THE CHALLENGE of CONNECTING INFORMAL and FORMAL PROPERTY SYSTEMS SOME REFLECTIONS BASED on the CASE of TANZANIA / Hernando De Soto

Home , Benjamin Mkapa, Hassan Mtenga, Hemed Suleiman Abdalla

Realizing Property Rights page / 18

THE CHALLENGE OF CONNECTING INFORMAL AND FORMAL PROPERTY SYSTEMS SOME REFLECTIONS BASED ON THE CASE OF TANZANIA / Hernando de Soto

Introduction Since independence, Tanzania has come are not held accountable for their commit- a long way in its efforts to empower its ments; assets are not liquid and cannot people. Tanzanian citizens now have the be used to create credit or capital; people right to own things, to operate business- are not interconnected, and transactions es, and to reside wherever they wish. They cannot be tracked from owner to owner; have been emancipated by policies and business organizations do not have stat- laws that bring management down to the utes that allow members to work under village level, allowing people to make deci- one point of control; they do not have the sions for themselves. In the last four dec- means to divide labor and control risks ades legislation has been reengineered through limited liability and asset par- and written law has been thoroughly mod- titioning, or associate in standard forms ernized. Nevertheless, President Benjamin such as corporations, cooperatives, and Mkapa has recognized that there is still other collectives; people cannot be iden- much to be done to unleash Tanzania’s tified, and contracts are unable to reach economic potential. Poverty still prevails. a market outside the limited confines of The legal tools created to enable citizens family and acquaintances. to cooperate on a nationwide basis are not Under these conditions of widespread being used: assets cannot be fixed in such extralegality, wealth continues to elude a way as to be economically useful or be the majority of the nation’s people; women pulled together from their dispersed local have yet to be empowered. How to change arrangements into one consistent network that? To find the answers, President Mkapa of systematized representations; people decided to reach into the grassroots of The Challenge of Connecting Informal and Formal Property Systems page / 19

Tanzania to find out what obstacles re- (and do not connect) with the government mained and what tools were available for – the basic stuff of economics. My under- Tanzanians to lift themselves out of pov- lying assumption is that it is impossible to erty. To that end, the Government of Tan- build a modern economy without includ- zania commissioned me and my not-for- ing most of the nation’s economic activity, profit organization, the Instituto Libertad and in Tanzania we found that well over y Democracia (“ILD”) based in Lima, Peru, 90 % of economic activity takes place out- to shed light on the shadows of Tanzania’s side the law. There is no way that Tanza- extralegal economy to learn as much as nia can escape poverty if the overwhelm- possible about the many local, informal ing majority of its citizens do not have the practices that people use to do business legal tools to create wealth: organizations among themselves. The Government felt that enable them to cooperate productively that among those informal rules might lie with each other, a property system to pro- the building blocks of the kind of formal tect their assets and build capital if they so legal system required to build a prosper- wish and legalize identity and contracts, ous modern economy, rooted in the beliefs allowing people to gain access to all the of the majority of Tanzanians and, there- markets in their own country. fore, legitimate and enforceable. What my team of 42 Tanzanians and From October 2004 to October 2005, 20 ILD researchers – with the help of 932 ILD researchers traveled deep into the key informants throughout Tanzania and world of extralegality in Tanzania in an Zanzibar – found is nothing short of ex- all-out effort to trail, find, compile, and traordinary. First (what Tanzanians them- diagnose the kinds of documents, rules, selves are generally not aware of) is that in and other social devices that Tanzanians the process of creating solutions for oper- have spontaneously generated for organ- ating outside the law, they have built their izing their production and assets. We al- own economic model. This model is under- so tried to identify the legal and admin- pinned by 17 solid and welldocumented istrative obstacles that uselessly get in- “archetypes” – patterns of social interac- to people’s way. Our overriding goal was tion whose further development is funda- to get as complete as possible a picture of mental to the creation of a legal economic how Tanzania’s extralegal economy actu- order rooted in Tanzania’s indigenous cul- ally operates and how the official legal sys- ture. Second, we have identified what are tem interacts with it. probably the most important bottlenecks We focused on how Tanzanians in the in the legal system – 67 of them that are extralegal economy connect with each responsible for the exclusion of the poor other, how they cooperate and collabo- and account in part for their inability to rate, how they make their deals and se- create wealth. The ILD then put together cure their contracts, how they organize some preliminary indications as to what themselves inhouse and between sepa- the Government of Tanzania might do to rate organizations, and how they connect integrate its enormous extralegal economy Realizing Property Rights page / 20 under a single rule of law – based on existing Tanzanian practices and beliefs that will create immediate benefits for all Tan- zanians and not only the small minority already using the present legal system. The results of the year’s work were as- sembled in a 1,700 page report present- ed to the Government of Tanzania in Sep- tember 2005, “The Program to Formalize the Assets of the Poor of Tanzania and Strengthen the Rule of Law: Final Diag- nosis Report.” This article is based on that ILD report.

The situation The Government of Tanzania has contin- ued to make significant progress in terms of macro-economic indicators: annual GDP growth rates are over 5 %, inflation is down to a single digit, and international reserves have been rising for a number of consec- utive years. Tanzania has also designed most of the policies and laws that are required to build a market economy. Norms are in place to allow Tanzanian entrepreneurs to register and incorporate a business, establish guarantees (using movable or im- disputes through appropriate institutions. movable assets), obtain credit (at micro- In short, the legal mechanisms needed to finance institutions or commercial banks), start up, operate, expand, and eventually carry out international trade, participate close a business appear to be in place. in public procurement tenders, advertise, Unfortunately, most Tanzanians do take out insurance, resolve disputes, and not use this legal system: 98 % of all busi- withdraw a business from the market vol- nesses operate extralegally (a total of untarily or through bankruptcy. On the 1,482,000); 89 % of all properties are held property front, citizens have legal access extralegally (1,447,000 urban properties to rights over land and buildings in urban and 60,200,000 rural hectares, of which areas, as well as access to occupancy only 10 % is under clan control – mainly rights in rural areas. Also, the law provides Massai pastoral land), and the rest is pri- that they can inherit these rights and resolve vately held. The Challenge of Connecting Informal and Formal Property Systems page / 21

The crucial question then is: Why don’t economy has assets worth US $ 29 bil- Tanzanians want to benefit from all the se- lion. This is 10 times all foreign direct in- curity, organization, information, finance, vestment accumulated since Independ- capital, and the expanded national mar- ence and 4 times the net financial flows ket that Tanzanian law can provide? The from multilateral institutions in the same usual Western explanation refers to a period. Putting it simply: what the poor of general defect in the culture of Africans. Tanzania already have is much more than The academic commentators in the “cul- what foreigners can ever give them. ture counts for everything” camp, such as Huntington, Landes, and Harrison, say 2. It is virtually impossible for 90 % of that African societies are “steeped in tra- Tanzanians to enter the legal economy. ditional cultures and are unsuited to mar- The obstacles that Tanzanians would have ket-oriented development and are, thus, to overcome to access the legal system and fundamentally hampered in their pursuit obtain organizational structures, credit, of growth.”1 A number of academics “assign hopelessness to countries that are seen as having the ‘wrong’ kind of culture for development.”2 Some have char- acterized African cultures as “regressive and tribal.”3 Others are kinder and blame it on Europe: “Africa’s traditional structures were destroyed by colonialism.” 4 And while many do not dare to say it out loud, they are still stuck on prejudices as old as David Hume, who, in the 18th century, declared that the main problem with the Africans is that they don’t have what it takes to get organized. “There never was a civilized nation of any other complexion than white … no ingenious manufacturers amongst them, no arts, no sciences …”5

The findings What we have found in Tanzania totally contradicts all of the above contentions. Here are three massive facts for why that is so:

1. The Tanzanian poor know how to create value on their own: Their extralegal Realizing Property Rights page / 22

Registry Clerk Registrar of High Court/Respons. Magistrate Cashier Clerk Court of Court Process Server Law Court Clerk Seal of the Court Judge / Magistrate for trial Chief Justice / Responsible Magistrate Biders Purchaser Court broker Police Officer Witnesses Lawyer Defendant (judgment-debtor, Civil Prisoner) Plaintiff (decree-holder) Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Minister Land Commissioner Land Land delivery section Development Services Division Legal section Land rent and records Director Cadastral surveying Surveys and Topographic Survey Mapping Division Geodesic Survey Hydrographic Survey Mapping Director Human Min- Urban Development Policy Settlements istry of Area planning and record keeping Development Land Division Urban strategic development plans Housing Policy Registrar Registrar of Title Assistant Registrar Agency Cashier Reception Chief accountant Accounts Unit Internal auditor Cashier Chief appraiser Property Assistant appraisers Valuation Agency Cashier Reception Frontdesk Chairman Director Council Land Allocation Committee Area Planning Committee Town Planning Committee

Directorate of Human Settlement Development Infrastructure and Survey and Mapping Human Settlements Land Develop. Depart. at Municip. (Authorized Land Officer) Munici- Planning and Town Planning Section pality Coordination Architectural Section Department Surveying and mapping unit Health DepartmentHealth Officer Fire Office Cashier Municipal Board Office Ward Executive Officer Chairman of street/village Ten-Cell leader Official Gazette Newspaper Architect Landowner (occupier) Applicant for Plot Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Stage 8 and 9 Stage 10 Stage 11 Stage 12 Stage 13 The Challenge of Connecting Informal and Formal Property Systems page / 23

Judge in Charge Appointed Judge Registry Officer Registrar Commercial Officer of the Court Court Cashier Commercial court assessors Summon servers Auctioneer Witnesses Advocate of the Plaintiff Advocate of the Defendant Receptionist Newspaper Accountant Purchaser / Buyer Plaintiff / Applicant Defendant Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 St. 8 Stage 9

Business Senior Registrar Registration and Registrar Officer Licensing Agency (BRELA) Cashier Commissioner Regional Branch Office Tax Officer Tanzania Revenue Samora House (Dar es Salaam) TIN Issuance subsection Authority (TRA) Value Added Tax Commissioner Department District Office Tax Officer Ministry of Licensing Committee Industry and Business Licensing Officer Trade Department Trade Licensing Officer Regional Office Regional Licensing Officer Headquarters (Dar es Salaam) Governor Director of Banking and Service Bank of Tanzania Zonal Office Bureau of Change officers Accountant National Social Security Fund (NSSF) National Insurance Corporation Bank Advocate Salesman (printing) Members Company Board of Directors Director St. (a) (b) Stage 1 Stage 2 Stage 4 Stage 5 Stage 7 Stage 8 Stage 9 Stage 10 3 Stage 6 Realizing Property Rights page / 26 capital, markets beyond their immedi- (land, businesses, cattle) and intangible ate families, and legal property rights, (ideas); and second, the reality of struc- are insurmountable. If a poor entrepren tures of relationships, physically captured eur throughout a 50 year business life in written documents that are the natural obeys the law, it will require him/her to habitat of advanced economic and social make cash payments of US $ 91,000 to relationships. the State for the requisite licenses, per- That is why, with the active participa- mits, and approvals, and to spend 1,118 tion in the field of hundreds of key infor- days in government offices petitioning mants operating in or familiar with the for them (during which he could have extralegal sector, we searched all over earned US $ 9,350). The same entrepren mainland Tanzania and Zanzibar, in rural eur would have to wait another 32,216 as well as urban areas, to see if we could days for administrators to resolve all his/ find extralegal documents that would her requests, and during that time lose help us understand the nature of Tan- another US $ 79,600 in potential income. zania’s underlying order. We needed to The grand total of these costs: almost know what tools this order has created to US $ 180,000 – enough money to create 31 enable poor people to make economic de- additional small enterprises. cisions, cooperate with each other, structure their collaboration, resolve problems, These numbers are based on the obstacles and protect their values. documented in 67 flow charts contained We found thousands and thousands in the full report to the Tanzanian gov- of extralegal documents. And what are ernment. Here are four prime examples they like? As Wittgenstein said about of what ordinary Tanzanians are up intellectual tools, “they are no different against: than the tools in a carpenter’s toolbox: there is a hammer, pliers, a saw, a screw- 3. Tanzanians in the extralegal econo- driver, a ruler, a glue-pot, glue, nails, and my have actually created a self-organ- screws.” However, Tanzanian document ized system of documented institu- ary tools, instead of bringing pieces of tions that allows them to govern their wood together, bring people together to do actions. The extralegal economy is the re- particular things such as: creating prop- sult of the local interactions of millions of erty, extracting credit and liquidity from Tanzanians who, in spite of only being able physical assets, and structuring entrepre- to deal among themselves at local levels, neurial associations where they can di- have nevertheless created an abstract or- vide labor internally and trade externally. der to govern the way they relate to each The extraordinary thing about the docu- other. In other words, like all other people mented tools that are used in the Tanza- in the world, extralegal Tanzanians live nian extralegal economy is how complete in at least two levels of reality: first, the they are. Some examples: reality made up of things, both tangible The Challenge of Connecting Informal and Formal Property Systems page / 27

