With some 1.35 million hectares, or about 25 percent of the country’s arable land, agricultural estates are an important part of Malawi’s rural economy.
But their contribution to public revenue is negligible, as 70 percent of agricultural estate leases have expired and failure to index to inflation levels of the ‘ground rent’ that was supposed to be paid to government for using the land has reduced revenue even for non-expired leases, according to latest research by the World Bank.
In a paper titled Assessing Effects of Large-Scale Land Transfers: Opportunities in Malawi’s Estate Sector, published last week, the Bretton Wood institution said charging half the market price for land rental would increase public revenue by $35 million (K25.6 billion) or five percent of total public spending a year.
According to the study, to boost commercial crop production, 21-year leases to a large number of estates, most sized from 10 to 30 hectares were, in the late 1980s, carved out of what was deemed unutilised customary land and transferred to aspiring farmers.
Despite relative land scarcity in the country, 75 percent of estate owners reported to have suitable land that they did not utilise with only about 18 percent of estates estimated to use 70 percent or more of their land for crops.
In tobacco estates, 29 percent of suitable land was not utilised, a share that varied between 50 percent in the North and 25 percent in the Centre with 28 percent of agricultural estates having at least 20 percent of their area registered to two different owners.
Said Klaus Deininger and Fang Xia in the report: “Associated losses are large: charging half the market price for land rental would increase public revenue by $35 million [K25.6 billion] or five percent of total public spending a year. It also undermines incentives for record maintenance. As a result, investment and productivity in the large farm sector remain low.
“To unleash the potential of properly run estates to contribute to the diversification of Malawi’s agricultural sector, there is need to renew, cancel or renegotiate existing estate leases in a systematic process that could then form the basis for continued monitoring of lease performance in near real time.”
Minister of Lands, Housing and Urban Development Anna Kachikho on Tuesday said leased land that is vacant is contributing to the loss in revenue, a situation she said needs to be looked at critically.
“This time around, what we have done is to make sure that once people have been allocated land, they should declare how they will use it,” she said.
Last year, President Peter Mutharika assented to land bills including Land Bill, Land Survey Bill, Physical Planning Bill and Customary Land Bill with six more land-related bills, including the Land Registry Bill waiting for Parliament’s scrutiny.