Securing the Future of Poor through Blockchain powered Land Ownership
“Even the poorest nations have more than enough assets to be successful. It is estimated that the total value of the real estate owned formally or informally by the poor in the developing world is $9.3 trillion. Private property rights are crucial to eradicating poverty.”
Peruvian economist Hernando de Soto
While walking through the picturesque rice fields of Bali, Indonesia, in the 90s, everytime the Peruvian Economist, passed through a farm, a dog would bark at his approach. And when moving across farm boundaries, quite suddenly, the first animal would stop and a new one would begin. He or the animals could not see the farm boundaries – but the dogs knew exactly where it was. Well, the dogs of Bali knew everything the bankers or governments needed to know about farm titles, they merely needed to ask the dogs, said Peruvian economist while engaging with the Government authorities in Indonesia.
Under UN 2030 Agenda for Sustainable Development Goals (SDGs) there are land-related targets and indicators (Goal 1 – No Poverty; Goal 2 – Zero Hunger; Goal 5 – Gender Equality; Goal 11 – Sustainable cities and communities; Goal 15 – Life on Land) in order to promote responsible land governance. It has been well recognised that Land is a significant resource, both cross-cutting and critical to achieving the SDGs.
Families living without formal property titles miss out on many social & economic benefits, and are unable to lift themselves out of a vicious circle of poverty, due to lack of access to loans on favourable terms, protection from eviction, making home improvements, send children to school and invest in small businesses.
In poorer nations and developing world, formal property titling conditions either do not exist or exist in a very imperfect form. The process to acquire formally owned property can be daunting. Establishing easy, and quick access to clearly documented property rights is a crucial precondition for moving a country from poverty to prosperity. And without clear rights to private property, which is often a complicated issue, the poor as a whole are unlikely to escape poverty.
"Globally, over 4.5 billion land parcels are informal, and 140 countries do not have effective property administration systems, and in some regions more than 50% of families have not registered their property."
Netsity works in the area of Land titling and property registration, by closely aligning with Agencies, Non-profits, Government organisations, Property formalization services providers, Property specialists & lawyers, with innovative technology solutions, powered by blockchain shared ledger infrastructure, smart contracts for property titles & transactions on blockchain, property data collection tools, geo-spatial mapping solutions and IoT devices, to make property titling scalable, affordable and transparent.
Aided with automation, technology and blockchain infrastructure, for collecting property data, requesting loans, full property formalization, case processing, property titling can be made more efficient. Research and studies have shown that property titles and ownership deeds can provide an incentive to poor to invest in Housing quality, education, and health. Families that have title to their land, tend to be smaller and their children are more likely to complete their secondary education.
If the Property deeds and title systems can be simplified through technology, they could help the poor cover a wide range of contingencies – protecting against expropriation, lowering information asymmetries, eviction of defaulting tenants, collateral for financing, and so on.
The Big Questions!
“Land rights can be very crucial in economic development and upliftment of the poor. By limiting expropriation and facilitating market transactions, property rights can fundamentally improve resource allocation and increase investment in a given society.”
- How to unlock the entrepreneurial potential of billions of people through formal property titles?
- If legal status of private property is a barrier to progress in developing countries and land only becomes property when there are effective titling systems in place, how to have widely recognized land titling and property deeds?
- How can the land under the feet of the poor, can translate into deployable capital, much of which currently lacks formal ownership?
- How can the poor use property formalisation and land assets to their advantage, by having higher credit ratings for mortgages, business loans, education, etc.?
- How can we eradicate absolute poverty and enjoy widespread wealth, by giving land titles to the poor?
- Can the poor have access to all the public utilities and other benefits by having secure ownership to private property, a permanent address which can be used for bills, credit history, identification, which we usually inherit, and quite often take them for granted?
- Why the land rights are statutorily undefined and uncertain? And why is the state executive so reluctant or incapable of enforcing rights? Why is the legislature so limited and unimaginative in identifying the underlying causes of system’s failure and reforming it?
"If in a country, nobody can identify who owns what, addresses cannot be easily verified, people cannot be made to pay their debts, resources cannot conveniently be turned into money, ownership cannot be divided into shares, description of assets is not standardized and cannot be easily compared, the rules that govern property vary from neighborhood to neighborhood or even from street to street, it takes between ten to twenty years to acquire and legally register a property, how will you prosper?"
“Digital decentralised applications can ride on top of “distributed ledgers”, a shared database for land owners, financiers, government organisations, donors, who agree on a “shared truth” to confer the legal recognition as ownership of land in a peer-to-peer fashion, without relying on intermediaries or siloed land registries at local or central level.”
- Geospatial data collection and land deeds stored through blockchain framework that keeps every version of property details and makes it simple to set up resilient networks for mirroring of data.
- Persistent availability of land title records with or without Internet backbone connectivity.
- Scalable blockchain architecture that can support hundreds and thousands of IoT transactions every second for Property imagery and measurement using drones and/or photogrammetry.
- No double spend. Same land parcel cannot have conflicting ownerships, duplicate property transfer related transactions or succession claims.
- In a trustless ecosystem between land owners, property agencies, financiers, government organisations, buyers or sellers, smart-contracts can be configured, and can allow transparent disbursement of funds between the parties.
- Tamper-evident audit trail. It’s easy to detect forged data in any land titles or ownership records.
