of risk among the various endorsers. See Marini, A, 2001, "Partnership between local peasants and large commercial investors" in Land Reform, Rome: FAO.
- For the abovementioned reasons, I prefer to use the concept of System for Registration Law instead of System of Positive, Statutory or Formal Law.
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