Vrban                                                           >  Report No. 10675
Management                                                                  / O r5
Progrfam
Reforming Urbfan Lfand Policies
and Institutions in
Developing Countries
Catherine Farvacque
Patrick McAuslan
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I



Urban Management Program
Urban Management and Land
Reforming Urban Land Policies and
Institutions in Developing Countries
Catherine Farvacque
Patrick McAuslan
The World Bank
Washington, D.C.



Copyright © 1992
The International Bank for Reconstruction
and Development/THE WORLD BANK
1818 H Street, N.W.
Washington, D.C. 20433, U.S.A.
All rights reserved
Manufactured in the United States of America
First printing May 1992
The Urban Management Program (UMP) represents a major approach by the United Nations family of
organizations, together with external support agencies (ESAs), to strengthen the contAibution that cities
and towns in developing countries make towards economic growth, social development, and the
alleviation of poverty. The program seeks to develop and promote appropriate policies and tools for
municipal finance and administration, land management, infrastructure management, and evnironmental
management Through a capacity building component, the UMP plans to establish an effective
partnership with national, regional, and global networks and ESAs in applied research, dissemination of
information, and experiences of best practices and promising options.
The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s)
and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to
members of its Board of Executive Directors or the countries they represent. The World Bank does not
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The complete backlist of publications from the World Bank is shown in the annual Index of Publications,
which contains an alphabetical title list (with full ordering information) and indexes of subjects, authors,
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from Publications, The World Bank, 66, avenue d'Iena, 75116 Paris, France.
Library of Congress Cataloging-in-Publication Data
Farvacque, Catherine
Reforming land policies and institutions in developing countries /
Catherine Farvacque, Patrick McAuslan.
p. cm.-(Urban management program)
Includes bibliographical references.
ISBN 0-8213-2092-0
1. Land use-Govemment policy-Developing countries.
I. McAuslan, Patrick. II. Title. III. Series.
HD1131.F37 1992                                         92-395
333.3'09172'4-dc2O                                        CIP



iii
FOREWORD
This paper has been prepared for the Land Management component of the joint
UNDP/World Bank/UNCHS Urban Management Program (UMP). The UMP represents a major
approach by the UN family of organizations, together with external support agencies (ESAs), to
strengthen the contribution that cities and towns in developing countries make toward economic
growth, social development, and the alleviation of poverty. The program seeks to develop and
promote appropriate policies and tools for municipal finance and administration, land
management, infrastructure management, and environmental management. Through a capacity
building component, the UMP plans to establish an effective partnership with national, regional,
and global networks and ESAs in applied research, dissemination of information, and experiences
of best practices and promising options.
This document has been prepared under the auspices of the World Bank-UNDP-UNCHS (Habitat)
sponsored Urban Management Program. The findings, interpretations, and conclusions expressed here are
those of the authors and do not necessarily represent the views of the World Bank, the United Nations
Development Programme, UNCHS, or any of their affiliated organizations.
Louis Pouliquen             Frank Hartvelt                      Mark Hildebrand
Director                    Deputy Director                     Chief
Infrastructure and Urban    Division for Global                 Technical Co-operation
Development Department      and Interregional Programmes        Division
Sector and Operations Policy    United Nations Development Programme  UNCHS (Habitat)
The World Bank



iv
ACKNOWLEDGMENTS
The authors would like to thank G. Ball, A. Bertaud, R. Buckley, M. Cho, J. Courtney,
W. Doebele, D. Dowall, F. Ford, 0. Grimes, L. Holstein, M. McNeil, D. Okpala, V. Renard, K.
C. Sivaramakrishnan, W. Stevens, and J. F. Tribillon for their comments on earlier drafts of this
paper. Vicky McIntyre did a splendid job of editing the paper. Vino David ably wordprocessed
revisions to the paper.



EXECUTIVE SUMMARY
i.         This paper is an attempt to define and assess the various institutional and mechanical
elements which constitute a land management system and which have a significant impact on the
functioning of land markets. The assumption of this report is that the accumulation over time
of different institutions and instruments, which have reflected different priorities and policies, has
inhibited the efficient and equitable operation of land markets and that reforms of institutions and
policies are now urgently needed.
What are the rules of the game?
ii.        Land is a unique commodity which is affected by the forces of demand and supply.
Unlike other markets however, ease of entry or exit is closely controlled by local and national
government policies. Well-functioning land market can therefore be characterized by the level
of ease of entry into the system and of carrying out land markets transactions, both of which
depend on the availability of adequate land information, secure tenure arrangements, and
appropriate registration/recording mechanisms. On the other hand, nonperforming land markets
are plagued with a number of problems easily recognizable and commonly found such as (a)
overcentralization of management and administration; (b) inappropriate, over detailed, and
inflexible regulatory and legal frameworks; (c) lack or inappropriate use of resources and political
will to tackle problems; (d) administrative systems lacking in efficiency, equity, accountability,
and probity; (e) a failure or reluctance to encourage participation from the urban poor. Among
the main policy instruments affecting the supply of land, the paper will focus on four of them,
namely property rights, land registration, land use regulations, and planning and direct public
intervention in the acquisition and disposal of land.
Why are reforms necessary?
iii.       Experience shows that the journey toward the lawful acquisition of a plot of land
is a long and confusing one; access to land, registration of land, permission to develop the land
involve time consuming, unduly cumbersome, and costly procedures which make the legal system
very difficult to access. In Peru, for example, the adjudication process of state lands takes about
43 months and is the result of 207 bureaucratic steps involving 48 different government offices.
In Ghana, where the absolute ownership of land is held by two main groups, the state and the
many stools or skins (customary authorities), the process of entry is equally complex. It has been
estimated that in the case of stool lands, for example, the tedious process of access to land
involves twenty major steps and in all its complexity can take several years. In Cameroon, it is
not uncommon for the registration process to take between two to seven years, which explains
why out of an estimated 1,600,000 plots countrywide only 100,000 (6%) are registered. With
less than 20% of the urban plots demarcated and titled and without any properly maintained
cadastral maps, it appears impossible to have a clear picture of the land tenure situation. The
absence of a clearly defined land ownership situation constitutes a major deterrent for the
realization of priority public investments in infrastructure and industry as well as for the
implementation of public and private land development programs. The formal process of land
development requires high up-front investments and creates scarcity. In Malaysia, for example,
the net cost of land is doubled because after receipt of the relevant planning building control and



vi
services approvals, only 48-50% of the land is useable for building purposes. In addition,
obtaining the permissions greatly adds to the cost of developing the land.
What are the deeper roots of the problem? The Governance of Land, the Gatekeepers and
the Policy Instruments
iv.        The trend of governance in developing countries has been that of centralization of
power, which does not leave much room for strong urban local governments. In the area of
urban land management, this in turn provided the rationale for land nationalization, the
substitution of parastatal land development authorities for local government land management,
central controls over land transactions and land use, the use of the bulldozer as a tool of land
management and other manifestations of overcentralized bureaucratic systems of management.
v.         A second set of issues is related to the law, its formulation, and its use. The
published laws of many developing countries suffer from a number of common defects, ranging
from the form in which they are published to the way in which they define the fundamental
nature of the power relationship between the state and its citizens. Too many laws, particularly
in the area of land management, are procured and passed by the economic and social elite to
facilitate their benefitting from state activities rather than from any perceived need of society at
large. There is considerable evidence that the adjudicative processes of the law are not working,
and this is a contributory factor to ineffective management of urban land. In Ghana, for example,
there is a backlog of over 16,000 cases relating to land in Accra, and large areas of land in the
city are effectively sterilized from any developments pending the resolution of these cases, some
of which go back forty or more years. Compensation for compulsory acquisition of land cannot
be paid because of unresolved disputes as to who is entitled to compensation. Tribunals and
boards do not sit because no members are appointed. This state of affairs can be paralleled in
other countries.
vi.        The approaches being argued for in this paper such as the orderly development of
land markets; the creation of flexible consumer-oriented systems of land management; the
commitment to transparency, probity, equity and value for money in administrative processes
cannot be divorced from and indeed may be seen as a paradigm of the wider issues of
governance now on the agenda of many states and of the international aid community;
participation and decentralization in government, transparency and accountability in
administration, an enabling rather than a controlling function for the public sector are integral
parts of this new agenda.
vii.       It is crucial to understand the primary functions or the "raison d'etre" of the
gatekeepers of the system in order to understand what is at stake for them and the implications
of change. Furthermore, this is also a prerequisite for identifying the scope for privatization and
a proper division of labor between the public and private sectors. The fundamental issue is: what
are the legitimate interests of central governments in land management and how can these be
provided for so that the interests of other centers of public power (local authorities) are not
inhibited and the private sector is not impeded in its use and development of land? In virtually



vii
all countries, central governments set the policies, enact the legislation necessary to implement
the policies, provide some or all of the financing to carry forward implementation, act as
supervisory mechanisnVauditors of the implementation by other agencies of policies and
programs. There are few countries where local governments or local authorities of some sort do
not have some role in land management. In practice, however, local governments rarely have
full authority to take decisions over land; there is a residual power vested in central government
to intervene or to hear and determine an appeal or to give final approval. The costs and delays
of this additional layer of the bureaucracy are too often ignored. Two questions need to be
uppermost in the minds of those charged with improving land management systems at the local
level; does a particular activity need to be controlled at all, i.e. developing land, buying and
selling land; secondly if there is to be control and if it is to be located at the local level, how can
it be structured so that it operates efficiently, cheaply, speedily and equitably?  Urban
Development Authorities (UDAs) have been created with the twin aims of superseding inefficient
local governments and isolating urban development from politics. However, experience shows
that they have not been able to address these two objectives adequately. Too often they have
created inefficient public monopolies of land development. Separate and distinct from UDAs are
the land administration agencies (LAAs) responsible for the management of public lands on
behalf of the state. The main danger with LAAs is that they often substitute political for market
criteria in land allocations and transactions. The existence of such agencies is inseparable from
the public ownership of land. Extreme inefficiencies as in India, partiality as in Nigeria,
overcentralization as in Ghana have affected the management of public lands by land
administration agencies so that the wheel has in effect come full circle and the argument now is
that land is more efficiently and equitably allocated by the market.
viii.      Traditional authorities constitute another important interest group in most of Africa
and some parts of Asia and the Pacific. Where traditional authorities are a part of the official
land management procedures, the process of obtaining land can be extremely complex, time-
consuming, and expensive as both traditional and statutory authorities have to be dealt with. To
try and eliminate the traditional authority input into land management, either by nationalizing
land and centralizing land administration under a statutory regime and agency, or by the
facilitation of the growth of land markets, is to invite the growth of a parallel unofficial land
management or land market system and conflict and confusion in land management. In many
countries, traditional authorities are in a process of transition in respect to their attitudes towards
land, moving from a social to an economic, more market-oriented, approach. We would therefore
argue that there must be an acceptance of the continued involvement of traditional authorities in
land management, and the aim should be to encourage and facilitate a convergence of social and
economic approaches to land, a recognition of the advantages in terms of economic benefits to
traditional authorities as landowners, and in terms of social benefits to their people, of a more
professional approach to land management.
ix.        Property rights and tenure systems are regarded in this report as the first group of
policy instruments which have an impact on the functioning of land markets. Three major policy
issues relating to tenure need to be addressed: whether to modernize and reform tenure on the
basis of freehold as in Kenya or leasehold as in China; each form of tenure has advantages and



viii
disadvantages which need to be carefully assessed before action is taken. Second, the issue of
landlord/tenant relations and the extent and nature of any regulatory controls on that relationship;
increased access to land by the urban poor is as effective a way to limit landlord power as are
controls. Third, general controls over transactions; these do not work well. Fiscal instruments
may be better than regulatory ones.
x.         Registration and the operation of land markets have strong linkages as well, which
can be simplified as follows:
a. it can help land markets;
b. it can facilitate the conveyancing process and subsequently ensure the
transparency of the transactions;
c. it can provide availability of records for land market operations.
xi.        Any discussion of land registration must clearly distinguish between the public and
private function of registration. As has been pointed out, the former relates to the welfare of the
state or community as a whole, the latter to the advantage of the individual citizen. On one hand,
registration may be used by the state as an inventory tool of the national land resources for fiscal
purposes or it can be used to ensure the rights of the owner or occupier of land and to enable
him  or her to conduct transactions safely, cheaply, and quickly.  This is an important
consideration when thinking about any improvement of the registration system. For whose
benefit is land registration being urged? If for the benefit of the individual citizen, consideration
should be given to whether there may not be alternatives to title registration which are more
appropriate under the circumstances. Three sets of problems hamper improvements in land
registration systems. First, institutional problems. These include lack of skilled staff, lack of
coordination among the various agencies involved and lack of clear policies on the respective
roles of the public and the private sector in registration procedures. Second, technical problems;
should one continue with deeds registration or move to full title registration, and if so with what
degree of sophistication and occurrence of survey? Third, financial problems; should registration
be regarded as a public good or made to pay its way. Little work has been done on this matter.
xii.       Regarding the third group of instruments (i.e land use regulations), the problems
related to them are well known. Existing regulations in many countries are criticized for both
their rigidity and the high costs that they impose on the builder or developer and ultimately the
purchaser. At the risk of oversimplification, one could categorize the most common grievances
along six main lines: regulations are outdated and based on inappropriate colonial models; master
plans take too long to prepare and fail to address implementation issues or the linkages between
spatial and financial planning; there is too much centralization; yet at the same time too much
institutional fragmentation at the center; there is too little coordination with financing planning;
and the process of control leads to delays in land development. What should we expect from
urban planning and land use regulations?



