interactions between formal and informal urban land management


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It describes formal and informal system in land management in Africa

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interactions between formal and informal urban land management

  1. 1. Article Review: “Interactions between Formal and Informal Urban Land Management: Theoritical Issues and Practical Options” By: Jimly Al Faraby and Aliya Gul Authors are students at International Joint Master Program SPRING, TU Dortmund, Germany – Ardhi University, Tanzania; This is a critical review of an article titled “Interactions between Formal and Informal Urban Land Management: Theoritical Issues and Practical Options” written by Carole Rakodi. It is an extract of a book edited by Volker Kreibich and Washington Olima with the title “Urban Land Management in Africa”, published in SPRING Research Series, Dortmund. Carole Rakodi is an urban planner and geographer in Department of City and Regional Planning, Cardiff University. She has worked and carried out research in range of African countries, including Zambia, Tanzania, Zimbabwe, South Africa, and Kenya. The article describes about two forms of systems operating in urban land management in African cities, formal and informal, and how they are interacting. She explored some theoritical issues underlying her arguments about urban land management system in Africa and provided several practical evidences based on experiences from several African cities. She started by describing how land market operates in practice in African cities. Based on the fact that land market is imperfect, then there must be intervention from appropriate institutions to ensure that it will work well. However, dynamics taking place in reality have raised two forms of rules governing land, formal and informal system. Under this framework (formal and informal system), she explained its relation to the land market, property rights, and infrastructure provisions. In introductory part, she pointed out the uniqueness of land market. Unlike any other commodity, land is a unique commodity because it has geographically fixed location which gives it unique characteristic. There will never be two pieces of land with exactly the same situations. She also highlighted the fact that land market is imperfect market because buyers and sellers have imperfect knowledge, so that the transaction costs are high. Assumptions of neoclassical economy theory (that buyers and sellers have perfect information, market transactions are costless, and supply respond easily to demand) are invaild in land market. Therefore, it is argued that government interventions are needed to organise market so it works better, making transactions easier and therefore increasing supply. She made reference to the argument from New Institutional Economics (NIE) to explain how state interventions on land market can be justified. According to NIE, institutions are needed as rules of the game to shape human interactions (North, 1990). With respect to the land market, state interventions are needed to rule relationships between actors and their behaviors in the market, such as decision whether or not to sell, subdivide and/or develop land. Another justification for state intervention that she mentioned is that because private market does not take Page 1 of 5
  2. 2. externalities into account, especially when it deals with the demands of infrastructures and impact on adjacent occupiers. Therefore, state interventions are needed to ensure that economic provision of infrastructure possible, which will reserve land for public purposes and protect occupiers’ property rights. In addition, to justify state interventions on infrastructure provision, she referred to the characteristics of infrastructures, which are public good and subject to market failures. State interventions governing land are formal, provided by legislative framework. However, to access land through formal market is very often time consuming and cumbersome, involves a large number of steps, especially if the land is provided by government agencies. Even land reforms emerging in some African countries in 1970s, such as nationalisation and conversion from freehold to leasehold, stimulated by rising price in formal property market still did not solve the bottlenecks. Even though it is argued that large publicly owned land will resulted in relatively well-planned urban development (as shown in Abidjan 1974-1981, Conakry 1963-1985, and Malawi in the mid-1970s), public land provision still experiences shortcomings, such as complex procedures and lack of financial, human and technical resources in the process of survey, allocation, and registration. Moreover, equity of access to land is also questioned because formal rules are considered as a means to secure power, rather than a reflection of mutual accommodation between state power and citizen’s rights; and they can use them to benefit their own clients. Therefore, in practice, formal land supply in African cities has brought problems of inefficiency, bureaucratic delay, and corruption to the process. In parallels, formal infrastructures provision has deteriorated the quality of services due to underinvestment in maintanance and poor management. As the consequence, the formal rules are ignored, and formal procedures are bypassed. Informal