- Each member in the ecosystem has private access to the same version of truth, immutable and stored on shared ledgers, as per their privileges.
- Privacy and anonymity of the beneficiaries can be maintained, while maintaining trust in the ecosystem through smart contracts.
- Tokenised property titles and ownership claims can be easily divided and recognised across generations within a family.
- Decentralised community driven process of asserting claims and effecting transfers, which usually at the level of central government, can become ridden with red tape and legally murkier than before.
- Embedded land rights in a set of well-aligned land-management and governance framework driven by Blockchain infrastructure, that can protect land rights at the level of family holdings, while following a clear set of guidelines defined within smart contracts as to how to adjudicate these forms of evidence.
“Strengthening family or individual rights would bolster the claims of rights holders against the claims of others, such as developers, traditional authorities and government, and ensure that land developments present opportunities rather than threats.”
“The first recognisably modern property registry was in Napoleonic France. All French properties were to be carefully mapped, and their ownership registered. Would he have implemented the land titles and property transactions through Blockchain to fund his incessant wars?”
Any subsequent property appraisals and assessments can be executed and shared across all the stakeholders through shared ledgers on the blockchain.
With clear property rights, collateral management and loan servicing through blockchain, banks or lenders can have assurance they need to offer a mortgage. Land titles or property deeds can be easily marked for mortgage until the debt has been paid.
“Studies show that housing quality is better for families who have formal ownership titles. Infact, granting of property rights prompted the house owners to invest around 40% more in their homes than the families who do not have land titles.”
Why are Land Registries Important? What are the Challenges?
Research has shown that if Poor have secure property rights they are likely to see 12% increase in loan approval rates, 3.8 times more income for women property owners, 35% increase in individual savings, doubled investments in property improvements and 28% reduction in child labor.
- Due to unregistered assets, Poor remain trapped, their assets can be stolen by powerful interests, preventing broader economic development to happen.
- In the developed world, the key source of prosperity is legally protected property rights, and the lack thereof is the reason why many developing countries remain mired in poverty.
- Without formal Property titles, the poor cannot use their small homes or land to generate capital, borrow money and start businesses.
- In some countries promoting property rights is challenging, where more than 90 percent of land remains outside the legal system.
“Farmers have been demanding that the government should recognize their legal rights over the land they till, especially in tribal areas, where the lack of land rights has ensured that generations after generations, tribal cultivators have got a raw deal from governments as well as banks.”
- As people don’t have long-term property rights, they cannot invest their time and energy into cultivating their land or exchanging it with someone who would make better use of it.
- In many countries, land constitutes 50-60 percent of asset endowment and is often valuable as a primary vehicle for investing, cultivating and transferring between generations, to generate livelihoods.
- People are unable to capture the full value of their house, protect themselves from unauthorised eviction, and due to lack of recognition of their home, they are not in a position to negotiate and request for social services and utilities.
“Reducing the cost of land titles and simplifying the systems can improve land security and livelihoods of the poor.”
- The poorest of the world have assets, but there is no process to borrow against their property and create capital. They have houses but not titles, and lands but not deeds. They are unable to use their assets as collateral for loans.
- Land records systems fail as they do not take into account well understood and familiar local and customary processes for holding, using and transferring land.
- Land rights are generally secure on the ground (i.e. locally). The prevailing norms governing their tenure are well understood at familial and community levels.
The Blockchain Solution
“Unlock the social and economic benefits of property formalisation and ownership titles for low-income families.”
- Secure the rights to your property and formalize it in the interest of your family’s long-term prosperity.
- Affordable and easy solution for low income families that does away with bureaucracy and middle men.
- Legalized property transactions, and full audit trail to ensure no tampering with property rights, no legal complications or fraudulent activity.
- Empowerment through formal recognition of property rights, and accessibility to many benefits for the poor.
- More efficient, transparent and cost effective services for indisputable land titles, property registration, issues related to succession, and accurate assessment for loans, transfer of rights.
- Aggregated visibility to the other participants in the ecosystem such as legal and technical analysis, corresponding government transactions, partners for financing.
- Leverage blockchain technology to formalise land titles faster and cheaper than traditional methods.
- Stable land ownership can help the Government increase revenue, have more effective property taxes, accelerate public investment in roads and infrastructure, empower previously impoverished residents in developing regions.
Property rights for world's poor could unlock trillions in 'dead capital'
“Even those who live in slums possess far more capital than anyone realises. For the 5.3 billion who do not have property rights, they are not able to leverage their resources to create wealth, their assets become “dead capital” which cannot be used to generate income or growth, and they don’t own property in a way that can be brought into the global market and make them wealthier.”
Netsity has been providing software development services for more than 20 years (since 1997), helping our clients transform innovative ideas into disruptive reality. We are focussed on projects that can make huge Social Impact at-scale and help Philanthropists, Donors, Multilateral Organisations, Aid Agencies, Governments, CSR Programs, Non-Profits, Social Entrepreneurs, Corporates, solve complex problems that affect the BoP segment most.
Netsity works in the area of Land titling and property registration, by closely aligning with Agencies, Non-profits, Government organisations, Property formalization services providers, Property specialists & lawyers, with innovative technology solutions, powered by blockchain shared ledger infrastructure, smart contracts for property titles & transactions on blockchain, property data collection tools, geo-spatial mapping solutions and IoT devices, to make property titling scalable and affordable.