ix
*  better coordination in land management
*  integration of spatial planning with financial, sectoral, and institutional planning
* definition of a collective rationale for intervening on the land markets
* better protection of the environment
*  economic efficiency to maximize the benefits of urban development
*  equity considerations
*  cost effectiveness to minimize public costs and to recover them
xiii.     It is now widely recognized that there is a direct and reciprocal relationship between
informal housing production and government regulations. One has to be very cautious, however,
about deliberately promoting deregulation. The relevant question then is: What are the minimum
levels of regulations that can be compatible with easy access to housing and services and yet
preserve communitywide interests and the environment?
xiv.       The fourth group of policy instruments relates to the direct public intervention in
land markets and takes three major forms; land nationalization; eminent domain and land re-
adjustment. The first intervention involves substituting public authority allocation of land for
market allocation; the record does not inspire confidence in this form of intervention. The second
intervention is a necessary but generally deeply unpopular form of intervention. In too many
countries it is backed by out of date and inappropriate laws; incompetent and unfair
administration of those laws and inappropriate and inadequate systems of compensation.
xv.        One of the principal disadvantages of compulsory acquisition is that it involves
confrontation between government and the people so that needed public development runs the
risk of being stigmatized as something undesirable before it begins. The aim of reforms is to
reduce the element of confrontation and increase cooperation and participation in the process.
Another way to achieve this is through an alternative to public land acquisition via compulsory
processes, namely land re-adjustment, developed for urban purposes in Japan and Korea. This
process took over procedures first used principally for rural purposes in Germany in the
nineteenth century, and which are now spreading to other countries as a way of harnessing
private and public initiative in land development.
Who are the winners and the losers of the existing situation?
xvi.       At one level, the question of who are winners and losers is simple to answer:
winners are those who have land or access to land or access to those who can grant them land
or access to resources which will enable them to buy and develop land; or are part of the
administration of the system with regular jobs and an income; losers are those who have none



x
of these things. Winners are politicians, senior public servants, traditional rulers, existing
landowners. They are, however, not the only ones who have a major interest in the status quo
of the existing legal and administrative complexities or urban land transactions. Armies of lower
and middle civil servants and thousands of persons who make a living by guiding both the poor
and the middle class through the mazes that we have described, all have a substantial stake in
the confused, multi-layered and irrational systems that now prevail. Devising incentives that will
defuse the opposition of these groups is a necessary precondition to change. The overall aim
must be to extend the facilities already available to the winners to the losers and enable winners
to gain legitimate rewards in place of foregone illegitimate ones.
The Path of Reform: A Strategy for Action
xvii.      What is being proposed is a major long-term program which would imply a major
political re-orientation of urban land management? The approach promoted here will involve
changes in the legal and administrative superstructure and will imply a new role for the public
sector. Instead of having the dominant controlling role, it will have a residual enabling role.
Instead of the private sector operating at the margins, especially in areas of low-income
settlements where its activities may be technically illegal, it will develop into the primary mode
of land delivery and development. A move toward greater reliance on markets for land delivery
and development is expected to benefit the general population by making it easier for them to
obtain and develop land, but it may disadvantage those in the political and administrative
hierarchies for whom existing secretive and inefficient administrative discretionary systems
provide opportunities for illicit private gain and political influence. Bringing about more
accountable and participative governance cannot be divorced from reforms in political and
administrative processes. The basic objective of reform is as follows:
xviii.     The institutions and instruments which between them provide for the management
and operation of urban land markets should be based on the principles of equity, efficiency,
flexibility, and participation with the overall aim of facilitating increased access by all citizens,
and especially the urban poor, to affordable and appropriately located land with adequate security
of title and occupation and adequate development rights, i.e., rights to use the land for a wide
variety of purposes, restricted only by essential environrnental, public health, and public safety
regulations.
What are the Proposed Reforms?
On the Institutional Front:
a. With regards to administrative institutions, the objective is to define the scope
of responsibilities of ithe public sector and to improve the capacity of
government at all levels to enhance the tasks it does best. The activities
recommended to achieve these objectives are (1) audit existing administrative
institutions; (2) decentralize activities such as land registration, allocation of
public land, permits, and approvals needed to undertake development of land;



xi
(3) develop transparent administrative procedures to handle activities such as
registration of titles, recording of transactions, grants of permission, allocation
of plots, compulsory acquisition, land adjudication, and fiscal exaction; (4) train
local officials and private actors to function in the new administrative
environment; (5) develop incentive-based systems of personnel management to
enhance efficiency and businesslike practices in public agencies; (6) establish
a monitoring mechanism with joint public/private sector participation to keep
under review the operation of the decentralized system of land management and
to further progressive involvement of the private sector.
b. With regard to legal institutions, the objective is to create a comprehensible
readily available systems of land laws catering to all sections of the community
and to develop efficient user-friendly systems of dispute resolution on land
issues. The activities recommended to achieve these objectives are: (1) audit
existing legal institutions; (2) create or revive specialized dispute resolution
mechanisms for land suits; (3) publish land laws that are easily available to the
public; (4) develop standard formns; (5) train lawyers, legal administrators, and
judicial decisionmakers to equip them to undertake the tasks outlined above.
c. With regards to institutions of the private sector, the objective is to assist the
private sector to function more effectively in its role as the primary operator in
land markets. The activities suggested to meet this objective are the following:
(1) review and when appropriate revise legal codes governing the establishment
and operation of corporate, bodies to facilitate small-scale, corporate and
cooperative land development activities and access of such bodies to credit; (2)
liaise with associations of land- related professions to develop programs for the
transfer to or the sharing with such professions of land management functions;
(3) work with traditional land holders to enhance modem urban uses of their
land, the continuation of traditional residual rights in land, and a regular income
from the land; train private-sector participants to take on transferred
responsibilities.
On the instruments:
a. On the land tenure issue, the objective is to develop a framework for a system
of land rights, providing a reasonable measure of security and a simple and
efficient system of affecting land transactions, taking into account the traditional
and informal systems of tenure. The activities recommended are the following:
(1) assess what is happening on the ground in respect of land rights in urban
areas; (2) review the existing laws governing land tenure with a view to their
reform, updating, re-organization and codification; (3) decide on the course of
reforms and choose between the full-fledged code or the development of a
simplified system for lower-income groups; (4) simplify procedures,
mechanisms, and forms used in connection with land transactions; (5) develop



xii
a system of financial incentives and rewards to encourage use of the formal land
tenure system.
b. On the land registration side, the following actions are recommended: (1) assess
the existing system; (2) define the objectives sought from an improved
registration system and make the political choice of improving existing systems
or setting up full-fledged title registration; (3) define the role of the government
and stimulate the scope for privatization; (4) address technical issues such as
data acquisition and data/record management; (5) improve institutional
arrangements to improve the organizational structure and the human capabilities
of the land registration functions; (6) introduce incentives to use the registration
system; (7) improve nonformal records; (8) improve the registration of
customary land; (9) strengthen the dispute settlement process and the judicial
system.
c. In terms of land-use regulations, the objective is to discard obstructing and
costly regulations and promote regulations focusing on essential public health,
public safety, and environmental factors. The activities include: (1) audit the
existing land-use regulations in order to assess their impact on the functioning
of land markets; (2) audit regulatory authorities monitoring performance
standards; (3) rethink the existing system of regulations and planning in view
of priority concerns; (4) design a bottom-up approach to identify those
regulations which are essential for the pursuit of set objectives; (5) decentralize
the planning function; (6) enhance institutional coordination; (7) establish zones
where development may take place with a minimum of regulations; (8) release
ail small-scale development from the requirement to obtain permission to
develop; (9) develop a "one stop shop" for the obtaining of all necessary
permission to develop land; (10) develop fiscal and other incentives to use the
regulatory system; (11) declare a moratorium on enforcement activities against
unauthorized developments in informal settlements.
d. In terms of public intervention, the objective is to reorganize and improve
systems and procedures for direct public intervention in land markets so as to
minimize disruption of the market. The following activities are recommended:
(1) develop an inventory or register of all publicly owned urban land with
information on which public authorities own what land, what the land is being
used for and where it is; (2) prepare a program for the development or sale of
publicly owned urban land; (3) revise the legal framework empowering public
authorities to acquire land compulsorily so as to enhance consultation and
prompt payment of compensation; (4) develop legal frameworks and
administrative processes for the practice of land readjustment.
x.         Land management is an extremely complex system which encompasses interrelated
activities and actors. There is therefore no unique solution. Perhaps the best that can be hoped
for is the timely identification of periods of transition during which well-targeted windows of
opportunities or new policies can be promoted.



xiii
TABLE OF CONTENTS
I. INTRODUCTION                                                                  1
Land Markets: What are the Rules of the Game?                             1
What Works and What Doesn't                                               1
The Political Dimension                                                   2
Scope and Objectives of The Report                                        4
Targeted Audience                                                         4
Structure of the Report                                                   5
How Does the Formal System Work?                                   5
Why is it not working?                                             5
What can be Done to Improve the Exixting Situation                 5
II. THE FORMAL PATH: AN OFTEN LONG AND CONFUSING JOURNEY
TOWARD LEGAL STATUS                                                       6
Access to Land                                                            6
Getting Through the Land Registration Process                            11
Getting Through the Land Development Process                             12
III. WHAT IS BLOCKING THE LAND MANAGEMENT PROCESS:
THE GOVERNANCE OF LAND AND THE GATEKEEPERS                               17
The Governance of Land                                                   17
The Law                                                           17
What is Wrong With the Existing Legal
System in Developing Countries?                                   17
Who Gains and Who Loses From Such a Situation?                    18
The Gatekeepers of the System: Issues and Trends                         19
Central Government Bodies                                         19
Local Governments                                                 22
Urban Development Authorities                                     24
Land Administration Agencies                                      27
Traditional Authorities                                           28
Private Consumers' Organizations: A Look at NGOs and Cooperatives        29
Nongovernmental Organizations (NGOs)                              30
Cooperatives                                                      33



xiv
IV. WHAT IS BLOCKING THE LAND MANAGEMENT PROCESS:
A LOOK AT POLICY INSTRUMENTS                                           36
PROPERTY RIGHTS                                                        36
Forms of Land Tenure and Their Characteristics                  37
Statutory Systems                                           37
Diversions from the Statutory Systems: The Many
Shades of Informality                                      39
A Third Set of Tenure Systems: The Survival of
Customary Systems                                          43
Policy Issues Related to Tenure                                 46
Freehold v. Leasehold                                       46
Landlord-Tenant Relations                                   50
Restrictions on Transactions                                52
Techniques of Tenure Reform                                 54
REGISTRATION OF TRANSACTIONS AND TITLES                                55
What is Land Registration?                                      55
Why is Registration Important?                              57
Costs and Benefits of Registration                              57
Registration for Whose Benefit?                             57
Registration, Security of Tenure, and
Resolution of Disputes                                      57
Registration and Revenue-Raising                                58
What Hampers the Reform of Registration Systems
in Developing Countries?                                        59
Institutional Problems                                      59
Technical Problems                                          61
Financial Problems                                          62
Motivation Problems                                         62
LAND-USE REGULATORY FRAMEWORK                                          63
Impact of These Constraints on the Land Markets                 65
Supply of Land                                              65
Costs of Development                                        66
The Way Forward                                                 67
Is Deregulation the Way to Go?                              68
What Should be the Role of the Planner?                     69



xv
DIRECT PUBLIC INTERVENTIONS IN THE ACQUISITION OF LAND   70
Nationalization of Land                                         70
Compulsory Acquisition/Eminent Domain                           72
What is the Purpose of Compulsory Acquisition                   74
Land Banking                                                74
Clearance and Redevelopment/Resettlement                    76
Land Readjustment                                               79
THE WAY FORWARD                                                        80
WINNERS AND LOSERS                                                     83
V. THE PATH OF REFORM                                                         87
PRIORITIES AND PRINCIPLES                                              87
The Basic Issues in Urban Land Management                       87
Strategies for Action                                           88
Equity                                                      88
Efficiency                                                  89
Flexibility                                                 90
Participation                                               90
FRAMEWORK FOR REFORMS                                                  91
Institutional Reforms                                           91
Administrative Institutions                                 91
Activities                                                 91
Legal Institutions                                          93
Activities                                                 93
Institutions of the Private Sector                          95
Activities                                                 95
Reforms of Instruments                                          96
Land Tenure                                                 96
Activities                                                 97
Registration                                                99
Activities                                                 99
Land-Use Regulations                                       101
Activities                                                101
Public Intervention                                        103
Activities                                                103
EXPECTED RESULTS AND BENEFICIARIES                                    105
BIBLIOGRAPHY                                                                 107



xvi
FIGURES
Figure 2.1. Steps in the Acquisition of State Lands in Ghana       7
Figure 2.2. The Process of Preparing a Stool Land Lease in
Kumasi, Ghana, Stage 1: Allocation                      9
Figure 2.3. The Process of Preparing a Stool Land Lease in
Kumasi, Ghana, Stage 2: Lease Preparation              10
Figure 2.4. Building Approval Process: Malaysia                    14
Figure 2.5. Algeria Subdivision Approval                           15
Figure 2.6. Algeria Building Permit Approval                       16
Figure 3.1. Organization of Land Administration:
Central Government of Indonesia                        21
BOXES
Box 3.1 Institutional Arrangements for Land Management
in Penang                                                 20
Box 3.2 UDA: The Case of Lahore                                   25
Box 4.1 Madagascar: An Illustration of the Many Shades
of Informality                                            40
Box 4.2 Invasions of Urban Land: The Case of Venezuela            42
Box 4.3 Urban Land Tenure Reform in the Peoples
Republic of China                                         49
Box 4.4 Zanzibar                                                  60
Box 4.5 Private Sector Land Registration in Brazil                 61
Box 4.6 Malawi: From Deeds Registration to Title Registration     62
Box 4.7 Land Use Regulatory Framework: Some Definitions           64
Box 4.8 Land Development in Indonesia                             67
Box 4.9 Korean Land Development Corporation                       75
Box 4.10 Resettlement in Abuja, Nigeria                            77
Box 4.11 Resettlement in Emmerton, Barbados                       78
Box 4.12 Compensations Provisions in the Lesotho
Highlands Water Project                                  82



xvii
"Land belongs to a vast family of which many are dead, few are living, and countless
numbers are still unborn."