rules emerged as alternative for land supply system. It involves a range of different channels, such as squatting, commercialized and non-commercialized customary allocation, and illegal subdivision of either privately or publicly owned land. The land development process in this system is different from the formal one. In formal system, the process starts from planning, and then sequentially continued by servicing, building, and occupation. While in informal system, the process is the opposite, starting from occupation, and continued by building, servicing, and planning. Therefore, land in informal areas is mostly unattractive for speculators and higher income households due to insecurity, lack of infrastructure provision, often poorly located, and expensive to service. However, she clearly pointed out an important aspect of informal system, namely informal institution. She argued that even in informal system, it has its own “rule of the games” which can organize the “players” and their behaviors in land market, by saying: “In each of informal supply systems, rules or institutions apply which are generally understood by and mutually acceptable to the parties concerned. Such rules may apply to tenure; registration and plot boundaries; transfers and price settings; and Page 2 of 5
  3. 3. landuse regulations and layouts. […] Although markets cannot function without such rule-forming and enforcing mechanisms, they do protect their own interests, and deprive those excluded of opportunities”. Furthermore, with respect to tenure system, she compared between statutory and customary tenure system. She defines land tenure as a relation between individual and organization to deal with the land. It is not a direct relation between individual and land. She tried to clear that the rights belong to only one person who is entitled, and nobody else is liable to any issue regarding that parcel of land. Only entitled person can enjoy the privileges in different forms like occupancy, usage, growing fruits, and no fear of being evicted. Entitled person has the command to decide the inclusive and exclusives of particular land, privilege to transfer as inheritance, gift, sale or rental within the limitations which have been agreed as per the title. Bringing the ideas of Payne (1997), she said that there are certain criteria to evaluate the tenure system and the top one is the rights should be clearly mentioned and well documented privileges. The system itself and information regarding the tenure system should be wellorganized and accessible for all social classes, actors of the game and the parties of the individual contract. Statutory systems in African cities have been introduced to give a unified tenure system by the governments through acquiring land from the indigenous people for the public use. However, it is not fully applicable in all African cities because different arrangements of holding systems and impact of colonization which has also contributed towards dualism of the tenure system. It is a compact system which has some set of rules and regulations to deal with all land matters. The roles and tasks of individuals and organizations are clearly mentioned; and policy issues regarding public land ownership, rights for freehold as well as leasehold system, relation between owner and tenant, credit issues and transactions matters all have a guideline. However, statutory system has some inefficiency caused by the bureaucratic incapacities which directly affect the land market and bring transaction to informal market. In addition, limited supply of plots provided from publicly owned land is another factor contributing to sell the informally subdivised plots by informal sellers. She also compared between freehold and leasehold tenure under statutory tenure. Even though she acknowledged the advantages of freehold in the sense that landowners are free to use their land for unlimited time period and therefore can maximize it as collateral to get economic benefits, she also argued that the necessity of leasehold tenure to deliver land to the urban poor with minimum bureaucracy and to provide economic return to the state through lease payment cannot be denied. Moreover, she argued that even providing individual title (freehold) does not necessarily mean easy access to credit if the borrower does not have suficient income to pay the loan. Page 3 of 5
  4. 4. Unlike statutory tenure, customary tenure in many African cities is a joint possession of rights by a family or a group of people. The rules governing land in customary system is based on kinship relation. However, she argued that because of market pressures, customary tenure has adapted to the needs of the market which leads to individualisation of the rights. It also adapts the practice of government administration in its own way (informally), such as to allocate, regulate access, regulate patterns of subdivision and use of the land, and record the transactions. It has its ground rules regulating the actors involved which rely on community structures. She made a point by categorizing customary and informal tenure as illegality. She argued that both semi-legal (customary) and illegal land tenure lead to illegal occupation of the land. She also believed that government attitudes contribute to the emergence of such illegality. They may encourage, tolerate, or prevent illegality depending on the benefits