This and the following section focuses on the principal issues faced by the transition economies of the Western and Trans-Caucasus Commonwealth of Independent States (CIS) as they reform their laws concerning agricultural land tenure relations and land markets, and consider potential approaches for resolving specific problem issues. The Western CIS countries included in this section are Belarus, Ukraine, Russia, and Moldova and the Trans-Caucasus CIS countries included in section II are Georgia, Armenia, and Azerbaijan.
The Western CIS countries differ substantially from the other Eastern European countries in terms of land privatization and development of land markets. The Western CIS countries lag far behind the Eastern European countries preparing for accession and the Trans-Caucasus CIS countries in virtually every aspect of land market development. In fact, with the exception of Moldova and the small-plot sector, the Western CIS countries generally do not have clear and authoritative legislation regarding reorganization of farms or agricultural land transactions, and land markets are virtually non-existent.
Of all the CIS countries, only Belarus does not allow private ownership of agricultural land (other than household plots).3 The Belorussian Constitution provides that “[l]and of agricultural designation is located in the ownership of the State.”4 However, the 1999 Land Code introduces two exceptions to the general ban: citizens may own (1) up to one hectare of agricultural land in a household plot; and (2) up to 0.25 hectares of agricultural land under and around a private house. This land accounts for approximately 20% of agricultural land.5 Land in private ownership may be sold, traded, mortgaged, leased out and bequeathed to heirs.6
All other Western CIS countries allow for private ownership of land, but the bundle of rights associated with that ownership varies from country to country, as discussed below.
In the Western CIS countries much of the agricultural land has been privatized under a “land share” system, in which a large majority of private owners (former members of the state and collective farm system) still hold their rights in common, with some form of right to partition land in kind (as yet unexercised).7 None of the Western CIS countries restituted land to former owners. The advantage to the land share system is that farm members who had been working on the land received a portion of the land into ownership or with ownership like rights. Of the four Western CIS countries, Belarus is on one end of the spectrum and Moldova the other in terms of privatization of agricultural land.
Land shares do not exist in Belarus, and therefore members of collective and state farms do not have even a theoretical right to a share of land. Rather, if a farmer wants to create a private peasant farm, the local administration can allocate land of the collective farm enterprise or from the state land reserve. Private farmers have use rights to this land but not ownership rights.8
On the other end of the spectrum is Moldova, which demarcated, titled, and registered land plots for individual farm members.9 With the exception of state research farms and village pastures, all non-forest agricultural land is owned privately. The land of the former collectives was divided among the members and pensioners. Almost all of this land has been demarcated and title certificates have been created. (Some of these title certificates that were created have not been distributed to the owners since the former leaders of the defunct collective farms block full implementation of land privatization.) The garden (household) plots, on the other hand, are not titled and in some villages function more like land shares with actual land used varying from year to year. Approximately 17% of agricultural land in Moldova falls into this category.10
Ukraine and Russia have privatized land under the land share system, with the exception of household plots, which are fully privatized in the sense that the owner possesses a demarcated parcel. Of the 41.9 million ha. of agricultural land in Ukraine, 26.7 million ha. (64%) have been transferred to the control of 6.5 million individuals, each of whom received a land share certificate.11 The land share certificates are undemarcated but represent a portion of land formerly used by the state farm or collective farm. The majority of those that received land share certificates quickly leased them to the collective farm from which they had received these undemarcated lands and little had changed in terms of their ability to exercise ownership rights.
While land represented by land share certificates is largely controlled by former collective farms, in 2000 the Government of Ukraine began an effort to push the land reform forward by converting land share certificates into title documents to individually demarcated land plots. As of July, 2001 the Government maintains that 1.5 million of the 6.5 million land share certificates have been converted into title documents for land plots.12
While Russia has distributed land to former collective and state farm members in the form of land shares, problems persist in terms of exercising ownership like rights over that land. The procedure in Russian law for converting land shares into demarcated land parcels can be difficult to utilize, and offers little in the way of a firm guarantee that the resulting land parcel will be of reasonable quality and in a reasonable location. The legal rules regarding physical demarcation are somewhat unclear, and farms interpret the legislation differently. To physically demarcate parcel boundaries on the ground, in some instances each member of the collective (the number of which might be 600 or more) is required to agree. In other cases, when a land plot is demarcated for allocation, it is located far away from the owner's settlement, and the quality of land is inferior. This procedural problem has contributed to the paucity of land share owners who have chosen to convert their shares into land parcels. Moreover, on some agricultural enterprises land share certificates prepared as far back as 1994 have still not been distributed to the land share owners, but rather languish in the hands of the managers of agricultural enterprises.
