The land rental system and diffusion of telecom infrastructure in Ghana: an institutional and transaction economics approach

Abstract

The paper answers the question: which are the economic and practical challenges encountered by mobile operators and tower companies when deploying infrastructure in countries with land ownership systems as in Ghana? The foundation for this issue is the clash and articulation of different kinds of land ownership structures and rights. Under the traditional social or communal ownership system, land belongs to the clans and is distributed among families following tradition-based user rights. The land ownership structures of a capitalist mode of production are only slowly breaking into this system. The analysis is based on institutional analysis including a calculated estimation of the transaction costs for telecom operators seeking to establish contracts for land rental and for enforcing contracts. Quantitative as well as qualitative empirical evidence is analyzed. The paper concludes that the land ownership system in Ghana creates problems for the telecom and tower companies. The communal lands constitute the dominant land ownership system. When this system encounters a private ownership system, a number of land ownership cases are produced, which costs money for the telecom companies. The total transaction costs relating to ownership problems connected with mobile towers are calculated to be between GHC 6.9 and 13.9 million in 2015. In the Ghana context, though this may not be a very large sum, such problems may hold or delay the expansion of the telecom infrastructure especially in rural areas. Uncertainty is an important factor when making investment decisions.