I. INTRODUCTION
Land Markets: What Are the Rules of the Game?
C   1.1        Like any other market, the land market is governed by the forces of supply and
demand. These forces determine the dynamics of land market operations and thus affect
adjustments to land prices. Unlike other markets, however, land is not a homogenous product.
Each parcel is unique, with a particular set of locational and physical attributes, and actors in the
land market are diverse and often have conflicting agendas.
1.2        The demand for land is determined by the product or service produced on the land,
in other words, by the use of the land. This characteristic, in itself represents a fundamental
difference between land and other commodities. The demand for residential land derives from
the demand for housing and is affected by demographic and economic pressures such as the rate
of household formation, the level of household income, the capacity for mobilizing household
savings, and the access to credit. It is also affected by the number of people wanting to hold land
as an investment and therefore by the incentives to do so, such as some form of security of
tenure and a good recording and registration system.
1.3        On the supply side, the quantity and price of land are affected by the spatial pattern
of infrastructure (the constraints on infrastructure capacity frequently impede land development);
the topography, which determines the extent to which the land can be developed physically; the
willingness of land owners to make land available on the market (speculators may keep land off
the market in anticipation of a substantial price appreciation); and by the government's
restrictions on the use of land (by means of zoning and other land-use controls).
1.4        Another distinctive feature of land markets is that ease of entry or exit is closely
controlled by local and national governments. Indeed, five main policy instruments affect the
supply of land: property rights, land titling and registration, land-use regulations, direct public
intervention in the acquisition of land, and fiscal practices.
1.5        A growing concern of policymakers in many countries is that urban land markets
are not operating efficiently and that land is in short supply or the price is too high, or both. This
situation in turn leads to pluralistic land market systems with their own sets of rules and actors.
What Works and What Doesn't
1.6        This discussion is concerned with the operation of urban land markets, the
processes by which land in towns and cities can be and is being made available to the urban
population in the appropriate places, in sufficient quantities, and with sufficient security of tenure.
Well-functioning land markets can be recognized by the ease of entry and the ease of performing
transactions, both of which depend on the availability of adequate land information, secure tenure
arrangements, and appropriate registration/recording mechanisms. Thus urban land markets work
well where these conditions are present in some degree and do not work where they are absent.
It is unrealistic to look for 100 percent success; the objective should be to attain some degree of



2
perfonnance and to put in place those institutions and instruments that will point land markets
in the right direction and ensure that they will operate in such a way that success is likely to
continue. This is essentially a modest standard.
1.7        By this modest standard, there are few urban land markets that work and many that
do not. To be fair, it should be pointed out that in those land markets that do not work, some
pockets have achieved a measure of success. Examples of markets that work include those of
Bangkok, Botswana, Barbados, and Singapore. In the case of Bangkok, the caveat on the modest
standard needs to be borne in mind; the lack of infrastructure and planning in Bangkok indicates
that "success" has been bought at a price there.
1.8        In the category of partial success are the upgrading programs in Lusaka in the 1970s
and early 1980s, the Community Mortgage Program  in the Philippines, the Kampung
improvement program in Indonesia, some aspects of urban land management in Mexico and
regularization processes in Venezuela, the management of land development in Kumasi
(excluding the operations of the Accra-based Lands Commission), and some small-scale examples
of community-based improvements in low-income settlements in many countries.
1.9        Turning now to the large number of markets that don't work, the reasons for their
lack of success may be summarized as follows: (a) overcentralization of management and
administration; (b) inappropriate, excessively detailed, and inflexible regulatory and legal
frameworks; (c) the lack or inappropriate use of resources-skilled persons, finance,
equipment-and no political will to tackle problems; (d) administrative systems lacking in
efficiency, equity, accountability, and probity; (e) a failure, or at least reluctance, to encourage
participation by the urban poor and their organizations.
1.10       Now compare these defects with the successes and partial successes. Decentralized
maniagement has been a positive force in managing the land market in Bangkok, in upgrading
management in Lusaka, and in developing the Community Mortgage Program in the Philippines.
Regulatory systems were simplified in Lusaka, in the Kampung upgrading program in Indonesia,
in Botswana, and in Bangkok. Resources and political commitment were in evidence in Botswana
andi Singapore. Effective administrative systemns have made importanit conitributionls in Singapore
anci Bar-bados. Andct Commun11L111ity participation  h;,s strelngthtleind lalnd progr11(alml11S in IAusaka, Bangekok,
Barbad(os, aid VeneZuela.1 an111d the' eflt I  IltI   I In pI  ' 1m kCI  I I - I
'1T I  I c   (lit  , I ^;S. i I,,



3
1.12       The general political trend throughout the world in the four decades since the end
of the Second World War in 1945 has been toward the centralization of power to achieve
economic growth, social welfare, and national cohesion. The developing world was offered
powerful and apparently successful models, notably the colonial form of government, in which
power resided in a strong central executive body with direct lines of control leading back to the
metropolitan government. These models of governance did not seem to leave much room for
strong local governments in urban areas.
1.13       Developing countries base their structures of government and administration on
these models. In order to build a nation, many countries had to develop a program of unification,
modernize their legal and administrative systems, and reduce the powers of local and traditional
rulers. As a result, political, economic, and social development moved in such a way that central
power was constantly expanded at the expense of local power. For reasons that need not be
reviewed here, many governments took the form of military or civil oligarchies concentrating all
resources in the center so that they could retain power by rewarding supporters through the
judicious use of these resources. In many countries, resources included urban land, the same land
that was traditionally a source of local power.
1.14       Despite the importance of land, many governments have felt ambiguous toward
illegal land markets. Policymakers often regarded the illegal settlements made possible by such
markets as a solution to the problem of rapid urban growth, which they could not possibly cope
with if public agencies rigidly enforced the conventional systems then available to them
(Serageldin, 1990).
1.15      Rapidly rising urban land values, particularly on the periphery of cities, generated
large profits that created strong economic interests, which in turn put pressure on bureaucrats and
government decisionmakers and made them reluctant to take steps to end market inefficiencies
and distortions that operated to the benefit of such interests (Payne, 1989).
1.16      Thus, the assumption about where the power to govern came from and the
assumption about where the power needed to be located to achieve economic development
provided the justification not merely for the practice of centralizing power but for the robust and
nonparticipative use of power. In the area of urban land management, this provided the rationale
for land nationalization, the substitution of parastatal land development authorities for local
government, central controls over land transactions and land use, top-down management of sites
and services and squatter upgrading programs, the use of the bulldozer as a tool of land
management, and other manifestations of centralized bureaucratic systems of management. In
short, the approaches being argued for in this paper-the orderly development of land markets,
the integration of formal and informal land markets and settlements, the creation of flexible
consumer-oriented systems of land management, the commitment to transparency, probity, equity,
and value for money in the administrative processes connected with land-cannot be divorced
from and indeed may be seen as a paradigm of the wider issues of governance now on the
agenda of many states and of the international aid community; participation and decentralization
in government, transparency, and accountability in administration, an enabling rather than a



4
controlling function for the public sector, are integral parts of this new agenda. This new
philosophy and approach to governance as a whole will make it much easier to develop a system
of urban land management that aims to facilitate the operation of efficient and equitable land
markets and to contain the externalities of such markets with a flexible, modest, and
implementable set of regulatory instruments.
Scope and Objectives of This Report
1.17       This report assesses the various institutions and policy instruments that affect the
functioning of land markets. It focuses primarily on the institutional and mechanical issues that
affect access to and supply of urban land, and therefore takes the viewpoint of both the
consumers and producers of urban land. The main objectives of the report are to highlight the
factors that limit the supply of urban land and its availability and to provide a framework for
introducing reforms. The assumption is that the accumulation over time of different institutions
and instruments that have reflected different priorities and policies have prevented land markets
from operating efficiently and equitably and have often achieved conflicting results.
1.18       More specifically, the aims of this report are as follows:
a. To assess the role and function that each institution and instrument is expected
to perform in isolation and in their relationship with others, and the implications
for the land markets.
b. To highlight the most commonly found bottlenecks and constraints in existing
systems.
c. To identify a policy package that would include recommendations or options
or actions for improving the institutional arrangements of land administration
and for improving the use of policy instruments.
Targeted Audience
1.19       This report is for policymakers and practitioners concerned with urban land policy
and planning at all levels of government. It also provides some operational guidance for donor
agencies and for all others concerned with improving governance in developing countries.
Because we hope that it will have operational as well as policy value, we have deliberately
explored some issues in detail and included detailed case studies.
1.20       While it is, unfortunately, all too easy to make broad recommendations about what
should be done to improve the functioning of land markets, the successful execution of such
policies often depends on even greater attention to procedures and instruments than in other
economic markets. In all countries, it is already surrounded by a Gordian maze of laws and
customs that are peculiarly resistant to internationally applicable panaceas.



5
Structure of the Report
1.21       This report is organized around three central questions:
How does the formal system work? (Chapter II)
1.22      It is crucial to understand what is meant by dysfunctional land markets. The best
way to explain such markets is to examine the steps that must be taken to formally enter the
system. This part of the discussion highlights the typical formal processes of (a) the
acquisition/access to land, (b) the registration of land, and (c) the development of land.
Why is it not working? (Chapters III and IV)
1.23       Chapter III outlines the most commonly found bottlenecks at the level of land
governance as well as the interests at stake of the many gatekeepers of the existing land
management systems.
1.24       Chapter IV looks at policy instruments such as (a) property rights, (b) registration,
and (c) the land-use regulatory framework in an attempt to assess their impact on the functioning
of land markets.
What can be done to improve the existing situation? (Chapter V)
1.25       Chapter V offers recommendations for improvement and provides a conceptual
framework for analyzing issues of an institutional nature as well as methods of improving policy
instruments.



IL THE FORMAL PATH:
AN OFTEN LONG AND CONFUSING JOURNEY TOWARD LEGAL STATUS
2.1    This chapter describes the various stages that one must pass through to enter the legal
land market system. The selected case studies illustrate the long and confusing journey toward
legal status. Three main aspects of the journey are considered here:
a. Access to land.
b. Registration of land.
c. Compliance with the land development requirements.
Access to Land
2.2    For the sake of simplicity, access to land can be divided into the following categories:
a. Private-private: This type of access is gained through the transfer of ownership in
private transactions or through the inheritance of land.
b. Public-private: A state allocation process may give private individuals access to state
lands.
c. Private-public-private: There may be a land banking scheme by which private lands
are pooled together under state monitoring and then redistributed to the private
sector.
d. Private/public-private: Private or public lands may be invaded by private individuals;
this type of access falls completely outside the formal sector.
e. Customary allocation: Land delivery may take place in the framework of customary
law, as is still applicable in many parts of Africa, Asia, and the Pacific region.
In many developing countries, much of the peripheral land on which new urbanization occurs is
public land that can only be allocated through government procedures, which in most cases are
unduly cumbersome.
2.3   In Peru, state lands are adjudicated through a long and time-consuming process, which
takes about 43 months, consists of up to six stages, and even involves the president of the
republic (de Soto, 1989). According to studies by the Instituto Libertad y Democracia (IDL), an
adjudication comprises 207 bureaucratic steps involving 48 different government offices. The
worst part of all this is that in the end the title to the allocated land is still not clear and holders
are unable to exercise their full rights.