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01 Systems of records to establish institutional memory 02 Agreements to have principals represented by proxies

01 02 Realizing Property Rights page / 28

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03 References that testify to the trustworthiness of economic agents 04 Consensuses that recognize the rights of people to their land, business or chattel 05 Informal mechanisms that safe-keep and retrieve information

03 04 The Challenge of Connecting Informal and Formal Property Systems page / 29

05 Realizing Property Rights page / 30

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06 Authorizations that empower enterprises to operate in certain areas 07 Titles that assign responsibilities and rights to business organizations 08 Mechanisms that establish prices 09 Extrajudicial mechanisms that settle disputes

06 07 The Challenge of Connecting Informal and Formal Property Systems page / 31

09 Realizing Property Rights page / 32

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10 IOUs to bear witness to debts 11 Ways to lay out statements of account 12 Means to ascertain qualifications 13 Maps to identify claims and possessory arrangements

10 11 The Challenge of Connecting Informal and Formal Property Systems page / 33

12 Realizing Property Rights page / 34

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14 Charts that illustrate the organization of extralegal business 15 Agreements that establish partnerships and other forms of association 16 Systems of declaration that convey knowledge

14 The Challenge of Connecting Informal and Formal Property Systems page / 35

15 16 Realizing Property Rights page / 36

With these tools, extralegal Tanzanians world of documentation is of huge signif- are today in the process of building a doc- icance. It means they are leaving behind umented, self-styled, homegrown, nation- an earlier oral world and moving from the wide market economy. We know this be- bottom up into the world of written rep- cause that is what documents – the result resentations where people, assets, val- of the expectations and the collective will of ues, and memory can be organized with Tanzanians – tell us. There is no need for extraordinary fecundity to produce sur- documents to interact in a small society: plus value. The economic systems of the everybody knows each other. In the village, West were created and are held together by for example, Tanzanians can identify each documents that, in the form of abbreviat- other directly by perceiving the distin- ed signals, communicate the most essen- guishing physical aspects of people, and tial information relevant to economic ac- as soon as people know “who you are,” tivity. Documents empower; titles, stocks they also know “your place in the village,” and share certificates create property; through kinship and everyday actions. In guarantees create capital and credit; iden- the expanded Tanzanian market, however, tity documents create identities; adjudica- identity requires standardized represen- tion decisions create ownership; author- tations of all aspects of the life of indi- ized signatures and fingerprints create viduals and groups, and this can only be levels of authority; statutes create compa- achieved through documents. nies; contracts materialize commitments; All Tanzanians may be brothers and proxy forms create delegates, and so on. sisters in the eyes of God, but their mem- All of these institutions – property, iden- ories cannot store the information about tity, companies, or capital – come into ex- millions of other Tanzanians. It is docu- istence through the creation, signing, and ments that allow people to function beyond filing of appropriate documents. face-to-face communication, through de- Documentation might not be consid- scriptive information. The documents cre- ered much of a technology compared to ated by the extralegal economy are an ef- such advances as the computer, for exam- fort by the Tanzanian poor to move from ple. In fact, most people take documents fragmented, isolated local realities towards for granted, what clerks spend their days a larger, self-organized complexity. Like dealing with. Yet documentation is one of most citizens of other nationalities, Tan- history’s most far-reaching technologies. zanians also need to know who everyone Documentation is the prosthetic exter- else is in their country, where they live, nalization of the law, of rules and agree- who owns what, and who runs what. ments. If these are not documented, they are fated to remain forever uninterpreted. Understanding the findings Documents are, in fact, the signature of The extralegal economy organized legal life; they initiate the rule The fact that the majority of Tanzania’s of law. They bring together humans all poor are spontaneously moving into the of whom, “thought-wise,” live in solitude, The Challenge of Connecting Informal and Formal Property Systems page / 37 and cannot structure a complex relation- ization, while documents that create busi- ship with other people, except through ness associations and property give them documents. They enable society to work as opportunities for economic improvement. a whole because they allow people to deal Like all developing people, Tanzanians are with things at different points in time, and slicing their world into separate pieces so in different places, even when they are not as to better organize themselves in an in- physically present. creasingly complex world. What impressed me the most were the The third principle that particularly five principles that I surmise underlie the impressed the ILD researchers – as they extralegal order in Tanzania. First, how observed village meetings, adjudication carefully even the poor of Tanzania take processes, and administrative acts at the care of the documents that represent their extralegal level – was how the whole pro budding order. Though they are impover- cess of creating documents resulted from ished, lack legal professionalism, and have rational deliberation. Tanzanian docu- little or no appropriate infrastructure, they ments are not being born through appeals are taking care of their documented tools to brute force or to magic; instead, they quite well: they have people who create the come from village meetings and day-to-day documents (drafters), sign them (contract- practice. We have been witnesses to the ing parties), stamp them (elected authori- fact that Tanzanians have a strong com- ties), fill them out (facilitators), revise them mitment to process and accept the out- (elected elders), file them (Mwenyekitis/Vil- come of their deliberations. lage Chairmen), realize actions mandat- The fourth impressive principle is how ed by them (citizens), deliver them (village similar the Tanzanian extralegal evolution self-defense through Mgambo and Sungu- is to what once happened in the developed Sungu groups), and declare them active or nations of today before their governments inactive (adjudicators). wrote out, codified, and gave articulated The second impressive principle is how form to extralegal practices. While extra the extralegal effort to create the market legal Tanzanian devices are not yet artic- economy is being carried out in harmony ulated, they do govern the action of Tan- with the rest of Tanzanian society, fami- zanians on the ground and are binding. lies, clans and tribes. Like in other coun- These rules are the ius gentium of Tanza- tries, Tanzanians are organizing in sepa- nia that has yet to be compiled into norma- rate social bodies that overlap each other, tive rules, as the Americans and Europeans even though they have been created for did in the 19th and 20th centuries. different reasons and have different sur- The fifth underlying principle I noted – rounding environments. Each group gives common to all the documents we found – Tanzanians a different role to play and is that they exist essentially to empower allows them to manifest themselves in dif- citizens over limited resources by giv- ferent ways: Families, clans, and tribes ing them the tools with which to govern offer Tanzanians opportunities for social- property, to manage collective cooperation Realizing Property Rights page / 38 among themselves, and to provide communication with parties beyond their immediate circles of acquaintance. That is why we have grouped all these documents into 17 patterns of interaction – what I shall from this point onward call “archetypes,” representing the principal mechanisms that are fundamental to Tanzania’s extralegal market order. In other words, I have organized the thousands of documents that we collected in Tanzania into 17 archetypes with the purpose of mapping Tan- zanians’ extralegal economic relationships from the world of acquaintances on the ground to the world of documents and law: the Archetypes of Property: Adjudication, Documentation, Registration, Fungibility, Collateral, Testament; the Archetypes of Business Organizations: Association, Di- vision of Labor, Management, Transpar ency, Traceable Liability; the Archetypes of the Expanded Market: Identification, Redundancy, Attestation, Representation, Standardization, Contract. Here is a sum- mary of what we found: The Challenge of Connecting Informal and Formal Property Systems page / 39

The archetypes of property

1. Adjucation 1.1 Archetype: Extralegal adjudication creates property. The way that Tanzanians resolve disputes by submitting to the authority of third parties that adjudicate them is at the origin of much of the property rights being created today in Tanzania’s extralegal economy: This rootedness of property rights 1.2 in a wider community consensus guarantees their sustainability.

1.1 Council of Elders in Kisongo, Arusha holds dispute resolution sessions 1.2 Two pages of the 30-page report by the Kisongo Council of Elders settling a boundary dispute. By documenting the resolution in writing and with a map, the elders have deter- mined who owns what and what the boundaries are.

2. Documentation 2.1 Archetype: The property rights established by mutual agreement in the extralegal economy of Tanzania are being documented: By transposing the notion of property from the physical object into the written world of documents, Tanzanians are disengaging their assets from their burdensome material constraints into a universe where the non-visible qualities of their assets are represented.

2.1 Document recording the transfer of property in Ilkerin Village. The contracting parties have described not only the boundaries of the land being sold but have also included a hand-drawn map with the property boundaries measured in steps. Realizing Property Rights page / 40

3. Registration 3.1 Archetype: The repositories of property and business documents run by the Mwenyekiti store the only visible evidence for investi- gating and ascertaining the truth as to who owns what and who has contracted with whom, and on what terms: Tanzanians are recognizing the value of registration as the storing of documents in a way that makes them permanently accessible, providing in one single source records of the information required to track property and contractual agreements. These village repositories mirror the network of economic relationships that can some day provide the basis of official registries.

3.1 The record-keeping office of a democratically elected Village Council Chairman (Mwenyekiti) in Dar es Salaam

4. Fungibility 4.1 Archetype: Authorized documentation of property allows people not only to defend their physical possession but also to do additional kinds of work, such as guaranteeing transactions, obtaining credit, and serving as the capital of a business organization: By representing property on paper, Tanzanians have learned how to uncouple the economic features of their assets from their rigid, physical state and allow them to produce valuable effects.

4.1 Property title document of a right of occupancy in an area of the Mtwara marketplace in the south of Tanzania – given as a guarantee for credit by an extralegal micro-finance organization. The Challenge of Connecting Informal and Formal Property Systems page / 41

5. Collateral 5.1 Archetype: Humans have demonstrated that they can agree not only to have rights over things but also conditional rights over the real rights of others: Tanzanians working in the extralegal economy have reached this stage on their own because they not only have established the right to property, but also the right to transfer that right to obtain additional resources, such as finance.

5.1 A “rehani” type of guarantee that uses land as collateral for a money loan. The debtor transfers to the creditor a parcel of land – on the condition that it shall be returned on the payment of the loan.

6. Testament 6.1 Archetype: Testaments are evidence that an institution is in place allowing people to express their individual will in such a way that it can become effective even when they no longer exist: Tanzanians are produc- ing valid testaments disposing of extralegal property, which are accepted and enforced on the basis of local community consensus.

6.1 Example of a testament containing a list of goods to be willed, the beneficiaries, and the signatures of the witnesses – officially certified by a Mwenyekiti in the Kibaha area. Realizing Property Rights page / 42

The archetypes of business organizations

7. Association 7.1 Archetype: A business association is a collective put together to organize enterprise and whose determinate meaning is captured by its statutes. Like the family, the clan, and the tribe, the business association is a moral entity, which belongs to an abstract realm and can outlast the individuals who form it: If the poorest of Tanzanians are mapping their entrepreneurial agreements into business associations instead of into the other collective wholes they also belong / to, it is because they find that the former are 7.1 Statutes of “Mungano Women,” an extralegal uniquely suited to organize enterprise: the enterprise that makes and sells straw statutory context it provides reduces ambi- products in Masasi, a small town in south- guity and makes more explicit the relationship eastern Tanzania. (N.B. the organization chart between economic facts and statements. in the lower right-hand corner)

8. Division of labor 8.1 Archetype: The division of labor as practiced in business associations consists in the organization of human behavior so that through certain repeated patterns of action it can operate like a body as a single, nested, complex system managed by a modern hierarchy: Tanzanians are already organizing the division of labor within business associations where they break up production into more efficient specialized functions, thereby increasing productivity.

