Sustainability of the LTR Program in Rwanda

Daniel Ayalew Ali, Klaus Deininger, Marguerite Duponchel, Hoza Thierry Ngoga

Annual World Bank Conference on Land and Poverty25 March 2015

The LTR program in Rwanda

• Rwanda, with a support from DFID, successfully implemented a low cost, imagery-based land demarcation and certification program (since 2010)

• In about 3 years,• 10.4 million parcels were demarcated• 8 million certificates were issued, of which about 5.8 million were picked up

• Impact of LTR• Improved perceived tenure security• Improved women’s access to land and land rights• Increased land rental market activities• But, not clear impact on land-related investment due to short time span

But… challenges for the sustainability of the system

• Two main concerns:• Completeness

• Disputes, payment of registration fees, difficulty identifying owners, etc.• Registration of subsequent land transactions

• Sales (including prices), inheritance, mortgages, etc.

• Monitoring is thus critical• Administrative and survey data are needed• The panel data collected for the impact evaluation give highlights

• On coverage• On rate of land transaction, and• Level of informality

Completeness: demarcation and certification

Percent Number of Parcels

Parcel demarcated at the time of registration 97.3 5501

Have the lease contract and land certificate 74.3 4939

Source: ongoing survey 2015

Share of rural households participating in land transactions over a period of 3 years

2011 (Before LTR) 2015

Land sales market

Purchased land 21.0% 14.7%

Sold land 8.8% 16.4%

Inheritance and gift

Acquired through inheritance and gift 14.6% 12.5%

Given out land in the form of inheritance and gift N/A 14.0%

Total Number of households 3600 1491

Sold parcels in Kigali (2013 registry – 6500 parcels)

Level of informality of transactions

Transferred-in Transferred-out

All Types of Transactions N=674, Size=0.11 ha N=635, Size=0.11 ha

Completely informal 36.1% 64.3%

Only informally registered with the village leader 18.7% 19.7%

Officially registered at the DLO/Deputy registrar 45.3% 16.1%

Through Land Market N=307, Size=0.11 ha N=319, Size=0.10 ha

Completely informal 31.6% 62.1%

Only informally registered with the village leader 32.9% 24.5%

Officially registered at the DLO/Deputy registrar 35.5% 13.5%

Through Inheritance and Gift N=275, Size=0.11 ha N=316, Size=0.12 ha

Completely informal 33.8% 66.5%

Only informally registered with the village leader 4.7% 14.9%

Officially registered at the DLO/Deputy registrar 61.5% 18.7%

Why transactions are not officially registered?

Main reason for not registering PercentLack of information 21.73Not interested (why???) 13.39Too expensive 17.56Previous owner not cooperating 2.68Office is too far 0.89Dispute related 0.6Will do it later 14.58Other 28.57

Determinants of transaction registration

  Transfer-inPurchased/sold parcel -0.115**

(-2.365)Government allocated parcel 0.073

(0.559)Parcel size 0.040**

(2.194)Has certified parcel 0.184***

(2.942)Distance to DLO in km 1.518***

(3.398)Distance to DLO squared in km -0.278***

(-3.206)Year acquired -0.195***

(-6.603)Value of household assets -0.007

(-0.343)AGE, GENDER, HEAD’S EDCUATION INCLUDED, BUT NOT SIGNIFICANTNumber of observations 597

Effect of distance to DLO

-.6

-.4

-.2

0

.2

.4

8.73 11.98 14.49 16.80 23.08Distance to DLO in km

on Transaction RegistrationMarginal Effects of Distance to DLO in KM

Potential obstacles to registering transactions

• Lack of information

• Accessibility

• Fees for transaction registration

Information campaign: Land week

• Recognizing high level of land transactions and the resulting informality, RNRA launched its first land week event in May 2014

• Encourage landowners to register their land transactions• Encourage landowners to collect their leases and certificates