7
2.4     Entry is equally complex in Ghana, where absolute ownership to land in urban areas is
held by two main groups: the state and the many "stools" or "skins" (tribal authorities). The main
steps in the process are outlined below. To acquire a public plot for any purpose in Kumasi, a
person has to apply to the regional secretary of the Lands Commission in Kumasi.
Figure 2.1. Steps in the Acquisition of State Lands: Ghana
1.    Application forwarded to regional secretary of Land Commission.                     l
Application may include a
banker's reference to show
that applicant will be able
to erect a building.
2.    The Regional Lands Commission allocates a plot.
3.   It forwards the application with a site plan showing the proposed plot to the Land Commission
at the central level.
4.   The Central Commission examines the application.
5.   On receipt of approval, the Regional Commission issues an offer letter to the applicant.
6.   The applicant notifies the authority of his acceptance.
7.   The leasehold document is prepared and signed and the first year's ground rent is paid by
applicant.
8.   Lease to be stamped and registered.
Source: Asiama (1991).
Under normal circumstances, grants of land by the commission are made on the basis of first
come first served, and every Ghanaian-irrespective of sex, age, educational or social status-is
entitled to a plot, where such plots are available. In accordance with section 45 (6) of PNDC Law
42, a person can only be granted one plot of land by the commission for residential purposes in
the same city or town. An applicant for a plot of land must also show a favorable banker's



8
reference that would enable him to erect a building costing not less than 5 million cedis on the
land. Where the application is found to be in order, the regional secretary of the Lands
Commission allocates a plot to the applicant and forwards the application together with a site
plan showing the proposed plot to the Lands Commission in Accra for approval. The commission
examines these documents to ensure that both are in order and approves the proposal. The
approval has to wait until the commission meets again to confinn its minutes before the decision
is communicated to the regional secretary of the commission in Kumasi.
2.5    On receipt of the approved proposal, the regional secretary issues an "offer letter" to the
applicant. The offer letter identifies the exact plot that is being offered through a block and plot
number and a site plan. The letter also provides information on the conditions under which the
offer is made. The applicant must examine the conditions with some care because they are the
same conditions that would eventually be incorporated in a leasehold document. The conditions
embodied in the offer letter include the terms and conditions of the lease (99-year lease, annual
rent, site improvement within 12 months). The applicant communicates his acceptance to the
regional secretary of the Lands Commission. In the next stage, a leasehold document is prepared
embodying these conditions. The applicant is then invited to pay the first year's ground rent, the
development charge, and the preparation and presentation fee. The document is then forwarded
to the Lands Commission in Accra, where the commission's chairman executes the document on
behalf of the government as lessor. The process of acquisition is then completed.
2.6   In the case of stool lands, the prospective grantee has to identify an area where land is
available for alienation and development. This information may be obtained through friends and
relations or through contacts at the Lands Commission, the Town and Country Planning
Department, the Valuation Board, or the Asantehene's Liaison Office. The next step is to identify
and contact the chief whose area of jurisdiction includes the identified land. The person needs
to contact the chief through a "front man" for the chief. After attributing the vacant land, the
chief issues an "allocation note," which is the written verification of the stool's grant of land.
Like the offer letter of the Lands Commission, this allocation note specifies the conditions that
attach to the grant. A common stipulation is that development of the land must start within the
12 months following the allocation and be completed within 24 months. The allocation note is
addressed to the regional secretary of the Lands Commission. The grant is not enforceable,
however, unless it is endorsed by the Asantehene.' To obtain the endorsement, the prospective
grantee must present the allocation note together with three site plans to the Asantehene's Liaison
Office. Once the Asantehene signs the allocation note, it is forwarded to the Lands Commission's
regional secretariat, and the allocation process is completed. This tedious process includes 20
major steps and can take several years to complete.
1. Asantehene: Ashanti king in Kumasi, Ghana.



9
Figure 2.2. The Process of Preparing a Stool Land Lease in Kumasi, Ghana Stage 1: Allocation
APPLICANT
ZIT
1. Payment of Drink Money.
LOCAL/CARETAKER
STOOL
2. Allocation note and three site plans.
ASANTEHENE                           LIAISON OFFICER                         LANDS COMMISSION
ENDORSES                         KUMASI TRADITIONAL                           SECRETARIAT
THE ALLOCATION                              COUNCIL                                  KUMASI
NOTE
5. Payment of Asentehene's                4. Confirmation of
..portion of the drink money.                   availability of allocation.



10
Figure 2.3. The Process of Preparing a Stool Land Lease in Kumasi, Ghana Stage 2: Lease Preparation
1 8. Stamnped Lease                                  9. Applicant signs lease.
LAND VALUATION                                          APPLICANT
BOARD
17. Assessment and
payment of stamp         16. Applicant    19. Stamped
duty.                    collects lease    lease for
for stamping.    registration.
7. Endorse                              12. For concurrence of
Allocation Note.                        Lands Commisioner.
LANDS
LIAISON OFFICER                              COMMISSION                                   LANDS
8. Lease prepared for    SECRETARIAT,                            COMMISSION
KUMASI         the signature of the       KUMASI                               SECRETARIATE,
TRADITIONAL    applicant.                                    15. Concurrence        HEAD OFFICE
COUNCIL                 .                                 in Lease.                  ACCRA
10. Lease for signature
of Caretaker chief and
Asantehene after
payment of                      20. Registered Lease
endorsement fee
11. Executed Lease         LESSEE
il
CHAIRMAN OF
LANDS
COMMISSION



11
Getting Through the Land Registration Process
2.7    The compilation of land ownership records consists of four basic steps:
a. Adjudication, or determining who owns what: adjudication is the process by which
existing rights in parcels of land are finally and authoritatively ascertained. It is the
first step in a title registration system. This process establishes what rights exist, who
exercises them, and what limitations apply. The boundaries of each parcel must be
agreed upon by all parties. The process of adjudication can be sporadic or systematic
and compulsory.
b. Demarcation, or marking out the boundaries on the ground: This procedure consists
of various levels of complexity, depending on the distinction between fixed and
general boundaries and the required level of surveying involved.
c. Surveying or recording the position of the boundaries: Surveying represents an
additional step, after the adjudication of ownership and location of boundaries, for
providing the necessary conditions for secure tenure.
d. Documenting, or compiling all evidence into a set of registers. The results of the
above steps are entered into a register. Two types of records are maintained: (a) data
indicating the name of the property owner and the details of the tenure, including
encumbrances, and (b) graphic data showing the results of the survey on a plan.
What does this mean for the prospective registrant? Consider the example of Cameroon.
2.8    Under laws enacted in 1974, land titles are the only legally recognized evidence of
property in Cameroon. The procedure for obtaining land titles (defined by Decree no. 76-165)
is a cumbersome and lengthy process made up of the following steps:
a. The application (documenting the identity of the applicant and describing the plot)
is sent to the Subprefecture that has jurisdiction over the subdivision in which the
property is located.
b. The application is then forwarded by the subprefect to the Prefecture and the
Provincial Lands Department (Service des Domaines). It is published and posted in
the local offices of the Lands Department at the prefecture.
c. A month after this first inquiry and depending on its results, the prefect sets a date
for the assessment of the plot occupancy and improvement.
d. Land occupancy and development are assessed by a Consultative Board chaired by
the prefect and including members of the traditional community.



12
e. After assessment, the property is demarcated and surveyed in the presence of the
applicant's neighbors by a certified surveyor of the Provincial Surveys Department.
f. The perfect then forwards the technical "dossier" to the Lands Department, which
will countersign it, if approved, and prepare the presidential decree for publication
in the official gazette.
g. If there are no disputes within a month following the publication, the application will
be transmitted to the Provincial Lands Department for registration in the Lands Book
(Livre Foncier).
2.9   It is not uncommon for this process to take two to seven years, but many people are
willing to wait this long because of the benefits of improved security of land tenure. At the same
time, the number of untitled plots is increasing both because of the lengthy and complex titling
procedures and the institutional inability of the land agencies to meet the demand. Out of an
estimated 1,600,000 plots throughout the country, only 100,000 (6 percent) are registered.
2.10   Title applications are plagued by numerous problems. Existing legislation has tried to
ensure that local people are informed about the procedure and can apply for or contest a title at
the local level. However, the process involves a multiplicity of agencies and actors at all levels
of public administration and is therefore cumbersome. Moreover, local administrators often lack
the expertise and competence required to carry out the investigation and successfully complete
the administrative and technical dossiers. In 1985, the new director of the Lands Department
(Domaines) found 16,000 unresolved applications.
2.11   With less than 20 percent of the urban plots demarcated and titled and without any
properly maintained cadastral maps, it is difficult to obtain a clear picture of the land tenure
situation. Since land ownership is not clearly defmed, important public investments in
infrastructure and industry tend to be put off and public and private land development programs
fail to be implemented.
2.12    Although every country is a special case and procedural details vary greatly, the slow
pace and complexity of land registration in Cameroon is not untypical of developing countries.
Getting Through the Land Development Process
2.13    The formal land development process requires high up-front investments and creates
scarcity.
2.14   In Malaysia, the net cost of land is doubled after interest and holding charges are added
to the original cost, because after the relevant plans and services have been approved, only 48-50
percent of the land is suitable for building purposes ( Sen, 1989). In Malaysia, approval
procedures are time-consuming, complex, and fraught with uncertainties. Some 18-20 departments
participate in the approval cycle for urban plans in the states of Malaysia, and the final approval



13
can take between one and seven years, depending on the particular state or local authority. The
Kuala Lumpur Structure Plan is a case in point. Plan preparation was begun in 1978, was
released to the public on September 1, 1982, and was finally gazetted in June 1984, almost six
years later. The unofficial estimated cost is M$6 million (US$1= M$2.50). The administrative
process of receiving, examining, and deciding on applications for conversion and subdivision can
take anything from two to seven years. Building approvals are generally obtained faster and are
more readily understood; however, some 16 to 20 departments are involved.
2.15   In Lima, Peru, subdivision approval takes an average of 28 months and must go through
three stages, all of which must be overseen by the Lima City Council. It takes another 12 months
to have building permits approved.
2.16   In Algeria, building and subdivision permits must meet strict regulations and standards.
A building permit cannot be approved without legal proof of rights to the land, as documented
by the "Acte de Propriet6."
2.17      Although we have emphasized the inadequacies of current practices, it should be
pointed out that many governments have recognized the need to simplify the procedures and
requirements for approvals. Such is the case in Brazil, where federal law 6766 of 1979 was a first
attempt to ease the legal requirements for subdivision approval and to facilitate compliance with
the formal system.



14
Figure 2.4. Building Approval Process: Malaysia
DEVELOPMENT ORDER (WP)
OR
APPROVED LAYOUT PLAN (STATES)
Conditions                                                       Conditions
CITY HALL KUALA LUMPUR                                                 FEDERALISTATE/
A. Parks and Recreation                                                GOVERNMENT/MUNICIPALITY
B. City Arcitect's Department                                          A. National Electricity Board
C. Civil Works Department                                              B. WaterWorks Department
D. Sewerage and Drainage                                               C. Drainage and Irrigation Department
E. Traffic Management Department                                       D. Fire Department
F. Public Services Department                                          E. Department of Land and Mines
G. City Planning Department                                            F. Public Works Departnent
H. Master Plan Unit                                                    G. Civil Aviation Department
H. Telecommunication
Approvals                                   Approvals
BUILDING CONTROL DIVISION
CITY ARCHITECT DEPARTMENT
MUNICIPAL ARCHITECT DEPARTMENT
DISTRICT OFFICE
BUILDING APPROVAL
COMMENCEMENT
CLEARANCES                                            .                              CLEARANCES
COMPLETION OF WORK
APPLICATION FOR CERTIFICATE OF FITNESS



15
Figure 2.5. Algeria Subdivision Approval
Subdivison Permit
1. A plan at the scale 1:2,000 or                                      Applicant
1:5,000 including orientation, road
network, and markers (locating the
plot on the ground).
2. Detailed plans at the scale
1:2,000 or 1:5,000 including
specific boundries, surface area,
contour lines, services...
3. List of the plots including
information on surface area, nature
of occupancy and use, servicing
needs.                                                               APC President
4. Work program regarding
improvements as well as estimates
of costs.
15 days
5. Specifications stating public
purpose obligations imposed on                    3 months
the subdivision.
Urban Planning Ofice at
the Provincial Level.
6. Record on the choice of land.
15 days
APC



16
Figure 2.6. Algeria Building Permit Approval
Building Permit
a. A plan at the scale 1:5,000 to 1:2,000 including                            Applicant
orientation, and road access.                                                      I
b. A site plan at the scale of 1:200 to 1:500 including                    President of APC
orientation, surface area, floor area, services...   4 months
c. Construction plan and evaluation plan.
d. Certificate of registry.                                               Urban Planning offices
at the Provincial Level
APC



III. WHAT IS BLOCKING THE LAND MANAGEMENT PROCESS: THE
GOVERNANCE OF LAND AND THE GATEKEEPERS
3.1        We now move from the mechanics of gaining access to land, registering it, and
complying with requirements for its development to broader issues of land governance. This
chapter gives special attention to the gatekeepers, who are the most important actors in that
governance.
The Governance of Land
The Law
3.2       According to de Soto (1989),
All the evidence suggests that the legal system may be the main explanation for the
difference in development that exists between the industrialized countries and those,
like our own, which are not industrialized.... The debate about development will
therefore have to be reformulated to take the importance of legal systems into
account. We cannot continue to close our eyes to the fact that not all of a society's
decisions are determined by its cultural characteristics or economic systems.
3.3       Any overview of the institutions and instruments associated with land markets must
first focus on the law that is supposed to provide a framework for policy formulation.
What Is Wrong with the Existing Legal Systems in Developing Countries?
3.4       It has been said that not all laws are good laws and that there are good laws and bad
laws: "a good law being one that guarantees and facilitates the efficiency of the economic and
social activities it regulates and a bad law, one that disrupts or totally prevents it" (de Soto,
1989).
3.5       The published laws of many developing countries are deficient in a number of
respects, ranging from the form in which they are published to the way in which they define the
fundamental nature of the power relationship between the state and its citizens. To all intents and
purposes, laws are meaningless and unenforceable if they are not published and generally
available to the citizenry. The same may be said of laws drafted and published in a language with
which the majority of the citizenry are unfamiliar. The language of the law is often the language
of the metropolitan power. This is inevitably the language of the urban elite but of too few
others. Furthermore, there does come a point when the sheer bulk of the law becomes
counterproductive, however well drafted. The fact that laws have costs as well as benefits is too
often overlooked. Nor are they seen as a reflection of the relations between citizen and state
wherein mutual rights and duties are constantly being readjusted. Instead they are viewed as the
formal part of the business of acquiring and exercising power. Too many laws, particularly in the
area of land management, are procured and passed by the economic and social elite to help them
benefit from state activities rather than to meet any perceived need of society at large. Part of
the problem is that many countries fail to consult on or properly scrutinize legislation before it
is enacted.



