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Costing and Financing of Land Administration Services (CoFLAS) in Developing Countries

Conference on Land Policy in Africa, 14th November 2014, Addis AbabaSolomon Haile (UN-HABITAT) and Kate Fairlie (Land Equity International)

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GLTN BRIEFING AND PROGRAMME

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GLTN Partners and other involved in COflas

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Overview • Setting the scene• CoFLAS implementation• Financing LAS• Key decisions made in LAS Reform• Next Steps• CoFLAS Tool

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What is CoFLAS?

Costing and Financing of Land Administration Services for developing countries

Decision-support tool for land administration

Assesses the readiness of a country and its responsible agencies to invest in LAS reform

Fit-for-Purpose approach as an overarching framework for CoFLAS

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CoFLAS: Development Process

CoFLAS tool developed 2013 – 2014

History of development includes: •Preliminary investigation by Lantmäteriat in 2011•Desk and literature review early in 2013•Preliminary discussions with DG/SGs in Abuja in May 2013•EGM in Rotterdam in May 2013

– questionnaires and country case studies•Piloting and refinement of questionnaires > data gathering•EGM in Sweden in October 2013 > Clarification of scope•Preparation and review of draft report in May/June 2014•Presentation in FIG 2014 > DG/SG presentations, GLTN session•Validation workshop in Bangkok October 2014•Pilots and refining of tool

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CoFLAS: Objectives

• All well established LAS have evolved over long periods (simple systems with limited cover > sophisticated systems with wide cover)

• Policy-makers aiming for ‘modern’ systems in shorter timeframe

• LAS reform projects long timeframe, large investment

• Governments and Development Partners need to prioritise their investments

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Early challenges• Different needs for Developed/Developing LAS

– Do we look at getting critical mass (eg Ethiopia, Rwanda, etc)– Do we restrict the tool to approaches appropriate to developing

countries

• Definition of ‘land administration services’, or ‘land services’

• Definition of ‘land revenue’– Annual property/land taxes (ground rent, lease payments, school

levies, LGA rates, utility fees (water, sewerage, etc.) etc)– Transaction fees and taxes (fees, stamp duty, capital gains tax,

etc.)– Other revenue (permits/approvals, sale of maps/data, GRN/CORS

revenue, fees for registration of professionals, etc.) – Sale of state land (including urbanisation)

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Early Challenges• Defining costs

– Different levels of government (central/state/LGA)– Mixed responsibilities– Routine (recurrent)/Project (development)– Cost/expenditure categories

• Sharing of revenue– Levels of government– Private service providers

• Evolving modes of service delivery– Public service– Government trading enterprise– Mixed public/private service– PPP (eg Ontario, India)

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Scope clarificationCoFLAS is intended as a tool to support:

– Land sector staff in preparing proposals for LAS reform– Land sector policy makers in assessing/proposing a

case for land reform– Key government agencies in reviewing LAS reform

proposals and ensuring value for money

Focus on developing countriesFormal end of continuum of land rights

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GLTN BRIEFING AND PROGRAMMEGLTN BRIEFING AND PROGRAMMEGLTN BRIEFING AND PROGRAMME

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•The continuum of land rights is a key concept in the work of GLTNThe continuum ranges between the two extremes of highly informal and

highly formal land rights. In between these extremes lie a wide and complex range of rights. The following diagram illustrates this in a simplified way:

Continuum of land rights

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Fit-for-purpose Land AdministrationFit-For-Purpose LA is based on four principles:

•General boundaries rather than fixed boundaries

•Aerial imagery rather than field survey

•Accuracy relates to purpose rather than technical standards

•Opportunities for updating, upgrading and improvement can be implemented over time

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CoFLAS Report

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Reflections • CoFLAS fulfills a real need• Opens up the process of LAS reform to

‘outsiders’ (both policy makers and land professionals)

• Highlights key decisions– Strategic approach to building LAS– Resourcing LAS– Survey methodology– Fixed/general boundaries and boundary markers– LAS service delivery

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CoFLAS Implementation Stages

