Land title, tenure security, credit and investment in the Lower Shabelle region, Somalia

Price inflation in excess of 45% per annum between 1980�86 and banking disruptions have shifted incentives away from financial assets toward land or commodities (e.g., gold) in investment portfolios. Saudi Arabia"s import embargo on live animals from Somalia (pending vaccination and quarantine measures) has severely curtailed animal exports and foreign exchange earnings and lowered economic incentives in the livestock sector. Official development assistance, which averaged $80/capita and 21.2% of GNP in 1985�86, has increased the supply of irrigated land and increased investors" expectations of economic returns in the river valleys. The 100% real increase in official maize prices between 1980 and 1985, the recent cut in food aid imports by donors, and market liberalization policies have sharply increased both private and official market incentives. The interplay among these factors has influenced rural land markets in three principal ways: (l) rising demand for land, particularly for irrigable land in Somalia"s river valleys, has led to rising land value and to mounting claims of counter�productive land speculation and land grabbing; (2) urban residents, traders, and civil servants have been important actors behind this land acquisition; and (3) rising land values and land speculation are raising concerns of inadequate tenure security and incentives for farm investment. Economists using a narrowly defined neoclassical model have derived hypotheses that individualized tenure, typically leasehold or freehold tenure, is superior to traditional tenure systems because it increases security of property rights, enhances credit access, and increases credit and investment demand. This paper examines the linkages among leasehold registration, tenure security, credit and investment in the context of irrigated agriculture on the Lower Shabelle river. It further examines the self�selection biases of households and parcels associated with title status under a sporadic system of registration. Policy implications of the research are then discussed along with some of the proposals for reforms in land policy and land registration that are now being considered by the Government of Somalia based on this research. (Author abstract)