Russia and Ukraine withheld a portion of agricultural land in state ownership when privatizing agricultural land. In Russia, land is held and controlled by the State in local level (raion) land redistribution funds.13 This land comes from three different sources. First, collective and state farms set aside roughly 10% of their arable land for redistribution to those who wanted to start peasant farms.14 Second, land that remained after calculation of land shares on agricultural enterprises was transferred into the same land funds.15 Third, land that is forfeited by peasant farms that have ceased operations, and land withdrawn by local officials for irrational use or non-use, continues to be added to the land funds.
The clear policy behind the federal land-fund legislation was to redistribute land from state and collective farms to peasant farmers. Redistribution of land remaining after distribution of land shares was specifically addressed in a 1991 presidential decree.16
The raions in the agricultural oblasts (regions)of the Russian Far East hold large quantities of land in state ownership, available for lease at nominal rates (quoted as anywhere between zero and five rubles per hectare per year). While this may ensure the availability of inexpensive land to many of those desiring to use it, it all but guarantees the retardation of development of a market in private land lease and sale transactions.
In Ukraine, land reform legislation provided that 10% of the arable land used by state and collective farms should be allocated to a “land reserve.” The land was to be used to distribute for private farming, subsidiary agricultural production, and to persons not currently engaged in agriculture. An additional 15% of arable land was allocated from state and collective farms for current members of agricultural enterprises to start private farms.17
In Moldova, where agricultural land is scarce relative to population, there is no agricultural "land fund", but each village was allowed to hold up to 5% of the land for village expansion of the residential area. In some villages this reserve land is being leased out to farmers, and in others the population pressure of new families has already consumed this land. Some villages did not reserve any land, preferring to distribute all of it to the former members of the collective.
The Western CIS countries have not significantly broken up the large collective farms. In Russia, about 290,000 private farms exist, although at least half of these farms are no longer currently operating.18 Private farms account for about 6% of the arable land, but provide only 2% of agricultural output because of a lack of funds and an uneven playing field with most of the government assistance going to the former collective and state farms. Household plots on the other hand, comprise about 7% of the total arable land and yet produce about half of all agricultural output by value.19 Little meaningful change has occurred on the large state and collective farms in terms of organization and management.
While the process of issuing land share certificates in Ukraine is almost complete, less than 5% of all collective members have actually separated from the larger collective agricultural enterprises.20 Only 15% of arable land is currently cultivated by the individual sector, which is comprised of household plots and family farms. The number of private farms (excluding household plots) leveled out at 38,000 in 1994. These few farms control only 2% of all arable land and produce about 2% of the agricultural product.21
The great majority of collective and state farms were “cosmetically” reorganized into other legal forms. This form of reorganization is said to be cosmetic since management of these farms has remained indistinguishable from the collective farm management style. A central management body mimicking that of the collective is found on 70% of the farms; only 30% reported having a less centralized system with responsibility shifting to a greater extent to the subdivision (“brigade”) level.22 Furthermore, there have been only limited improvements in profitability and efficiency, and yields on the whole have not increased above pre-reform levels.23
Programs financed by international donors have assisted with restructuring 620 farms out of a total of 16,000 large-scale farms. Grass roots efforts have begun in the form of local initiatives by farm managers and regional authorities toward the goal of restructuring. Such grass roots initiatives have generated about 500 spontaneously restructured farms. Combined, the international donor projects and spontaneously restructured farms represent only 7% of the former collective and state farms.24 However, there is a question of how significant even this limited restructuring has been, since most of these farms remain large-scale farms.
In Belarus, the overall structure of agricultural land25 has remained fixed since 1992, with 84% comprising the socialized sector and 16% making up the individual sector. Currently, the individual sector, represented mainly by household plots, accounts for the vast amount of this land, with private farms accounting for less than 1% of agricultural land in Belarus.26 The absence of genuine, market-oriented restructuring of large farm enterprises is preventing progressive agricultural changes.
