LAND TENURE SECURITY, FARM INVESTMENT AND TECHNICAL EFFICIENCY IN GHANA

Abstract

Governments and policy makers in Sub-Saharan Africa are increasingly becoming aware of the implications of land market imperfections for long-term sustainable economic growth and development. A direct consequence is the implementation of land administration reform programmes across the sub-continent, driven largely by neo-classical theory arguments that individualisation of land tenure (leasehold and freehold ownership) increases tenure security of the landholder, increases investment and also leads to the emergence of markets that transfer land to producers able extract higher value of product from land (productive efficiency). Land tenure insecurity has often been associated with land use arrangements that confer land rights to groups rather than to the individual end user. With over 80% of land in Ghana is held under such communal arrangements, there are concerns over how indigenous Ghanaian land use arrangements and land rights forms influence holders’ evaluation of their tenure security and by extension their willingness to undertake long-term land improvement investments. This study examines how land tenure arrangements in Ghana influences land tenure security, farm investments and technical efficiency, using data from six regions in Ghana. The study is anchored in the theories of evolutionary land rights, share tenancy, efficiency and the household. The study specifies a household investment model and a frontier model to analyse how indigenous Ghanaian land use arrangements affect farm investments and technical efficiency respectively. The study finds that private ownership of land significantly influences the probability of households deciding to invest while documentation of land rights did not. With respect to the levels of household investments in soil and water conservation and in irrigation, both individual ownership and documentation of rights have significant positive effects. The study also finds that land transactions that transferred permanent rights to the holder such as outright purchase and cash renting are negatively correlated with technical inefficiency, an indication that monetisation of land transaction helps to reduce tenure insecurity. Technical inefficiency is also positively associated with production on family or sharecropped land. Among other things, the study recommended interventions such as imposition of idle land taxes and minimum lease terms to discourage speculative demand for land and uncertainty associated with short term land use arrangements respectively.