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Archived Discussion - September 2004

Can Formal Property Titling Programs Ensure Increased Business Investments and Growth?

Moderated by Caralee McLiesh and Richard E. Messick

Many developing countries are beginning to implement titling programs to secure property rights, recognizing that they can go a long way in encouraging business investment, productivity and growth. With formal property titles, entrepreneurs can get mortgages on their homes or land, and launch businesses.

But property titling programs by themselves arent enough to foster private sector growth unless property registries are streamlined and efficient. Many such programs in developing countries provide little security of ownership. And formal titles quickly revert to informal status because registration procedures are costly and time-consuming. For example, in the average African country, a simple, formal property transfer in the largest business city costs 14 percent of the value of the property and takes more than 100 days.

Broader business environment reforms are also needed to accompany property titling reforms if they are to be effective. A title in a country with poor contract enforcement or collateral laws may be of little value to an entrepreneur.

Some argue that more regulation and a formalized property registration process ensure more due diligence and strengthen property rights. But others say that complex regulations increase uncertainty, transaction costs, and chances of fraud.

Many developing countries are taking steps to reform property registration procedures by simplifying and combining them, linking and unifying agencies involved, and providing easier access to registries.

Discussion Questions

What are some other types of reforms needed to register property easily, and how should they be implemented? Although countries cant overhaul the entire business environment along with property titling programs, what are some smaller steps they can take? Can the use of technology be an effective way of streamlining registration procedures in developing countries? Do you think that more regulation and a formal property registration process are needed to secure property rights in developing countries?

Notable quotes
"Yes, it's a shame if a title, once entered, is lost, or if transfer of title is slow, but the deal-killers all come before that - with settling disputed claims, getting the land surveyed, and getting past myriad government approvals..."
- Jacqueline Coolidge

Background reading
Property Registration, from Doing Business in 2005, World Bank
(PDF, 127KB)

Land Policies for Growth and Poverty Reduction, by Klaus Deininger
(PDF, 1.6MB)

Reforming Land and Real Estate Markets, by Ahmed Galal & Omar Razzaz
(PDF, 115KB)

World Development Report 2002 chapter on farmers, World Bank
(PDF, 215KB)

Administrative Barriers to FDI, by Jacques Morisset & Olivier Lumenga Neso
(PDF, 62KB)
Recent discussions
Doing Business in 2007: How to Reform Sylvia Solf and Svetlana Bagaudinova

How to Help Technology Help African Entrepreneurs? Naomi Halewood, George Clarke and Rob Henning

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