• How was it done?• Meetings with local leaders• Public meetings at sector and cell levels• Performance by local artists with land week messages• Media (Radio, TV and new papers) were used to communicate land week messages

• Coverage• 150 sectors from 25 districts were covered during the first land week event• The second land week event is currently underway• Recorded transactions increase from less than 10,000 to about 75,353 after the first

land week event

Determinants of transaction registration

  Transfer-inParticipated in land week meetings 0.150***

(3.192)Purchased/sold parcel -0.125**

(-2.551)Government allocated parcel 0.039

(0.299)Parcel size 0.037**

(2.006)Has certified parcel 0.193***

(3.094)Distance to DLO in km 1.396***

(3.199)Distance to DLO squared in km -0.256***

(-3.014)Year acquired -0.202***

(-6.756)Value of household assets -0.005

(-0.266)AGE, GENDER, HEAD’S EDCUATION INCLUDED, BUT NOT SIGNIFICANTNumber of observations 597

Accessibility: Process for transaction registration

Applicant

• Compile documents for the transaction: (i) proof of ownership, transaction agreement, marriage certificate, proof of identity (ii) depending on type: extract cadastral plan, court decision, tax clearance certificate

• Submit application to the Deputy registrar through the district land office (DLO)

District LO

• Verify authenticity and completeness of the documents and file them• Book the request for transaction (LAIS)• Accept the request for transaction• Transaction proceed in the LAIS (transaction captured and changes are made)

Deputy

registrar

• Approve the transaction• Sign and print the certificate (done automatically by the system)• Seal the original certificate and stored at the office of the Deputy Registrar• A duplicate certificate will then be sealed and forwarded to the DLO for issuing to the applicant

Improving accessibility: Sector land mangers notarizing land transactionsN=30, Avg area=810 sq km N=416, Avg area=58 sq km (7%)

~70 in place, rest in the process

Fees for transaction registration (27,000 RwF)

• 20,000 RwF transaction fees• 5,000 RwF for the new title• 2,000 RwF for notary services

• Other costs?• Cost of transportation to the DLO• Covering costs incurred by witnesses, etc.

Transaction fee and property value in Kigali (2013) and rural areas (2011/12)

Percentile of sale value of properties

Transaction fee rate in percentKigali (admin data) Rural Areas (survey data)

10 4.22 86.420 1.59 65.130 1.09 53.440 0.83 41.750 0.64 32.360 0.48 26.870 0.35 21.380 0.26 17.190 0.17 12.3

100 0.08 6.87Mean 0.93 33.8

Note: Rural parcels with sale value of less 27,000 RwF are dropped from the analysis (76 out of 560 parcels).

Transaction fee rate based on rural households willingness to pay

Percentile of sale value of properties

Transaction fee rate in percentKigali (admin data) Rural Areas (mean

WTP=3582 RWF)Rural Areas (median

WTP=1000 RWF)

10 4.22 11.46 3.2020 1.59 8.64 2.4130 1.09 7.08 1.9840 0.83 5.53 1.5450 0.64 4.29 1.2060 0.48 3.56 0.9970 0.35 2.83 0.7980 0.26 2.27 0.6390 0.17 1.63 0.46

100 0.08 0.91 0.25Mean 0.93 4.48 1.25

But,… a more in depth analysis is needed

• Required information:• Number of parcels disaggregated by use and location (administrative data)

• Estimates on the incidence of market and non-market activities (survey and administrative data)

• Information on land prices (survey and administrative data)

Concluding remarks

• Subsequent transaction registration is key for the sustainability of the program

• Actions being taken by GoR so far:• Information dissemination (land week campaign)• Accessibility (hiring of sector land managers)• Potential revision of transaction registration fees

• Given these measures, will the land administration system be financially sustainable?

• Cross-subsidization from urban to rural areas depends on the magnitude of transactions in urban areas

• Gradual scaling up of sector land managers is an option