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CoFLAS – Stage 1

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• Existing System:– Key issues (LGAF, other analysis)– Plans for LAS reform

• Piloting of efficient processes• Requirements for legislative changes• Stakeholder consultation

– ICT strategy– Sector capacity development plan (TNA, HR Strategy)– Planning, M&E– Government/DP activity and interest

Stage 1: Context for LAS Reform

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Establishing a comprehensive LAS typically involves:•Completing first registration•Establishing a spatial framework for LA•Establishing physical infrastructure to support LAS•Implementing ICT to support LAS•Capacity development•Project management

Stage 2: LAS with Broad Geo. Cover

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(Burns adapted from Simpson, 1976)

Stage 2: LAS with Broad Geo. Cover

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Stage 2: LAS with Broad Geo. Cover

• Likely unit costs for systematic registration:– Adjudication with substantial work by local volunteers and

with no spatial framework for $1/parcel– Systematic registration can be undertaken for:

• about $9-10/parcel with little investment in mapping/GRN• about $15-20/parcel with investment in mapping/GRN

– Ground survey methodology is likely to be +$50/parcel

• SR also involves HR - ~50 parcels/person month

• Conversion - ¢ > $ /parcel – needs to be cost effective

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Stage 2: LAS with Broad Geo. Cover

Spatial framework:•Few countries have invested in new GRN (Tanzania -$6.1 M 70 primary/600 secondary, gravity)•CORS

– Typical unit cost $30-40,000– Additional costs if infrastructure required– Various accuracies

• 0.5m – 1 CORS/500 km2

• 1-2cm – 1 CORS/70 km2

– Operating costs can be significant ($500-1000/month)– Additional effort to make available to users

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The staff requirements for LAS service delivery will depend on: •How LAS services are to be delivered and roles and responsibilities•The nature and complexity of the LAS processes and procedures•The tasks that are expected of staff assigned to LAS service delivery•The completeness and comprehensiveness of the LAS records •The level of land market activity, user demands (may be seasonal)

Stage 2: LAS with Broad Geo. Cover

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CoFLAS – Stage 3

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Stage 3: Cost of Running LAS

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Stage 3: Cost of Running LAS

Country PPP Conversion Factor

Albania 45.9Denmark 7.9Georgia 1.0Lesotho 4.8Netherlands 0.8New Zealand 1.5Norway 9.1Peru 1.6Rwanda 271.7Sweden 8.9Thailand 17.5

(Source: World Bank, WDI, 2011)

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Stage 3: Cost of Running LAS

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USD (PPP)/ Property

Management Registration Cadastre Other

1 Single agency, central back-office. Flat organisation structure. Significant investment in IT system with on-line registration capability.

Central back office. Agency adopts regulatory role with data entry/update by private parties.

All cadastre digitized. Surveys undertaken by private surveyors. Survey plans lodged electronically.

Agency solely focussed on LAS. Valuation, tax collection, planning undertaken by LGAs or private sector.

2 Single agency with limited branch offices (<10). Flat organisation structure. Significant investment in IT.

Central back office. Registration updates undertaken by the agency.

Cadastral surveys undertaken by private surveyors. Survey plans lodged manually.

Agency focussed on LAS and providing most LAS services in-house.

5 Multiple agencies, and/or significant regional network (~50 offices). Limited attempt to flatten organisational hierarchy.

Multiple offices, traditional processing of registration without optimising resources (no back office/front office). IT used for processing (no B2B or C2B interface).

Cadastral surveys undertaken by government surveyors. Significant investment on support of reference frame, NDSI, etc.

Agency largely provides LAS in-house. Agency also responsible for other tasks not directly associated with LAS.

10 Multiple agencies, regional network (~100 offices). Traditional bureaucratic structure.

Multiple offices, traditional processing of registration without optimising resources, emphasis on paper lodgement and processing.

Cadastral surveys undertaken by government surveyors. High survey standards, requirement for extensive mapping (buildings, land use, etc.) Significant mapping program.

Agency responsible for a broad range of tasks.

