Will Formalising Property Rights Reduce Poverty?

A new commission – The High Level Commission on Legal Empowerment of the Poor – sets out, according to its website “to explore how nations can reduce poverty through reforms that expand access to legal protection and opportunities for all”. The site makes the case that “poverty can only be eradicated if governments give all citizens, especially the poor, a legitimate stake in the economy by extending the rule of law, making access to users’ and property rights and other legal protections not the privilege of the few but the right of all citizens”.

The Commission was launched in September 2005 by a group of developing and industrialised countries. The Commission’s Secretariat is hosted by the United Nations Development Programme in New York. The Commission, which will complete its work by late 2007, is co-chaired by former US Secretary of State, Madeleine Albright and Peruvian economist, Hernando de Soto. Commission members include UK Chancellor of the Exchequer, Gordon Brown, and focal countries are Tanzania and Guatamela, both with high-level political support. Donor support comes from Canada, Denmark, Norway, Sweden and the UK, combined with significant private sector contributions.

De Soto is perhaps the leading intellectual driving force behind the Commission. As President of the Peru-based Institute for Liberty and Democracy, he has argued in numerous works, notably his book ‘The Mystery of Capital’, that creating formalised legal systems to help the poor access property rights, assets and capital is essential for economic development.

Until January 2006, the Commission is in a preparatory phase, laying the groundwork for the first meeting, when an ‘overview of global knowledge’ will be presented. Following this, a series of workshops around six thematic analytical tracks will be held. According to the Commission, a key facet of this phase will be intensive consultation in order “to consider a broad range of perspectives and experiences around the issues of legal empowerment, the informal sector, land tenure, and property rights in developing and transition economies”.

Of particular concern to the themes of the Future Agricultures consortium is ‘Analytical track 1’ focusing on “Consolidation, dissemination and expansion of existing methodologies for empowerment through property reform”. This will focus on a comparative examination of ongoing property reform processes in selected countries, particularly where reform processes are based on these three institutions: Fungible Property Rights (communal, collective, and private); Legal Organisational Forms (communal, collective, and private); and Identity Devices that allow citizens and enterprises to operate beyond the confines of their family and neighbourhood circles in the expanded market.

According to the Commission website: “Analysis will also include an examination of the risks and opportunities involved, in order to provide a good balance sheet for policy-makers and provide the basis of a decision matrix whereby risk mitigation measures can reduce or eliminate the risks or enhance the opportunities not least for women, and for particularly vulnerable groups such as indigenous people”.


In this language it all sounds very benign. But a number of researchers and activists are concerned that the Commission – and particularly the involvement of Hernando de Soto – is a route to pushing an agenda of formalisation of private property rights in conditions where such an approach may be undermining of existing resource management institutions and the livelihoods of the poor.


As Daniel Bromley of the University of Wisconsin argues in his recent paper ‘The Empty Promise of Formal Titles’: “the causal story from insecurity to titles to security to investment to poverty reduction warrants critical examination”. Indeed, much empirical evidence points to a much more complex story. Formalised, private titles do not necessarily result in security of tenure; they are usually highly expensive to register and administer; and conflicts inevitably arise with other ownership and management systems, which, if given appropriate support, may provide much more effective routes to resource management and land tenure.

A well-established body of work demonstrates how for example ‘common property’ or ‘joint management’ systems are often highly effective at managing resources, with lower transactions costs, and less likelihood of exclusion of the poor and marginalised (see for example work collated by the International Association for the Study of Common Property; the CGIAR system-wide programme of common property and collective action; and the Land Tenure Center. Of course such systems don’t operate in isolation, and different property regimes interact and overlap in an area. It is policy and institutional frameworks for the the management of complex, multiple tenure arrangements, under conditions of high dynamism and uncertainty that is key. Simple recipes such as promoted by de Soto and others have been shown again and again not to work.


As a recent Policy Brief from the South Africa-based Programme for Land and Agrarian Studies argues “De Soto’s policy prescriptions may be inappropriate for the poorest and most vulnerable in our society”. Attention instead should be paid to “supporting existing social practices that have widespread legitimacy”. The Brief highlights, for example, the importance of understanding the social embeddedness of property relations; the layered and relative nature of rights, and the flexible character of boundaries. Gaining access to key livelihood assets – whether land or housing – occurs through a range of institutional routes, and formal title is just one, and in many settings very limited, part of a more complex picture.


A working group consisting of Norwegian NGOs under the umbrella of the Norwegian Forum for Environment and Development has established a website to encourage wider debate on these issues and to provide a counter to some of the positions being promoted by the Commission (landrightswatch.net/). The site states:

“We urge the Commission to seriously look into the complex realities of land rights. How will the Commission secure that women and other marginalised groups are not further marginalised in formalisation processes? Previous experiences clearly indicate that women are losers when land is registered. How will the unique and flexible traditions of collective rights among indigenous peoples and other communities be secured? Land cannot only be seen as an asset to be used in the market economy, land must also be understood in a socio-cultural context”.

As part of the work of the Future Agricultures consortium, field level work in Ethiopia, Kenya and Malawi will be exploring some of these issues, asking what sort of institutional and policy frameworks really make sense to ensure that pro-poor agricultural growth really takes off.



High Level Commission on Legal Empowerment of the Poor
Contact: hlclep@undp.org

Institute for Liberty and Democracy

The Mystery of Capital, Hernando de Soto

The Empty Promises of Formal Titles, Daniel W. Bromley

Land Registration in Amhara Region, Ethiopia, Berhanu Adenew and Fayera Abdi, IIED

Land Tenure, Land Reform and Land Administration In Africa: Lessons of Experience and Emerging Issues, Lorenzo Cotula, Camilla Toulmin and Ced Hesse, IIED

International Association for the Study of Common Property

CGIAR System-wide Program on Collective Action and Property Rights

Land Tenure Center

Exploring Understandings of Institutions and Uncertainty: New Directions in Natural Resource Management, IDS Discussion Paper 372, Lyla Mehta, Melissa Leach, Peter Newell, Ian Scoones, K. Sivaramakrishnan, Sally-Anne Way, 1999

Tales of the Unexpected: Environmental Governance in an Uncertain Age, IDS Policy Briefing 16, edited by Lyla Mehta, 2004

Will Formalising Property Rights Reduce Poverty in South Africa’s ‘Second Economy’? Questioning the Mythologies of Hernando de Soto, PLAAS Policy Brief 18,
B. Cousins, T. Cousins, D. Hornby, R. Kingwill, L. Royston and W. Smit, 2005.