NOTES ON CUSTOMARY MORTGAGES IN GHANA AND AFRICA

Notes on Customary Mortgages in Ghana and Africa

Introduction to Customary Mortgages

Customary mortgages are a form of securing loans or credit agreements under the customary laws and traditions of a specific locality or community. In Ghana and other African countries, customary law plays a significant role in regulating land ownership and transactions. Customary mortgages, therefore, exist alongside statutory land transactions and provide a culturally relevant means of securing credit.

Definition and Concept

A customary mortgage is an agreement where an individual (the borrower) transfers an interest in land or other property to a lender as security for a loan or credit. Unlike statutory mortgages, customary mortgages are rooted in the traditions and customs of a particular community and often lack formal documentation. Instead, they rely on verbal agreements, symbolic acts, or the involvement of community elders to validate the transaction.

Key Features of Customary Mortgages

1. Basis in Customary Law: These transactions are governed by the rules and norms of a community, which vary widely across regions in Ghana and Africa.
2. Community Recognition: Customary mortgages often involve community leaders or elders to legitimize the process.
3. Security of Land: Land is the most common form of security provided under customary mortgages, as it holds significant cultural and economic value.
4. Symbolic Acts: The transfer of interest may be symbolized by the handing over of a physical object (e.g., soil or crops) to represent the land.
5. Lack of Formal Documentation: In many cases, the agreement is not formally written but orally agreed upon and witnessed by trusted community members.

Legal Framework and Recognition

In Ghana, customary law is recognized under the 1992 Constitution, particularly in land ownership and transactions. The Land Act, 2020 (Act 1036), incorporates customary practices into formal land administration, allowing customary mortgages to coexist with statutory mortgages. Similarly, other African countries such as Nigeria, Kenya, and South Africa recognize customary land tenure systems and the transactions arising under them.

Advantages of Customary Mortgages

1. Accessibility: Customary mortgages are accessible to rural and low-income individuals who may not meet the stringent requirements of formal financial institutions.
2. Cultural Relevance: They are tailored to the social and cultural realities of the community.
3. Flexibility: The terms of the mortgage are often negotiable and adapted to the borrower’s circumstances.
4. Community Support: The involvement of community elders or leaders ensures trust and mitigates conflicts.

Challenges of Customary Mortgages

1. Lack of formal documentation: The absence of formal records can lead to disputes over the terms or validity of the mortgage.
2. Unclear Ownership Rights: In communities with shared land ownership, determining the rightful owner to mortgage the land can be problematic.
3. Limited Enforcement: Customary mortgages may not be easily enforceable in formal courts, particularly when disputes arise.
4. Gender Inequality: Women often face barriers to land ownership and, consequently, the ability to access customary mortgages.
5. Urbanization and Modernization: The growth of urban areas and the introduction of formal land administration systems can erode the relevance of customary mortgages.

Examples of Customary Mortgages in Practice

1. Ghana: In rural areas, landowners may secure loans from local moneylenders or other individuals by transferring temporary rights to their farmland until repayment.
2. Nigeria: Customary mortgages are common in Igbo and Yoruba communities, where land is temporarily transferred through symbolic acts until the debt is repaid.
3. Kenya: Under the customary tenure systems of various ethnic groups, land or livestock may be mortgaged with agreements overseen by elders.

Modern Developments and Integration

Governments and financial institutions in Ghana and other African nations are increasingly working to integrate customary land tenure systems into formal frameworks. This integration aims to enhance security, transparency, and enforceability while preserving the cultural significance of customary practices. Programs such as the Ghana Land Administration Project (LAP) have sought to document customary lands and streamline customary transactions.

Conclusion

Customary mortgages remain a vital aspect of credit and land tenure systems in Ghana and Africa. They provide a culturally appropriate means of accessing credit for individuals excluded from formal financial systems. However, challenges such as documentation, enforcement, and gender disparities must be addressed to ensure the sustainability and fairness of these traditional practices. Efforts to integrate customary mortgages into formal legal and financial systems are crucial for achieving a balanced approach to land administration and economic development across the continent.