In early 2015, Prime Minister Ibrahim Mahlab invited Peruvian economist Hernando De Soto to meet with him and other ministers and hold a seminar with experts and civil society on how to address the challenges of informal areas. De Soto is one of the world’s most sought after development economists, a position that does not come without controversy. Through his research company, the Institute for Liberty and Democracy (ILD), De Soto promotes the theory detailed in his books The Other Path (1990) and The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (2002).

He claims that most of the problems faced by people living in informal areas stems from the lack of official ownership of their land. Because of this lack, he claims, residents in informal areas are sitting on a mountain of “dead” capital, which he estimated in 2001 to be around USD 240 billion. To put this number into perspective, Egypt’s GDP in 2013 was USD 272 billion according to the World Bank. . However, in practice, De Soto’s theory has fallen short of its promise. If De Soto will have any sway over how the government addresses informal areas, it is important to revisit the issue of land titling. This article will provide a brief overview of the main arguments for and against land titling and then will proceed to outline land titling projects in Egypt, their main challenges, and their impact on poverty-reduction.

Arguments For Land Titling

De Soto’s theory is straightforward and alluring. He argues that many poor people are successful “entrepreneurs” but lack the tools to expand their businesses. In other words, he claims that most residents in informal areas not only face demolition and forced eviction, but they also cannot access formal credit systems because they do not own the land title that gives them legal claim to their property. Property is the most common form of collateral when acquiring a loan from a formal lending institution in most countries. Without legal proof of ownership, residents cannot take loans to leverage the so-called “dead” capital locked in their informally owned property. Therefore, providing land titles to the urban poor would give them proof of ownership, grant them access to formal credit markets, convert their “dead” capital into assets and allow them to participate in formal economic life. In short, securing land titles would release them from the grip of poverty. As Mitchell describes “creating property owners [supposedly] offered a simple and inexpensive means to end widespread poverty” (2005).

Among the other benefits from land titling is security of tenure. Tenure security guarantees residents the right to remain in their homes and provides incentives for people to invest in their properties which then increase in value (Brandao and Feder, 1996).¹ Even without additional investment in their properties, their value would increase anyway once formalized. Again, this would give such home-owners the option to exchange their assets for capital if needed. Some researchers have argued that titling schemes are even beneficial to the state, since they are a much less expensive option than resettlement, especially if new settlements need to be built and serviced to house residents living in existing informal areas (Runkel, 2009). Proponents of land titling also argue its importance in protecting families from forced eviction. The United Nations Office of the High Commissioner for Human Rights Fact Sheet No.25 states that “the provision of legal land title to dwellers currently lacking such protection can go a long way towards preventing forced evictions” (1993).

Residents living without tenure interviewed by TADAMUN said that in their eyes, the most important benefit likely to come from formalization is official recognition of their area as part of the city. Residents of two informal areas linked this new status as legitimate citizens to their right to demand services without having to constantly negotiate with (and bribe) local authorities.

Arguments against Land Titling

Just as many arguments have been made to support land titling, many have also highlighted its shortcomings. Gilbert argues that titling projects benefit state budgets (through the selling of land titles) more than they benefit the poor (2002). Durand-Lasserve and Payne point out that formalization could likely lead to a rise in housing values, causing severe gentrification in formalized areas and ultimately pushing out the poorest segments in the community such as renters (2005).² this argument by claiming that incorporating informal land into the formal economy benefits comparatively wealthier residents but can be disastrous for poorer ones (2006, pp.81).

Titling projects can also sometimes result in land-grabbing and forced evictions, especially in countries with a high incidence of corruption. For example, a 2011 report by the Bank Information Center claims that a World Bank land-titling project in Cambodia was not adequately supervised, and thus some of the poorest families were arbitrarily denied titles. After the inadequate implementation of the land titling component, the Cambodian government granted a private company a 99-year lease over the land and more than 20,000 people who had been living on the land for years were consequently accused of squatting illegally and risked forced eviction (BICUSA, 2011).

Runkel argues that it is unreasonable to expect property titles to guarantee residents living in informal areas access to formal credit services because such services often exclude the urban poor as a whole (2009). The only way the urban poor can gain access to formal credit is through legal and institutional reform and by ensuring that banks have small-credit products tailored to the needs of the poor. This argument is also supported by several on-the-ground experiences. For example, a 1994 study in Kenya and Tanzania found that land titling had barely any impact on investment or credit markets. Thus, the study concluded land titling to be “unimportant for development” (Pinckney and Kimuyu, 1994).