18
3.6       The adjudicative process has its problems as well, mainly in the area of efficiency
and effectiveness. Considerable evidence from many parts of the world suggests that adjudicative
processes are not working and that this is having an adverse effect on the management of urban
land. In some cases, adjudicative problems are bringing administration to a virtual halt, as can
be seen in the operation of the Land Acquisition Act in India and similarly in Pakistan. Planning
and land development are seriously impeded by delays in the courts associated with land
acquisition under the act. In Ghana, there is a backlog of more than 16,000 cases relating to land
in Accra. Development is, in effect, banned on large areas of land in the city pending the
resolution of these cases, some of which go back 40 or more years. Compensation for
compulsory acquisition of land cannot be paid because of unresolved disputes as to who is
entitled to the compensation. Tribunals and boards do not sit because no members are appointed
to them. Where the courts finally do reach a decision, the situation is often merely made worse
for boundaries are described in relation to old landmarks and therefore are impossible to locate
on up-to-date maps. Backlogs are also a problem in Jamaica, where title registration is preceded
by a lawyer's detailed and time-consuming examination of the whole history of the title and all
associated documents. Peru has to deal with an inefficient system of justice, and Tanzania does
not have enough trained manpower to handle the cases in the courts.
3.7        Other issues affecting adjudication have to do with access to and the "user-
friendliness" of the courts. Disputes over land are considered so important that they have to be
resolved in the higher rather lower courts in the judicial hierarchy. These are both fewer in
number and more expensive to use. Court procedures create additional problems for the litigants;
originally developed to clarify issues and bring order to the proceedings, in too many cases they
have now taken on a life of their own and impede what they were designed to facilitate. In
response, many developed countries have established specialist tribunals and courts that
concentrate on one subject only and so have been able to develop expertise in that subject, which
itself helps speed up the resolution of disputes. A few such specialist bodies have emerged in
developing countries, particularly in the area of landlord-tenant relations (rent tribunals, for
example, enforce rent control and security of tenure legislation), compensation for compulsory
acquisition of land, boundary and titling disputes, and disputes arising out of various land
transactions and land-use controls. The experience with these bodies has been mixed: Although
some of them have provided a better, cheaper, speedier, and more informed service, others have
suffered from the same defects as the courts they were designed to replace. Their language is not
the language of the majority of the population, and their decisions can be appealed to the courts,
which merely adds one more layer to the adjudicative hierarchy.
Who Gains and Who Loses from Such a Situation?
3.8        Formal adjudicative processes help reinforce the alienation that many people feel
toward formal legislative processes. Where courts in Western democracies, however imperfectly,
perform and are perceived to perform an important role in providing some protection against the
administration, those in developing countries do not have such a role, and that has been the case
since colonial times. Courts were then, and still are now, seen as agents of the government,
enforcing the government's will.



19
3.9        The operators of this system, namely lawyers in public and private practice, have
not seen their role as embracing the concerns of the urban poor. The part they play in urban land
management is that of processing land transactions in the official legal sector of the economy.
In the absence of any system of legal aid, lawyers inevitably provide their services for those who
can pay for them. As a result, numerous studies have concluded that lawyers are available to
landlords rather than tenants; to landowners rather than squatters; to officials rather than those
officialdom is meant to serve. To be fair, however, mention should be made of the thin stream
of legal concern that does address itself to the urban poor-the informal sector. There are
numerous examples of lawyers who have established legal practices in informal settlements and
of lawyers' associations that have funded legal aid and assistance programs. This suggests that
one way to improve both equity and efficiency in land management would be to include legal
and other relevant professional assistance in the package of management reforms.
The Gatekeepers of the System: Issues and Trends
3.10       The extent to which land markets function effectively depends in part on the
appropriateness, relevance, and operational efficiency of the institutions of land management. It
is essential to understand the primary functions of the gatekeepers of the system in order to
understand what reform would mean for them. Furthermore, such an understanding is needed to
identify the scope for privatization and to appropriately divide labor between the public and
private sector.
Central Government Bodies
3.11       First, we should ask what should be the overriding aim of the government bodies
involved in land management at all levels of administration. It should be to provide the policy
and administrative framework needed to ensure the smooth operation of the urban land market,
that is, to provide the mechanisms that will ensure a ready supply of land is available to a wide
range of people and organizations at prices that they can afford for purposes of their choosing,
and to ensure that due attention is paid to careful use of the environment and to issues of social
equity. It is in light of this objective that these institutions should be judged. Two examples will
serve to illustrate the complexity and the number of institutions involved in urban land
management: Penang in Malaysia and Indonesia.
3.12       In virtually all countries, central governments set the policies, enact the legislation
necessary to implement the policies, provide some or all of the financial support needed to carry
forward implementation and act as some kind of court of last resort or supervisory mechanism
or auditor of the implementation by other agencies of policies and programs. In addition, central
governments may own land in urban areas and be reluctant to allow this land to be regulated by
any other agency. In some countries, the role of central governments and other levels of
governments is set out in the constitution, and in such cases it is difficult to bring about the
necessary reorganization and reallocation of responsibilities. Urban land issues are often said to
be too important to leave to lower tier authorities. Under the guise of setting policy, allocating



20
Box 3.1 Institutional Arrangements for Land Management in Penang
Penang is under three levels of govemment administration. The federal government is involved in the
affairs of the municipality, mainly through the Ministry of Housing and Local Government. However, there
are two other federal inputs into urban land management: the National Land Council, established by the
constitution, chaired by the Deputy prime minister, which ensures that there is uniformity in the administration
of land within the country and the Urban Development Authority established in 1971 to promote and carry
out urban development projects in certain areas of Malaysia.
Under the constitution, states are responsible for aUl land matters. There are 11 departments or
parastatals in the Penang state govemment that have some responsibility for land management. Among the
most important are the following: the Lands and Mines Department, which is responsible for the alienation
of state land, the amalgamation and subdivision of land, the issue of land titles and temporary occupation
Licenses, the registration of all land transactions in Penang, and for taking action on offenses against land law.
Second, the Survey and National Mapping Department whose primary function is to undertake cadastral and
title surveys for the issuing of land titles by the Department of Mines and Lands. An additional function is
to evaluate applications for the amalgamation or subdivision of land.
Third, there is the State Town and Country Planning Department and State Planning Committee. The
department advises the committee and carries out decisions and implements the Town and Country Planning
Act 1976. The committee, chaired by the chief minister of the state and consisting of 11 other people from
different departments, advises the state government on all matters relating to the conversion, use, and
development of land in the state and coordinates the planning work of the two Municipal Councils of Penang
state.
The Public Works Department might also be mentioned. It is responsible for the design and
construction of all government buildings and comments on road requirements before the municipal authority
gives planning permission.
Two state parastatals relevant to development are the Penang Development Corporation, which has
engaged in commercial development in Penang, and the Penang Water Authority. Turning now to the Penang
Municipal Council, it is divided into different technical and other departments reporting to the full Council
through committees. The Council's principal involvement with land management is via town and country
planning. This takes the form of preparing development plans and dealing with applications for permission
to develop land. Applications are referred to four Council departments for comments; Town and Country
Planning, Building, Engineering, and Health. They are also referred to eight departments of the state
government for their comments. According to one commentator: "The average duration of the process of
planning application to the grants of planning permission has been worked out to average 11 months. This
however depends on the complexity of the application. Generally, planning permission have been granted in
a matter of 3-6 months although in certain exceptional cases, the duration process can take as long as 2-3
years." Applications for permission to plan buildings are part of a separate process, which also involves
several departments within and outside the Municipal Council.
Source: UNCRD workshop in Urban Land Policies: 'Towards Better Management of Asian Metropolises: The Case of
Penang, Malaysia" (1991).



21
Figure 3.1. Organization of Land Administration: Central Government of Indonesia
President
Dept. of Home Affairs
Directorate for        Directorate for Land      Directorate for Land       Directorate for
Land Use               Reform                    Ownership Procedures       Land Registration
Subdirectorate for     Subdirectorate for        Subdirectorate for         Subdirectorate for
Analyzing and         Land Reform                Program Preparation        Photogrammetrics
Collecting             Development               and Technical              and Traiangula-
Data                                             Extension                  tions
mzI                                    I                           I
Subdirectorate for     Subdirectorate for        Subdirectorate for         Subdirectorate for
Program Planning      Land Guidance and          Ownership and Land-        Land Measurement
Extension                 Use Rights                 and Terrestrial
Mapping
Subdirectorate for     Subdirectorate for        Subdirectorate for         Subdirectorate for
Technical              Agricultural Land         Land Exploitation          Technical
Extension              Titling                   Rights                     Manpower and
Equipment
Subdirectorate for    Subdirectorate for         Subdirectorate for         Subdirectorate for
Public Relations       Land Profit Sharing,      Building Use and           Registration and
Land Mortgages, and       Maintenance Rights         Registration
Private Lands                                        Problems
hIlLY~~ Ill  Ill    111I
Subdirectorate for     Subdirectorate for        Subdirectorate for         Subdirectorate for
Mapping               Land Compensation          Legal Affairs              Technical and
Equipment
Development
Source: Macandrews (1986).



22
funds, providing the basic legislation, or approving a plan, upper tiers of government seek to
control lower-tier decisions. Indeed, sometimes the upper tiers flatly refuse to allocate powers and
responsibilities to lower-tier authorities on the grounds that they are incompetent. It is common
to find the law being used to ensure ultimate central control or to approve urban development
plans made by local authorities. This often leads, as we have seen, to long delays in the final
approval of plans, which are consequently even more out of date when they finally come into
force than they would be because of the length of time it takes to prepare them. Such examples
could be replicated many times and disclose an unhappy state of affairs. Central governments
control the law-making process and through it they ensure themselves a continuing involvement
in land management and development. Clearly, the use of the law is important as it legitimizes
the desire to hold onto power, but at the same time it inhibits the reexamination of structures,
functions, processes, and procedures. And the more that officials strive to comply with the law
and its often arcane procedures, the more likely it is that the citizenry will turn away from the
law and develop their own methods of carrying through and protecting land transactions and
development. The fundamental issue then is: What are the legitimate interests of central
government in land management, and how can these be provided for so that the interests of other
centers of public power (local authorities) are not inhibited and the private sector is not impeded
in its use and development of land?
Local Governments
3.13       There are few states in which local governments or local authorities do not have
some role in land management. This may take several forms; local governments may own land
and as such act as landlords and/or land developers; they may act as agents for central
governments in the allocation of land or in other aspects of its administration; they may have the
primary legal duty to determine whether individuals may develop land and to draw up plans for
the development of their areas; and they may be empowered to acquire land compulsorily or to
initiate that process. In practice, as examples will show, local governments rarely have full
authority to make decisions concerning land; there is a residual power vested in the central
government to intervene or to hear and determine an appeal or to give final approval. Many of
these residual powers may be justified-it should be possible to appeal a refusal by a local
authority to allow a person to develop or sell his or her land as a matter of common justice, or
to have it reviewed by a higher authority-but the costs and delays of this additional layer of the
bureaucracy are too often ignored. Two questions need to be uppermost in the minds of those
charged with constructing systems of land management at a local level: (a) does a particular
activity-such as developing land, buying and selling land-need to be controlled at all; and (b)
if there is to be control and if it is to be located at the local level, how can it be structured so
that it operates both efficiently-cheaply, speedily-and equitably?
3.14       What does the record say about the functions of local authorities? And what general
conclusions can we draw from the record? Two specific areas may be considered: the allocation
of public land to private users and developers, and the control or regulation of land development.
With regard to allocation, there appears to be considerable ambivalence toward local authority
functions; on the one hand, there is a perceived need to placate local interests, whether traditional