The Belarus Civil Code, which was revised in 1999, may have some positive impact on farm reorganization. The Civil Code recognizes three legal forms of business organization (limited-liability joint stock companies, unlimited-liability partnerships, and cooperatives), but does not recognize collective farms or collective agricultural enterprises. The intentional exclusion of this collective form was presumably meant to encourage reorganization (or perhaps the appearance of reorganization). However, the President has rejected proposals from the Ministry of Agriculture for possible options for farm restructuring, and the pertinent provisions of the Civil Code have been in effect suspended. No additional, significant action has been taken to change the legal form of the collective farms.27
For reorganization to occur in Belarus, either the worker’s collective or farm managers can take the decision to reorganize. Management must have support from the general meeting of farm members, but no other formal permission from the State is needed at the inception of reorganization. However, there are no transparent procedures for reorganization. This lack of an adequate legal base is one of the main impediments in farm reorganization in Belarus.28 The most obvious change that has occurred in restructuring is the distribution of collective non-land property to members in the form of property shares. Paper certificates are given to members entitling them to fractional ownership of the noon-land property.29
In spite of the fact that the land of the former collective farms has been demarcated and titled in Moldova, actual farm break-up has been spotty. Although roughly 20% of the former farm members and pensioners have separated from the former collective to form independent farms, the remaining 80% continue to lease their land to the successor of the collective, which is usually registered in the name of one or more of the former leaders of the collective farm. In conservative areas of the country, such as the Gagauzia region of southern Moldova, the privatization of agricultural land has produced virtually no change in the structure of the former collective farms, which simply re-registered in other legal forms.30
As a result, for the majority of rural landowners in Moldova the only change in relations introduced by the land privatization program is that they may cancel their land leases and withdraw their land if they do not receive the rent specified in the contract. In practice it is very difficult to enforce land leases, though some landowners have made use of free legal assistance to insist that the lease terms either be respected or that the land be returned to them.31 As a consequence of the widespread lease of agricultural land to the successors of the collectives, Moldovan farms remain very large by European standards, averaging over 500 hectares each. (This is still far less than in Russia, where farms in the cosmetically reorganized collective sector average between 4,000 and 5,000 hectares of arable land each.)
There are several reasons for this lack of farm break-up in Moldova, despite the individual demarcation and titling of the land. First, although former farm members and pensioners have documented rights to shares of the non-land assets of the former collective farm (the so-called “property shares”), in the great majority of cases these assets continue to be used free of charge by the successor enterprise. The de facto ban on distribution of non-land assets – principally tractors and other necessary machinery – has hampered the ability of farm members to withdraw land to establish independent farms. Only in villages where the farm members succeeded in insisting that the former collective be divided into multiple units was the machinery distributed to groups of independent farmers. Second, the arrangement of owned land parcels within the middle of large arable fields greatly restricts the landowner’s use of the parcel. It is very difficult for a landowner whose a parcel is “locked into” the middle of a field to lease it to anyone other than the person or enterprise that controls the surrounding land in that field, since leasing to another farmer would not allow for efficient machinery use. The middle of the field problem also affects farmers’ ability to withdraw their land and farm independently. Rights-of-way for future roads are shown on the map, but are presently planted with crops and do not provide access in practice. The only viable option in such cases is for the landowner to exchange his or her parcel with that of an owner whose parcel borders a road, a process that is allowed by law but as yet used rarely.32
Third, while immediate family members usually receive contiguous parcels, the requests of other relatives, friends or neighbors to receive parcels that adjoin one another are sometimes ignored. This may happen through the actions of the collective manager, the prospective “leaders” of new farm enterprises, the mayor, or even the surveyor employed by the program. Moreover, there are other types of intentional impediments by leaders of the former farm.33
Finally, the unstable economic climate, difficulty in obtaining capital for current operations (and long-term investments), and lack of managerial and marketing experience discourages some would-be farmers from establishing their own farms.
The land privatization process in Moldova nevertheless provides some basis for optimism. Prior to the National Land Program, in many enterprises anywhere from 10 to 40% of households (and in some cases, 100% of households) had already withdrawn land from the collective to start independent farms. Moldovan authorities estimate that the average was probably close to 20%. While most collective farms that participated in the National Land Program did not undergo further major break-up during the initial titling process -- usually, there are only one, two or three resulting corporate farms – small numbers of individuals continue to withdraw from some large enterprises after the initial titling process. This phenomenon varies greatly by region.
Russia legally recognizes private agricultural land ownership, but buying and selling of land is restricted both by law and in practice. Moldova and Ukraine have no structural barriers to land transactions. Belarus does not allow land transactions for agricultural land.