8.1 A Dar es Salaam furniture showroom, office, lumber supplier, wood working shop, door factory, bed and cabinet manufacturer, and fabric supplier – all independent entities operating under the business license of the showroom owner. The Challenge of Connecting Informal and Formal Property Systems page / 43

9. Management 9.1 Archetype: When people collaborate in business associations, some of them begin specializing in management which covers the functions of developing business goals, organizing and distributing work, keeping track of accounts, supervising labor, distributing profits and salaries, calculating risks, making decisions, determining the organization’s policy, dealing with clients, suppliers, and officials: Tanzanian associations are / already doing this – even trash collectors. 9.1 Members of the Amani Mazingira Group, an enterprise that provides trash collection services in a peri-urban area of Dodoma; owned by 13 women partners who have divided management among themselves into Chairwoman, Treasurer, Secretary, and Counselor, who employ male labor to carry out the tasks requiring physical strength, such as pushing heavy three-wheeled trash carts.

10. Transparency 10.1 Archetype: When contracts and property are fixed in written form, their power in the market place increases manifold. Repre- sentation in writing, no matter how simple, brings out the most economically and socially useful qualities about these agreements. All the confusing lights and shadows of assets and the contracting parties are filtered out and the attention of all con- cerned is focused on their economic charac- teristics and potential: Tanzanians are increasingly recording their agreements in / writing and storing them with a recognized au- 10.1 Mwenyekiti making documents that represent thority, which shows an evolution towards property, contracts, and business associations increasing transparency in their productive available in his office. and business activities. Realizing Property Rights page / 44

11. Traceable liability 11.1 Archetype: Written documentation is indispensable in order to attribute responsibilities between economic players, both inside and outside the organization, and to track the flow of activities through the life of the business organization. The trail that is thereby created allows traceable liability in case of fraud or error and facilitates the enforcement of contracts, the protection of property, along with good governance and self-correction within each association: /

Extralegal business associations founded 11.1 Members of Iringa Furnitures in Dodoma – by Tanzanians have various devices for tracing including the designated stock-keeper and the liability within their record-keeping. record-keeper who keep track of assets. The Challenge of Connecting Informal and Formal Property Systems page / 45

The archetypes of the expanded market

12. Identification 12.1 Archetype: Establishing identity is crucial for economic cooperation and trading relationships. At the village level, establishing identity is simple – physical aspects (face, voice, eyes, teeth, gait, etc.) and knowledge of position in the vicinity make identification easy. In the expanded market, however, nobody can personally know more than a fraction of 1 % of Tanzania’s 36 million inhabitants. Identity in the expanded market is the answer to the question “Who are you?” using imaging devices (e.g. photo- graphs and fingerprints) and other imprints (e.g. signatures), and descriptive information (e.g. names, addresses, dates of birth) to validate personal documents. Re- 12.2 garding objects (e.g. cattle and equip- ment), differentiating marks (e.g. brands and nametags) are necessary: Tanzanians in the extralegal economies are already creating identification imprints and marks to have themselves and the things they own recognized in wider circles.

12.1 Document in which a Mwenyekiti from the Kibaha area certifies the identity of an individual from his village by imprinting both the photograph and signature with his official stamp. 12.2 Marks used to identify ownership of the cattle at an auction market in Dodoma. Such branding serves as the basis for a formal pledge system. Realizing Property Rights page / 46

13. Redundancy 13.1 Archetype: By assembling multiple types of overlapping information in a structured context, Tanzanians are developing the archetype of redundancy – creating extralegal document-based devices that ensure against the subversion of the truth: The problem in any society, and especially one that is market-based, is that agents use their im- agination not only to invent, predict, and plan but also to lie and deceive, to commit fraud and theft.

13.1 Will made out by “Helen Kiwale” – with her signature AND countersignature of a witness AND written on a standardized form provided by the Kikara Parish Lutheran Church in Moshi AND the church’s official stamp AND the signature of a church authority.

14. Attestation 14.1 Archetype: Acceptance by citizens that re- cognition by an authority legitimizes a statement. The creation of trust through a triadic relationship: All throughout extralegal Tanzania, there is commitment to a process whereby third parties help determine the validity of transactions. This is a significant step towards the rule of law.

14.1 A sales contract for a piece of land in the Mwanza area. Attestation appears in the form of a fingerprint, signatures (also countersignature and official stamp of the Mwenyekiti) The Challenge of Connecting Informal and Formal Property Systems page / 47

15. Representation 15.1 Archetype: Representation as a kind of de- ontic action-at-a-distance is an important step in the evolution of law, because it allows the expression of intention of one person or entity to have an immediate con- sequence in the form of an obligation for another group at a remote place: Tanza- nian extralegal associations in many cases have statutes which provide that specific persons within the organization are vested with the powers to represent the organization as an entity in its own right.

15.1 The statutes (top) of the “Mungano Women” (bottom), which authorizes certain members of the group to represent the others in business negotiations – with a chart of their different roles within the company.

16. Standardization 16.1 Archetype: Standards are recognized patterns of consensually approved practice which convert documents from ad hoc nar- ratives to structured representations of reality which can be organized within a single inter-connected system with dynamic properties: Poor Tanzanians have already begun creating their own standards and are therefore sharing terms and practices which will allow them to assemble their assets into ever more valuable combinations to reach an ever- expanding market.

16.1 An extralegal sales contract for a one-acre parcel in the outskirts of Arusha with names of witnesses plus a fingerprint – all imprinted on the standardized “dotted line.” Realizing Property Rights page / 48

17. Contract 17.1 Archetype: A contract is the written agreement entered by two or more parties to do something – and the terms under which it will be done: Many Tanzanians in the ex tralegal economy are already concretizing their reciprocal claims and obligations in written documents, increasingly using similar terms and vocabulary.

17.1 Money-lending contract between two individuals, which establishes the amount of the loan, the interest rate, the payment period, and the collateral to be used in case of non-payment (the debtor’s house). The document is signed by both parties, the witness provided by each, and the balozi or “ten-cell leader.” The Challenge of Connecting Informal and Formal Property Systems page / 49

The problem with these archetypes is that able law that allows each enterprise to on the ground they all work separately, function unwaveringly under one point trapped in thousands of fragmented, in- of control where the division of labor, the formal, undersized and underdeveloped combination of assets, and the intercon- circumscriptions. The result is a series of nection of contracts between suppliers, barriers that prevent ordinary Tanzanians clients, creditors, and investors can take from creating efficient and productive le- place. The extralegal system does not yet gal institutions from the bottom-up. Spe- fully separate the legal personality of the cifically, these barriers are: enterprise from its owners; nor does it al- Regarding the Archetypes of Property, low the partition of assets so that all par- in the extralegal economy, they have only ties – including workers, owners, suppliers local validity. To build an effective bot- and creditors – can feel that their rights tom-up property system that can be rec- are protected. They also lack the legal pro- ognized by all Tanzanians and foreigners visions that can give entrepreneurs lim- will require that these dispersed prop ited liability so as to reduce risks and in- erty archetypes be pulled together into crease information about property that is one consistent network of systematized committed to transactions, as well as per- representations. Additionally, most prop petual succession rules that allow a col- erty in the extralegal economy is not lective to live beyond the death or depar- sufficiently fungible: assets cannot be ture of its initiators. Missing, too, are clear combined into higher valued mixtures, provisions for statutes and standard or- because they are not defined in standard ganizational forms so that all enterprises definitions that allow the low cost meas- can have similar structures and can cap- urement of their attributes nor their valua ture information about each other easily tion through their inscription in track and thereby avoid exploitation. records that are accessible and easy to Regarding the Archetypes of the Ex- follow. Also, because these rights are held panded Market, the extralegal system does in the context of local arrangements, the not provide them with enforceable rights legitimacy of these rights is still too po and obligations throughout the whole liticized compared with those that are nation. It does not protect their trading protected by the impersonal context of names and the trademarks of their prod- national law. People are still more ac- ucts, nor protect their imports and ex- countable to the local context than to the ports at national and international levels, principles of law. They also miss the low nor allow them to freely advertise, nor give cost legal connecting devices that would them the means to demonstrate cash flow allow them to use their property to access and financial statements to outsiders us- credit, capital, services, and insurance, as ing official accounting standards, nor al- well as to secure inheritance. low them to issue shares to raise capital Regarding the Archetypes of Business and guarantees to obtain credit outside Organizations, they still lack an enforce- their local circles. Realizing Property Rights page / 50

Because these Tanzanian archetypes lack rigorous, the law as a whole becomes de- all the above benefits of standard law, pro- tached from the real world. The result is ductivity in the extralegal economy is ex- that the legal system creates top-down tremely low, the capacity of extralegal en- barriers and costs that keep people on the terprises to reap the rewards of organized, outside, that my researchers have exam- large scale production in an expanded ined step by step, from the point of view market is practically nil, and their chances of the people trying to comply with the of using property efficiently and obtaining law. Tanzania’s barriers can be summa- credit and capital in competitive condi- rized in this way: tions are very reduced. Extralegal enterprises operate way below their potential Property barriers because they lack the rule of law. 1. Most property rights are not fixed in writing, or standardized to facilitate The legal economy search, use, and discrimination between The problem with the existing legal sys- similarities and differences. tem is that in practice it only applies to 2. Information is not stored in a fixed 2 % of Tanzanians regarding business, place in each village or neighborhood and and 11 % regarding property. In general, is also dispersed over 10,000 locations the law lacks transparency, predictability, nationwide and disconnected from the and economic sense: more than 120 ordi- 3 separate, uncoordinated registration nances regulating the business life cycle, systems. and more than 100 administrative offices 3. Registration procedures are unneces- are involved in the most frequent prop- sarily burdensome for poor property own- erty and business paperwork; written in ers: they have access to only six registry English, though most Tanzanians speak offices nationwide and are obliged to com- Kiswahili; not easy to obtain; frequently ply with irrelevant red tape – 7 tax and ad- amended; incomplete and inconsistently ministrative obligations and sophisticat- regulated; often contradictory or outdated, expensive surveying. ed – and requiring unjustified costs of al- 4. Some 90 % of Tanzanians cannot be most US $ 180,000 over the 50 year life- located through the property system and time of a successful business. be identified to get credit, services, deliv- This is not at all unusual: all develop- eries, and to exercise their rights as con- ing countries that draft their laws profes- tracting parties and citizens. sionally and inspired by Western systems 5. Due to prior authorizations required produce very good legal documents that from land, government and tax authori- are harmonious on paper and meet the ties, registrars, and valuers, property is standards of good universities; but they not very liquid: it is difficult to mobilize, pay a price for that elegance. As the writ- transfer, combine, divide, and be lever- ten law streamlines and the connections aged into credit and capital. between the documents are made more 6. Complying with the law takes too much The Challenge of Connecting Informal and Formal Property Systems page / 51 time: Valuation, planning, surveying and defend themselves against alleged arbi- titling procedures (8 years), land alloca- trary decisions. (Objecting to a adminis- tion for urban purposes on the mainland trative decision on the mainland requires (7 years), in Zanzibar (9 years); transfer- consent from the Attorney General – and ring and registering property (380 days). could take 570 days.) 7. High-level decisions – virtually impos- 6. To incorporate a private company in sible to obtain – are often required: The Zanzibar or register a cooperative on the Minister of Land intervenes six times to al- mainland requires complying with proce- locate land in Zanzibar; on the mainland, dures that are totally unrelated to either all surveying maps must be approved by objective or that duplicate procedures al- the Director of Surveying and Mapping; ready completed. all titles by the Commissioner for Lands. 7. Incorporating a private company on the mainland costs US $ 2,669; to wind up Business organization barriers a company voluntarily costs US $ 2,753 – 1. 90 % of the businesses in Tanzania are almost four times the average annual wage sole traders and partnerships, but the law for an ordinary Tanzanian. makes no provision for separating their 8. It is impossible for most Tanzanian business and personal assets or for a busi- companies to raise financing by selling ness to continue after the owner’s death. shares on the stock exchange – unless 2. Tanzania has no clear laws for sep- they have been profitable for the past arating the owners of small enterprises three years and have a minimum of TShs from their managers – and holding them 50 million in capital, a description of less accountable for their management. than 1 % of the nation’s companies. 3. Agreements between employers and 9. Growing through mergers and acquisi- trade unions require the approval of the tions is also closed to the majority of Tan- state bureaucracy. zanian companies who do not have the 4. Incorporating a private company can requisite stock to transfer nor the funds only be done in Dar es Salaam – and is to meet the costs of judicial procedures to thus virtually impossible for most of the change company by-laws. 87 % of the nation’s businesses located outside the capital; permits for officially Expanded market barriers declared “special businesses” (e.g. phar- 1. Mainland Tanzania has two legal sys- macies, restaurants, tour agencies, cell tems, and neither offers security to con- phones) are available only in Dar es Sa- tracts: The statutory system contains gen- laam – and may cost between US $ 3,916 eral norms and specific ones, which are and US $ 5,506. not well-known to most entrepreneurs; in 5. Authorities have excessive and unreg- the customary system it is easy to make ulated discretionary powers over applying contracts, but difficult to enforce them – laws and regulations – and Tanzanians do an appeal must be moved into an entire- not have the reasonable mechanisms to ly different legal system with different Realizing Property Rights page / 52

8 Govt

): million admini-

hire

12 1991,

days 40

lifetime. Zanzibar registry,

100

Law of

in must

): least

individuals. years.

claims than

services.

