How to use blockchain technology to unlock real estate potential in Uganda

Uganda is recognised as having a complex land tenure system. With a number of land tenure systems including freehold, leasehold, private mailo, customary freehold and crown land, all sometimes existing within the vicinity of each other.

In addition to having a complex land tenure system, the land administration process including land registration and titling, land sale/purchase and conveyancing is also complex and subject to fraud, corruption and errors with resulting inefficiencies in collection of taxes and dues and challenges in maintaining a secure land registry, uncertainty in land and property rights.

This is a reflection of and exacerbated by poor controls and governance within the organisations and communities responsible for overseeing land be they public or private lands. The challenges with Uganda’s land administration process have been well documented including by the ongoing Land Inquiry Commission headed by Hon. Lady Justice Catherine Bamugemereire.

For example, according to Ministry of Lands, Housing and Urban Development (MLHUD), as of 2016 approximately 19% of land in Uganda is held under freehold tenure, approximately 45,800 sq km.

For freehold tenure, Uganda uses the ‘Torrens’ system of land registration. The Torrens system was designed to provide certainty as to title since it requires duplicate documentation be held by a central office, and by the rightful owner of the land.

Transactions should only take place when the two documents are seen together. In practice, evidence has shown the application of the system in Uganda is not foolproof, with problems of fraudulent documents as well as a poor system of land records which contribute to inefficiency and lack of transparency in land administration with incidences of more than one title for the same piece of land being common.

Furthermore, information from the Uganda Legal Information Institute shows that there is a high prevalence of cases linked to land fraud in the courts and legal system. According to Liz Neate's The lie of the land released in June 2017, over the period 2011 – 2016, cases related to land fraud accounted for on average 10% of all cases coming to the courts.

However, these challenges are not unique to Uganda with similar challenges being identified in other jurisdictions such as Ghana, Honduras, Brazil, India and the UK where cases of an inefficient land administration process and land and title registry fraud are either rampant and or on the increase. With land recognized as a key investment asset and core to identity and community.

In addition, right to and protection and validity of property rights are key to doing business in any economy. Is it not time the challenges with Uganda’s land administration process got resolved once and for all?

There is a case for using blockchain technology in the land administration process. At the very heart of blockchain technology through its distributed ledger technology and consensus protocols is a set of rules and checks that inherently help reduce fraud, corruption and error while streamlining the collection of taxes and maintaining a secure land registry all at a reduced cost compared to existing centralized solutions.

Fortunately, blockchain technology is already being applied to the land administration process with solutions being piloted and explored elsewhere globally, some examples include:

Bitland: Streamlines and automates the entire land registration process so it provides a better system of record. Bitland combines automation with blockchain technology. Bitland is currently piloting in Kumasi, Ghana with plans to scale globally.

Related: Here’s how Blockchain technology is fixing what the internet had failed.

Ubitquity: Based in Delaware, USA and offer the ability to securely recording and tracking property with a Software-as-a-Service (SaaS) blockchain platform to provide a clean record of ownership, reduce future title search time, increased confidence and transparency. Ubitquity is currently piloting with the Land Records Bureau in Brazil.

Suyo: A social enterprise based in Colombia and formed out of a project under Mercy Corps and funded by Omidyar Network. Suyo offer property formalization services to low-income families in Colombia including a property assessment with a mobile app, legal and technical analysis, case preparation and all of the corresponding governmental clearances and transactions at a fraction of standard market rates.

Chromaway: Use a ‘Postchain’ or the consortium database, combines the power and flexibility of mature database systems with the secure collaboration and disruptive potential of blockchain. ChromaWay has previously piloted a real-estate blockchain project in Sweden and is currently trialling the blockchain in India.

Dubai Land Department: Dubai's land registrar is developing a system that would seek to record all local real estate contracts on a blockchain as part of overseeing land purchases and approving real estate trades. The project is part of a plan to secure all government documents on a blockchain by 2020.

Reviewing some of the applications of block chain to real estate highlighted above, it is clear that adopting blockchain technologies may be a solution to the land administration challenges in Uganda and also unlock wider potential through efficiencies in the real estate value chain.

Any blockchain solution would have to work with and complement the existing land registry processes and ongoing reforms especially under the National Land Information Survey (NLIS) project under the Ministry of Lands Housing and Urban Development (MLHUD) here but look to use blockchain technology to improve the governance, controls and approvals required in a decentralized and transparent manner and at scale working across the various stakeholders involved including the Land Registry, Uganda Revenue Authority, MLHUD, banks/financial institutions, landowners, landlords and trustees among others.

The implementation of a blockchain for the land administration process would have to be designed to ensure benefits are maximized including speed up of transactions, reduction in paper work, reduction in fraud and transaction costs. On this real estate blockchain backbone can be built other services linked to property and real estate such as collection of rental incomes, payment for utilities and bills associated with properties, asset management, renovations and repairs, title deed insurance, collateralized financing, investment property, etc.

By adopting blockchain technology for real estate, not only will we address current bottle necks but one can also scale and optimize the real estate value chain.

Digest Africa

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