Financial Management of Inalienable Customary Land

The Pacific provides a distinctive situation for the effective financial management of land.  Institutional arrangements have been influenced in various ways by western countries.  Generally, Pacific Island Countries (PICs) retain the core traditional belief that the superior interest in land should not be sold.  The financial importance of land is its use for most economically productive activities.  As more productive land uses become available, they have prompted changes to the traditional ways of dealing with land.  These changes have also encouraged reconsideration of the economic balance within customary communities.

The income disparity that is available from new commercial land uses compared to traditional uses has distorted some aspects of customary life.  Customary landowners have had the tendency to under optimise the financial return on their land when leased.  In circumstances where they have subsequently become aware of the true value of their land, conflicts have arisen.

This has challenged their willingness to uphold contracts regarding their land.  Western people place contractual obligation paramount, regardless of the equity in the arrangement.  The principle of caveat emptor (let the buyer beware) is an accepted foundation of western commerce.  By contrast, customary peoples place more importance on equity and respect for cultural traditions.  This makes contractual obligations of only secondary importance.

Guadalcanal Plains Oil Palm Project, Solomon Islands.  Fieldwork for the Pacific Islands Forum Secretariat Land Management and Conflict Minimisation Project, June 2007.  John Richard Satekala (left) – landowner and case study co-author, Samuel Tiri (centre) – landowner and oil palm ‘outgrower’ with Spike Boydell (right).
Guadalcanal Plains Oil Palm Project, Solomon Islands. Fieldwork for the Pacific Islands Forum Secretariat Land Management and Conflict Minimisation Project, June 2007. John Richard Satekala (left) – landowner and case study co-author, Samuel Tiri (centre) – landowner and oil palm ‘outgrower’ with Spike Boydell (right).

In 2007 Spike and John were involved in Land Management and Conflict  Minimisation initiative for the Pacific Islands Forum Secretariat.  Our report (available here) builds on recent regional initiatives and plans that engage with the financial management of customary land.  These include the USP Solutions (2001) Land Tenure and Land Conflict in the Pacific, the FAO/USP/RICS Foundation South Pacific Land Tenure Conflict Symposium (2002), and the subsequent National Land Workshops / Summits (Fiji 2002, Solomon Islands / Melanesia 2005, PNG 2005 & 2006, Vanuatu 2006), and ADB Swimming Against the Tide (2004), Forum Secretariat Pacific Plan (2005), AusAID Pacific 2020 (2006).

Our advice provides a detailed review of published and unpublished literature, drawing on experiences from within and beyond the region.  There are references to the evolution of landownership structures in Europe and, in particular, leasehold examples from Australia and the UK.  This is intentional, as the Pacific can learn from both the strengths and limitations relating to the financial management of land in countries that have seen the full cycle of 99-year leasehold arrangements.

The report contextualises the effectiveness of the different financial management systems / arrangements using four detailed country case studies: Fiji, Samoa, Papua New Guinea, and New Zealand, which are included as appendices.

The recommended elements for inclusion in the overarching framework for action are solutions-based, comprising guiding principles for the Financial Management of Customary and other Land in the Pacific: Transparent Land Information Systems; Trusts and Incorporated Land Groups; Pacific Valuation Methodology and Valuation Application;  Land Use Planning; Land Courts or Tribunals; Eliminating Premiums on Lease Transfer; Restitution; Leasehold Solutions; Debt and Equity Funding; Increasing Financial Management Capacity; and the One-Stop-Shop.

Land and Titles Court, Samoa (photo Spike Boydell)
Land and Titles Court, Samoa (photo Spike Boydell)

We also completed a comprehensive review of Customary Property Rights and Formal and Informal Institutions for Economic Development and Conflict Minimisation (which is available here), which provides a detailed review of published and unpublished literature, providing rich context through six detailed country case studies: Fiji, Samoa, the Solomon Islands, Vanuatu, Papua New Guinea, and New Zealand, which are included as appendices.

The recommended elements for inclusion in the overarching framework for action are solutions-based, comprising guiding principles for Practical Institutions for the Modern Use of Custom Land: Clarity of ownership; Leasehold conditions; Zero rental leasehold (also known as ‘rent upfront’); Development leases; Restitution; Use of Trusts; Enterprise Frameworks; One-Stop-Shop; and Education about Property Rights, Obligations and Restrictions.

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