How to Unlock the Value of Land to Create Wealth

Last week we embarked on a new series which aims at helping leaders, particularly District Commissioners, become transformative in their work.

Our nation, like many African nations, is poor. So, the question of being transformative in our context is vital. We have to understand the nature of our poverty, so that leaders can forge effective paths forward.

In answering the question ‘Why Africa is Poor’ – the title of his brilliant book – the author Greg Mills, replied by saying: ‘Africa is poor because its leaders have decided so’. By Dr. Mills’ thesis, which I strongly agree with, our leaders need to make different choices if our nations are to develop.

However, being raised to follow political and ideological fidelities, leaders are invariably restricted by dominant thought patterns. These are, in my opinion, reactive (mabeberu this or that). What they need is a paradigm shift towards pragmatism, that is, to start focusing on what works and what works alone.

In introducing land as our first ‘grand solution’ for creation of wealth, we made a twofold argument: One, land is only an asset only when value has been added to it and, two, that Tanzania has an abundance of land which is a great opportunity. Without any further ado let us review four ways a DC, any DC, can uplift people from poverty by addressing the question of land.

One, formalise ownership of informally owned properties.

In a popular book ‘The Mystery of Capital’ the author, Prof. Hernando de Soto, argued that poor nations are poor because they lack systems which transform their assets into capital. He called these assets ‘dead capital’, that is, their value is unavailable for use in wealth creation. According to de Soto, the value of such assets in Tanzania in 2003 was USD 29 billion!

De Soto’s solution was simple: give people titles for their properties. Titling is what makes dead capital alive. In the words of de Soto: ‘property law is the place where capital is born". In other words, one can create wealth out of thin air by signing a document. This idea is what inspired Tanzania’s MKURABITA program. Being part of government’s agenda, it needs to be owned by local and district leaders for its transformative effects to be prevalent.

Two, aggressively survey and develop land in your districts.

The objective here is threefold: one, to promote formalisation of properties (through planning), two, to increase the value of properties (through provision of services – power, water and sewerage), and, three, to distribute valuable assets to people.

For this process to work, equitable distribution ought to be observed. People do not live in squatters because they enjoy chaos but because the system has not worked for them. Corruption has created land hoarders who, by overpricing land, have made it a scarce resource. When leaders address this artificial creation of scarcity, they will eliminate the logic that leads to both hoarding and creation of squatter settlements alike.

Three, distribute land (and possibly houses) to citizens freely.

Tanzania has enough land to give every individual up to 4 acres, so, surely, we can afford to give people some medium sized serviced plots for development, can’t we? But, if someone wishes to go one better, free housing for the poor is the way to go. South Africa has managed an impressive 4m housing units (as of 2014), but in terms of quality nothing comes close to the Singaporean model – where 80% of Singaporeans live in public housing. What Singapore has shown is that public housing does not have to be ghettoes. With some innovation in construction practices, the same can be achieved.

Four, ban the building of mud or temporary shelters.

I am usually unease with this use of power but building mud houses as if people are perpetual vagabonds propagates a culture of poverty and people need a nudge to do the right thing. If people have clay and sticks then they can have clay bricks. Just ban the madness!

Permanent buildings are key for development of civilisations, and the continued circles of rebuilding of houses has detrimental effects to development. No wonder Sub-Saharan Africa had, as Prof. Samuel Huntington argued in The Clash of Civilisations, none. With permanence, the value of real estate increases and settlements develop faster. This is one of the factors that the author of ‘Civilisation: The West and the Rest’, Prof. Niall Ferguson, highlighted as the reason for the two paths of development followed by Anglo-America and Spanish America.

To summarise: Mheshimiwa, land which is available in abundance is an opportunity. When utilised improperly you end up with slums which lead to sickness, death, crime, overcrowding, and poor value for assets. It is better to use interns to survey lands than end up in such a position. Conversely, when land is deployed appropriately you get improved housing situation which alleviates poverty through, for example, capital appreciation and improved labour participation. Please keep following me for the next ‘grand solution’ to poverty.

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