NORBERT MAO: Use Land Fund to plan, survey and title land in new cities

In May 2018 the Commission of Inquiry into land matters sounded alarm bells over government failure to operationalize the land fund 20-years since it was planned. The fund is supposed to support targeted beneficiaries, including tenants seeking to buy or own land, government seeking to buy land for redistribution to bonafide occupants or resettlement of the landless. The fund was supposed to be operationalized within one year after the coming into force of the Land Act in 1998.

Unfortunately, the fund has become a slush fund where well connected people get paid in shady land deals. During the hearing, the then Lands Minister, Betty Amongi stated that an additional 157 billion Shillings is required to compensate people whose land has been valued and taken over by government. However Lead Counsel Byenkya challenged the motive for the call for more money saying: “Money is pouring out of the Land Fund and it is being paid to imposters in billions. These are imposters without a doubt. Employees in the Fund are dedicating time to the wrong reason, your officials have been sharing out on this money and the beneficiaries actually get 30 percent. This is a testimony before this Commission.”

With the creation of new cities, the government should put more money into the land fund and pay for the planning, surveying and titling of all the land in the cities. All planned roads should be opened and concrete pillars put in the road reserves where fruit trees may be planted. This is the best way to give a sense of ownership of the cities to local landowners especially those in the rural areas within the city boundaries.

Why is this titling of land important? Peruvian economist Hernando de Soto in his book “The Mystery of Capital” argues that economic success and a key driver of wealth creation lies in the legal structure of property and property rights. He argues that “every developed nation in the world at one time went through the transformation from predominantly extralegal property arrangements, such as squatting on large estates, to a formal, unified legal property system. In the West we’ve forgotten that creating this system is what allowed people everywhere to leverage property into wealth.” This book changed the way people view capital as a way to leapfrogging from backwardness to socio-economic transformation.

Many intellectuals of note endorsed this groundbreaking book. Milton Friedman said: “De Soto has demonstrated in practice that titling hitherto untitled assets is an extremely effective way to promote economic development of society as a whole. He offers politicians a project which can contribute to the welfare of their country and at the same time enhance their own political standing, a wonderful combination”. Other high-profile endorsers of de Soto’s book included Margaret Thatcher, Javier Perez de Cuellar, Francis Fukuyama, and William F. Buckley Jr. Mrs. Thatcher said that “The Mystery of Capital has the potential to create a new, enormously beneficial revolution, for it addresses the single greatest source of failure in the Third World and ex-communist countries—the lack of the rule of law that upholds private property and provides a framework for enterprise. It should be compulsory reading for all those in charge of the ‘wealth of nations.’” Recognizing that the absence of the rule of law and private-property rights for the poor in the Third World is a major shackle on the way to wealth, Thomas Sowell emphasized that the book “should be required reading for those—including law professors—who seem to think that property rights are just privileges for the rich. The poor need them most of all, especially if they want to stop being poor” Former president Bill Clinton reportedly declared de Soto “the world’s greatest living economist” on account of the book.

Of course titling land alone in the absence of other initiatives like affordable credit and income enhancement is not enough. But a poor landowner with a title will likely not sell his land to buy a Boda Boda. He will use it as collateral for a loan to buy a Boda Boda which repays the loan over time and gives him a sustainable cash flow.