In spite of the fact that the avenues for obtaining additional land are highly restricted in Belarus, significant numbers of farmers are interested in obtaining more land. Two-thirds of the private farmers included in a 1999 World Bank survey expressed a desire to increase their landholdings. Furthermore, most private farmers support the proposition of being able to fully transact in land; 80% believe that buying and selling of land should be permitted.34
Attitudes of farmers in Russia are similar. Research conducted in the Russian Far East in 199735 found that in “Red” Amur Oblast, officials and farmers alike supported introduction of the right to purchase and sell agricultural land. But in Russia, the legal framework for the purchase and sale of agricultural land has been debated for 10 years by the federal parliament, the State Duma, with no decision yet.36
In September 2001, the State Duma adopted the Land Code that would liberalize regulation of transactions involving non-agricultural land.37 However, the new Land Code covers the 18.6 million hectares in cities, towns and villages, and 17.4 million hectares of industrial land.38 Chapter 17 of the Russian Civil Code guarantees the right to own land, and clarifies a number of substantive and procedural issues concerning land ownership, but will not become effective until the federal Land Code becomes law.39
With no movement at the federal level, regulation of agricultural land ownership is left to the regional governments. Seventeen regions have passed laws allowing the sale of agriculture land. However, potential buyers have been reluctant to invest in agricultural land, fearing they may lose their plots if a federal Land Code is passed banning or severely restricting agricultural land sales.40
The 7% of arable land that is in the “small plot” category, however (household plots, dacha plots, garden plots), and comprising some 41 million small holdings, has been fully capable of being bought and sold under specific federal legislation adopted in 1992, with implementing rules promulgated in 1993.41 There have been significant numbers of purchase and sales of such lands since the mid-1990s.
In Ukraine, Article 6 of the Land Code provides that citizens may acquire land through purchase. The Code, however, also provides that a citizen may buy land only for certain purposes: for private farming; for subsidiary farming; for gardening; for dacha and garage construction; and for residential construction.
In Moldova, procedures have been established and tested for lease, sale, bequest, exchange, and mortgage of agricultural land. Fees for notarization and registration of agricultural land transactions have been reduced to be more affordable. There are still very few purchase and sale transactions, which is probably the result of the poor economic climate for agriculture and the fact that prospective buyers lack capital to purchase land and have been reluctant to invest in agricultural land.42
Much of the leasing that is occurring in the Western CIS countries is between land share holders and the individual or corporate successors to the former collective farms. Most of the agricultural enterprises underpay (or do not pay at all) the owners of land shares for the use of their land.
In Ukraine, most leases involve the transfer of land shares from individual farm holders to farm enterprises or other individuals. In this form of leasing, paper transactions are made, but the plots of land are not demarcated. When land shares are leased to a farm enterprise, the farm enterprise basically assumes rights to the land (which has always been cultivated by that farm enterprise but is now recorded on the books as a lease of privatized land).43 In effect, this is simply a perpetuation of the situation that existed during under the pre-reform period.
However, it is possible for land share owners to transact in land shares, and in turn, adjustments to farm size of private farmers can be made. This is done predominantly through leasing. Originally, the state was the main supplier of leased land, but this is changing as individual leasing increases in popularity.44 On the whole, the lease market for land shares is the only type of land market that currently exists in Ukraine. Private farmers who lease in land shares increase their holdings, on average, from 25 ha. to 60 ha. Furthermore, over half the land in private farms is leased. A World Bank survey indicated that from 1997 to 1998, 45% of private farmers reported leasing in land; of which 20% of the 45% reported leasing land from private individuals.45
Land in Ukraine is mainly leased for 5 years, but the periods may run from 1 to 10 years. A form of competitive leasing has appeared whereby enterprising individuals lease large blocks of land shares from former collective members and then compete as lessors with the former collective farms. The result is that lessees can obtain sufficient land for a large, commercial farm.46 It may, however, be important to distinguish between such leases, which are voluntary and involve a moderately reasonable level of payment to the lessor, from others in which ex-collective farm leaders or others with leverage may extract leases (sometimes of a rather long term) and offer little payment in return.
