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Land Market Study

The Centre for Urban Research and Innovations in collaboration with the Association of African Planning Schools (AAPS), conducted a study on ‘infrastructure knowledge programme policy research’ themed Urban infrastructure in Sub-Saharan Africa – harnessing land values, housing and transport’.

The study commissioned by the UK Department for International Development’s (DfID) focused on planning and land use legislation, urban infrastructure finance, urban land markets   all targeted towards answering two key questions;

·         To what extent is the additional finance available through increasing land values used to develop improved infrastructure?

  • Where authorities are able to do this, are they using the finance raised to fund infrastructure that is likely to enhance the city’s productivity and job-creation potential and / or benefit low income groups?

The study was spearheaded by Prof. Peter Ngau – the director CURI assisted by Ms. Sharon Boit and Mr. Philip Olale who are research assistants at the centre. The centre worked with members from the AAPS and was able to come up with useful findings as outlined below;

Planning legislation

In Kenya, planning of urban areas, land use management and development control has long been highly problematic. First, there has been uncoordinated planning, for example, plans are prepared and funded at the sector, district, local government and constituency level. Under these circumstances, accountability and effective monitoring of development plans would be a problem. It also means that funds are so thinly spread out that on application their impact is at best minimal. Another major challenge of development planning has been the poor linkage between local planning and budgeting in a properly conceived medium term expenditure framework.

Nevertheless, the promulgation of the Constitution of Kenya 2010 with the resultant supporting statutes portends a new lease of life for planning, land use and development control. The opportunities for preparation of various plans that are able to respond to local challenges and spur growth are now available and buttressed through legislation. The key planning, land use and development control statutes include the County Government Act 2012, Urban Area and Cities Act 2011, the Physical Planning Act Cap 286 and the Environmental Management and Co-ordination Act 1999.

Effectiveness of Planning

In Kenya, development planning has long been highly problematic. First, there has been uncoordinated planning, for example, plans of various nature and focus were prepared and funded at the sector level i.e. district, local government and constituency level. Moreover, various service sectors such as roads, water, forests, among others have been preparing sector plans without an integrated framework. Under these circumstances, accountability and effective monitoring of development plans would be a problem. It also meant that funds were so thinly spread out that on application their impact was at best minimal. Another major challenge of development planning has been the poor linkage between local planning and budgeting in a properly conceived medium term expenditure framework.

Nevertheless, there have been considerable gains in planning right from the national level down to the devolved units. In deed there are a number of plans that exist, the challenge has always been implementation. This challenge in plan implementation can arguably be traced on a number of factors. According to Kimani and Musungu (2010), the major concerns of those in charge of planning and development control at the local level is political interference, the question of inadequate budget, technical competence, low public awareness, slow processing of plans and development applications and corruption.

For example, outside the current constitutional framework, planning has largely been a top-down agenda with minimal if any public involvement. This top-down planning process alienates stakeholders affecting their ability to contribute towards its implementation. In addition physical development planning has not been a prerequisite of any building construction in Kenya. This has led to location of developments in areas that are poorly served with infrastructural services and with incompatible and conflicting developments. On the other hand the building and construction sector has been proceeding without the appropriate planning and building laws and regulations.

Devolution of Functions

There have been challenges that arose after devolution as the country adjusted from the old system to the new devolved system. While there is a strong legal system that outlines the functions of the different levels of government, the implementation of devolution in Kenya has been marred with difficulties. The national government still controls majority of the functions that are intended for county governments while the county governments on the other hand have not fully functional. There are many grey areas in the devolved system that create conflicts between the two levels of government. (East African Centre for Law and Justice)

Land Value Capture

Land Value Capture (LVC) refers to the identification and capture of the increase in in value of land and development resulting from public investment in infrastructure. It also includes capturing the value of privately owned land which increases as a result of public investment in infrastructure, publicly approved changes in land use or broader changes in the community such as population growth. In essence, arguments in support of Land Value Capture presuppose that governments should use taxes and fees to collect a share of this increase in value for public purposes including funding infrastructure and service improvements.

Nonetheless, existing policy and legal framework in Kenya does not give sufficient provisions to enable both the national government and the county governments to expressly use funds generated from improvement in land values and collected through rates to specifically carry out public purpose works. Section 13 of the Rating Act allows urban authorities to levy a rate in their areas of jurisdiction to meet their expenses. For clarity, the Act provides that the amount of the rate levied should be sufficient to meet all liabilities to be discharged by that urban authority for which provision is not otherwise made, including amounts required by such authorities to establish or increase to a reasonable level a general reserve fund.

The study which highlighted the state of devolution in Kenya and shed light on the challenges faced by devolution. Kenya is still struggling with devolution 5 years after the promulgation of the constitution mainly due to the shortcomings in systems and leadership. This is evidenced by the consistent wrangles between the national government and county government which has led to slowed service delivery.

by Sharon Boit

CURI

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