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
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.
Community Recognition: Customary
mortgages often involve community leaders or elders to legitimize the
process.
Security of Land: Land is the most common form of
security provided under customary mortgages, as it holds significant
cultural and economic value.
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.
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
Accessibility: Customary mortgages are accessible
to rural and low-income individuals who may not meet the stringent
requirements of formal financial institutions.
Cultural Relevance: They are
tailored to the social and cultural realities of the community.
Flexibility: The terms of the mortgage are
often negotiable and adapted to the borrower’s circumstances.
Community Support: The involvement of community
elders or leaders ensures trust and mitigates conflicts.
Challenges
of Customary Mortgages
Lack of formal documentation: The
absence of formal records can lead to disputes over the terms or validity
of the mortgage.
Unclear Ownership Rights: In
communities with shared land ownership, determining the rightful owner to
mortgage the land can be problematic.
Limited Enforcement: Customary
mortgages may not be easily enforceable in formal courts, particularly
when disputes arise.
Gender Inequality: Women often face barriers to land
ownership and, consequently, the ability to access customary mortgages.
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
Ghana: In rural areas, landowners may
secure loans from local moneylenders or other individuals by transferring
temporary rights to their farmland until repayment.
Nigeria: Customary mortgages are common in
Igbo and Yoruba communities, where land is temporarily transferred through
symbolic acts until the debt is repaid.
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.
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