In Russia, land leasing is more common than buying and selling. Approximately, 33% of private farmer respondents and 24% of farm enterprise managers in a government survey (2000) reported they knew of land leasing transactions.47
|With assistance from USAID, Moldova has made some progress in mortgage lending to support development of the real estate market. One pilot program assisted two commercial banks in making 30 mortgage loans worth 274,000 USD to operators of small- and medium-size farms and agribusinesses, helping borrowers to purchase a total of 360 hectares of agricultural land. The other pilot program assisted six rural Savings and Credit Associations to make 31 small loans worth a total of 43,000 USD to farmers to purchase a total of 100 hectares of agricultural land, all in tracts of less than four hectares. These pilot programs provided insight into the problems of using land mortgages to finance the purchase of land (commonly referred to as a "purchase money mortgage" in America). In a modern legal system, the land purchaser can obtain a bank loan to purchase a parcel of land, using the purchased land as security for the loan. Although as of 1999 the Moldovan law allowed this process, Moldovan notaries nevertheless refused to notarize the mortgage agreement until the purchaser/borrower was first registered as the owner of the real estate. Thus, the seller was forced to relinquish title prior to the bank's release of the loan proceeds, leaving the seller exposed. The problem with the notarization of documents was not solved in practice until the rural Savings and Credit Associations, with the assistance of the pilot program, challenged the notaries to notarize both the sale contract and the mortgage simultaneously, as allowed by the 1999 amendments to the Law on Pledge. Moreover, Territorial Cadastre Offices frequently delayed the registration of mortgage agreements without cause, further extending the period of time the seller would have to wait for his or her proceeds. The pilot programs were not continued, and the purchase money mortgage procedure was not widely adopted by Moldovan commercial banks.|
In Moldova, all titled land can be leased to Moldovan citizens and Moldovan legal entities without restriction. Many leases are now in writing and are for 1-year terms, allowing flexibility to landowners. Still, former leaders of collective farms who now lease in large tracts of land often abuse landowners by refusing to honor lease contract provisions or refusing to allow landowners to withdraw their land. Landowners do not have sufficient information regarding land rights, and cannot conveniently enforce their rights even when they know of them. Some leases are not individual or in writing or are short-term. Consequently, in many villages lease payments have not increased as a result of titling.48
In the Western CIS states, where there are few land owners who are private actors and few land transactions, mortgage of agricultural land is very limited.
In Moldova the Law on Pledge was amended in 1999 to make land mortgage easier. The mechanisms of the Law on Pledge, while not well defined, are sufficient. One amendment provides for simultaneous conclusion of both sale and purchase agreements and mortgage contracts (a procedural point that was previously unclear), while another amendment defined more precisely a foreclosure procedure on mortgaged land.
The mortgage law in Russia provides that land parcels enterprises, buildings, structures, apartments, and other real estate can be mortgaged, but excludes agricultural land.49
Ukraine has no mortgage law, though proposals are being discussed.
The Belarus Civil Code of 1999 relaxed leasing and mortgage restrictions, and leaseholders can now sublease and mortgage their use rights to land.50 According to a 1997 presidential decree, certain banks may now accept land plots as collateral. The Belarussian Council of Ministers and the National Bank adopted rules on the mortgaging of land plots to banks as loan security.51 This seems to apply even to those who merely have use rights on the land. However, the mortgage of lease rights is highly unlikely in a non-market economy.
The Western CIS countries have all started registering land with the exception of Belarus. Land titling and registration are non-existent in Belarus, creating major barriers to the existence of land markets.52
In Russia, the federal law "On Registration of Rights to Immovable Property and Transactions With It” has been in place since 1998, but its implementation in rural areas has been problematic. This is particularly true regarding land shares. Although there are 12 million land share owners in Russia, most raion registration offices refuse to register land share transactions, in part because relevant legislation (the Civil Code and Law on Registration) does not effectively address the unique characteristics of common shared land on agricultural collectives. Moreover, the cost of services for surveying (keeping in mind that a land share must be demarcated on the ground if it is to be leased or otherwise transacted to an individual private farmer, a step not necessary if it is “leased” to the collective enterprise) is unaffordable for most private farmers and owners of land shares.
In Moldova, ownership of all privatized agricultural land was registered at the village level, but the law provides that such land can be the subject of transactions only if it is also registered in the regional registry. As of December 2000, as the result of cooperation between USAID and the World Bank-financed “Cadastre Project,” roughly half of all privatized agricultural land was registered in the regional registry.53
In Ukraine, articles 9, 10 and 11 of the Land Code require registration of rights to land. This registration is carried out by the local village councils. It is commonly accepted that the registration process is not meeting the needs of its farmers. A comprehensive law on state registration is needed, and has been under preparation in the Supreme Rada, Ukraine's parliament, for some time.
In the Western CIS countries, the relevant administrative framework is primarily in the hands of the State. There is little motivation for the private sector to develop since there is both resistance from entrenched state actors and very little economic motivation with little or no agricultural land market.