1,286

than

courts, 5 at obligations. to

contracts.

expanded of less

and national

12 1991,

business

of and

debt

product takes lend more

Const. of 2

. (

: pledges iv of year ( because corporations.

new access with

costs. even D

account

entrepreneurs a 50

cycle;

commercial products to

a rt tion

up-to-date Zanzibar not

u between

life u

to that registration

bank o Customary laws, Law of the in with

through their

disputes

sinesses

over a 2, 1952, Board of Ext. ec

u . C Banking & Financial Inst. business does take x

Banking & Fin. Inst. Act No. for b The Government Proceeding Act No. statements e

mechanisms

): res .

to : k): level law registering

courts subject

handle complex business omm %

integrated, Pride could

and circles. entrepreneurs

180,000 ban 18 1966, Sub. Regs.

the not

requiring so appropriate 40

2, 1952, Board of Ext. Trade Act 1978, E. Constitution of Tanzania 2000 (rev.),

betw

1of 1995, Regs. 2001.

49 1966, et al. no

– C

12 1991, et al.

financial

of NGO are Co-op Societies Act No. 2 2003, Co-op Societies are courts

tion trademarks arbitration decision family

ommerce Trade & Service Mark Act (No. 12, 1986), ): non-compliance

stomary u innovation:

tion tion about and freely. tion

decision or

roced regulating u C

through u u

through or k: u

Banking & Financial Inst. Act No. ARCHETYPES 141 Judicature & Application of Laws 4,745.

Tanzanian system, costs finance

legal

P $ ): of

the

flow

–

prohibitive, months:

for loan k i.d. business outside

Local Govt. Act (Urban Act) 1982, Highway Ord.

adding 1, 1961, et al.

ets ets names

saccos :

resol resol procedures resol constit ride

an (

national/international

costs also k k cash ignore

micro

three entrepreneurs Insurance Act Nor. a

recording 1 1995, B. of Tanzania Regs. 2001, et al.

te te place . B .

is 1,000 discourages

te op ordinances

trade

- u u unjustified compliance

$ trademar u ar at ar ar

for

in at appealing

national

trading a

export nat agents,”

Public Procurement Act No. 21 2004, Local Govt. Auth. Act No.

financing law co

120

administrative track

(N / (NGO P ( and of : ervices M M M

million not disp disp “fast-track”

disp

arantee mainland, 6 and rance

of 1,022; u enforcement

10,000 than

Tanzanians u

$ requiring g protect advertise. leave publicize demonstrate obtain issue 140, Govt Notice No.

the

Customs Management and Tariff Act No.

Customs Mgmt & Tariff Act No. ns credit credit credit credit : 12 1991, B. of Tanzania Act No. :

rement accountable pay the high costs of registering or using extralegal real estate for collateral. There are not publicly available guidelines for obtaining permission strative offices involved in common property and business issues; written in English; often amended, contradictory, or outdated, inconsistently regulated – in practice, modify awards. no fully organized credit bureaus. shillings and cost 10 times greater than regular courts. (107 days); faster on mainland, but can be done only in Dar. for advertising – and no time limits for approval. Microfinancing Special, More Trademark Most Recovering Import Systems

ection panded panded panded − and On −

markets:

“clearance − −

− TShs − − and − enforceable rights and obligations. official accounting standards. Tanzania’s Cannot Not Cannot Cannot Cannot Cannot Cannot Cannot j port ovable btain btain b btain btain btain ommercial ommercial ontract egistration lternative dvertising roc

mport C Bank of Tanzania Regs. 2001, NGO’sO Act & regs. Trade Act 1998, E. African CustomI and Tariff Tax Mgt. Act 1970, Africanet al. Afr. Custom & Tariff Tax MgtO Act 1970, Customs and Excise Mgt Act 1977, et al. Ord. Cap 453, et al. C Contract Ord. Mag. Courts Act A 1984, Primary Ct. rules. Civil Proced. Code 1966 (“Arbitration”),P et al. 1982, Company Ordinance Cap 212,O et al. 1994, Chap 5 RE 2002, et al. Ex M Trade & Service Mark Regulation,A 2000. Cap 167, Town & Country PlanningO Act 1962, and bylaws. B. of Tanzania Act No. Ex Notice No. O Tanzania 1977, Civil Proc. Code C Act No. Contract Ord. Cap 433 No. R Act No. Regs. Banking & Financial Inst.O Act No. Ex − Ex 12. Identification 13. Redundancy 14. Attestation 15. Representation 16. Standardization 17. Contract − − − − − − − −

laws

thus

to four

contracts: compa-

30, 1997,

moved

and

30 1997, to

other. – signed

cash,

applying elsewhere. run.

212, unable almost

profitable

the for is

– control each

over must be or

costs.

Tanzanian security Salaam

al.

firm

have

one to located cooperative

Govt. Exec.

es et 2,753 Govt. Exec. Agencies P outsiders.

a about :

the : $ managers.

most

to appeal associated. offers U powers

must

have Dar

under

to info

an how in

are

Penal Code Chap. 16 of Laws entrepreneurs, individuals

costs

transaction :

alaam workers re

parties.

State :

Govt. Exec. Agencies Act No. appeal

businesses S neither u

S Co-op. Societies Act

or : know closed done all

most

to es capture

function the

known parties is professional

of enforce:

and all

companies be

Govt. Exec. Agencies Act No. to

ar discretionary Govt. Exec Agencies Act No. of all mainland reducing to ar

nation’s suppliers, D MBEYA: don’t 15 2000, Income Tax Act 2004,

that easily

D only

founder/owners.

Zanzibar directors

rights the

roced . thus so the class

between

which can

can on

systems,

association a P

services

difficult

exchange,

standardized MBEYA:

trader acquisitions

unavailable firm,

only survive of

49 of 1966. cooperatives

protect creditors, by and unregulated firms

but

legal

under

have

not 87%

are enterprises

–

and

into

stock

company

sole Bankruptcy Ordinance Cap 25, Company Ordinance 212,

et company company not two orms made the orms

(

make the k goods p archetypes

terms

protect F of

F memos do credit

to responsibilities has u

benefits

on u to

offense of mergers the

private excessive,

persons”

. extralegal

private private

The Companies Ordinance, Cap 212, Winding Up Rules 1939, outsiders

a BARRIERS TOP DOWN most succession

typically

mar structures

: on a a BARRIERS BOTTOM easy

adm.

Tax Revenue Appeal No.

provide

(private bureau of change) (public bureau of change) (private pharmacy) (private bureau of change) start : social for have

forms

to are

crim roced registration are “legal &

Tanzania

bring

through financing

870,000 to associations define

partitioning statutes any

and perpetual standard

to company

raise incorporate

ptcy

ections or p j 30 1997, Companies Ord. Cap 212, Income Taxt Act 2004 & subsid regs, et al. u panded

separate nies – without stock to transfer or funds to pay for bylaw changes. Statutory system contains specific norms not well known; customary system’s times the av. annual wage. approval of the Finance Minister or A.G. and carry non-refundable fees. objective, duplicating completed procedures. due to no national i.d. system and ineffective registry system. and regulations – and Tanzanians do not have mechanisms to defend themselves. different legal system and language (Kiswhali to English). for three years and have a minimum of TShs 50 million in capital. on the mainland requires complying with procedures that are unrelated to either Mainland Incorporating To Traditional Incorporating Contracts Authorities To Contracts Growing

asset clear means r

d u modifications

k u Ex −

− contracts − − impossible − −

− − −

−

to allow division of labor, combination of assets, and interconnection of contracts with suppliers, clients, creditors, investors. Tanzania’s Extralegal Not Without No No No Unable Without Management x rganizational rganizational rganizational ind reation egistration an ile ra a

ncorporation ncorporation ncorporation ncorporation Value Added Tax Act 1997 & Amendments,Amendments, Stamp et Duty al. Act 1972 & B the Bankruptcy Rules made underW section 121 Cap 25. The Civil Procedure Code. No. 10 2003 – Companies Act CapNotice 212, No.Co-op 280. Societies Rules I 2004, Government (Revised) Princ. Legis., Crim.F Procedure Code 1985, Companies Ordinance Cap 212. O R Business Name (Registration) Ord.I Cap 213, Inc. Tax Act 2004 Companies& subsid regs,Ord. Capet al.212, IncomeI Tax Act 2004 & its subsidiary Agenciesregulations, Act No.et al.30 1997, Companiessubsidiary Ord. regs.,Cap 212, et Incomeal. Tax I Act 2004 & 30 1997, Companies Ord. Cap 212,C Income Tax Act 2004 & subsid. regs., et al. Civil Procedure Code 1966, ActT No. Act No. F O − O 7. Association 8. Division of labor 9. Management 10. Transparency 11. Traceable liability

− − − − − − − − −

does

2, nation-

be law

from Cap 334,

intervenes

the and obliged

difficult

not Land 1961

but

are

locations

connective

maps

facilitate

years, system

and

liquid: to enterprises

– approval. 10,000

survey

contracts

very

take

low-cost Minister

small

accessible,

1982. all

property over not of state

partnerships,

via

their

(e.g. is nationwide

the more Tanzania

and standardized

Magistrates Courts Act No. need

2, 1984, et al.

owners market mainland,

procedures over

Land Acquisition Act 1967, located: made offices dispersed :

Land Act 1999, Land Survey

required : res property all through on

traders

or unions

writing,

titling in

Village Land Act 1999, Village Land Birth & Death Registration Act, Land Act 1999, Income Tax Act 1999,

: : : place, often sole and

Probate & Administration, Ord.

registry permit pancy expanded

separating

and located

properties u

mobilized, are fixed

49 1966. six

Zanzibar:

dispersed

local

the identified for

orms

be in

roced

in occ bldg not The Courts (Land Dispute Settlements) Act 2002,

: F Land (Amendments) Act 1999, Land Reg. Ord. Judicature and Application of Laws Act 1961 authorizations, decisions Land Acquisition Act 1967, Land Act 1999, : :

P laws

fixed & : instate Land Survey Ordinance Cap 390, employers

: are easily

land access

assets (

can’t surveying a

cannot

certificate

tion be in prior registration

u enterprises

clear &

ights Town & Country Planning Ord. Cap 378, 1956, Town

only plot : Land (Amendments) Act 2004, Courts (Land) Disputes thus

rights & interfaced implementation

nregistered

no R Town and Country Planning Ordinance Cap 378, 1956, ights .

