Property and Business Formalization Program (PBFP) is an initiative of the Government of the United Republic of Tanzania, aimed at economically empowering the poor majority in the country, by increasing their access to property and business opportunities, towards development of a strong expanded market economy, which is governed by the law.
The Program is conceived within the National Strategy for Growth and Reduction of Poverty (MKUKUTA and MKUZA) and specifically seeks to facilitate transformation of property and business entities in the informal sector, into legally held and formally operated entities in the formal sector of the economy. It is currently housed in the Office of the President as its institutional home.
The Program’s implementation is organized in a four Phases model that was developed by the Institute for Liberty and Democracy of Lima Peru – which is led by Dr. Hernando de Soto. These phases are:
- Reform Design
- Implementation and
- Capital Formation and Good Governance
Implementation of the First Phase i.e. Diagnosis of the Extra-Legal Real Estate and business sectors commenced in November, 2004 and was completed in September, 2005. The aim was mainly to determine the following:
- Mode of operation,
- Size and economic value of the sector
- Legal and institutional barriers to formalization
- Incentives that encourage preference of extralegal practices to legal and formal systems
The implementation of the Second Phase i.e. Institutional and Legal Reform Design started in January 2006 and was completed in May 2008. The Phase generally aimed at providing the government with detailed policy, legal and institutional reform proposals, as well as implementation strategy that will be used to integrate extralegal real estate and business into legal system in order to boost economic growth and reduce poverty.
These two phases were largely financed by the Government of Norway. The main activities carried out and outputs realized from both the first and second phase are well documented in the Program Phases under the Diagnosis and Reform Design Phases.
However, the costs for institutional development and the concomitant activities to the Reform Design were funded by the Government of Tanzania through annual budgetary allocation. The activities included those related to practical testing of the implementation of the Land Laws to provide lessons that were fed into the Reform design processes as well in maintaining the visibility of the Program within the public.
The implementation of the 1st Phase was led by experts from the Institute for Liberty and Democracy (ILD) while the Second Phase was implemented mostly by a Local Reform Design Team (LRDT) for sustainability and ownership purposes. The ILD experts provided guidance and supervision for quality assurance.