Financing infrastructural development through public investment on Land

Land in Kenya has been known to be an emotive issue owing to the history of ownership and acquisition shrouded in underhand and fraudulent dealings. The action by the Ministry of Lands, Housing and Urban Development to digitize land parcels and clean up the registry is a sure way to pave way for transparency and accountability in terms of ownership, acquisition and tenure status. Land administration systems in Kenya have evolved from the colonial periods established by the colonial regime to generate revenue to sustain operations of the then government. The predominant forms of tenure in Kenya passed down from the colonial systems are land leasing and freehold systems which attract a form of consideration (payment) hence a source of revenue for the current system of administration i.e. the central government and county governments.

County governments are constitutionally mandated with provision of basic services to the general citizenry such as sanitation and waste disposal. However, county governments are faced with challenges in financing options despite collection of revenues from land based sources (land rates and rents) besides other tax sources which are used to actualize the budgetary requirements of the county government. But what if rates were levied on the increment in value of land as a result of public investment infrastructure such as improved accessibility due to a new road constructed (such as the bypasses and new link roads) or provision of water and sanitation infrastructure (water and sewer trunk lines)? Land value capture/mobilization presents a potent source of revenue from public investment which is capable of financing 80% of the infrastructural and developmental initiatives of the central government or county governments consequently reducing the burden of external borrowing which currently stands at Sh1088.83 billion (Central Bank of Kenya) and subsequently complementing the public private partnership policy to support infrastructural development. To facilitate this, fiscal cadastral management should be established which spells out the legal description, dimensions, location of boundaries, ownership, description of improvements and land use. It is sustainable in the sense that urban development is financed with the resultant appreciation in land values and also offers a pragmatic solution as a high potential in generating the much needed local revenues to propel development. In addition, land value capture/mobilization addresses issues of equity where benefits of public actions or investments which previously benefitted a handful of land owners in close proximity to the said public action or investment are spread across by provision of other services to other land owners far from the newly developed investment.

Land value capture/mobilization entails pegging an acknowledged percentage rate calculated based on the best use value of land for freehold properties and periodical review of the premiums and annual rates paid for the leasehold properties according to the increase in value of the property. Stakeholders such as the residents and property owners should be informed on the services and benefits they will enjoy upon payment of such land based fees which forms a fundamental right to land and provision of services as far as land ownership and payment of considerations are concerned. Consensus on such matters of payments of land based costs would lead to efficiency in revenue generation where the residents are assured of the services they are to receive from the county government thereby alleviating incidences property rates/rents defaulters. With the contemporary developments on the need to have state of the art infrastructure for economic development, the government should pursue this avenue of capturing increment in land values as a result of infrastructural development to provide basic services to the residents and also to pay off the massive loans acquired for the construction of such infrastructure.