obtained from those strategies. By referencing to the economic crisis in 1990s in many African countries, she showed that political attitude toward informal system had played role in determining the situation. For instance, in countries which are incapable to legitimate the informal system and reluctant to acknowledge it, condition of informal settlement is so much deteriorated. In contrast, in countries with stable economies having tried to legalize the informal sector or market up to certain extent, the situation is relatively better. While in countries with stable political situation, having also intervened to regularize informality, the situation has been so much improved. Therefore, she emphasized the importance of a satisfactory tenure system for both new developments as well as existing developed area. Administrative arrangements for registration and titling are required to secure the tenure. It is suggested to recognize the informal tenure either by regularization or any other alternatives. Regularization of informal system can be done if there are political commitment and incentives, and it should not be seen as a confrontation between the supporters of informal system and those who initiate regularization projects. Moreover, informal system even sometimes can be involved to fill the gap in formal system when it is appropriate, such as to solve land disputes in traditional communities. Finally, she emphasized that direct public provision of land through nationalization is inappropriate. However, land in state ownership is still needed to address issue of scarcity of the land for development through the process of subdivision. The state is also suggested to play its role as regulator to ensure efficiency of market and reduce negative externalities. And when it is appropriate, government can exercise its power of compulsory acquisition to ensure public interest. She made similar arguments for infrastructure provisions. When formal method is lacking of effectiveness to provide appropriate services and informal sectors cannot provide adequate provision, compromise should be considered. For instances, while formal standards and Page 4 of 5
  5. 5. installation should represents payment capacity of the residents, priority of particular services should be based on technical arguments. Through this article, Rakodi has made a useful point by referring to NIE to explain how land markets in African cities operate. This theory can provide explanation about complexity of institutional aspect of land management in Africa. According to North (1990), institution can be formal and informal. Likewise, insitution organizing land market in Africa could be either formal or informal. Both have their own actors and rules which are understood and accepted by the respective parties. This theory also provides guidance to analyze urban land market, especially in African cities. Therefore, understanding urban land market in Africa may not be possible until rules, actors involved, and their behaviors in the both formal and informal market are understood. However, informal does not necessarily mean illegal. Experience from land tenure, for instance in Tanzania, shows that land tenure cannot be simply distinguished as legal and illegal, or formal and informal tenure. It has some layers overlapping each others which make tenure system complex. The author has also touched this point at a glance. To some extent, sometimes informal system applies legal procedure or gets recognition from formal system, and therefore cannot simply be judged as illegal. Furthermore, through this article she tried to argue the importance of reconsiling formal and informal system due to weaknesses and strengths in respective system. In land tenure, she seemed to support regularization of informal system, while in infrastructure provisions she suggested a compromise between the two. In the context of African cities, it sounds reasonable. With the long history of dualism in land tenure and strong traditional customs, obviously it is not easy to immediately transform the informal system into formal. Immediate transformation may stimulate negative reactions by residents and undermine social structures in communities. In addition, government does not have capacities to deliver immediate transformation either. However, government is still responsible to ensure public interest and protect property rights of residents. Therefore, what she suggested that government should focus on improving its capacities as indirect provider, such as titling, registration and regulation; and providing incentives to engage informal actors in the process is an appropriate way to improve the situation. References: Kombe, W. J & Kreibich, V. (2001). Informal Land Management in Tanzania and the Misconception about Its Illegality. Paper presented at ESF/N-Aerus Annual Workshop: Coping with Informality and Illegality in Human Settlements in Developing Countries. Leuven and Brussels. Lamba, A. O. (2005). Land Tenure Management Systems in Informal Settlement: A Case Study in Nairobi. (unpublised Master Thesis). ITC Netherlands. Enschede Marx, C. (2007). Do Informal Land Markets Work for Poor People?: An assessment of three metropolitan cities in South Africa: Synthesis Report.Urban LandMark, Pretoria. North, D. C. (1990). Institutional Change and Economic Performance. Cambridge University Press Page 5 of 5