De Soto himself tested out his theories in his home country of Peru through a project that started in 1998 in cooperation with the World Bank and initially aimed to register properties of around 960,000 homes in the informal housing sector. Reviews of the project’s impact (cf. Cockburn, 2001; Field and Torero, 2006; Field, 2003) found that it had “no significant effect on access among the poor to business credit” (Mitchell, 2005). Field 2003 found that while investment in household renovations did increase, most of these investments occurred without accessing any credit (2003). In fact, mortgage lending to the poor did not increase until after the government began subsidizing low-income lending (Mitchell, 2005).

A 2008 study of land titling projects in Senegal and South Africa found that many residents already enjoyed de facto tenure security, and thus titling had little impact for them (Payne, 2008). However, it had a strong positive impact on increasing tenure security for women³ and a negative impact on tenants’ security in the wake of rising rents. The study also found that while the perceived increase in tenure security led to an increase in home investment by the informal dwellers, it did not have an impact on their access to credit because banks had “not adapted their practices to the needs and economic situation of regularized low-income families in terms of loan conditions, procedures, guarantees, and repayment facilities” (Payne, 2008).

Land Titling in Egypt: Experiences and Challenges

The first Egyptian government intervention to address land titling began in 1978, in cooperation with UNDP, to upgrade an area in the city of Al-Ismailia. The project was implemented from 1978 to 1983 to upgrade Al-Hikr (one of the largest informal areas in the city) into Hai Al-Salam. It allowed residents to purchase their plots through incremental financing schemes and subsidized prices.⁴ Prices were set at less than EGP 2/m2 to be paid incrementally, and by the end of the project the sale of over 7,000 titles covered the project costs (Runkel, 2009; Sejourne, 2006). In parallel with this project, the government issued Law No. 135/1981 which mandated the regularization of informal settlements.

Although the Hai Al-Salam project was considered by international organizations as a success in regards to the upgrading and infrastructure components, it faced many issues with the implementation of land titling. For example, the land titling component only included residents in particular locations, and only those who could prove that their dwellings were not on agricultural land (Deboulet, 2007). Eventually the land regularization activities were halted due to a disagreement between the project managers and the governorate, and the project focused solely on infrastructure provision.

In 1978, the World Bank’s Egypt Urban Development Project launched an initiative that aimed to sell titles to 120,000 residents in Manshiyyat Nāṣir, a large informal area in Cairo. However, the Ministry of Housing and the General Organization for Physical Planning (GOPP) resisted this approach, preferring to relocate residents to other areas instead (Runkel, 2009). Eventually, the project provided some infrastructure and physical upgrading to Manshiyyat Nāṣir, but its land titling component was not implemented.

The next attempt at regularizing tenure took place in 1986 via USAID’s 1976-1988 “Helwan Housing and Urban Upgrading Project.” The project made use of Law No. 31/1984 which authorized governorates to sell state-owned land to squatters as long as they had settled the property before 1984. Offices for selling application forms were set up in October of 1986 and prices were to be negotiated at the market rate. However, a year after opening the field offices, only 720 people had applied, and none had received titles (Runkel, 2009). By the time USAID released its project audit report in 1988, not a single person had received a land title. The audit report cites “inordinate delays and questionable management decisions regarding, among other things, site selection, engineering, and the type and size of units to be built” as reasons for the project’s failure to meet its goals. However, Taher (1997) and Dorman (2007) highlight the lack of cooperation from executive government agencies and disagreements between USAID and government decision-making agencies. Dorman also refers to a 1991 report by CNN that links the project’s failure to corruption and incompetence within USAID itself (2007).

Between 1987 and 1991, a land titling project was implemented by the Aswān governorate in cooperation with the German development agency GTZ (now GIZ). The project attempted to formalize an informal area in Aswān’s Nasriyya neighborhood. The experience was similar to that of Hai Al-Salam, as land prices were negotiated with residents at a low rate (EGP 5-10 per m2) to be paid incrementally (Mills-Tettey, 1998). According to Runkel (2009), a study of the project conducted in 2006 found that it had succeeded in selling land to around 45% of residents, while the others are renting the land at a low rate of EGP 4/month.⁵

In 1997 De Soto, through his Institute for Liberation and Democracy (ILD), proposed a “Property Formalization Program” to test out his theories in Egypt. The objective of the promoted project was to formalize/register all property nationwide, beginning with Cairo and eventually spreading across the country. The project received funding for a “preparation phase” from USAID, and although much effort was made by the ILD to develop the action plan and hold multiple conferences to garner political support, that government support never came and the project was never approved for implementation (Runkel, 2009).