ights : between rights al allocate

can

impossible u be and

stored planning,

cannot

extralegal

resol R

R ARCHETYPES to

has –

of reg allocation allocation Tanzania Tanzanians

in inheritance

excessive

not

te claims registration

property of of consent

u to

permit ply with 7 tax and administrative obligations and expensive surveying.

cannot times dministration

transfer and

owners individ m

1, 1993. land land granted A billion

fungible registration

parties or citizens. identified for credit, services, deliveries, and exercising rights as contracting land allocation for urban purposes (7 years), in Zanzibar (9 years). must be approved by Director of Surveying and Mapping). managers – and holding managers accountable. co not separate business and personal assets or provide perpetual succession. search, use, and discrimination between similarities and differences.wide, disconnected from the 3 uncoordinated registration systems. mobilize, transfer, combine, divide, and be leveraged into credit and capital. Due Most 90% High-level, Agreements 90% Tanzania Info Tanzanians Valuation,

disp

rganizational roperty 2001, Local Govt (Dist. Auth.) Act, 1982. 29

390, 390, Local Government (District Authorities) Act.

six − P − O − −

− − − − − − to create surplus value. and trust mechanisms. not integrated in a systematized national network. and combined into more valuable mixtures to create capital, get credit, access to public utilities and information, etc. enforceable – and thus cannot encourage the kind of trust needed devices such as record keeping organizations, fiduciaries, insurance $ Assets Not Asset stomary ral ilding rvey roperty ortgage ortgage roperty roperty irth lanning state illage ormal ttachment and

P Urban Land Act 1999, Town & Country PlanningF Ord. Cap 378, 1956, etLand al. Reg. Ord. Cap 334, 1954, V et al. Town and Country Planning OrdinanceBu Cap 378, 1956, et al. Township (Building) Rules, Cap 10,Su 1953. Land Survey (General) RegulationsM 1959. 1954, Notaries Pub. and Comm. P for Oaths Ord. 1928, et al. & Country Planning (Use Classes)A Regs. 1960 amended 1993, et al. Ward Tribunals Act 1985. Ru Cap 445, Administration (SmallB Estate) Ord. Cap 30 et al. Cap 358, The Local Customary Law (Declaration) Order 1963. Settlements Act 2002, Magistrates Courts Act No. M Reg. Urban Ord. E Cu Number L 1984 Civil Procedure Code Act No. P − P 1. Adjudication 2. Documentation 3. Registration 4. Fungibility 5. Collateral 6. Testament −

− −

The Challenge of Connecting Informal and Formal Property Systems page / 53

8 Govt

): million admini-

hire

12 1991,

days 40

lifetime. Zanzibar registry,

100

Law of

in must

): least

individuals. years. claims than

services.

1,286

than

courts, 5 at obligations. to

contracts.

expanded of less

and national

12 1991,

business

of and debt

product takes lend more

Const. of 2

. (

: pledges iv of year ( because corporations.

new access with

costs. even D

account

entrepreneurs a 50

cycle;

commercial products to

a rt tion

up-to-date Zanzibar not

u between

life u

to that registration

bank o Customary laws, Law of the in with

through their

disputes sinesses

over a 2, 1952, Board of Ext. ec

u . C Banking & Financial Inst. business does take x

Banking & Fin. Inst. Act No. for b The Government Proceeding Act No. statements e

mechanisms

): res .

to : k): level law registering

courts subject u

handle complex business omm %

integrated, Pride could

and circles. entrepreneurs

180,000 ban 18 1966, Sub. Regs.

the not

requiring so appropriate 40

2, 1952, Board of Ext. Trade Act 1978, E. Constitution of Tanzania 2000 (rev.), betw

1of 1995, Regs. 2001.

49 1966, et al. no

– C

12 1991, et al.

financial

of NGO are Co-op Societies Act No. 2 2003, Co-op Societies are courts

tion trademarks arbitration decision family

ommerce Trade & Service Mark Act (No. 12, 1986), ): non-compliance

stomary u innovation: tion tion about and freely. tion

decision or

roced regulating u C

through u u

through or k: u

Banking & Financial Inst. Act No. ARCHETYPES 141 Judicature & Application of Laws 4,745.

Tanzanian system, costs finance

legal

P $ ): of

the

flow

–

prohibitive, months:

for loan k i.d. business outside

Local Govt. Act (Urban Act) 1982, Highway Ord.

adding 1, 1961, et al.

shares et

ets ets names

saccos : resol resol procedures resol constit ride

an (

national/international k

costs also k k cash ignore

micro

three entrepreneurs Insurance Act Nor. a

recording 1 1995, B. of Tanzania Regs. 2001, et al. te te place . B .

is 1,000 discourages te op ordinances

trade

- u u unjustified compliance

$ trademar u ar at ar ar

for

in at appealing

national

trading a

export nat agents,”

Public Procurement Act No. 21 2004, Local Govt. Auth. Act No.

financing law co

120

administrative track

(N / (NGO P ( and of : ervices M M M

million not disp disp “fast-track”

disp

S arantee mainland, 6 and rance

of 1,022; u enforcement

10,000 than

Tanzanians u

$ requiring g protect advertise. leave publicize demonstrate obtain issue 140, Govt Notice No.

the

Customs Management and Tariff Act No.

Customs Mgmt & Tariff Act No. ns credit credit credit credit : 12 1991, B. of Tanzania Act No. :

ection panded panded panded − and On −

markets:

“clearance − −

laws

thus

to four

contracts: compa-

30, 1997,

moved

and

30 1997, to

other. – signed

cash,

applying elsewhere. run.

212, unable almost

profitable

the for is

– control each

over must be or

costs.

Tanzanian security Salaam

al.

firm

have

one to located cooperative

Govt. Exec.

es et 2,753 Govt. Exec. Agencies P outsiders.

a about :

the : $ managers.

most

to appeal associated. offers U powers

must

have Dar

under

to info

an how in

are

Penal Code Chap. 16 of Laws entrepreneurs, individuals

costs

transaction : alaam workers re

parties.

State :

Govt. Exec. Agencies Act No. appeal

businesses S neither u

S Co-op. Societies Act

or : know closed done all

most

to es capture

function the

known parties is professional

of enforce:

and all

companies be

Govt. Exec. Agencies Act No. to ar discretionary Govt. Exec Agencies Act No. of all mainland reducing to ar

nation’s suppliers, D MBEYA: don’t 15 2000, Income Tax Act 2004,

that easily

D only

founder/owners.

Zanzibar directors

rights the

roced . thus so the class

between

which can

can on

systems, association a P

services

of co

difficult

exchange,

standardized MBEYA: trader acquisitions

unavailable firm,

only survive of

49 of 1966. cooperatives

protect creditors, by and unregulated firms

but

legal

under

have

not 87%

are enterprises

–

and

into

stock

company sole Bankruptcy Ordinance Cap 25, Company Ordinance 212,

et company company not two orms made the orms

(

make the k goods p archetypes

terms

protect F of

F memos do credit

to responsibilities has u

benefits

on u to

offense of mergers the

private excessive,

persons”

. extralegal

private private

The Companies Ordinance, Cap 212, Winding Up Rules 1939, outsiders

a BARRIERS TOP DOWN most succession

typically

mar structures

: on a a BARRIERS BOTTOM easy

adm.

Tax Revenue Appeal No.

provide

(private bureau of change) (public bureau of change) (private pharmacy) (private bureau of change) start : social for have

forms

to are crim roced registration are “legal &

Tanzania

bring

through financing

870,000 to associations define

partitioning statutes any and perpetual standard

to company

raise incorporate ptcy

ections or p j 30 1997, Companies Ord. Cap 212, Income Taxt Act 2004 & subsid regs, et al. u panded

asset clear means r

d u modifications

ob k u Ex −

− contracts − − impossible − −

− − −

−

− − − − − − − − −

does

2, nation-

be law

from Cap 334,

intervenes

the and obliged

difficult

not Land 1961

but

are

locations

connective

maps

facilitate

years, system

and

liquid: to enterprises

– approval. 10,000

survey

contracts

very

take

low-cost Minister

small

accessible,

1982. all

property over not of state

partnerships,

via

their

(e.g. is nationwide

the more Tanzania

and standardized

Magistrates Courts Act No. need

2, 1984, et al.

owners market mainland,

procedures over

Land Acquisition Act 1967, located: made offices dispersed :

Land Act 1999, Land Survey

required : res property all through on

traders

or unions

writing, u

titling in

Village Land Act 1999, Village Land Birth & Death Registration Act, Land Act 1999, Income Tax Act 1999,

: : : place, often sole and

Probate & Administration, Ord.

registry permit pancy expanded

separating

and located

properties u

mobilized, are fixed

49 1966. six

Zanzibar:

dispersed

local

the identified for

orms

be in roced

in occ bldg not The Courts (Land Dispute Settlements) Act 2002,

: F Land (Amendments) Act 1999, Land Reg. Ord. Judicature and Application of Laws Act 1961 authorizations, decisions Land Acquisition Act 1967, Land Act 1999, : :

P laws

fixed & : instate Land Survey Ordinance Cap 390, employers of

: are easily

land access

assets (

can’t surveying a

cannot certificate tion be in prior registration u enterprises

clear &

ights Town & Country Planning Ord. Cap 378, 1956, Town

only plot : Land (Amendments) Act 2004, Courts (Land) Disputes thus

rights & interfaced implementation nregistered

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Realizing Property Rights page / 54 courts, rules, modes of proof, and lan- the mainland, trademark registration is guage (Kiswhali to English). quicker – but can be done only in Dar es 2. Contracts are typically made only be- Salaam. tween individuals known to each other 9. Enforcement of contracts through ju- and on a cash basis, due to lack of effec- dicial procedures is lengthy and costly: tive national identification and registry In Zanzibar, recovering a US $ 1,000 loan systems. through the courts takes 1,286 days and 3. For most Tanzanians, contracts to pro- costs US $ 1,022; appealing the decision vide goods and services to the State are could take between 2 and 5 years. On inconceivable: not only do they have to be the mainland, the same procedure costs in writing, they must have the signed ap- US $ 4,745. proval of the Attorney General or the Min- 10. Special, “fasttrack” business courts ister of Finance, and carry non-refunda- are available only to big businesses: they ble fees and financial guarantees. handle disputes of no less than 40 mil- 4. Traditional forms of credit are un lion shillings, cost 10 times greater than available to most entrepreneurs – unable regular courts, and are located only in the to pay the high costs of registering or use capital and Arusha. their real estate for collateral because it 11. Most Tanzanians also discount the is extralegal; pledging moveable proper- possibility of legal arbitration and me- ty, such as a car, takes 297 days on the diation mechanisms, because courts, in mainland. (In Zanzibar, such pledges are practice, can modify the awards, no mat- non-existent.) ter how fair – thus destroying the mean- 5. Micro-financing is also prohibitive, ing of “arbitration.” requiring a bank account of at least TShs 12. Tanzania simply does not have the sys- 10,000 for three months; groups receiving tems in place to allow its entrepreneurs loans are required to attend weekly train- access to expanded markets: no national ing sessions for a month. I.D. system, no integrated, national reg- 6. There are no publicly available admin- istry with up-to-date information, no fully istrative guidelines for obtaining permis- organized credit bureaus. sion for advertising – and no time limits on the approval of a proposed sign or And where does that leave the people? As billboard. the following graphic shows, when a legal 7. Import and export procedures are pro- system detached from the real world gives hibitive for most Tanzanians: due to the the people mechanisms to formalize their complexity of regulations, entrepreneurs property, organize their businesses, and must hire “clearance agents,” increasing expand into wider markets – summa- the cost of doing business by about 40 %. rized in the top-down arrows – its effects 8. The current law discourages innova- are stymied by barriers that keep people tion: registering a trademark for a new out of the system. But when they create product in Zanzibar takes 107 days; on their own extralegal archetypes, these, The Challenge of Connecting Informal and Formal Property Systems page / 55 too, smack into barriers summarized in its people – and in the process creates a the bottom-up arrows. The people are thus constituency for change. The challenge stuck in the middle – doomed to being less is two-fold: to tailor existing legal institu- productive than they might be. tions to suit the poor, a top-down exercise, and, then, to harmonize, professionalize, Looking to the future and formalize the extralegal archetypes Tanzania has designed a varied, sophis- of the poor, a bottom-up exercise, so that ticated legal system that offers its people the Government of Tanzania can even- the possibility of creating and using prop- tually have its two institutional realities erty, organizing collectives, and operat- meet somewhere in the middle. ing on a nation-wide scale. The problem This would allow the formal legal sys- is that this system is inaccessible to most tem to remain stable and macro-economic Tanzanians. From the point of view of the growth and other formal development ef- poor, it is just too burdensome. Tanzania’s forts to continue, while the poor quick- current legal system has to be simplified ly see their practices being recognized, and pruned and adapted to local practices strengthened, and gradually weaved to- – until it fits the needs of the great major- gether to create an effective rule of law – ity of Tanzanians. without having to wait for the existing le- On the other hand, Tanzania’s people, gal system to reach them over the longer working extralegally, are building institu- term. tional archetypes that tell us where they The reforms to be designed will have to want to go, archetypes that are totally take into account not only the prevailing in sync with their culture. However, these local and customary arrangements that archetypes lack the standards, systems, exist in Tanzania’s extralegal economy information management, and basic in- (bottom-up), but also the institutional ob- frastructure to allow property to create stacles and deficiencies found in the na- good credit and capital, business organ- tion’s legal framework (top-down). Some izations to divide labor productively, and of the reforms will focus on improving the identification and contractual systems to existing legal framework, while others will enable Tanzanians to operate all through- focus on improving current “extralegal out the national territory. The archetypes practices” – all in a way that will merge they have produced – those that have both systems into a single legal frame- been discovered and those that are yet to work that will help create an inclusive be discovered – need to be built up and legal and economic system in Tanzania. formalized. Special consideration will also be given to These facts provide sufficient mate- ongoing Government reform initiatives. rial to outline some recommendations Herewith follow the principal recommen- and to begin building a strategy and a dations we have made to the Tanzanian program that will help Tanzania create a government: modern rule of law that fits the culture of Realizing Property Rights page / 56