23
(in customary land areas) or elected; on the other hand, vague formulations such as "national
interest" or "public policy" are invoked to justify the central government's continued involvement
in land allocation decisions. Thus, even in a federation such as Malaysia, where land is a state
matter, the constitution establishes a National Land Council whose function is to formulate, in
conjunction with the federal government, state governments, and the National Finance Council
national policy for the promotion and control of the utilization of land throughout the federation.
This body is used by the Town and Country Planning Department of the federal government to
promote national policies on town and country planning. In Mexico, too, the same dissonance
between the federal constitution and land management practice is present:
One of the main constraints for an efficient land management process is accounted
for by the many coordination problems among the various public agencies that are
involved in urban affairs. It could be said that there is a contradiction between the
decentralized nature of the federal structure of the Mexican State on the one hand
and the de facto highly centralized mode of functioning of the State on the other.
(Azuela, 1990)
3.15      Turning to the control of land development, there is a high degree of uniformity in
different systems, whatever their metropolitan or colonial origin may be. Systems derived from
the English model of town and country planning divide responsibilities between central and local
levels, the boundary usually falling between general policy considerations on decentralization and
specific land policy considerations. Similar comments may be made of systems derived from
French models. Two examples may be quoted. First, in Mali:
Urban planning and land tenure are subject to overlapping competencies of several
organizations, often working without any meaningful co-ordination. The most
obvious example is the fact that both the Ministry of Transport and Public Works
and the Ministry of the Interior were preparing substantially different solutions for
the same problems. Inevitably, representatives of services affiliated to different
Ministries often
show little restraint in expressions of mutual hostility when interviewed. (Baross and
van der Linden, 1990)
Second, in Tunisia:
The Bureau of Planning of the Ministry of Equipment is the ultimate authority for
all urban plans in Tunisia as well as for approval of zoning and building permits.
In a country of 158 communes, such a high degree of centralization can easily lead
to bottlenecks at the top, as well as insensitivity to local conditions in elaboration
of urban plans. Although some such problems exist, the ministry has managed to
work out partnership arrangements with municipalities, backed by presidential
decrees, that permit a much more flexible situation in practice, fairly well tuned to
local circumstances and responsive to requirements of specific development projects.
(Rivkin and Rivkin, 1986)



24
3.16       Some common themes run through these examples of local government
involvement in the management of land. Local governments are given limited powers by the
relevant laws; there are either legal, administrative, or conventional restrictions on their powers.
These restrictions tend to discourage coordination between different tiers of authorities and cause
delays in their decisions. Furthermore, in many countries the legal boundaries of local powers
have not been reviewed for many years and local authorities may thus be unable to take effective
action on questions of urban development. Nor should the political dimension be overlooked;
many countries have great difficulty in accepting either the possibility or the actuality of cities
and towns being planned and governed by parties and groups of a different political persuasion
from that of the people in power at the center or, in a federation, at the state level. This is
particularly the case in the capital city. Because that city is likely to be the largest in the state
and to have the highest concentration of urban challenges to tackle, it often suffers the greatest
confusion about who does what. All these factors tend to limit and restrict further the land
management powers of local governments and have given rise to the institution to be considered
next, the Urban Development Authority.
Urban Development Authorities
3.17       The term "Urban Development Authority" (UDA) refers to a legislatively established
body of either the central/federal government or the state/provincial government, the members
of which are appointed by the government that enacted the legislation. The UDA's duty is to plan
or develop (or both) the land of a particular urban area, or in some cases all the urban areas,
within a country or state.
3.18       Urban Development Authorities come in many shapes and sizes and have, a long
history, albeit under other names. Moreover that history has a habit of repeating itself. Under the
earlier name of Improvement Trust, UDAs functioned in India in the nineteenth and early
twentieth centuries. According to a noted Indian town planner, they were created when, under
pressure from rapid population growth, the urban local authorities were unable to undertake the
necessary developmental functions:
The new developmental agencies had more official elements in them and being
nominated by state government could not be as responsible and sensitive to the
people's needs as the local body. This was however considered an advantage in that
the developmental function was freed from political pressure. It was not realized
that these very political pressures and influences were the means of reflecting the
needs of the community. (Chandrasekhara, 1978)
3.19       These twin aims, to overcome inefficient local government and to isolate urban
development from politics, have been the driving force behind the modern UDAs-such as the
Calcutta Metropolitan Development Authority, created at the behest of the World Bank in the
1970s, and the Reconstruction and Development Corporation established in 1981 in Uganda at
the prompting of UNCHS (Habitat).
3.20       Just as all countries have local authorities, so virtually all countries have UDAs of
one sort or another. A representative example is the Lahore Development Authority.



25
Box 3.2 UDA: The Case of Lahore
"The Lahore Development Authority (established under the Act of 1975) replaced the Lahore
Improvement Trust under the Town Improvement Act, 1922). The LDA Act 1975 provides the Constitution
and the institutional set up of the Authority. According to the Act the objectives of establishing the authority
were:
a.   to evolve a comprehensive system of planning aimed at improving the quality of life in the area
of Lahore;
b.   to optimize use of resources and ensure an effective utilization of land;
c.   to evolve programs for improving the environment of housing, industrial development, traffic,
transportation, health, education, water supply, sewerage, drainage, and waste disposal.
It is therefore, responsible for preparing and monitoring metropolitan development plans, for initiating
and implementing schemes for housing, solid waste disposal and transport, improving Katchi Abadis, general
beautification of Lahore, maintenance of parks and places of historical significance and for formulating and
administering building regulations.
LDA with a professional strength of 270 and non-professional staff of 1700, plays the lead role in area
settlement but also has become the axis for future development. The planning and development of land is the
principal function and responsibility of LDA with civic services provided by the LMC and the Water and
Sanitation Agency (WASA). For its residential projects, LDA acquires land, plans and develops land. The
developed land is sold through allotments, by ballot, or through public auctions.
Although its primary function is the creation of infrastructure for developing housing schemes LDA
is called upon to perform much more as is apparent from the discussion above. It is, for instance, required
to perform a whole variety of functions which include normal repairs and maintenance of the capital assets
and physical infrastructure-activities which essentially fall witiin the functional domain of the municipal
council."
Source: (Kardar 1990)
3.21         UDAs perform such a variety of functions that it has often been argued they tackle
too much and therefore have not been able to fulfill their basic mandate. This criticism has been
leveled against UDAs in India, for example, where these agencies have played an active role in
land banking and land development. In the words of a noted Indian commentator:
It is in Delhi that a beginning was made with the concept of socialization of urban
land and the creation of an urban land bank.... One can write reams on how this
land has been used in Delhi and depending on whether one is a protagonist or
antagonist of the Delhi Development Authority (DDA) to hold this up as a model
for urban development or to condemn it in toto. However, regardless of its efficacy
in serving desired goals, the fact remains that this policy for Delhi, supported by
hefty financial aid from government, was sought to be replicated in other states,
with calamitous results.... Development Authorities were established all over and
told to go ahead and acquire land, almost as monopolists. Funds or the expertise to
assess needs, plan and executive development programs or to manage the lands
were not provided. Thus the Jabalpur Development Authority, for example, notified



26
6000 hectares for acquisition, actually took over about 1200 hectares and developed
less than 400 hectares. What was effectively achieved, however, was the blocking
of developments by individual initiative and therefore spawned a multitude of
unauthorized colonies.... One of the underlying assumptions of large-scale public
ownership of land was that part of the land would be used to generate profits which
would be ploughed into developing more land.... In actual operation, however, all
Development Authorities, especially the DDA have been forced into a spiral of
making huge profits which are channelized into highly visible ventures such as
Hyderabad Urban Development Authority, for example, has been virtually brought
to a standstill because of such hare-brained schemes. (Buch, 1984)
3.22      It is because of such criticism that UDAs are generally considered more of a
hindrance than a help to the efficient and equitable operation of land markets. To counter that
criticism one might mention the new approach to UDAs exemplified by the Zimbabwean UDC
and the Singaporean URA, which are much more concerned with facilitating development by
others, both public and private, than with developing land themselves. Such UDAs might well
have a useful role to play in urban land markets, especially where, as in Zimbabwe, the skills and
disciplines needed for such public involvement in urban land management are in short supply,
especially at the local level.
3.23      What other advantages might UDAs have? Is it an advantage to "cut out" politics?
Is this even possible? The fact is that politics cannot be entirely divorced from public sector
involvement in land management and development, and UDAs are often a way of substituting
one set of politics (and politicians) for another. The idea of a "single-purpose" authority is often
advanced as being the strongest argument for UDAs; rather than a local authority with a
multitude of functions to attend to and never able to give sufficient time and resources to land
management and development, a UDA's function is solely that and therefore likely to be more
effective. But one of the problems, as we have seen from the Indian experience, is that UDAs
tend to take on too much, so they fall victim to the multipurpose disease. In addition, they tend
to become monopolists of land supply and as such constrict and distort the markets in which they
operate.
3.24      In addition, UDAs are a centralizing mechanism; they remove development from
the people and make it harder to put local inputs into plans and proposals for development.
Increasingly, this is being seen as a disadvantage; without the full participation of those who are
to benefit from the development, the plan runs the risk of not meeting relevant needs and
concerns.
3.25      The point, then, is not that there is no place for UDAs in urban land management
but that where they exist, they should be used as a mechanism both to help local authorities
perform their functions better and to assist the private sector in their efforts to obtain and develop
land through the market. An effort must be made to ensure that coordination takes place on an
institutional basis. Equally, UDAs must be integrated into the "bottom-up" approach to
development; their existence must not be used as an excuse for ignoring the need to consult with
and involve the people in urban land development programs.



27
Land Administration Agencies
3.26       Separate and distinct from UDAs are the land administration agencies. These are
public sector authorities (often parastatals or agencies having a separate and distinct legal
personality from, although reporting to, the ministry responsible for lands) in which are vested,
or that manage on behalf of the state or the president (in those countries where land is vested in
the president), the public lands. Their primary management functions are to allocate public land
to persons and organizations in the private sector and to public sector organizations; to fix the
terms on which such allocations are made (e.g., land use, rent, rights of reentry, and resumption);
to acquire land from the private sector; and sometimes to undertake land titling. Where, as is the
case in many countries, all land is public land (i.e., land has been nationalized), such land
administration agencies are of central importance to the development and operation of a land
market.
3.27       Unlike UDAs, land administration agencies vary a great deal. Some are highly
centralized: the Land Commission in Ghana is a case in point. Some operate on a decentralized
basis: in Nigeria, all land is vested in the (military) governor of each state, who is advised as to
the allocation and management of urban land by the State Land Use and Allocation Committee.
Similarly in Mali, the district governor must be petitioned for public land, and he delegates his
responsibility to a conmmission. Some embrace all facets of land management; others only some
aspects. An example of the latter is the directorate-general of agrarian land in the Department of
Home Affairs in Indonesia.
3.28       The Lands Commission in Ghana is an example of the former. Its principal function
is to make grants of public land, but it also exercises extensive powers over stool land, that is,
land held under customary tenure. First, the government has the power to vest stool land in itself
in trust, and when it has done so, the powers of management of such land are exercised through
the Lands Commission. Second, it is required to consent to any assurance of stool land by a stool
or any person entitled under customary law to possession of such land. Third, the secretariat of
the Lands Commission acts as the administrator of stool lands2 and as such it is responsible for
the management and disbursement of all existing funds held for stools by the government and
for the collection of all rents due to stools, and for their disbursement.
3.29       This example demonstrates that a land administration agency may, in effect, control
the operation of the land market, and as was noted in one report on the equivalent agency in
Uganda, may substitute political for market criteria in land allocations and transactions. Such
agencies are part and parcel of the public ownership of land, which, as already mentioned, has
a long history and a firm ideological base in the many ex-colonies in the developing world. In
many countries, public ownership of land has increased in the past 30 to 40 years as policies
have been adopted to nationalize land-India via the Urban Land (Ceiling and Regulation) Act,
Nigeria via the Land Use Act, Cuba after the revolution, to name but three countries-in the
belief that public control and allocation of land will be both more efficient and more equitable
than leaving allocation to market forces or to traditional authorities. A national approach to land
allocation was and is still seen as an important aspect of nation building. This is not the view
2. Stool Land: Land under customary tenure, generally allocated by a local chief or other tribal authority.