In Russia, over the past five years the government has undergone numerous reorganizations and shifts of responsibility over land policy and administration. Currently cadastre activities are the responsibility of the Federal Cadastre Service, registration is controlled by the Ministry of Justice, and land policy is the bailiwick the Ministry of Property Relations. In addition, the Ministry of Agriculture undoubtedly plays its role as well.
One positive private initiative in Russia is legal aid centers in Samara and in Vladimir Oblasts focused on private rights to agricultural land and related issues.54 The rural population does not know and does not understand their rights to land and other assets, and many rural residents are afraid to complain about violations because they fear they will be punished for attempt to protect their land and other property rights. The two legal aid centers in Russia have been assisting rural citizens to learn about and to exercise these rights.
In Belarus, the administrative framework stifles farming. The government intervenes to correct the effects of what it sees as “inherently unstable” free market forces. Intervention takes the form of implicit taxation on the agricultural sector, and provision of subsidies to mitigate the effect of taxation.55 Government controls, fixed price quotas and extensive trade regulations impede reform and prevent the recovery of the agricultural sector.56
While both private farms and farm enterprises must operate in a restrictive economic environment in Belarus, private farms do not receive the many subsidies enjoyed by most farm enterprises. Rather than promoting positive conditions for private farmers, the government has tried to impose stricter administrative controls.57 According to Presidential Decree No. 193, beginning in April 1998 private farmers were required to enter into contracts with local authorities, agreeing to specific land use conditions, production structures, and production of specified types and amounts of goods for allotment to the State.58
The 1999 Land Code further controls private farmers by providing that the State can terminate the farmer’s rights if his crop yields are lower than the yields considered “normal” for the region. Moreover, local authorities have the right to dictate cropping patterns to land users, in effect substituting the judgment of state bureaucrats for that of private farmers.59
In Moldova, the role of the State in administration of agricultural land has been sharply reduced. Farmers are not required to sell production to the State or to obtain state permission when altering their production patterns. During 1997 – 2000 village mayors implemented a comprehensive land titling project pursuant to procedures established jointly by the Department of Privatization and State Property Administration (of the Ministry of Economy and Reforms), and the National Agency for Cadastre, Land Resources and Geodesy.60 The process of decentralization of the land reform reduced interference from central bureaucracy and allowed citizens to apply pressure to mayors who delayed action. On the other hand, the decentralized process that empowered mayors also allowed unscrupulous mayors to abuse their authority to reward friends with better land and punish enemies with worse land. On the whole, however, the decentralization proved an effective strategy for accelerating and then completing privatization of agricultural land in Moldova.
In the Western CIS, only in Moldova are there the beginnings of an active private sector in land management institutions for agricultural land. The USAID Project to Develop Land and Real Estate Markets provided financial and technical support to establish some 50 new private survey firms to help implement the National Land Program, as well as four private brokerage firms to assist buyers and sellers of real estate to complete land transactions.
|In Moldova, in October 1999, the Project assisted four project staff members (with prior experience in privatizing urban land associated with Moldovan commercial enterprises) to establish four private real estate brokerage firms to serve enterprises interested in privatizing land beneath their enterprises, as well as buyers and sellers of privately owned real estate. The brokerage firms fulfilled an important role in evaluating the activities of private notaries and the public regional real estate registrars. These brokers forced notaries to charge their clients appropriate fees for their services and to accept proper standardized contracts. They and complained to the central registration authorities when regional registrars overcharged buyers and sellers of real estate or otherwise failed to provide registration services. The brokers also informed new landowners of their legal rights and helped them exercise those rights during transactions. They proved to be the only entities that represent the best interests of their clients, the buyers and sellers of real estate, because the client pays their commission and is a source of referral business.|
The Project originally broke the state monopoly over land surveying by enticing state employees to form private survey firms, promising contracts to implement the land privatization program. The number of firms grew over time as the privatization program grew. Without the participation of the private survey firms, it is highly unlikely that much land privatization could have been completed. With completion of the land privatization program in 2000, many private firms have found other business, including implementation of other donor-financed privatization as well as World Bank contracts and services required by the new real estate market.
There were problems associated with privatization of surveyors as well. Since private surveyors were paid only for work performed and not a daily rate, it was in their interests to work with local farm "leaders" rather than directly with citizens. Working with local farm leaders gave them easy access to a lot of work. Sometimes the result was a local decision making process that did not include adequate citizen participation. In addition, payment-by-the-job meant that some jobs were rushed.