Meanwhile, in 1998, the Cairo governorate, also in cooperation with GIZ (known, at the time, as GTZ), started a process to sell land titles to residents of ʿIzbit Bekhīt (an area in Manshiyyat Nāṣir) through the “Participatory Urban Development of Manshiyyat Nāṣir” project. Based on a participatory needs assessment conducted with the area’s residents, land titles were meant to provide residents with tenure security and would also contribute to covering the project’s costs (Runkel, 2009). Runkel (2009) and Piifero (2009) mention that in the project’s initial stages there were disputes between the Ministry of Housing (MoH) and the Cairo governorate about who was responsible for re-planning Manshiyyat Nāṣir, which delayed the project’s implementation. Furthermore, there was initial resistance from the MoH to the idea of titling altogether, but this changed in 2000 when the Minister of Housing promised that land titles would be sold to all residents of Manshiyyat Nāṣir. The project began by dividing Manshiyyat Nāṣir into nine planning areas MN1-MN9, and developing a detailed upgrading plan for ʿIzbit Bekhīt which constituted MN1. This detailed plan was approved by the Cairo governorate in 2000 (Piffero, 2009) ⁶ In 2000 the head of Manshiyyat Nāṣir district authorized the establishment of a computer database to register property owners in ʿIzbit Bekhīt. By the end of 2000 the preliminary plan for the land titling procedure in ʿIzbit Bekhīt had been prepared and was awaiting the decree from the Cairo governor to open the land titling process. In 2003 an order came from the Cairo governorate to form a technical committee and make all preparations necessary for land titling, and the governorate’s Properties (Arabic: amlāk) Department began preparations in 2004 (Runkel, 2009). 2004 also saw a change of the project’s Team Manager from David Sims to Khalil Shaath (current Cairo governer’s advisor and former head of Cairo governorate’s informal area upgrading unit), as well as a change of the Cairo governor to Abdul Azim Wazir. In 2005, a registration office was finally set up in Manshiyyat Nāṣir. In 2006 a committee was set up to collect applications from residents who were interested in purchasing their land plots. The applications came slowly, and in 2007 Shaath collaborated with local natural leaders to encourage people to apply.

Expected Impacts of Land Titling in Egypt

In addition to pricing complications, the various titling projects discussed above demonstrate how administrative and political constraints can diminish the efficacy of these programs. The bureaucracy of most government programs requires applicants to submit multiple applications to multiple entities, creating a long, arduous, and often expensive process. Civil servants appointed to handle such applications are often under-paid and have very little incentive to handle the process efficiently.Even when these issues were addressed during the GIZ project described above, there is still the task of getting residents to trust the process and to believe it will actually be beneficial to them.

Moreover, due to the sheer quantity of informal settlements across Egypt and the distinct character of each, land titling programs tend to be a heavy burden on governmental agencies. Whole departments must be formed in order to create cadastral maps, appraise properties, process applications, and manage the registration process. As a result, the process, although seemingly straightforward, can be enormously inefficient and take long periods of time.

Finally, the ambiguity of ownership in informal contexts sometimes leads to land disputes among residents themselves, as well as disputes between government agencies in the case of state-owned land. In light of widespread corruption, limited funding, and vague legal frameworks, administrative bodies tend to be weak and inefficient.Due to these factors land titling projects usually don’t produce their expected impact, which is discussed in more detail in the following sections.

Security of Tenure

A 1997 study by De Soto’s Institute for Liberty and Democracy found that 90% of Egyptians did not possess land titles. Yet, Shakwat argues that insecurity of tenure is not simply dependent on the absence of formal title documents, but it is more related to the extent to which land ownership is disputed (2013). By analyzing security of tenure alongside the tendency for land ownership disputes, he found that 44% of Egyptians’ land tenure can be considered “insecure.” This is still a frighteningly high figure, but the discrepancy between his figure and De Soto’s 90% estimate demonstrates the complexity and variability of tenure security in Egypt. It is legally problematic for the state to evict residents of settlements on private agricultural land because it is private property. Encroachments located on desert land tend to be more insecure because the state has legal jurisdiction over them. Still, some settlements have grown out of government initiatives that temporarily relocated laborers and housed them on desert land, and so residents feel as though they were given the land by the state. Residents of well-established informal areas have gathered a number of formal documents such as receipts from paying property taxes (‘awāyid) or utilities bills which gives them a certain amount of legal entitlement to their land, even if it is located on state-owned land. Finally, given that a large percentage of inhabitants of informal areas are renters, there is a high likelihood that land titling programs would have a negative impact on them.

