THE Department of Land and Property Sciences at the Namibia University of Science and Technology (NUST) has carried out a study entitled, ‘Leasehold as a Vehicle for Economic Development – A case study of small-scale farmers in Oshikoto Region, Namibia’
The study was carried out by Dr Wolfgang Werner and Charl-Tom Bayer from the department, in conjunction with the Legal Assistance Centre (LAC).
The study investigated the reasons for the low number of registered leaseholds, as well as the reasons for financial institutions rejecting long-term leaseholds over State land as collateral.
“One of the challenges faced by small-scale farmers is that financial institutions do not accept registered leaseholds over State land as collateral, because they are not allowed to sell a leasehold, in case the borrower defaults,” said Dr Wolfgang.
“We found that without an active land market that allows the easy transfer of leases, leased land has no collateral value. A basic condition for any asset to be used as surety is that it must be able to be sold in case of loan defaulting,” he added.
The study also revealed that for a registered leasehold to serve as a guarantee, a legal land market must be allowed to develop. Such a market should be regulated to reduce the risk of compromising the objectives of the land reform programme.
Furthermore, the study indicates that the development of a legal land market will also have other positive impacts on resettlement. Legalising the sub-leasing of land allocated under the resettlement programme, will provide protection for a practice that is already widespread.
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