ECONOMIC CONSTRAINTS OF COSTLY INFORMATION IN EMERGING SUBSAHARAN AFRICAN REAL ESTATE MARKETS
BY
F. NIKOI HAMMOND1
And
Adarkwah ANTWI
SCHOOL OF ENGINEERING AND THE BUILT ENVIRONMENT
UNIVERSITY OF WOLVERHAMPTON
STAFFORD STREET, WOLVERHAMPTON
WV1 1SB
UNITED KINGDOM
Email: f.n.hammond@consultant.com
Tel: +44 (0)1902322253
This paper examines the economic implications of costly information to the efficient functioning
of urban real estate markets in sub-Saharan Africa. There is in recent times growing cynicism
among economists concerning the usefulness of government interventions as solutions to market
failures(Feiwel, 1985; Friedman, 2002; Tisdell, 1974; Hartley & Tisdell, 1981; Coase, 1960). There
is nonetheless consensus among economists that such interventions could produce beneficial
outcomes if they are designed to significantly reduce transaction costs and promote the efficient
functioning of the price system(see further Coase, 1960; 1966; 1972). The problem of information
asymmetry in real estate markets is atypical in that suppliers of real estates invariably possess
more accurate knowledge about their properties than purchasers. This stems essentially from the
hidden rather than explicit nature of relevant real estate information coupled with the
heterogeneous character of real estate commodities. Consequently, this creates suitable settings in
real estate markets for opportunistic behaviours founded on guile (see further Williamson, 1986).
In sub-Saharan Africa, government interventions aimed at bridging the information gap between
bilateral real estate transacting parties is trite.
It is evident from existing works (Antwi, 2000; Toulmin & Quan, 2000; Quan, 2000; Brandao &
Feder, 1995; Deininger, 2003; Feder & Feeney, 1991; Brandao et al., 1995; Feder & Nishio, 1999)
that most countries in sub-Saharan Africa rely on land titling and registration to remedy the
problems of real estate market information asymmetry. Even as Western societies (Mackenzie &
Philips, 1993; Megary & Wade, 2000) as well rely on land titling and registration to redress
information asymmetry the outcomes in the two societies have not headed in the same direction(
see further De Soto, 2000). While accurate and reliable information for rational decision making
at relatively reduced costs have become attainable in the West by virtue of these registration
schemes, widespread failures, inaccurate, unreliable and expensive real estate information have
characterised sub-Saharan Africa real estate market activities(Antwi, 2000; Toulmin et al., 2000;
1
Corresponding Author.
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Quan, 2000; Platteau, 2000). This naturally leads on to the question, are land titling and
registration, as they operate in sub-Saharan Africa the right options in redressing the problems of
real estate market information asymmetry in the region? What are the actual net benefits of such
interventions in sub-Saharan Africa as far as information asymmetry is concerned? It is in
providing responses to these central questions that this proposed paper is devoted. Insights from
public choice and new institutional economics would be employed to explore responses to these
questions as they pertain to Accra, Ghana.
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