Economic Agency

Proponents of land titling programs presume that these programs would allow those in informal areas to gain a degree of economic mobility by giving them access to formal credit systems, mainly in the form of mortgages and eliminating the need to often pay extensive bribes in order to realize a degree of tenure security. However, without a concurrent effort to restructure Egypt’s credit systems and economic policies, the provision of land titles would probably do little to increase the economic agency of those living informally. As discussed above, land titles alone do not guarantee access to credit, especially because the property on which the poor wish to borrow money is often in an unattractive location. In addition, poor people are often reluctant to borrow money primarily because of fear they may be unable to repay the loan and harsh measures would follow. They therefore prefer to rely on personal savings and loans from informal sources to purchase, build and improve their housing. Eligibility for loans is indeed much more dependent on an adequate and stable income. These requirements prevent most Egyptians, let alone those living informally (and most likely working informally), from accessing credit systems.⁷In Manshīat Nāṣir, 40% of the residents are unemployed, and of those who are employed, many largely work in the informal sector, where work is unstable and poorly paid (Runkel, 2009). It is clear, then, that the provision of land titles in the absence of reforms to the Egyptian credit systems would not do much in the way of increasing access to formal credit. But if combined with such reforms, land titling projects could potentially make a positive impact on residents’ access to credit.

Conclusion: TADAMUN’s Viewpoint

For the most part, Egyptians living in informal settlements, especially those that are well-established, enjoy a relatively high degree of security of tenure despite the high rate of homeowners without formal title to their land. However, this is not the case for residents who live on highly sought after land (e.g. Ramlet Boulaq) or land that is included in state plans for large-scale infrastructure projects (e.g. land being expropriated near the planned Rud Al-Farag transport hub). Furthermore, as detailed by Amnesty International (2011), although evictions have been historically uncommon in Egypt, they are not unheard of, and they have been happening at an increasing rate during the past decade. Moreover, many residents of informal areas (albeit mostly owners) have been struggling to achieve tenure regularization (e.g. ‘Izbit Khairallah).

There is, therefore, an argument to be made for the importance of land titling, as well as an argument against it as a ‘silver bullet.’ As highlighted in the numerous examples offered above, land titling programs could in some cases offer the potential benefits of security of tenure and possibly better access to services. What land titling does not do, however, is magically open the doors of the formal market to the poor, a market they were excluded from first and foremost because of their socioeconomic status before living in informal areas. Unless land titling programs are coupled with other national pro-poor programs, the regularization of tenure cannot, on its own, pull the poor out of poverty. Furthermore, the poorest segments of informal areas—namely, renters—need to be considered when implementing titling schemes to ensure that they are not pushed out by the increased land value.

Ultimately, despite any potential benefits of land titling, programs will simply not succeed without significant administrative reforms, conducive legal frameworks, anti-corruption measures, and mechanisms that allow the voices of all segments of informal dwellers to be heard. It also important that if land titling programs are to be implemented this should take place within a national policy that provides clear and unambiguous political backing to such programs. Finally, what is of the utmost importance is that titling is seen for what it actually is: a means that, if done correctly, could make a contribution towards poverty-alleviation, and not a panacea for poverty in and of itself.

^{1. security of tenure is one of the dimensions of adequate housing as outlined in the UN social and economic rights charter, and was part of the Urban Constitution Campaign, as outlined in Tadamun’s (2013) article on the right to adequate housing.
2.Gentrification is defined by Merriam-Webster dictionary as “the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents”.
3.The increased tenure security for women is related to Gibert’s finding that the absence of formal titles can pose a threat to “particular kinds of families” such as female-headed households (2002).
4.Read more about the significance of this project in Tadamun’s article: The Social Production of Habitat in the Egyptian Constitution
5.For more information about the Nasriyya project see here
6.The detailed plans for MN2 and MN3 were approved in 2006, while those for MN4, MN5, and MN6 were approved in 2007, and MN7 in 2008 (Piffero, 2009).
7.A 2009 study claims that by the end of the 1990s 69% of new entrants into the labor market had been absorbed by the informal sector. A 2011 report by the ILO (using 2009 data) estimates that 51.2% of people in non-agricultural employment are in informal employment.}

References

Davis, M., 2007. Planet of Slums. Verso.

Deboulet, Agnès (2007), “Restructurer l’habitat précaire. Récits de ‘meilleures pratiques’”, Espaces et sociétés, 4, No. 131, pp. 67-83.

Gilbert, Alan (2002) “On the Mystery of Capital and the Myths of Hernando de Soto. What Difference Does Legal Title Make?”, in International Development Planning Review, No. 24, pp. 1-19.

Mills-Tettey, Ralph. Nasriya Upgrading Programme – Aswan, Egypt. 1998.

Runkel, C., 2009. The Role of Urban Land Titling in Slum Improvement: The Case of Cairo (A Critical Examination of the GTZ Land Titling Programme in Manshiet Nasser) (Diploma). Institut für Stadt- und Regionalplanung, Technische Universität Berlin, Berlin, Germany.

Séjourné, Marion. Les politiques récentes de” traitement” des quartiers illégaux au Caire: nouveaux enjeux et configuration du système d’acteurs?. Diss. Tours, 2006.

Shawkat, Y., 2013. Social Justice and the Built Environment | A Map of Egypt.