The Tribune

FOOD/WATER, energy, land and human capital are the four resources that all countries require not only for economic development but also their mere existence. These resources are so valuable that I have coined the term 'Essential National Assets' to collectively describe them. The economic success of all countries is determined by the availability and judicious use of these assets. The Bahamas has an abundance of all four, but we have not made the best use of them. Thus they have become, in some cases, non-performing assets or, indeed, liabilities. In this article I will focus on our land assets, Crown Land, generation property and land registration. 1. The term Crown Land needs to be changed to State Land, as this land belongs to the Bahamian people and not the Crown in England. 2. All State Land should be re-zoned as residential, commercial, industrial, touristic, farmland, wetlands and forestry. 3. All State/Crown Land should then be placed into a National Land Bureau that would be mandated by the Government, but managed by the private sector in a fair and transparent way. 4. The Bahamas Mortgage Corporation (BMC) and the Bahamas Development Bank should then be re-capitalised with funds from the Government, The National Insurance Board, pension funds and the private sector. It would also be necessary to repopulate the management and Board of Directors of these two financial institutions with a team of qualified and accountable persons, who will have the ability to manage them. By this I mean qualified bankers, accountants, certified financial analysts and venture capitalists. These two entities would then become the primary lending facilities for persons desirous of purchasing a piece of Crown/State Land. The BMC would be responsible for funding residential purchases at a rate of 3-5 per cent interest, and the BDB handle all non-residential purchases (commercial, industrial and touristic), but at a higher rate of interest (5-7 per cent) because of the greater risk involved. As well, all commercial and industrial proposals would be first vetted by venture capitalists at the BDB to determine project feasibility before any loans would be given for these properties. No land zoned for forestry or wetlands would be sold, and any farmland would only be leased. Foreign entities would be prohibited from buying any land earmarked for tourism but, where appropriate, would be able to lease the land on a long-term basis. I am of the opinion that if this approach were to be adopted, then the best use could be made of what Crown/State Land is still available, and the procurement process would be fair and transparent. At present, all of the Crown/State Land is controlled by the Office Of The Prime Minister. This individual, single handedly, determines the distribution of all Crown/State Land. There is never any public disclosure of these transactions, nor is anyone aware of the criteria used in the allocation process or the current status of how much land is available; who the current lease holders are; whether or not the land is being used for its intended purpose; and if the current lease holders are up to date on their payments. Such an opaque system lends itself to abuse, corruption and nepotism. This approach will provide the opportunity for many Bahamians to purchase land relatively inexpensively. They would then have a chance to own a piece of the rock and build a home. This now creates economic activity, because mortgage payments would be made to the lenders; homes would be built, which means construction jobs; homes would have to be furnished, which means increased retail purchases; and real property taxes and utility bills would have to be paid, which translates into more income for the Government. Another positive impact of this approach is that Bahamians would have an alternative source of loan funding. This would therefore create more competition in the banking sector, which could result in lower mortgage rates for all Bahamians. This would then translate into more disposable income for other mortgagee, which would result in more economic activity in the country. There are acres and acres of generation property all over the Bahamas, especially in the Family Islands. There is no reason why this land cannot be regularised and the rightful owners granted clear title to their properties. There are commonage laws that could be used to rectify this situation and, if additional laws are needed, then they could be enacted. Granted, this would be an arduous and no small task. Yes, there would be many disputes, but it needs to be sorted out. There would also be major resistance from persons who have made a profession, and millions of dollars over the years, by acquiring much of this land. Once this problem is resolved there will be hundreds of new Family Island millionaires, who will then have access to land that they will be able to sell, build on or use as collateral for whatever purpose. Any money spent by the Government to sort out this problem would be well spent, because it would not only economically empower many persons but would also result in increased economic activity in the country. The transaction costs (Stamp Duty, realty and legal fees) associated with the sale/purchase of land are too high, and are a deterrent to potential land sales. Indeed, these fees in the Bahamas are some of the highest in the world, as in many places realty and legal fees are offered at a flat rate as opposed to a percentage of the gross sales price. The present arrangement adds to the overall structural inflation that all Bahamians must endure. The legal profession justify their fee structure based on the time and effort it takes to do the relevant title search, and the potential for litigation if there are any problems. The simple solution to this is to adopt a system of land registration that would reduce the time required for the search and the chance of litigation. As well, Government should reduce the Stamp Duty to a flat fee that would range between $250-1,000 per transaction depending on the value of the transaction. This, combined with a reduction of realty fees to a flat rate within the same range of $250-1,000, would be helpful and put the Bahamas more in line with what happens in the US. This scenario would result in a win-win situation for all parties, as there would be an increase in the number of real estate transactions, so any income lost on the swing would be gained on the roundabout. Such land reform would benefit all Bahamians, the Government and the Bahamian economy. After all, economics is about making the best use of available resources, and land is certainly one of these resources.