Institutional determinants of large land-based investments’ performance in Zambia: Does title enhance productivity and structural transformation?

Abstract

The importance of well-functioning land markets for structural transformation via labor movements to the non-agricultural sector, farm size growth, and the ability to use land as collateral for credit has long motivated Government efforts at reducing the transaction costs of registering and transferring land but evidence on the effect of such measures for large farms is scant. We explore the impact of land titling on productivity for a representative sample of 3,000 large farms in Zambia, one of the earliest African adopters of such policies to close this gap. Ward fixed effects and instrumental-variable (IV) regressions suggest that title has little or no effect on productivity, investment, or credit access and reduces rather than improves rental market participation. This points towards quality and cost of land services as an under-researched barrier to structural transformation. Improving transparency, document quality, and reducing cost via exclusive use of digital registries and streamlined workflows and fee reductions will be essential to address this. A land tax on state land may further help incentivize productive rather than speculative land use; allow cancelation of outdated legacy documents; and via revenue-sharing, involve local authorities in record maintenance and land management.