Stage 3: Cost of Running LAS

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CoFLAS – Stage 4

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Stage 4: Revenue from LAS• Possible sources of revenue to government:

– Annual property taxes• Effective identification of properties and assessment

of taxes• Efficient collection of taxes

– Transaction taxes, fees and charges• Need to balance affordability with cost

– Sale/licensing of data/information• Can limit use of LAS data for NSDI and SEG

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CoFLAS: Financing LAS• Governments with development partner

support can fund the development of LAS –but the maintenance/operations need to be sustainable

• Possible strategies for financing LAS:– Full funding by government as a public service– Setting fees and charges to fully or partially recover the cost

of providing LAS services– Transferring core parts of LAS delivery to others such as

local government or private sector service providers– Separating the regulatory and service provision LAS

functions > PPP

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CoFLAS: Financing LAS

• Possible sources of revenue to government:– Annual property taxes

• Effective identification of properties and assessment of taxes

• Efficient collection of taxes– Transaction taxes, fees and charges

• Need to balance affordability with cost– Sale/licensing of data/information

• Can limit use of LAS data for NSDI and SEG

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CoFLAS: Financing LAS

The three traditional methods of financing LAS:•The agency providing LAS services charges a fee to the user requesting a change or update in the LAS data;•The agency providing LAS data/information charges a fee to the user requesting access to or the use of LAS data; and•The agency providing LAS services is funded as a public service.

Source: de Vries (2012:9)

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Strategic approach to building the LASLow cost option Sporadic approach, relying on individual requestsImplications • There are costs in responding to sporadic requests (need staff,

maps etc.)• Can create issues with data (gaps, overlaps) • Lack of transparency• Can take a long time – +100 years

High cost option Systematic registration on a village-by-village approachImplications • Large initial investment

• Shortest time frame (although some areas need wait)• Strong community engagement• High transparency

Options to reduce costs • Convert existing documents where possible• Can reduce cost by undertaking systematic registration in priority

areas.

Key Decision - 1

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Resourcing LAS reformLow cost option Large involvement by community and/or local governmentImplications • Essential to motivate local leaders – may need to pay fee

• Need to ensure activity is a priority• Need to build capacity• Can build community support

High cost option Mobilise central government and/or outsource some/all SR activityImplications • Large cost

• Must manage interface between government/ contractor• Need to ensure community engaged• Need strong PM skills

Options to reduce costs • Establish voluntary committees in community• Link to existing local institutions/processes

Key Decision - 2

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Survey methodologyLow cost option Use of photomaps with a general boundary approachImplications • Lowest cost

• Limited requirement for capacity development• Will need process to settle boundary disputes

High cost option Full ground survey with professional surveyorsImplications • High cost

• Risk of limited resources• No country has been able to scale this approach

Options to reduce costs • Can adopt a mixed approach• Accuracy can be improved over time

Key Decision - 3

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Boundary marks (fixed or general boundaries)Low cost option General boundaries (using image maps)Implications • Lowest cost

• Lack of mark can lead to disputes – but marks can be moved• Higher cost for resurveys

High cost option Fixed boundary marks or beaconsImplications • High cost – both for mark and logistics/transport

• Permanent reference – but can be moved• Difficulties where boundaries are occupied

Options to reduce costs • Use low cost marks• Charge land holders for marks• Have land holders place marks

Key Decision - 4

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LAS Service deliveryLow cost option Establish central LAS office(s)Implications • Can create difficulty and cost to access

• Need to develop access strategies (local front office, intermediaries, ICT)

High cost option Establish network of LAS offices linked to administrative areaImplications • Significant investment

• Need establish oversight, M&E• Difficult to balance resources

Options to reduce costs • Phase opening new offices• Create front/ back/office

Key Decision - 5

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Pilot CoFLAS in Tanzania & LesothoRefine tool based on pilot experienceBroaden tool, perhaps in:

Broader range of tenure types (more focus on the informal side of the continuum)Create definition that fit realities of developing countriesEnhance linkage with FiFoLAInclude land use planning as LA functions?Broaden and elaborate the financing options; identify typical LA services and provide costing models

CoFLAS: Next Steps