A. Reforms geared to improving the real estate assets, and harmonizing cur- current legal system until it fits rent registers in Mainland Tanzania and the needs of the great majority of Zanzibar. Tanzanians (top-down) ___Facilitating the economic utiliza- Reforms to improve public administration of properties, eliminating restric- tion and to defend user rights, such as: tions on transfers and other conditions ___Introducing simplification and modern- that, in practice, are no longer in effect ization principles, legislation, and proce- in Tanzania. dures for public administration (e.g. acceptance of applications and statements at Reforms to improve business organiza- face value; decentralization; deregulation; tional forms, such as: elimination of unnecessary and expensive ___Allowing access to asset partitioning requirements and formalities, etc.). and risk reduction through entity shields ___Designing special mechanisms to con- and limited liability facilities for all en- tinually improve and streamline the reg- terprises, particularly sole traders and ulations that govern all the relationships partnerships, which constitute the most between the government agencies and for- frequently used organizational forms in malized businesses, as well as to receive Tanzania. and channel user feedback. ___Establishing decentralized, simplified, ___Harmonizing the current programs, standardized, and low cost procedures projects and initiatives that aim to im- for the entry into (incorporation, registra- prove specific aspects of the institutional tion, licensing) and exit from the market framework to facilitate entrepreneurial legally (protecting third party rights), for activity and assign clear property rights all enterprises and particularly sole trad- in Tanzania. ers and partnerships.

Reforms to improve the property system, Reforms to facilitate operation in ex- such as: panded markets, such as: ___Improving the existing formalization ___Establishing simplified and low cost procedure, possibly with, among other procedures that allow small and medium things, a simplified, standardized and low- sole traders and partnerships to contract cost formalization procedure that allows with the Tanzanian State and to comply costly and time-consuming official sur- with the legal and administrative requi- veys to be conducted by private profes- sites to export, import, advertise, etc. sionals; a simplified, decentralized, mas- ___Establish simplified mechanisms to sive, and low cost registration procedure solve disputes. with a geographical database. ___Establish simplified procedures to draw ___Establishing simplified, standardized, up and foreclose mortgages and pledges. and low cost procedures for the registra- ___Design an interconnected business in- tion of transactions involving formalized formation system to provide all interested The Challenge of Connecting Informal and Formal Property Systems page / 57 parties with a clear, reliable and updated ___Introduce ways to protect the rights of information service. women and minors in extralegal practices for the administration of property received B. Reforms geared to improving the through inheritance. (For example: In- archetypes of Tanzania’s extralegal formation programs, the availability of a economy (bottom-up) local authority, such as a mediator.) The Government needs to determine how these dispersed grassroots extralegal pro- Reforms to improve organizational cedures can be pulled together, systema- archetypes: tized, codified, and harmonized with the ___Provide more easily accessible legal op- existing legal system. But here again is a tions for poor people to form business as- sample from our list of recommendations, sociations, allowing the separation of their according to each category: personal assets from the assets of their businesses. (For example: Standardizing Reforms to improve property archetypes: forms for bylaws or statutes for compa- ___Classify extralegal documents in a way nies, partnerships, etc.) that they can help create a wide-spread, ___Introduce simple rules and legal mech- inclusive legal property system. (For ex- anisms to promote good management. (For ample: Defining the probative value of example: Standardizing rules for simple, documents that formalize property.) transparent accounting practices that ___Design and introduce throughout could be the basis of a national account- mainland Tanzania basic rules for stan ing system.) dardizing and setting up archives for ___Design mechanisms to make most citi- the records and representations that the zens and business organizations account- Mweyenkitis are now keeping, each in his able. (For example: Putting all extralegal own way, that could be the building blocks arrangements in a standard, written form for future registries that will function na- that can be enforced according to availa- tionwide. (For example: Organizing the ble documentation.) Mwenyekiti archives under a genuine fo- lio system, with a unique number for each Reforms to improve expanded market real estate unit and owner; standardizing archetypes: registration books and providing efficient ___Design mechanisms that will help mechanisms to store them; standardiz authorities monitor and simplify the use ing forms to record transfers and con of redundancy to control mistakes and tracts; facilitating access to this archive fraud. (For example: Clarifying the legal and delivery of copies of the documents effects and the hierarchy of documents stored in it; establishing legal mecha- created to prove something, such as land nisms requiring the outgoing Mwenkekiti transfer contracts and wills.) to pass on the registration book to his ___Determine the constraints of extra successor.) legal arrangements for enabling effective Realizing Property Rights page / 58 representation and its enforcement. (For cooperate productively with each other, example: Perfecting or standardizing the a property system to protect their assets powers of attorney and liability arrange- and build capital if they so wish and legal- ments based on extralegal practices to ize identity and contracts to gain access help make representation less risky and to all of their own country. more widely acceptable.) ___Determine how contract and company I am extremely grateful to the government law can take advantage of the increasing of Tanzania and especially to President clarity of extralegal contracts to provide Benjamin Mkapa for having the courage norms and standards that will make it to look at Tanzania’s problems with the easier to monitor and interpret the duties same or even greater enthusiasm than and obligations of each contracting party. they look at their many achievements. (For example: Creating simple, standard I am proud to have been chosen to sup- forms for different kinds of written con- port them in their quest for development. tract; evaluating the need of the Village Needless to say, my colleagues and I are Council’s role in approving contracts and especially thrilled to see how the facts that mortgages.) have been discovered continually demol- ish the notion that Africans are not pre- Implementing these reforms will benefit pared culturally or disposed to work in a all Tanzanians and not only the small mi- modern market economy and are doomed nority that already uses the present legal to depend on charity and untested models system. The prospect of such widespread of development. benefits will, in turn, not just inspire equally widespread support for reform but Acknowledgements also silence the opponents of institutional We would like to thank the following peo- change. When the Government of Tanza- ple for their contribution. nia first asked us to shed light on the nation’s informal sector, the hope was that In Peru: Patricia Aparicio, Ana Lucia we might find among the extralegal prac- Camaiora, Gabriel Daly, Enrique Díaz, tices of ordinary Tanzanians the building Victor Endo, Almudena Fernández, blocks of a modern, legal economy. We have Mario Galantini, Susana Lizárraga, done exactly that. As a result, we believe Gianna Macchiavello, Iris MacKenzie, that all the facts laid out in this document Gustavo Marini, Manuel Mayorga, along with its recommendations, pro- Luis Morales Bayro, Rosario Payet, vide the pillars for establishing a Mas- Anthony Power, Juan Pulgar Vidal, ter Plan to identify the policies to include Patricia Ritter, Javier Robles, Jackie the extralegal economy under the rule of Silva, Gerardo Solis, Edward Tivnan. law by providing it with the indispensable legal tools to create wealth: organizations that enable Tanzanian entrepreneurs to The Challenge of Connecting Informal and Formal Property Systems page / 59

List of Participating TanzaniAns /

/ / / Business participants Abuu A Salim Amon Angyelile – business issues Adam Makame Haji Amran Batenga Abadía Iddi Mchekwa Adamson Mororo Ananyise Mpomonde Abeid Ngatumbara Aden Andrew Alois Abbas Hamis Said Agostino Begga Andrew Mhina Abdala Salim Juma Agumbwike Mwakalasa Anil Kaul Abdalah Salum Abdalah Ahmed Said Anna Chikuti and family Abdalla Abbas Omar Ahmed Y. Alawy Anthony Ikomgo Abdalla Khalfan Aibu Suleiman Anthony Kiponaya Abdalla Naubata Akida Mwaimu Arvesta William Mariki Abdallaa Habib Suleiman Alawi Mohamad Massoud Asha Bakari Abdallah Ahmed Alex Mwamposya Asha haji Suleiman Abdallah Salum Ali Adam Ali Asha Hayi Abdel Abdalah Ahmed Ali Bakar Ali Asha Juma Ali Abdul Majid Ismail Ali Haji Kheri Asha Masoud Abdulla Hassan Ali Massoud Khalfan Ashura Mahfoudh Abdulrahman Ali Ali Massoud Saleh Asifiwei Samuel Abdulrahman M. Omar Almas muhuna Almas Atanas Mjumbe Abdulrahman Mdimu Aloyce Maganga Athman Mrisho Abeid Abdalla Salim Aloys Mwamanga Athuman Mfutakamba Abeid Khamis Juma Aly Ibrahimu Aziza Ally Abel Mwasongola Alya S. Mbarone Bahati Mwakanema Abel Vunjambao Swalle Amina Abdalah Barbanas Nyamonge Msabi Abia Basansingohe Amina Mchakai Barton N. Nkolabigawa Abraham Limo Amina O’mary Bashir Kanji Abu Hassan Sele Amir Ali Juma Basil Lwemba Realizing Property Rights page / 60

