Assessing the impact of customary land tenure in obtaining credit services from financial institutions - Case study: Rukungiri District

Abstract

This research intended to assess the impact of customary land tenure in obtaining credit from financial institutions: A case study of Rukungiri District. This research looked at the nature of the property pledged against loan acquired, criteria followed and techniques adopted in deriving the land value by financial institutions as well as the recommendations towards improving the market value of the property. Chapter one introduces the main focus and aim of the project through stating the problem statement, identify the project objectives, the area under study and the justification for the project. Chapter two gives the literature review of various topics covered, a brief theory about the main components used in the project, various dynamics involved for proper analysis and comprehension of data that was collected from the field. Chapter three presents the methodology which explains in detail the techniques/tools and methods used to analyze collected data from various stakeholders that were involved as respondents to the study and these included; various Land owners, Banks, Professional valuers and District Land officials and the main channel for data collection was questionnaires. In summary from the findings and analysis of this study, the researcher came to clear conclusion that the predominant land tenure system in the district is Customary (Individually owned) and that majority of the people who account for 85% of the respondents clearly understand that unregistered land owners have limited chances of easily accessing credit (loan) compared to registered land owners (Freehold interests). As a result, they are awarded less market value of the property due to limited proof of ownership which limits highest economic use of land as a primary investment option. Therefore, the researcher recommended financial institutions to always involve professional valuers who have requisite knowledge in ascertaining value of the property (land), sensitization of people about benefits of registering land highlighting the challenges associated with customary land.