28
everywhere, however; extreme inefficiencies (as in India), corruption and partiality (as in
Nigeria), overcentralization (as in Ghana), have affected the management of public lands by land
adniinistration agencies so that the wheel has in effect come full circle, and the argument now
is that land is more efficiently and equitably allocated by the market. Realistically, however, it
is unlikely that policies are going to change to the extent that land administration agencies are
going to dump all the land they control on the market and close down.
3.30       Thus, recognizing that land administration agencies are going to continue operating,
we have to focus on their strength and weaknesses, boost the former, and try to eliminate the
latter.
Traditional Authorities
3.31       Traditional authorities straddle the boundary between the public and the private
sector. Where they still exist, they derive most of their official authority and power over land
from statute from the government. Yet, in their own eyes and in the eyes of many of those who
still regard them as the fount of legitimate authority, their authority and power are derived from
their traditional status, and their powers over land are akin to those of an important private
landowner rather than a government official. And even in the countries where they have no
official role at all, any attempt to deal with land without their unofficial involvement would be
likely to fail. There is, then, considerable ambivalence about the role, status, and functions of
traditional authorities in land management, which makes it both necessary and yet difficult to
discuss them and formulate principles of land management that might be applicable to them.
3.32       Traditional authorities are distinguished from statutory authorities such as land
administration agencies in that they are concerned first and foremost with allocating land to
"their" people; indeed, one of the driving forces behind the nationalization of land and the
creation of land administration agencies was the desire to overcome this approach to land
management. It would be a mistake to assume, however, that traditional authorities do not
accommodate the allocated land to "strangers." Thus in Ghana, one may distinguish between a
subject usufruct, which is "indefeasible, indeterminable, inheritable and alienable," and the
specific or stranger's usufruct, which is a "specific grant made by the stool or its subjects to
persons who are not members of the land-owning group." Such an interest "is potentially secure
unless he (the stranger) grossly misbehaves by mortgaging, subletting or selling part of the land
without the consent and concurrence of the land donor or by denying or subverting the allodial
title or the customary freehold of the land donor." In urban and peri-urban areas, allocation of
land to "strangers" is the rule rather than the exception. In Port Moresby in Papua New Guinea,
for instance, complex rules and arrangements have been developed between strangers and hosts
to allow for their coexistence in that city.
3.33       Where traditional authorities are a part of the official land management procedures,
obtaining land can be an extremely complex, time-consuming, and expensive process as both
traditional and statutory authorities have to be dealt with. It is unlikely that the process is much
different where traditional authorities are not part of the official process but are part of the real
process. The dilemma for any government or any would-be reformist is to try to eliminate the
traditional authority's input into land management-either by nationalizing land and centralizing
land administration under a statutory regime and agency or by facilitating the growth of land



29
markets-without inviting the growth of a parallel unofficial land management or land market
system and thereby introducing conflict and confusion into land management. On the other hand,
to incorporate traditional authorities into the official system is to build the potential for conflict
into such a system as different criteria for decisionmaking may be used by the different
components of the system, and this may cause delays and further complicate matters.
3.34       The question of the place of traditional land authorities in land management must
be viewed in relation to their approach to land and the nature of power over land. Those
traditional authorities that continue to see the land as a social asset, as an important part of their
political control over "their" people, remain reluctant to adopt a more market-orientated or a
more regulatory approach to land management-Swaziland is a good example of this. Those
traditional authorities more attuned to the economic approach to land have been able and willing
to adapt both to regulation and to market-led allocation. That has been the case in Botswana and
among the Ashanti of Kumasi. In many countries traditional authorities are experiencing a
transition, whatever their official position, in the land management system, and are moving from
the social to the economic approach. Therefore there is every reason to continue to involve
traditional authorities in land management, and the aim should be to encourage and facilitate a
convergence of social and economic approaches to land, in recognition of the economic benefits
to traditional authorities as landowners and of the social benefits to "their" people (and
"strangers") that can be derived from an approach to land management that makes room for both
the market and regulation.
Private Consumer's Organizations: NGOs and Cooperatives
3.35       Private institutions that play an important role in land markets are the
nongovernmental organizations (NGOs), including community-based organizations (CBOs) and
cooperatives. These institutions tend to operate at the lower end of the formal land markets and
in informal land markets. They act as the point of contact between formal and informal markets,
between public sector agencies and the people in the informal sector, and often between private
landowners and people wanting land. Because they operate in part within and in part outside the
official system, an important issue to address is what should be the relationship between
officialdom and these organizations? To what extent does the official system, as discussed in the
preceding sections, provide an welcome climate for these organizations to work in, and to the
extent that it does not, how can such a climate be developed? Equally important are issues arising
from these organizations themselves: How are they structured; how do they involve those with
whom they are working; to what extent do they wittingly or unwittingly take on the
characteristics of the public bureaucracies?
3.36       In concentrating on cooperatives, NGOs, and CBOs, we are not ignoring the
important role that land developers play in the operation of land markets. Many land developers
are incorporated and operate in the form of a company; companies, partnerships, and other forms
of business association must all be seen as private sector institutions whose effective functioning
is a vital aspect of the development of a land market. Fine though the distinction may be, the
institutional questions on land developers as corporate bodies lie outside the scope of this
discussion. Our concern rests with the NGOs, CBOs, and cooperatives since they are significant
and often overlooked institutions for improving the functioning of land markets, particularly for
the poor. It must also be remembered that such organizations, by their very nature, are tempting



30
vehicles for political action, either by those who may be opposed to an existing government, or
by an existing government that sees them as an excellent way to maintain contact and support
at the neighborhood level.
Nongovernmental Organizations (NGOs)
3.37       In the past decade increasing attention has been given to the role of NGOs in
providing shelter and developing land in both rural and urban areas.
3.38       NGOs perform at least seven kinds of functions. First, they provide a vehicle for
popular participation and mobilization. Second, they can assist in local planning and goal setting.
Third, they can provide services, for example, in urban areas, schools. Fourth they can mobilize
local resources, both human and material, in order to execute a project. Fifth, they can define and
express local needs and demands, which can then be incorporated into government programs.
Sixth, they can influence local administrations and make them more responsive to local needs.
And seventh, they can create political awareness among people at the local level (see Cheema,
1983).
3.39       There is some overlap between these seven roles. At the risk of oversimplification,
they can all be classified into two broad categories: those roles and activities that concentrate on
and at the local level-providing services, mobilizing resources-and those that represent local
concerns and needs to various branches and agencies of government. The first category
encompasses institutional issues concerning whether NGOs have the power and authority to carry
out their activities and what happens if their activities are illegal; the second category includes
issues pertaining to relationships with government-whether there is a formal framework of
consultation in place, and what, if any, legal status in the judicial or administrative process NGOs
have.
3.40       In matters relating to urban land, NGOs frequently take an active role in acquiring
and developing land for housing and other services. They have been particularly effective in
pooling the resources of individuals and buying and then developing the land on a community
basis, as the following example illustrates:
In Kenya the people of a small squatter settlement known as Mjini pooled their
resources to buy some land when they were faced with eviction.... A different,
though equally impressive approach to finance, is provided by the Sou Sou [penny
by pennyl Land Limited in Trinidad and Tobago. It operates a traditional group
saving system whereby people contribute on a regular basis and take turns to
withdraw the total sum of deposits. Sou Sou Land was started as a way of buying
land for squatters. It has grown into a major exercise that numbers some 12,000
participants who have invested in the region of US$5 million for the purchase of
1,200 hectares of land. A similar experience is that of the Pagtabmayayong
Foundation in the Philippines. Here people also pool resources to buy land, while
the Foundation, as the sum of their small contributions, represents an acceptable
partner for financial institutions....



31
In the Republic of Korea squatters used a grant from MISEREOR (Private
Voluntary Organization of the Catholic Church in the Federal Republic of Germany)
to purchase land. People paid for their lots and this money was then used to provide
housing loans. In other words, a revolving fund was created. MISEREOR also
provided the funds for the purchase of land by the residents of the Kampung Sowah
in Indonesia who had to be relocated when it was decided that the area they
occupied should become a green belt. (Habitat, 1988)
3.41      In these cases, the purchase of land provided a legal basis for later development, but
this did not automatically ensure that later development was itself legal. In Trinidad and Tobago,
the land that was purchased by Sou Sou Land Limited was relatively cheap because it had not
been zoned for development in the country's National Physical Development Plan. In the view
of Sou Sou Land Limited, the town and country planning system in Trinidad and Tobago was
unconstitutional, since it operated to deprive people of a right to a home. Thus, there was a
deliberate refusal to seek planning permission before development started on Sou Sou Land, with
the result that such development was illegal. There was, however, an understandable political
reluctance to take any action with respect to that illegal development.
3.42      What NGOs do appreciate are the advantages for operating, as far as possible, within
the law. There is, it is generally conceded, an enormous gap between official law and
administration and the lives of the urban poor; NGOs may well be the crucial link in closing the
gap. NGOs can help the urban poor form a co-operative, purchase land, fill in the necessary legal
forms, negotiate with administrators and lawyers to obtain permission to build, and finance the
eventual project. These are all ways in which NGOs can help extend the protection of law to the
urban poor. In this respect, it may be that, whatever the merits of the Sou Sou Land approach,
encouraging the landless to ignore and defy the law might not be in their own long-term interests.
3.43       As for the relationship between NGOs and the government, this may be discussed
from the perspective of land management in particular or the situation in general. In the first
case, it is on the whole rare to find in land-use planning legislation, for example, a specific
provision for consultation with NGOs in the preparation of plans. Thus, where NGOs do attempt
to formulate local plans or to put forward, perhaps at a national level, an alternative approach to
development, they must rely on personal contacts, networks, and administrative goodwill to have
their views and ideas fed into the official system. Perhaps consideration should be given to
providing for specific consultative and participatory roles for NGOs in the land management
process, as was proposed in draft legislation on Town and Country Planning in Trinidad and
Tobago.
3.44      The more general question of the overall relationship between governments and
NGOs must be viewed in terms of the "political" dimension of NGO activity. In the urban
context, that dimension has been summed up as follows:
As governments increasingly become constrained in their ability to provide essential
services, more emphasis is placed on the role of the active citizen in self-
provisioning, and in taking responsibility for the maintenance of those public assets
which they have managed to secure. This involves not only neighborhood



32
committees but also voluntary organizations, as a re-negotiation of the role of
government and the individual is sought and the boundaries between statutory and
voluntary provisioning change. (Marsden and Moser, 1990)
3.45       Obviously, NGO involvement in urban management means a good deal more than
helping the poor obtain land and housing and fil in legal forms correctly. It also has to do with
empowerment-participation as an end, not just as a means-and a restructuring of relations
between government and the governed.Although this idea may be tolerated or even encouraged
by some governments, other governments react negatively to this aspect of the work of NGOs.
In El Salvador, after the 1979 coup d'6tat, for example, much hostility and suspicion was directed
at the work of the Salvadorean Foundation for the Development of Low-Cost Housing
(FUNDSAL) and other NGOs "who through their methods or philosophy, attempted to go beyond
the mere supply of service (i.e., housing in the case of FUNDSAL) and [they] were pressured
to abandon their long-run objectives" of contributing "to social change not only by transferring
resources to the urban poor but also by organizing them and raising their consciousness" (Stein,
1990).
3.46      The second example comes from Kenya and concerns the recently enacted
Nongovernmental Organizations Coordination Act of 1991.
The stated aim of this legislation is to provide for the registration of all NGOs in
Kenya and to co-ordinate their activities within Kenya. An NGO Coordination
Board is established with a substantial official membership. This Board is to co-
ordinate the work of NGOs, maintain the register, advise Government on the
activities and roles of NGOs in Kenya, provide policy guidelines to NGOs to
harmonize their activities to the national development plan for Kenya and to
approve a code of conduct for the self-regulation of NGOs and their activities in
Kenya. The code is to be developed by a Kenya National Council of Voluntary
Agencies, which will be composed on an interim basis of the first one hundred
NGOs to be registered by the Board, and whose first meetings will be supervised
by an official designated by the relevant Minister. The code is to cover "activities,
funding programs, foreign affiliations, national security, training, the development
of national manpower, institutional [sic] building, scientific and technological
development and such other matters as may be of national interest. The Board shall
ensure that the code of conduct is consistent with the national and foreign policies
and all written laws of Kenya.
3.47      The thrust of this legislation is plain: NGOs are to be brought under stricter
government control and wiUl have to comply with and implement government policies. If they
do not, they wiUl be struck off the register, and persons involved in such NGOs will face heavy
penalties. Such an approach to NGOs repudiates their whole purpose, which is to experiment,
innovate, show the way toward new policies, suggest ways to improve (in a lawful way) current
policies and their implementation where they are hurting the clients or members of NGOs. Under
the constraints outlined above, NGOs will be transformed from private to public institutions;
inevitably, they wiUl have to have more regard for the Coordination Board, its officials, rules, and



33
policies than for their members or clients. It will require extraordinary sensitivity on the part of
the board and its officials to ensure that Kenyan NGOs-the large international NGOs will be
able to look after themselves-are not in the future perceived as just another government agency
implementing policies decided on elsewhere. We would argue that insofar as an institutional
framework for the operation of NGOs is thought to be necessary, it should emphasize and
facilitate their creativity, their unorthodoxy, their role "to empower the urban poor" and their role
"to build effective and legitimate networks connecting local social movements with national
governments" (Marsden and Moser, 1990).
Cooperatives
3.48      Turning to cooperatives, the principal purpose of cooperatives in the area of land
markets is to acquire and provide housing. Housing cooperatives perform several tasks:
a. self-help (mutual assistance through association), which does not necessarily
imply manual self-help or the renunciation of external assistance
b. membership promotion, which means promoting the economic interests of the
members through service relations between the members and the cooperative
enterprise
c. safeguarding the identity of co-owners and customers of the cooperative
d. democratic management and control of the society by the members and thus also
equality of the members. (Lewin, 1981)
3.49      According to Lewin, one of the main institutional problems of low-income housing
cooperatives is the difficulty they have reconciling the formalities of the law with the realities
of low-income life-styles. On the one hand,
the legal framework is vital to the operation of the housing co-operative and essential
for the collective acquisition of land, procurement of construction funds, and the
determination of rights, duties, and liabilities of the members, the co-operative, and
the sponsoring agency. If the housing co-operative is not legally recognized as a
corporate body, it is neither able to perform its obligations towards the members, nor
are the members bound by any agreement with the co-operative.
On the other hand,
the stipulations of co-operative laws involve some important problems and
difficulties of adapting by-laws to the requirements and socio-economic realities of
low-income households. The formalized institutional approach and proceedings,
particularly as far as the general meeting and committee is concemed, assume a high
degree of adaptation to formal organizations and a level of formal education which
may rarely be found among low-income households....