Tallen Don Millan Fatma Massoud Hatari Malima Benjamín Munanka Fatma Yusuf Mohamad Hawa Mohamed Berna James Fauz Issa Abass Hellen E. Bahingin Bernard Imrope Ferdinand Swai Hemed Rashid Ali Betram Kiswaga Festo Machella Henry Masaje Birshard Kahama Festus Makota Holland Burton Boke mwita Florence A. Maare Hosea Meshimba C. David Barnaba Francisco F. Swebe Humprey Kamenya Chacha Msangi Seth Dulles Hussein Abdul Charles Abdulrahman Frank Mshanga Hussein Manji Pirbhai Charles R. Mulaki G. Minja Hussein Mngwaya Chihoma Gasters Mselle Hussein Mohamed Chrisinta B. Kavishe Gaston Kikuwi Hussen Muyinga Christopher Magembe Mangu Geava Mwaigali Ibrahim Juma Ami Christopher Mwambasa Geofrey Milonge Ibrahim Khamis Costa Mshanga Gerald Mbengwa Iddi Awadhi Cristina B Kavishe Gerald Yusuf Iddi M Changa Cristopher Makelele Gerson B. Kimei Imani Ulomi Crotson B. Mwanga Getrude Rwiza Isaac A. Kitomary Daniel Machemba Gordian Grevaz Lushaju Israel Kiyame Deusdedit Stephen Grace Joseph ImaniYetu Issa Hasan Ali Donald Mashallar Grece Ndumukwao Issa Mwamposya Dr Chihoma NKP AA. Kilasara Issa O Hassan Dude Mwalima Hadija B Msala Issa Said Edson Mzeru Hadji Mporogonyi Jacinta Sist Adam Victor Haidar Jacob Chamwanza Kipinu Mseli Haidary Abdara Jafari Akiberali Jumanne Ayoub Anil Kaul James Luchunga Elibariki Mmari Hamad Faki Kombo James Obama Elisha Buberuva Hamadi Faki Jane Banura Byabusha Elizabeth Kalinga Hamali Ali Khatib Janeth Mkonyi Elizabeth Kikarugaa Hameed Sherrif Jankey Andrew Ndingo ERasto Jsel Mbilinyi Hamza Kasarile Japhet D. Mnzava Erik Mwakisore Happy Kasigwa Jaribu Nasituna Ester Mbangwa Hasan Husseini Jasón Mnyesi Evance Kachenje Hashim J. Siddiq Jassin Chetto Peter Buguye Hashim Mwangonda Jastin Cuthbert Masue Hassan Haji Faki Joachim Sawe Ally Hamed Hassan Joshi John Ayuke Hassan Mtenga Hassan Mtindo John Bosco Njau The Challenge of Connecting Informal and Formal Property Systems page / 61

John Jolly Kingi Mwakamela Mmnaga Khamis Songiro John Kimati Kokushubila Mutasa Moh’d I Khatib John Matimbwi Kombo Addala Massoud Mohamad Abbas Maalim John Mbaga Kombo Omar Suleiman Mohamad Amrah Abdalah Johnathan Mzava Laizeki Kabweki Mohamed H Ali Jonas K. Jackson Latifa Buham Mohamed Makame Haji Joseph Charles Lawrence Msakwa Mohamed Mkubiwa Joseph Mwiru Leea Vikman Mohamed Namba Katibu Josephine Lungu Leila and Mr Best Mohamed Omar Josephine Mgombawatu Lilian Kipana Mohamed Parpic Josn Siria Lucas J. Sundi Mohamed Seleman Salum Josttu A. D. Odara Lucas James Mohamed Suleiman Judith Cyril Temu Lucy Mhagama Mohammad Mkubwa Judith Frank Sempoly Ludwina Ebrahim Mohammed O. Ramadhah Julia Chipalo Lupakisyo Mwatambo Mohsin Patel Julius M. Kaijage M Tenga Mr Suleman Juma Ali Juma Mahmoud M Mussa Mr. Charles J. Rwenyagira Juma Ayub Habib Majid Igangula Mr. Juma Juma H. Juma Majuto Mwaikongobe Mr. Salah S. Salah Juma Haji Makongoro-Mohamed Mr. Salem Juma Hatibu Habibu Mong’ateko Ms. Asha Khalfan Mohammed Juma Jefta Maneno Hassan Mwibangi Ms. Lillian Juma Khamis Manis Birchand Aggarwal Mtumwa Haji Chum Juma M. Mbange Margaret Lungwadila Muhammad Yussuf Jumane Bundala Mariamu Omari Muharam A. Ahmed Jumbe Memye Mariamu Simba Mukesh H. Radia Juvenary E.A. Matagili Marki Chuwa Musa Marifa Kagere George Martha Josephat Mwanshinga Mussa Ali Mussa Kalua M Simba Martín Philipo Mussa Omary Mhando Kassim Said Mzula Masoud S. Daud Mustapher Mwaposa Khalid Mohammad Massy Fimbo Mwajuma Mbaruku Khamis Ahmed Suleman Maulid Suleiman Mwalim J Mwalim Patricia Don Millan Mauricio Mea Mwanahawa Ali Mtumwa Khamis Mussa Omar Max Mushuga Mwanahawe Salimu Khamis Nyange Makame Medard Prosper Mwanaisha Mohamed Khamis Sharif Khamis Melchor Manyanga Mwanga Godson Khamis Uledi Melisa Kato Mzaliha Omar Mjaka Khomein Mfaki Juma Mzee Bakari Ali Kikundi Cha Ushiri- Mlkiti Nabil Ali ka U-Malijuhudini Kazi Mmakasa Vyosena N. Naki Pandu Khatib Realizing Property Rights page / 62

Naomi Kabalika Salma H. Mambo Wellington K Maleya Nasi Tunajaribu Salma Rajabu William Mbengalinkee Nassor Mazrui Salum Amour William Mpangalukula Nassoro Saidi Salum Diwani Yahana Atanas Neema Spry Salum Maloudh Yasin Eskiondo Nicholaus M.F. Duhia Samta Mwamposa Yassin H Nkanida Niclaus Maleko Saumu Husein Yuma A Mohammed Njao Msawe SBM Baronga Yunus Nassor Ali-Miskry Noel Abu Salum Selemani Issa Yusufu Betamayo M. Kiti Norman Shayo Shaban Omari Kihiyo Zabroni Mwakajela Nusura Kombo Mbwana Shimimana Ntuyabaliwe Zafarawai Alim Mtumweni Omar Hamad Aba Siajabu Kombo Hamad Zainabu Bashiri Omar Hassan Mussa Sidine Mwalukasa Zamda Ziad Omar Lleis Haji / Sitiku Mwalukamwa Zameni Ali Salim Omar Zubeir Omar Sofia Munha Zito Kajembe Panneshkumar M. Patel Sophia Hassan Zubeir Said Khami Patricia Rutahigwa Stanley M Nyamayahasi Zuberi Senga Paul Justine Ollomi Stanley N. Nyamba Tobia Msaki Peter Massele Stephen Anosisye Joseph Njari Peter Mrema Stephen Rweikiza John Ngur Philly Mpangamawe Stephen Smith Joachim Teram Pralay Dey Suleiman Ali Hamad Peter Ngaleson Rahma Khalfani Suleiman Amour Hamad Loota Sari Rashidi Suleiman Hawaii Likingurani Stei Renetus D Mushi Suleiman Juwa Ali Sabina William Richard Shemengale Suleiman Rashid Jacobo Ezekie Ridha Ali Faki Suleman Ali Mbaraka Lumatne Luguesha Rinal Ratel Swadakta Videche Zacharia Laniezu Robert Kisanga Taifa Mohamed Mhosa Magadula Robert Rweyemamu Tamko Mohamedi David Kishamawe Ronny Hezron Titus Kimwaibasa Sauda Rashidi Munihga S W Komba Veikko Jantunen Mwajuma Machemba Said Hamad Massoud Vekash Chochan Abedi Ngatumbara Said Mohammed Victor Ombeni Macha Ali Mrisho Said Salum El Touqy Victoria Frank Yasini Muhamad Said Yussuf Said Vishal Dass Choudhry Gerald Mbengwa Saimon Manga Matiko Wanzelya Mungure Adinani Mangache Msuya Saleh Juma Abdulla Wauza Kanga Vitenge Limo Mangachi Salim H. Hemed Uwabindo Antony Stephen Salim H.B. Minkonje Wauza Khanga Vitenge Stambuli Mgowa The Challenge of Connecting Informal and Formal Property Systems page / 63

Abraham Lyimo Charles Simkoko Hassan Mbugha Msandi Msangi Christina Buluda Helena Hohn Pius Rutta D J Kisoma Helena Mbembela Mbaga Likelela Daniel Shoo Helia Matonya Joseph Steven Dornadi Minga Henry Mrena Mr Madanga E. Mankwe Hussein Irunga Thomas Manyaka Edwadi Moyo I.W. Kinloch Gasper Attanas Edward Hirara Idda C. Mambo Ramadhani Sakalelo Efulaem Masebo Iddi R Isimbula Mbago Maulid Eliasi Kunati Isad Mushi Charles J Rwenyagira Elizabeth Chipanha Ismail Mdoe Emanuel Bukuku Jacob E Gao Settlers / Villagers – Enea M Kakoko James Maligana real estate issues Enock Cheddy Johena Seleman Abdul Khelly Esia Lwinea Jolyne Manya Ablahamani Ali Esther Jonson Kilonzo Adam Kichoka Ijuma Eva John Mavika Joseph A. Mushi Ahmad Mwalim Faison Mgala Joseph Negu Ali Suleiman Khmis Faiza Mussa Joshua Hamisi Alphonzina James Faki Juma Ali Jovi Ndimbo Amoni J Munuo Farles E Mwasaga Judith Mabina Amoni Mbonea Fatma A Seja Juliasy Mwambuchi Anangiswe Kibuye Felix Morengwa Julietha Mpimbili Anin Chagga village Fidelis Mahundi Juma Kilimba Anis Ali Nasso Fokassi K. Mushi Juma Mabwe Anna James Shayo France Kiwola Kadura Nasorro Anna Kibete Francis Sweya Kenedy Puhimba Anna Nyangwa Francis Woiso Kennedy Mwashivya Anne Mrungu Franiwelo Panja Kenneth Muhila Asha Rashidi Gelani Kayani Kenneth Woiso Ayoub Mussa Omar Gelon Kayani Khalfan Ali Faki B. Mchau Gelvusi MONGI Khalifan Nandule Ben W Tweve Gen MSH Sarakikya Kinnso Benjamin Laingurawie Geradi Kimata Komba Haji Mijaja Bernard A Msungu Gilde mamba Kuruthum Mateke Bira m Bira Godfred Mbano Lamson L Mshani Brown Mfinanga Haida Mbuihe Laurent Mgalla Bweni Zuberi Bweni Haji Nialu Lazaro Resuma Charles Kitundu Halsoni Kikula Lidia Samuel Charles L Nzumbi Hamis Mpita Loishiye Solongi Realizing Property Rights page / 64

Lt Col S Mwaipaja Peter Mavunde W P Mtweve M R Wwakisinza Phiupi Henry Maro Wihadi Puimba M. Rubima Rahely Mshiko Wikison Mlozi Mahambu Msangi Ramadhan Abeid William Igogo Mama Zawale Ramadhani Mnaki Willibald Vengi Mariam Hangu Robert Mwasanguti Zamda Kwamba Maryam Abdi Suleman Roman Kavishe Frank Shayo Mashauri Monti Rosina Mwashiuya Ledni Msoka Matilda Jeremia Rozi Petro M. Rubima Matryan John Sada Ali Valeriani Shayo Maudi W.Mchumia Said Amir Philipina Musiti Max Vincent Said Juma Simba Mark Momburi Mbatta B M Obadiah Saimoni A mbuzi Anthony Casmiry Mboni Ruzegea Sakina Ponera Martini Mombur Mhison T Njungu Salehe Juma Mariana Rambay Michael Barampangaje Salim Baubi Gaibi Gregory Peter Shayo Mikaeli Ngonja Sam Simkoko Joackim Momburi Millai Max Samsoni Muhaha Loburu Ngaleson Mkwavi Leonard Sara Mnkondya Lemono Mesan Mkwawa Simfukwe Sauri Merinyo Maro Kadogo Kashuba Mobyu Kaikei Seif Abdulla Hemed Ngare Mara Mohamed Ahmed Seif Mohammad Ali Medutieki Maree Monica Ndahani Seliphat Mbughi Loishie Karsan Moreland Mattowo Seth Mambareo Simon Sikabo Moses P Lyela Shaban J Sinkonde Moses Mijinga Mossess Mwaisango Shayo Ja Gelele Igunda Mr. Silas Simeon Lechipia Mary Kaligi Msamalia Kella Simon Agustin Joseph Manyama Msanif Ali Khamis Simon J Mwashinya Richard Bullama Musa J Mgalle Soyo Mwaipaja Pastory Masasila Mussa Said Stephen S. Minja Ibrahim Kikuma Mwajuma Nyanza Steven Limbula Adam Ujama Kishoka Mwanate Ali Swalehe Bodo Jamu Saibu Naomi Makota Tatu Fadhil Ali Abdalah Iddy Nasor Kassim Ali Tatu Mketo Maneno Hassan Mwinbagi Nomale P Kalinga Thereza Matayo Abdalah Kisuwa Nuru Mtamba Timleti Mwamwezi Jackson Kisamori Orlais Kiboya Trezia Mwashilindi Frank Mshanga Pathiani Belembuki Uru Oyora Musa Marifa Peter Leoni Kissora Mkulima Vick Mwamasaba Mohammed Wenye The Challenge of Connecting Informal and Formal Property Systems page / 65

