The continued closure of the Land Registry and Land Administration offices in Kampala means greater losses, more trouble and lost opportunities for real estate companies, banks and individual land dealers.
The offices were closed by the ministry of Lands, Housing and Urban Development December 2012 to allow for the computerization of over 500,000 land titles. The process is being undertaken by a French firm, IGN France, at a cost of $10m (Shs 26bn). They were supposed to be reopened in January 2013 but the ministry now says a new date will be communicated, particularly for the land offices in Kampala and Wakiso, which handle the bulk of transactions.
This continued delay to reopen the offices has affected the businesses of real estate dealers and banks. Emmanuel Kikoni of the Uganda Bankers Association said he had not fully examined the issue but added that "it will certainly affect the operations of the banking industry, especially if it is going to be for long".
A banker in one of the top commercial banks said they were seeing a reduction in borrowers because many people use land titles as collateral for loans. A big portion of profits declared by many commercial banks accrues from interest charged on loans. According to Bank of Uganda's Annual Supervision report for 2011, the latest, the profitability of commercial banks rose in nominal terms (to Shs 488.3bn from Shs 268.7bn in 2010) and it was mainly driven by bank lending and the rise in lending rates during the second half of 2011.
"As a share of total financial income, income from loans and advances rose from 53.7 per cent in 2010 to 62 per cent in 2011," the report notes. Therefore, a decline in lending will inadvertently affect the profitability of banks.
Derrick Anguzu, Managing Director of Aderok Real Estates, told The Observer that they have experienced a reduction in business by up to 50% since the offices were closed.
"You get one client in a week and even then verification of land titles takes ages. This has scared away many people," Anguzu said.
The closure in December could not have come at a worse time for the land dealers who normally do brisk business during the festive season. Dennis Obbo, spokesperson of the ministry of Lands, Housing and Urban Development, advised the land dealers and banks to be patient.
"We are trying to streamline the system for the common good. I know this can be inconveniencing but there is no shortcut," Obbo said.
He explained that at the moment only four zonal offices are operational although they are understaffed. These are Masaka, Mbarara, Jinja and Mukono.
Obbo says the computerization of land titles is expected to curb the increasing cases of forgery of land titles and related fraud.
"We shall no longer be having multiple transactions. There will be no cases of missing titles," he said.
Obbo added that there will be a reduction in time and costs involving land transactions while banks and courts of law will be in position to promptly access information regarding land titles, online. In the recent past, unscrupulous people have exploited the paper system to forge titles and falsify information. There have been cases where more than two people claim to be in possession of a single land title.
Yet the computerization of the titles might not be the magic bullet that eliminates fraud and forgery in the land office. A couple of years ago, the ministry of Public Service computerized the pension payment system, hoping that would eliminate fraud and weed out ghost pensioners. But last year investigators uncovered a scam in the ministry, whereby some officials manipulated the system, connived with bank staff and stole an estimated Shs 169bn meant for pensions. Investigations are still ongoing.
Last week, Idah Nantaba, the minister of state for Lands, revealed that the information on some of the titles being computerized could be false.
"There are cases where the surveyors took wrong measurements which are reflected on land titles," she said at the inauguration of new members of the Surveyors Registration Board. This means that some titled land might have to be resurveyed and new titles made before they are computerized. This will definitely call for more time, but the banks and land dealers can't wait.