5. Options for reforms

agricultural land ownership in the world and in women in the region controlling smaller plots and facing greater restrictions on accessing finance for agricultural investments. Women rarely sign sharecropping contracts.6 Women are often not paid for their work on family farms, further increasing their vulnerability and economic dependency.

5. Options for reforms

In view of the above challenges and their root causes, we briefly discuss a set of core policy priorities for reform, including the need to modernize land administration, rethink the approach to land management, stimulate and leverage land markets, and revisit broader policy objectives.

Modernizing land administrations

A clear priority for intervention is modernization of land administration, including digitization and greater transparency of information on land. Technology offers opportunities for cost-effective solutions, data generation and sharing, service delivery, and transparency, all of which are crucially lacking in the region. Global experience in modernization of land administration has shown that a comprehensive approach and long-term political commitment are prerequisites for success, yet even with such an approach and commitment, hurdles often remain in the form of lack of adequate technical, financial, and operational capacity that must be addressed.

Reforms are also needed to integrate the currently fragmented main land administration and management functions, which would lead to more consistent land information (thanks to harmonization of records) and more efficient provision of services and use of government resources. Integration would also facilitate establishment of a self-funding model. This would thus result in strong gains to address institutional fragmentation in land administration and management, although in several countries in the region, institutional consolidation is a long-term goal that requires strong political commitment. In the short term, finding ways to streamline land management functions incrementally (e.g., simplifying procedures, establishing one-stop shops, and improving the interoperability of land information systems) can provide some gains.

Important challenges remain to bring legal frameworks in line with the need of modern economies, reduce the complexities of land tenure regimes, and promote a convergence of statutory and customary legal regimes.

Rethinking Land Management

Long-established practices that treat land as a free resource for redistribution or delivery of public services without considering the costs (economic, environmental, social) must be revisited. The recommended approach to land management requires treating public land and property as a portfolio of assets to be optimized. In the Middle East and North Africa, efficiently managing public land is especially important, given the high level of state ownership and scarcity of land. Countries that aim to improve public land management should prioritize establishing or completing

6 This finding may stem in part from women’s low literacy rates—particularly women in rural areas—which prevent them from accessing information about land rights or from reading, understanding, and signing equitable contracts.

public land inventories as part of the development of land information management systems while increasing the asset management capacity of institutions. They should also adopt market-driven, transparent mechanisms of land allocation such as public auctions. Lotteries and direct allocations are less efficient because they may fail to allocate land to the best use and because they diminish the potential to generate public revenue. In the long term, efficiently managing public land will require better coordination of the institutions that control land and its allocation, as well as some level of decentralization of land management functions.

Better land governance in general, and more-efficient mobilization of public land in particular, are needed to stimulate land markets and increase the formal supply of land to accompany urban development. Mobilizing public land will require a clear policy regarding public land management—identifying the best potential use of the stock of public land and efficient ways to make some of this stock available for investment.

Stimulating and Leveraging Land Markets

A large segment of the land market in Middle Eastern and North African economies is informal. Although addressing this is difficult, an important policy objective should be to bring informal transactions into the formal market while ensuring affordable access to land and housing. Modernizing land administration will strengthen trust in the system, which should encourage formal transactions. Increasing formal land supply should enable formal land markets to function more efficiently and reduce land prices, facilitating access to land for firms and households.

In Middle Eastern and North African countries, there is considerable scope to leverage land for revenue generation through property taxation, but attempts to do so have faced resistance, and moving forward will require addressing technical and political obstacles by completing registries, developing a valuation infrastructure, increasing tax administration capacity, and minimizing tax exemptions. Applying land market principles to land valuation and taxation would increase revenue generation and make the taxation system fairer, but many governments in the region are still basing taxation on book value. There is thus a need for reforms to align property valuation with market values and reduce distortions from taxation exemptions (particularly on vacant land). Such reforms are under consideration in only a few countries. Saudi Arabia is an interesting exception, with its progressive introduction of a vacant land tax since 2016 on the value of large plots of idle land in major cities.7

Revisiting Broader Policy Objectives

In addition to sector-specific interventions, a more-holistic approach to the land sector is needed in Middle Eastern and North African countries. Governments should seek to use land optimally to meet economic, social, and environmental sustainability objectives in the evolving context of climate change, population growth, and the many challenges facing economies in the region (e.g., unemployment, gender and economic inequality, obsolescence of the resource rent model). Careful consideration of what governments can achieve and what is better left to markets will thus be needed.

7 The tax was announced during the holy month of Ramadan and set at 2.5 percent annually, a rate that is reminiscent of the rate of the Zakat—the annual tax that Muslims are obligated to pay as a religious duty—, which could have facilitated its political acceptability.