Guiding Principles:
Land Tenure in Development Cooperation

Orientierungsrahmen:
Bodenrecht und Bodenordnung

Deutsche Gesellschaft
für Technische Zusammenarbeit
Abt. 45 / Div. 45

Divestiture is a generic term for worldwide macro-economic reform processes having the goal of reducing the degree of direct governmental influence on agriculture, industry and the service sectors and allowing market forces to become more effective.

Divestiture occurs through structural adjustment programs which were started in the 1980´s in a growing number of Latin American and African countries under the supervision of the International Monetary Fund and the World Bank. The programs comprised the currency devaluation and the reduction of trade interventions with the help of fiscal and monetary policies and the dissolution of inefficient and oversized public sectors to the benefit of private sectors. Liberalization was not limited to product markets, but also included the creation and increased efficiency of land and other factor markets. This required reforms of the institutional environment, especially of land tenure systems.

With the fall of the former Soviet Union and the "Second World," a profound restructuring process took place for a further group of countries in the economy and the society "from plan to market" (World Bank 1996). An economic order based on central government planning gave way to a new order with a decentralized market economy. For many African countries, the former Soviet Union and Indochina, this meant a totally new legal and regulatory framework: separation of powers, new land, contract, family and inheritance legislation and the implementation of this framework on the regional and local levels.

The dissolution of large state landholdings with wage earners and productive cooperatives (LPG in the former GDR, kolkhozes) enforces the family farm as one model besides others (autonomous cooperatives, agro-industries). Its success as an economic form and way of living depends on secure ownership and user rights to land, either as registered private property or through permanent user rights which can be bequeathed (e.g. hereditary tenancy) or other forms of lease (fixed lease with a monetary or labor payment or as shareholding). Thus, the organization of land cultivation and land tenure reforms are interwoven with one another and cannot be divided.

Though family farms are favored by many governments as the most suitable organizational form of land cultivation, the people especially in the former socialist countries fear competition in a free market economy and the many and diverse risks associated with entrepreneurial activities. Correspondingly, cooperative forms of production, marketing, supply and credit remain attractive for them despite the discreditable concept of the cooperative by forced collectivization. Too little has been publicly discussed to date whether the new creation of registered private property is really a necessary prerequisite for households and/or farms willing to work cooperatively (supporting cooperatives) or whether also certain long-term lease conditions can be offered to families who leave the collective to become self-employed. This would be possible, for example, in Russia within the current legal framework and without the necessity to wait for the lengthy process of decisions concerning the introduction of private property together with the appropriate administration (see as well 3.10.2).

The decision makers as well as the rural population in countries undergoing transformation and reforms fear the distributional effects and the social consequences of deregulated land markets. Large-scale land speculation, land concentration, total sale of land to powerful urban groups, and landlessness are feared. As a result, most governments favor strong social ties in property ownership. This is manifested not only in the fact that state reservation of title of property and land remains in existence, but also in prohibitions and restrictions of sale and leasing or prohibiting the sale of land to foreigners. Parallel, "gray" markets are tolerated as a result.

Restitution of landed property to former landowners and users is of central significance in the transformation process not only for the German reunification, but also for other countries undergoing transformation in Central and Eastern Europe and in some developing countries. Due to the socio-politically explosive nature of this core question, the majority of the parliaments and governments decided on a very restrictive approach keeping the circle of beneficiaries small.

Under 5 hectares

< 100 hectares

over 100 hectares

(in percent)

Independent of the country-specific path and the instruments used for divestiture, the actors involved are striving towards regulations based on rule of law for the transfer of land and in the case of conflicts and changes of its use. Key topics include the following: heeding the separation of powers, criteria set by the administration which are comprehensible for the public for deciding on land distribution, price determination, taxation, etc. (cf. 2.2).

In many countries such as Ethiopia or Cambodia which have seen the most different dictatorships and political regimes come and go within a generation, however, the people are not acquainted with attested rights uninfluenced by arbitrary rulers.

The new designing and redesigning of the legal and regulatory framework are used to create consistent regulations valid not only for the access and use of land, but for all other economically usable natural resources as well. This resource legislation is supposed to optimally record the diverse interdependencies between different resources (e.g. agroforestry, agriculture in conjunction with pastoralism, irrigation agriculture or preservation of biodiversity and agricultural production), to consider the environmental impact and to attribute the impact to the responsible parties. This enables the sustainable use of resources for the following generations. National and regional environmental and forestry action plans, developed as a result of the UNCED process, support the realization of the new approach. The discrepancy between the complex lead models and implementation in reality is considerably large, however.