Blockchain and Land Rights: Could Increased Digitalisation and Transparency Help Make Property Ownership More Fair?

Startups, large companies and politicians are increasingly looking at how blockchain technology can help solve land rights related conflicts and tackle fraud.

Author Felix Dunkl:

Translation Felix Dunkl, 06.04.18

Startups, large companies and politicians are increasingly looking at how blockchain technology can help solve land rights related conflicts and tackle fraud.

According to World Bank estimates, around 70 per cent of the world’s population does not own a title deed to their land. This can have problematic consequences – especially for small landowners and farmers in economically weaker countries. The Leibniz Institute for Global and Regional Studies has calculated that between 2000 and 2016 a total of 26.7 million hectares of agricultural land were purchased by investors. According to a report from their Land Matrix project, investors are focusing in particular on areas already used for agriculture in countries with weak land rights, mainly in Africa, closely followed by Eastern Europe. It is also striking that investors are thereby competing with mainly local farmers, in countries that are poorly integrated into the global economy due to hunger, poverty or disease.

Using Blockchain to tackle corruption

In countries such as Kenya and Ghana, where land contracts have been confirmed merely by oral agreements for generations, there are increasing incidents of land being allocated to different people multiple times over – mostly to the detriment of small farmers. The enormous influence of cartels and investors, as well as the high rate of corrupt officials in Kenya invariably ensure that crucial files in ministries remain undetectable and that small farmers lose their livelihoods through so-called “land grabbing” by corporations.

Using a blockchain-based digital land registry approach, several startups, such as BenBen and Bitland (both from Kenya), are trying to put an end to land grabbing. Sophisticated blockchain technology is intended to develop the digital land registers in such a way that all land data records are publicly visible and can no longer be falsified.

Bitland also helps farmers to digitally map and register their land. Being able to officially register their own land would help small farmers to obtain mortgages and loans more easily.

Technically, the start-ups are on the right track. BenBen is already so far along that the approach is being funded by the United Nations. What hinders market entry, however, are political structures. Transparency International Kenya land sector consistently ranked as one of the most bribery prone sectors in Kenya and Ministry of Agriculture as one of the most corrupt institutions in Kenya and found that a change by the Ministry is only conditionally desired and maybe not desiring change.

The Scandinavian pioneers

The situation is different in Scandinavia. Sweden is one of the few richer countries to test a blockchain-based digital land registry in the so-called Lantmänteriet (the ministry responsible for land distribution). With the elimination of bureaucratic paperwork, the state hopes to achieve savings of over 100 million euros and the elimination of typing errors with devastating consequences. Whether this can be considered realistic remains questionable. After all, blockchain technology is not particularly energy-friendly (for example, the production of a bitcoin will require the same amount of electricity as a family household in twelve years). In addition to Lantmänteriet, a Swedish telephone provider and two Swedish banks are also testing the use of blockchain-oriented solutions.

While providers are enthusiastic about their approach, legal obstacles prevent this database-like system from being introduced before 2019. The digital signature and signature, which must be given by both owners in order for a change of ownership of the country to take place, is not recognised by the authorities. Notaries such as Prof. Dr. Maximilian Zimmer, also honorary professor for business law at the Harz University (FH) in Wernigerode, also warns that a blockchain-based approach could also eliminate the protection of the buyer, since this aspect is also not regulated.

The development of the Blockchain

However, unlike in Kenya, a prominent ministry in Sweden is in favour of the further development of the digital and transparent land register. The tax office is primarily interested in this and hopes that the publicly accessible land register will ensure that no change of landowner goes unnoticed by the tax authorities.

Although the topic of blockchain is on everyone’s lips, it remains to be seen to what extent this technology will prevail, especially in state institutions. After all, the core idea of the blockchain is the decentralisation of structures and power structures. It will be exciting to see if and to what extent a state like Sweden will ultimately get involved in it.

This is a translation by Marisa Pettit of an original article which first appeared on RESET’s German-language site.

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