Amon John Mbonea Edgar H. Berege Jane Binamungu Safieli Sengesa Edward Mbara Jared J. Mariki Sekedi Woiso Edward Ngaya Mapema John M Lubuva Mr Gervas Mhogi Edwin . W. Shetto John Massao Emanuel Mshana John S.K. Mhina Public officials Emmanuel Chilewa John T. Ndomba A D Shemi Emmanuel Henkunge Julius Caesar John A. Ndimbo Erasmus Masumbuko Julius Silungushila Abdalla Amran Abdala Ester Akilimali Justine J. Kajeli Agantina Miyowela Esteriano Em- Kayoshi Alex Olotu manuel Mahingila Kazija Said Alfred Luanda F. P. Kapella Kessy Alhaj Bakari Juma F.J. Kilawe Khatib Said Khatib Ali A. Ahmed Fakir Said Hamad Kidawa Mselemi Ali Limo Felix G. Kibodya Kilawe Ali Said Hamed G.Ndanu Kizota Jerome Ame Said Sukwa Gaspar AlphoneMsoka Lazaro Sabanga Amour Hamil Bakari George S. Andres Poraler Leonsi D Umbu Beatus Joseph Mallya Gerald Mango Lucy Kimoi Bede Lyimo Gerson Kira Lukas Mwaisaka Bhoke M Ghalib R Hamis Lusekelo B. Mwaseba Bibiana Mnyamara Gregory Nkarango M J Maro Bonephace Nyambele H.O. Mgonja M. Myihirani Bosco R. Gadi Habiba, Issa Issere M.J.M. Mdundo Bramsidon Sichone Hamad Massoud Hamad M.M.S. Mtimila Bumita J. Nboya Hamish Jigwa Mabrouk Jabu Makame Claritha Nichols Hamisi S. Fakil Magembe Kainja Mrimba Constansia S.C. Akaro Hamisi M.K. Magesa CC. Bairi D.S.L. Foka Hassan Karambi Majutto A. Mbuguyu Damas Gakwaya Hezekiely Kitilya Margaret Julius Mziray Danford M. Kamenya Hon. Adolf W. Mahay Mariam Kimolo Daniel Mangwehe Hon. Alhaji Mussa Mkhangaa Marthe R B Mayila Daniel Ole Njoolay Ibrahim D.Mwenda Martin G. Madekwe Daudi Mwilenga Ibrahim Ramadhan Mary Ding’ohi Dawa Juma Mshindo Idaiam Mgogo Maryam Msangi Deus Dedit Kalenzi Iddi Khamis Ramadhan Matern M.N. Didas R. Mrungi Indure Issa Matilda Lemuel Makando Dyness S. Mwayage Issa Kinole Ali Mercy J Urassa E.A. Mwangatua Issa Mlingoti Mike Laiser E.N.B. Chibona J.K. Katabaro Mkapa, A.B.W Realizing Property Rights page / 66

Mlindwa Mlewa Sauda Saidi Majalla Mr. Mshana Mohammad Khamis Ali SBM Baronga Mr. Muta Monica P.Z. Kwiluhya Seif Kindamba Mrs. Sarah Kyessi Mr. Kipesha, Fr. Severine Luambano Mr. Mugamuzi Mr. Nyerembe D. Munasa Shandi Yim Mr. Kinhurwa Mr. Seif (Architect) Simbangulile I. Kivinge Mr. Materu Mrs. Olympia Kowero Simon Mpangala Mr. Kifanga Mrutu Chidiel Susan E. Bidya Ms. Bumi Mtzee Hamid Khamis Yuma Sylvester Basondole Mr. Masala Mussa S.K. Nkahangua Sylvia Nmkwe Mrs. Jenny Mwanaidi Juma T.A. Kyamba Mr. David Mwarab Khalfan T.A. Massawe Mr. Mollel N KJ Hillu Taabu Jossey Mkya Mrs. Mkwizu Nana R. Mwanjisi Thomas P. Kadushi Mr. Walusumbwi Nassari Tobias Sakaia Mr. Mpogomi Obadiah Philip Mtei Tom Blomley Mr. Mazengo Omar Haji Shaali Twaib M. Adolf Mahay Omar Yusuf Mzee Vuai Mwinyi Josephine Lungu Patricia M K Maganga William P Haaly Mrs. Kuyoza Peniel Partwati Emson Adamson Mr. Masanja Peter Bitwale Mr. Shayo Mr. Masua Peter N.B. Kimaro Mr. Mazengo Mr. Mbuya Pius Wenga Mrs. Kuyoza Alfred Luanda Protas H. Mmanda Mr. A.K. Faki Mr. Tukay R. Mwanahatme Mr. Masua Mr. P. Pomwa Rahia Kupaza Mr. Mbuya Martin G Madekwe Rajab Khatib Mwinyi Mr. Anderson Mlabwa Susan E bidya Raphael M. Moglel Mr. Tukay Rashid Kitambulio Mr. Ringia Political authority Raymond J. Ritte Mr. Laimos Sichone Abdallah Hassani Majala Rehema Kitambi Mr. Mshani Abdullah Ng’alanga Respicius E. Mwijage Mr. Gervas Mhogo Blassy Thadeus Minae Rose Mpeleta Mr. Wandu David W Mgongo Rovil Nguyaine Mr. Msangi Elisha O Marti S.K. Marwa Mr. Mapunda Evarist Momburi Said Shaaban Said Mr. Peter Betuel Fukumba H Ng’winula Salum Msonge Mr. Shahid Godofredo Muyambobo Salutaris T. Kessy Mr. Wandu Hezron Ndahani Samuel Mkwesa Mr. Kifanga Jackson Ndhani Saralateya F.M.N Mrs. Kimoi Jasón Mgala The Challenge of Connecting Informal and Formal Property Systems page / 67

Johana Chawa Hamisi Milanzi Johnathan Ndahan Happy Likwelile Joseph Masanika James Kajuna Kibwana Kiwaya John Ulanga Maiko Mwangosi Joseph L. Kironde Mandazi Hinga Joyce Ndumbaro Miston Nyondo Justine Msoffe Moses Mwakarasya Makame Pandu Mrs Gomeli Mariama Margareth Ezekiel Muriet Olekisile Martine Basil Nassar Mtemi Muhammad Salim Sulaiman Othman Bakari Othman Nashitabo Mwalende Salud Longuida Nassoro Said Mkarafuu Samson Karonga Peter Obama Shaban Kombo Prosper Mwangamila Simon J Msaki Revocatus Makelemo Simon Ole Saningo Ringo Tenga Simoni Mbati Said Omar Fakir Sofo Ufuzo Haji Haji Salvatory Rugumisa Victor Mhagama Stephen Mwakasingila Zacharia Kimale Stephen Rusibamayila Joseph John Philip Tesha Thierry Kayombo Leonard Ashanas Walihi Mang’Waru Simon Olé Saningó Yahya Hamad Fumbuka Nawinula Yusufu Yakubu Jackson Tumbo Ezequiel Goromel Mohammed Kimungu Fred Ringo Ladislaus Salema Consultants – I & R Anthony Temu Ahmed Miskiry John Msafiri Alec Rwongezibwa Dandy Dam Amour Bakari Anna Bomba Anna Minja Arnold Kamala B.B. Majani Diana Uronu Edward Mbangukira Florens Luoga G Fimbo Notes page / 279

The Challenge of Connecting Informal ernment’s support of the Janjawiid militia and Formal Property Systems see “Ties Between Government and Jan- Some reflections based on the case jaweed Militias Confirmed,” Human Rights of Tanzania Watch, July 20, 2004, at: www.hrw.org/eng- Hernando de Soto lish/docs/2004/07/20/darfur9095.htm. 4 “Fresh fighting in Darfur threatens peace talks,” 1 Summed up by V. Rao & M. Walton (eds.), IRINnews.org, Sept. 23, 2005, at: http:// “Culture and Public Action,” Stanford 2004, www.irinnews.org/report.asp?ReportID=492 p. 10. 22&SelectRegion=East_Africa,%20West_Afri 2 Critically referred to by A. Sen, “How Does ca&SelectCountry=NIGERIA-SUDAN. Culture Matter?” in: V. Rao & M. Walton, 5 “Sudan – The long road to embracing peace,” “Culture and Public Action,” Stanford 2004, IRINnews.org, Sept. 12, 2005, at: http:// p. 38. www.irinnews.org/report.asp?ReportID=4 3 Joy M. Moncrieffe, “The Role of Culture in De- 8999&SelectRegion=East_Africa&SelectCo velopment,” prepared for the Commission for untry=SUDAN. Africa (November 2004) p. 1: http://www. 6 GlobalSecurity.org states that “The ongoing commissionforafrica.org/english/report/ civil war has displaced more than 4 million background.html. southerners.” Available at www.globalsecu- 4 See C. Coquery-Vidrovitch, “La mise en rity.org/military/world/war/sudan.htm. dépendance de l’Afrique noire,” 1800 –1970,” 7 See Robert Cooter, “Issues in Customary Land in: “Cahiers d’Etudes Africaines,” 1976, Law,” Institute of National Affairs, Port Mo- p. 7– 58; P. C. W. Gutkind & P. Waterman, resby, Papua New Guinea 1989. Available at: “African Social Studies: A Radical Reader,” http://works.bepress.com/robert_cooter/ London 1977. 8 Amnesty International, note 1. 5 D. Hume, “On national characters,” in: “Politi- 9 For example, assume you own an apartment cal Essays,” ed. By K. Haakonssen, Cam- and rent it to a young couple for US $ 1,500/ bridge 1994, p. 86, note f. month for a term of one year. At the end of the year’s time it turns out that demand for housing in this area is much stronger and Property Rights and Resource Conflict in you, the landlord, can now offer this apart- the Sudan ment at US $ 1,750/month. In a free prop- Karol Boudreaux erty market you should be able to renegotiate with the couple, offering them another year’s 1 See GlobalSecurity/Darfur, at: www.globalsecu- housing at the increased price. They might rity.org/military/world/para/darfur.htm need to move if the price is too high for them, 2 Sudan, Darfur: “Too many people killed or they might accept. The important issue is for no reason,” Amnesty International, that the contract terms be allowed to change Feb. 3, 2004, at: http://web.amnesty. to reflect changes in demand. org/library/Index/ENGAFR540082004. 10 See Karol Boudreaux, “The Human Face of 3 For documentation regarding the central gov- Resource Conflict: Property and Power in The Editors page / 311

Hernando de Soto is currently Co-Chairman of the UN High Level Com- mission for the Legal Em- powerment of the Poor. He is The Editorsalso President of the Institute / for Liberty and Democracy – headquartered in Lima, Peru – considered by “The Econ- o mist” as one of the two most important think tanks in the world. “TIME Magazine” chose him as one of the five leading Latin American innovators of the century in its sp ecial May 1999 issue “Leaders for the New Millennium,” and included him among the 100 most influential people in the world in 2004. Hernando de Soto was also listed as one of 15 innovators “who will reinvent your future” according to “Forbes Maga- zine’s” 85th anniversary edition. In Janu- ary 2000, “Entwicklung und Zusammenar- beit,” the German development magazine, described him as one of the most important development theoreticians of the last millennium. In October 2005, over 20,000 readers of “Prospect Magazine” and “Foreign Policy” ranked him among the top 13 public intellectuals.