Land is a basic factor of production without which neither rent nor farm produces can be realised. The essence of land use is to maximize individual benefits in the form of income, shelter, produces from various sectors (depending on the nature of land use). In Africa, most people have had their lands appropriated, expropiated or redistributed against their common desires and each government involved have targeted effective real estate utilization for national economic growth. The leaders would always embrace various development policies of the United Nations and the World Bank as far as they can favour the governed. Now that every country is striving to acheive globalization project (Vision 20:2020), is does anyone have a clearer assessment of the trend in relationship between the various land policies, land governance and the dynamism in real estate within the West African countries?
Good, but complex question! There are several issues here. First, land expropriation or compulsory acquisition of landed property is a policy that is tainted with some irregularities, not only in West Africa, but worldwide. Government seeks to expropriate in the public interest, but unfortunately the acquired land has more often than not benefited the 'haves' rather than the dispossed land owners. Talking about real estate dynamism, the price mechanism is ill-equiped to effectively allocate land resources particularly in the urban area that suffers from externalities. Hence, the need for government intervention in the allocation of resources in the land market.
Even then, I think it is a bit difficult for government to exonerate itself from the inefficiencies we daily experience in land use and development activities (e.g. land disputes, pollution, blight, etc.) because government itself has not always been fair in its intervention policies.
Here are some notions to explore:
1) confiscation of property with more or less (usually less) compensation
There are legitimate uses of eminent domain. These uses are limited to creating connections to networks of various types: roads and utilities. Every other use is illegitimate. When compensation is below the owners' losses, then investors will underinvest and disinvest in properties that may conceivably be taken by the public sector.
2) regulation including zoning (with exclusive or cumulative, sometimes called progressively inclusive, zones)
Cumulative zoning is very much to be preferred to exclusive zones which essentially guarantee the misallocation of land. There are market based methods to control externalities. Consider, if only for intellectual purposes, alternatives such as: “Tender Mercies: Efficient and Equitable Land Use Change,” Real Estate Economics (formerly AREUEA Journal), (1997), 25: 525-537.
Externalities do exist, of course, but one should weigh intervention to control externalities against the likelihood that these interventions will be used by government agencies for illegitimate purposes. Aim for the biggest problems. This is not the place for fine tuning.
3) taxation ("user charges," ad valorem, land value, or exactions)
Sometimes user charges are utilized that bear no relation to the costs of the resource involved. An example is that water rates might be used to fund something else as well as line the pockets of bureaucrats. This causes potential investors in real estate to seek other jurisdictions.
The Laffer curve really exists in real estate taxation. So if rates are raised from fairly high levels, tax receipts can actually fall. Realistic tax rates are in the 1 to 2 percent per year range. When I encounter rates that are 8 or 10 percent, I know that the jurisdiction will fail and so will its population.
Exactions are usually proposed by those who are weak in accounting/finance and cannot detect double counting. In any event, they should be used sparingly. Are they simply institutionalized bribery?
I agree with Jacob that this is a complex question with many issues lumped into one.
I totally agree with Peter on the illegitimate uses of the powers of eminent domain which is one of the more serious issues in land policy interpretation and land governance in West Africa.
There are several cases where urban renewal projects are embarked upon and residential properties are acquired, demolished and the land given to Real estate developers to build high rise modern residential estates on it.
The original owners are then displaced of choice locations and given compensation payments that are so low making replacement of what they have lost, impossible.
How can we deal with this injustice. Is it possible to have a glossary or lexicon of what is and what is not overriding public interest?
Interesting! Perhaps we should now focus more on research that explores the feasibility of replacing monetary compensations with non-monetary compensations.
Jacob, do you worry that compensation in-kind will result in good quality and well located property will be taken and the compensation will be poor quality and poorly located property? I prefer monetary compensation. I would focus on judicial reviews of the magnitude of the compensation.
- Badges
- Science topic
- Similar topics
- Medicine
- Disease
- Infectious Diseases