“Land Package” for Rural Development: Why the “Decentralization” Draft Law is Extremely Important

Draft Law No.2194 on decentralization and deregulation is probably the most important bill for the present land reform (no less critical than the Law on agricultural land turnover) within the draft land law package which consists of 8 bills, one enacted law, and a set of supportive actions aimed at increasing the transparency of land governance.

More detailed information on the whole package is available in this blog. As for draft Law No.2194, it was approved in the first reading in November last year.

This draft law is quite complex, that is why I would like to summarize and focus on two extremely important points for the development of local, including rural, economies:

– Decentralization of land governance in Ukraine, which means that the state-owned land beyond the boundaries of settlements will be transferred into the property of communities, and the supervision and management functions of the StateGeoCadastre will be passed over to respective local authorities. So, the StateGeoCadastre will be transformed into just a servicing agency to be responsible for cadastral accounting.

– Modernization of state control and regulation in the sphere of land relations and land management in order to get rid of the outdated and utterly corrupted forms of state interference and to simplify access to land resources for citizens and businesses.

Why is it critically important? Today, the following interesting observations can be made on the basis of available statistical data and research:

– Villages are significantly poorer than cities. Rural dwellers are seriously behind urban population by income level.

– Rural farming, although being a kind of back spine for rural economy, is nevertheless not fully contributing to the growth of well-being of rural citizens.

– Development of villages has been seriously undermined by the lack of funding of village councils’ budgets and limited development options in the last two decades. There are many reasons for that, but the extremely inefficient, centralized, and corrupted land management and the absence of land market are, in fact, the main ones. Only about 11% of total income in local budgets is generated by their own returns on local taxes and fees.

Therefore, as envisaged by draft Law No.2194, the transfer of estimated 5.5. mln ha of state-owned agricultural land (out of exisiting 7.2 million), located beyond settlement boundaries, into the communal property, as well as the transition of land governance functions from the StateGeoCadastre to the local level, will provide rural communities with an additional development resource and a possibility to better manage land resources locally. And lowered corruption and transaction costs will certainly have a positive impact on the economic indicators of communities.

In addition, I would like to specially praise the very-well written and formatted executive summary to this draft law explaining the core provisions of the proposed bill, which is unfortunately quite rare in the law-making activities nowadays.

In total, the draft Law proposes 28+ new changes to the legislation regulating land governace in Ukraine.

Oleg Nivievskyi, Kyiv School of Economics