Lands Cabinet Secretary Farida Karoney last year spoke about the digitisation of records at the Lands Ministry and how it would ease the property registration process.
An upbeat Karoney noted that the ministry had started testing the new system in Nairobi, which would bring down the process of registering land in Nairobi County from 73 days to 12 days, and that it had been a success. “Our aspiration is to make property registration process possible within 24 hours,” said the CS.
“With the best internet penetration in the country, there is no good reason that will keep us from making it easier for every Kenyan to do business,” she added.
She was right. But while the ministry’s focus has been on digitising the land registration process, the issue of transparency in a bid to rid the property sector of irregularities has stuck out like a sore thumb.
When Charity Ngilu, the then Cabinet Secretary for Lands, began the process of digitisation of the land registry in 2013, it was hoped that the new shift would bring efficiency and transparency in the land sector in the country.
Under the plan, 57 land registries that had been keeping manual records since 1895 were to go digital.
And while there are loopholes in digital systems, the pros glaringly outweigh the cons, according to experts.
The computerisation initiative was mooted to improve service delivery by dealing with the mysterious and commonplace disappearance of documents, a poor file tracking system, tattered and unkempt records in the land registries, poor image of the ministry and long timelines of service delivery, among an avalanche of other challenges.
But the elephant in the room has always been corruption, which has always marred property registration.
Proceeds of corruption are easily hidden in real estate, one of the safest havens for criminals who deal with loads of stolen money.
That real estate development is a cash-intensive business involving many constant payments alongside buying and hiring of expensive machinery ensures that the flow of money is unlikely to raise suspicion even when laundered in bulk.
Peter Mburu, a Nairobi-based property lawyer, agrees that real estate could offer a leeway for money launderers to hide and benefit from their loot at the expense of innocent potential property buyers left to bemoan weak administrative systems.
“Systemic failures on the part of the institutions mandated to run our land and property sectors, especially the public institutions are the reasons there are irregularities in the real estate industry,” he says.
Dr Mburu says the mysterious operations in the sectors, where transparency is seen to be missing a lot of times, is a thriving ground for hiding proceeds of corruption.“It is true corruption proceeds are hidden here because corruption thrives in darkness. If the systems are clogged with mysteries in their processes such as inland administration, then that is darkness. If you shine a light here, such as by digitising land and other asset registers or registries and processes, there will be nowhere to hide illegally acquired assets.”
Digitisation of records, which is expected to rid the system of ills associated with land, is progressing at a good pace, according to the Institute of Surveyors of Kenya (ISK) President Abraham Samoei.
The process by the Lands Ministry was supposed to be completed by June 2020, a target that was missed due to, among other reasons, disruptions occasioned by the Covid-19 pandemic.
But the ISK chief says once fully operational, a digital platform will ultimately solve problems that have encumbered land registration and administration in Kenya for a long time.
Digitisation makes data classification and management more efficient through Geographical Information Systems (GIS) and Land Information Systems (LIS).
When all land-related data is finally entered into a digital platform, cases of irregularities associated with land conveyance will fall.
At the click of a button, any interested party can get all the details about a parcel of land from previous ownerships to lease status and current interests in the land.
Bureaucracies involved in transactions will also be eliminated, and forgeries will be a thing of the past.
“We are doing very well,” said Samoei in an interview with Home & Away.
“We have made good efforts in our digitisation and soon, Survey of Kenya and registries will be digitised. The regulatory and enabling frameworks have worked very well.”
Mburu believes the opaqueness in the real estate sector in the region is a breeding ground for corruption.“Digitisation brings openness and transparency. When there is transparency, people with unclean money will fear to invest in sectors that will shine a light on the evils,” he says.
“With proper automation, every move in the system is audited. If the registry staff is compromised and tries to perpetrate fraud, they will leave fingerprints, if not footprints.”
Real estate property expert George King’oriah has constantly lamented the exorbitant prices of property in the city, citing greed as the main reason.
Professor King’oriah says most estate agents use crude surrogates, such as auction market results, to indicate the equilibrium prices – the market price where the quantity of goods supplied is equal to the quantity of goods demanded.
“The highest bid in an auction is often characterised as the equilibrium price. At times, advertised rental and capital values by estate agents are described as market values,” he says.
“When challenged in courts as to how he (a property owner) arrived at his valuation, he wins by quoting as many examples of rent and sales as possible and convinces the court that his valuation reflects an ‘equilibrium market price’.”.
Powerful, corrupt individuals have often been earmarked for scrutiny over money seeping into real estate amid concern from experts about the many suspicious property buying companies coming up in the country.
“When politicians obtain huge sums of money in unscrupulous ways, they have a tendency of channelling it into real estate, albeit indirectly through proxies. The proxies might be close friends and family members. And they are usually directed to invest the money in land and houses. Property is preferred to other investments because it can be managed passively,” one quantity surveyor said at a past press briefing.
“The normal developer who wants to build residential apartments, for instance, has to apply for bank loans in order to secure the capital. However, a corrupt individual is hardly affected by the banks’ interest rates. When both developers ultimately put their apartments on the market, the corrupt developer can afford to charge lower rents than his debt-ridden counterpart, hence attracting more tenants faster.”
Track proceeds
A report by Transparency International says it is almost impossible to track proceeds of corruption money once it has found its way into real estate.
“When corrupt officials take large bribes, embezzle funds or otherwise steal money from the countries they are meant to serve, the money usually has to be cleaned before it can be enjoyed. As well as offering the trappings of luxury and symbols of status, property bought with dirty money can be sold, effectively disguising the corrupt origins of the funds.
In some places, in particular, it is easy to hide the real owner of property: anonymous companies can be used to purchase property, meaning even law enforcement don’t know who owns the house next door,” says the report
“A central register online that simply shows who owns what property would go a long way in creating greater accountability over the origins of money in the market, particularly when it includes the names of real beneficiaries of the property. This would make investigations by journalists and civil society much easier and also help law enforcement join the dots as they pursue cases,” the report adds.
Another report by the European Parliamentary Research Service says the veneer of respectability of the real estate sector hides some of the most ill-gotten money.
“Abuse of the real estate sector has long been described as one of the oldest known ways to launder ill-gotten gains.
Real estate is as attractive to criminals as it is to any investor (prices being generally stable and likely to appreciate over time) and is also functional (the property can be used as a second home or rented out, generating income),” says the report.
“Real estate also provides a veneer of respectability, legitimacy and normality. This applies to both residential and commercial properties as part of a reliable and profitable investment strategy. Real estate transactions can involve large sums and are subject to more limited scrutiny with regard to money-laundering risks than financial sector transactions, as non-financial sector rules are much more limited,” reads the report.
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