Tanzania's Bank reject customary land titles for loan security

Certificates of customary rights of occupancy were issued to, among other things, help farmers acquire loans by using them as collateral. However they are still not useful for the purpose.

Banks financial institutions and even the Agricultural Inputs Trust Fund, reject the certificates as collaterals in acquiring loans despite being legal documents. The reason is clear.

The certificates of customary right of occupancy cannot provide the security required to provide loans to farmers because agricultural sector perceived to be of high risk and prone to many negative factors, including unpredictable weather and price fluctuations.

The Minister for State in the Prime Minister’s Office (Empowerment and Investments), Christopher Chiza said in Dar es Salaam last week that one of his priorities would be to work out strategies that will ensure Certificates of customary rights of occupancy were accepted as collateral by banks and financial institutions.

The minister said he would engage the Ministry of Finance and Economic Affairs and that of Lands, Housing and Human Settlement to come up with better arrangement that will ensure that the deeds were accepted as collaterals in loan acquisition from banks and financial institutions.

“I cannot solve this problem on my own. It involves other ministries. We must involve other ministries to come up with a more friendly approach that will help farmers access loans by using their land,” he said.

An expert from the Land Rights Research and Resources Institute (LAARI), Cuthbert Tomito said in interview that despite being legal documents, the certificates provide no security to loan provider.

He said to address the problem the Village Land Act No 5/1999 needs a review to empower district and village councils to administer land issues. He said for the time being the district councils lacked capacity in terms of funds, skills and equipment to administer land issues.

“We think we district and village council should be given more powers to administer land issues,” he said. “Capacity building and awareness campaign are important but banks and financial institutions should reach out to the people to educate so as to raise awareness on their financial services what is required for the people to acquire loans.”

He said LAARI had presented their proposal for some changes to the Village Land Act of No. 5 of 1999 to the Constitution Review Commission (CRC) but were not included in the final process. “May be if the proposed constitution is approved the law would be reviewed to to take on board the changes we proposed,” he said.

Agriculture is the lifeline of the economy in Tanzania contributing about 27.6 per cent of the total national economic output and employing about 75 per cent of the population.

The sector is dominated by smallholder farmers who hold average farm sizes of between 0.9 hectares and 3.0 hectares and cultivate 5.1 million hectares annually, of which 85 per cent is food crops, according to available data.

The Village Land Act of 1999 recognises land held under customary tenure arrangements and legally empowering village governments to manage Village Land and outlines procedures for obtaining a certificate of “Customary Right of Occupancy.”

The law provides that a “customary right of occupancy is in every respect of equal status and effect to a granted right of occupancy.”

However, according to law experts the arrangements are not effectively implemented or enforced and as a result it has done little to improve the security of customary land for most poor rural populations.

Government officials do not recognise customary land rights as equal to statutory rights, and they do not respect the legal authorities of village government over Village Land.
Source: Daily News, reported by Henry Lyimo, from Dar es Salaam, Tanzania
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