Landed property as collateral to access credit for housing development in Ghana: The case of Northern Region of Ghana

Abstract

Property in the commons, or the Washington Consensus, as it is known in other circles, posits that landed property and access to formal credit are directly related. Whether landed property improves access to formal credit or not has been at the centre of the debate, with varying practical evidence, especially for the Global South. Another related dimension of the debate concerns the implications of family-help-mortgage arrangements using intra-family transfer of land as collateral to support a member's mortgage by placing a charge on the collective property. This paper investigates the use of landed property as collateral to access formal credit from financial institutions for housing development in the Tamale Metropolitan Area (TMA) in the Northern Region of Ghana. The primary research question is: does formal documentation of landed property as collateral help in accessing formal credit for housing development in TMA? The study involves the use of in-depth interviews to investigate the opinions of estate developers, credit officers of universal banks, and land title holders on the relative importance of landed property and access to credit for housing development. The data are analysed by means of thematic content analysis. The findings indicate that even though landed property may contribute to the decision to grant formal credit, it is not a turn-key solution easily accepted in the final lending decision. This study adds to the body of knowledge primarily by evaluating the effects of reforms to increase credit access with landed property as collateral in Ghana, investigating the implications of family-help mortgage arrangements, including the use of intra-family assets as collateral in obtaining loans for investment at the micro-level in Ghana. The paper concludes that while formal documentation of land rights matters in the broad scheme of estate financing, it is not sufficient to bring about more immediate access to credit, especially for those who lack regular or reliable systems of income that could be critical in ensuring the payback of loans contracted using landed property as collateral for housing development.