34
Adapting the by-laws of the co-operative to the principles and practices of the
customary law and prevailing social traditions, may at times be a difficult task,
traditional concepts of the family, and responsibility towards its members, may often
seem at odds with the requirements of co-operative legislation and the by-laws of the
society. (Lewin, 1981)
3.50      The task of reconciling law with reality and helping members understand their roles
and responsibilities and helping them participate in management is usually assumed by some
governmental agency, at least until a cooperative has become self-reliant and acquired the
necessary degree of "technical, financial, administrative and legal expertise on the one hand and
a thorough knowledge of co-operative practices, responsibilities and duties on the other."
However, such external assistance itself creates problems: Experience in various developing
countries has shown that governmental or semigovemmental organizations for the promotion of
cooperatives often tend to develop a stiff bureaucratic approach and practices to discourage
initiative and overemphasize their own role.
3.51      At the same time, the case for persevering with cooperatives, and with other similar
kinds of organizations geared toward meeting the needs of the urban poor in the housing and land
market, has been forcibly argued in a survey of access to land by the urban poor in Latin
America, which
stresses the difficulty, if not the impossibility, for a family with limited resources to
find a place to live when acting on individual terms, because the disparate nature of
the urban land market makes for a very uneven and unequal relationship. A logical
line of action would be for the promotion of organizations of lower income
households affected by the housing problem, in order to improve their chances of
faster and better solutions. Such organizations could play an important role by
providing a better bargaining position in the market as well as in "extra market"
situations.
These organizations could be of great help in the market in providing a rallying point
for dispersed individual efforts. Advantages would accrue in such aspects as: the
possibility of buying large plots of land which could later be sub-divided; lowering
per unit prices as a result of usually paying less for large tracts of land; providing
greater flexibility in location decisions; making possible the alternative of
implementing ad hoc saving schemes and providing access to bank loans with
conditions of shared responsibility. In addition, such organizations could play an
important role at extra-market levels. As shown, urban public authorities are subject
to strong pressure from different agents who require government support in varied
aspects of urban development. Strong organizations could not only increase the
amount of benefits to be directly received, but could also affect the ranking of
priorities or urban public authorities. A healthier balance between effective
participating agents and interest groups in the urban scenario could possibly stimulate
a more active public policy with regard to the urban land problem. (Trivelli, 1986)



35
3.52      Trivelli's remarks draw attention both to the market and to the political role of the
organizations he has in mind (which could in fact be cooperatives, NGOs, or CBOs). It is
necessary to add, however, that many governments consider that a political role for such
organizations is unacceptable, so that great care has to be taken in going down that path.
3.53       Although cooperatives as a private institution in land development are a sound idea
in principle, institutional arrangements need a good deal of thought to guard against creating a
legal-bureaucratic maze that could destroy the spirit of cooperation and self-reliance characteristic
of most cooperatives. Indeed, the formation, development, and management of and support for
cooperatives brings into sharper focus than most aspects of the institutional framework on urban
land development the dilemma for those searching for appropriate institutions: how to develop
a framework that facilitates land development and the operation of a land market by and for the
urban poor yet at the same time provides a regulatory framework that ensures, in equal measure,
efficiency, equity, and probity in the management of urban land.



IV. WHAT IS BLOCKING THE LAND MANAGEMENT PROCESS: A LOOK AT
POLICY INSTRUMENTS
PROPERTY RIGHTS
4.1        It has been said that land tenure forms the basis of development policy, performing
both an indirect, facilitating role, and a direct and active one. It interacts strongly with other
elements of the urban economy, being closely linked to the mortgage market, which takes a
substantial proportion of borrowed funds in most countries; it is a major determinant of the local
tax base and significantly affects the quality and return of investment undertaken in land and
structures. The objectives of urban tenure policy must, therefore, be viewed within the setting of
more general policies concerning urbanization itself... One way of stating the problem of
determining an optimal system of land tenure may therefore be that it is the task of finding tenure
arrangements most capable of reconciling the contradictions between the public and private
natures of land. (Doebele, 1983)
4.2        Another important point to note is that all societies see land tenure as more than
merely a relationship between people and land. It embraces cultural, social, and political
concerns; indeed, the evolution of government is closely connected with struggles over land, and
the present patterns of land tenure everywhere cannot be properly understood without examining
how they evolved. This is particularly true of urban land tenure in the countries of the developing
world, where many different approaches to land tenure-often conflicting-have come together
over the years and jostle for recognition within the confined space of a city. This near-Hobbesian
struggle for recognition has in the past been dignified by the term "dual system of tenure," which
is actually somewhat confusing because it implies urban land tenure is characterized by an
ordered rationality, which might exist in theory but rarely in practice. More important, it fails to
recognize one of the key difficulties in attempting to create a "system" out of current confusions;
different systems of land tenure-with their different sets of rules, practices, and tacit
understandings, which profoundly affect relations between people and land-are based on
fundamentally different conceptions about the role of land and land tenure in society. Unless
these different conceptions are fully appreciated, future attempts at reform, like those of the past,
will be thwarted.
4.3       In considering, as we must in a policy context, the brakes and the accelerators of
any particular land tenure system-what blocks development, what facilitates it- we need to
assess the basic concepts of the system as much as the specific surface characteristics.
Basic Concepts:
4.4        Every land tenure system is founded on certain social and economic concepts. In
some systems, land is considered part of the social relations between people and society and no
distinction is made between the economic and social aspects of these relations. This approach is
common in traditional societies governed by customs of long standing. In contrast, other systems
treat land as part of the economic relations between persons in society. Modern societies
dominated by the market, for example,keep economic and social relations strictly apart and view
land as a commodity and a factor of production. Unless both approaches are taken into account,
however, urban land policy and land management are likely to be ineffective. In giving this
recognition to both approaches, one must bear in mind that they overlap; land might be, de facto,
subject to rules and practices derived from land tenure systems based on each approach; people
might move from one or to the other. Each approach, in the eyes of its users, is legitimate; each



37
is therefore an integral part of the whole society and one cannot make assumptions about the
legality or illegality, legitimacy or illegitimacy of either.
4.5         The situation in the cities of the developing world is even more complicated than
this. They do not have two or three discrete systems of land tenure, each occupying its own
space, applicable to its own group of people, and having its own set of institutions and
instruments. Rather, one will find there pluralistic systems of overlapping tenure arrangements,
including (a) a formal official statutory system, (b) an informal system applicable in unauthorized
settlements, and (c) indigenous Islamic or customary land tenure.
4.6        These systems overlap in three respects: First, people move between the systems
both in terms of their actual relationship to land and in terms of the transactions they engage in;
a person may own and deal in land in the formal statutory system in one part of the city and
have rights and duties associated with customary land tenure in another part of the city. Second,
it may be difficult to determine whether a particular piece of land falls under a particular system
of tenure; it may in fact be within two systems and thus be open to conflicting rights and duties.
This is usually the case with land occupied by squatters in an informal settlement: the tenurial
relations within the settlement are one system; the relations between the squatter and the official
legal landowner-public or private-is another system. One finds similar conflicts between
customary land tenure and statutory regulation of land use: permission from a chief to build a
house on land that falls within his customary jurisdiction may well conflict with the statutory
regime of land-use control applicable to the same piece of land, so that the house can be
considered legal or illegal depending on which system of land tenure and land use controls one
judges it by.
Forms of Land Tenure and Their Characteristics
4.7        This mosaic of ownership concepts can be analyzed in the context of three broad
groupings, namely, statutory systems (including common law and civil law), informal systems
(including the many shades of informality), and customary system. The latter two are offshoots
of the statutory systems.
Statutory Systems
4.8        Common Law Land Tenure. Many systems of urban land management are based
on concepts arising out of the common law. Their most important characteristic is that they
permit multiple rights to the land. Different people can have or own different sets or bundles of
rights in the land, which may last for different periods of time or may be so arranged that they
only come into being in the future and may cover different aspects of the total corpus of rights
to land-the right to use and manage it; the right to the fruits; the right to dispose of it. The
notion that two or more people could have rights to the same piece of land at the same time
arose from the concept of the estate. In common law systems, people do not own land; they own
estates or bundles of rights in the land. "A" may have the right to an income from the land, "B"
to live on the land, "C" to walk across the land, "D" to build on the land and, E to abstract water



38
from the land. All these persons have legally enforceable rights that also command a price in the
market.
4.9        The common law of the land is thus an extremely flexible body of law; indeed, its
flexibility has been the cause of considerable complications over the centuries as different
bundles of rights were invented and made it extremely difficult to buy and sell land. Legislative
reform was necessary to untangle the confusions, but legislative reform itself was based on the
fundamental principle of the division of interests in land. Reform was based on the separation
of two sets of rights-rights of management and rights of enjoyment, which would make it easier
to develop a market in land. Rights of management were located in freehold estates ( those that
have the potential to last indefinitely ) and leasehold estates (estates that last for a fixed period
of time, e.g. up to 999 years), while the rights of enjoyment were relegated to rights to insist that
the owners of the legal estate (managers or trustees) paid to the beneficiaries what they were
entitled to receive.
4.10       What Does It Mean for the Market? The division of interests or rights into rights
of management and rights of enjoyment is a fundamental principle of a market economy. It is
at the root of the company structure and its division between managers and shareholders. The last
major package of reforms that set the land law firmnly on the path of facilitating a market in land
in England was enacted in 1925. However, in many countries where this law was imposed at the
outset of colonialism, it was a nineteenth-century version of the law (in Caribbean countries, it
was a much older version) and it contributed to the existing jumble of concepts, rules, and
philosophies. The conceptual framework of the common law has been carried over into the
regulatory framework that has been added to the basic land law. The laws regulating land use
(town and country planning legislation) are based on the concept that there is a distinction
between the existing use of land and the right to develop. The latter is said to be of interest to
society and for this reason may be controlled by the state, which may restrict its allocation to a
person or a body that comes forward with an acceptable proposal for the development of the
land.
4.11       Civil Law Tenure. The civil law system is another extensive system that is
applicable to urban land in countries on every continent. Unlike the common law, which derives
almost entirely from one source (England), the civil law, although it can be traced back to the
Napoleon Code, was imposed or imported from a variety of metropolitan sources-France,
preeminently, but also Belgium, Holland, Portugal, and Spain. The civil law system grants
outright ownership of the land. The code defines ownership as "the rights to absolutely free
enjoyment and disposal of objects provided they are not in any way contrary to laws and
regulations." Like common law, the powers implied in the ownership of land are not completely
unrestricted; over the years, all civil law systems have accepted the need for restrictions imposed
on the owner in the interests of the wider community (public law restrictions) or of neighbors
(private law restrictions and in particular the important civil law concept of the abuse of
ownership).



39
4.12       What Were the Aims of the Statutory Systems? Statutory systems were
introduced with three main objectives in mind. First, they were to make it possible to acquire
land in colonial possessions from the indigenous people and grant it to settlers, mining
concessionaires, and other commercial organizations. This was the case in Malaysia, Indonesia,
the South Pacific, and many countries of Africa. Second, the system was expected to simplify
land transactions, which was the primarily goal in the Indian subcontinent and in Malaysia, where
the national land code enacted in 1965 provided one of the most comprehensive statutory systems
of land law contained in one code. Third, as Indonesia's Basic Agrarian Law of 1960
demonstrates, the law could also serve to unify dual systems of tenure based on a coherent
philosophy reflecting indigenous interests and ideas. Land is a gift of god and constitutes the
wealth of the nation; the state, on behalf of the nation, regulates land and other resources; land
has a social function and land rights have to be adjusted to national laws and interests. Social
functions and interests take precedence over land as a commercial commodity, which can be
freely bought and sold in the market. It is important to be aware of the aims of the statutory
system for they can affect its evolution just as much as the historical circumstances affect the
potential changes of the total system.
Diversions from the Statutory Systems: The Many Shades of Informality
4.13       Degrees of Informality. Most often, there are several informal systems in operation,
owing to the fact that the concept of informality covers a wide spectrum of cases: (a) defective
land tenure conveyed by the original landowner to the subdivider; (b) defective tenure conveyed
from the subdivider to the purchaser; (c) the establishment of the subdivision in an area in which
it is not a perrnitted land use; (d) failure of the subdivider to follow applicable subdivision
regulations governing layout, plot sizes, and the provision of basic services; (e) failure of land
purchasers to follow building and occupancy codes when constructing buildings on their plots.
At one end of the spectrum is the classic squatter settlement, which can be defined as the illegal
occupation of land, either public or private, followed by the building of structures that ignore all
planning, zoning, building, and public health regulations. No official acceptance is granted to
such an occupation and development so any tenure relations and transactions must develop
without reference to official institutions or procedures. At the other end of the spectrum is the
development that is "5% below the required standard" (Doebele). The land has been sold legally
by a landowner to a developer who subdivides it into plots below the required standard and sells
the plots to individuals who construct houses based on but not fully complying with the relevant
statutory codes. Because the regulations have already been by-passed and in order to save on
costs, plot owners may not register their titles, which are thereby rendered technically illegal and
unenforceable. In short, there are almost infinite degrees of informality, which are normally
paralleled by almost infinite degrees of official toleration. Informal systems come in a wide
variety of forms and involve a wide variety of parties.
4.14        It was widely assumed in the past that only two parties were involved in informal
or illegal settlements: the squatters and the rightful owners, public or private. This is an
oversimplification. A considerable amount of evidence is now available to show that, in all parts



40
Box 4.1 Madagascar: An Illustration of the Many Shades of Informality
According to the existing legislation, aU urban land occupied before February 15, 1950, and on which
site improvement has occurred (Mise en Valeur) can be granted ful title. In other words, any pretender to
a title would have to show evidence of occupation exceeding 40 years!
In this context, occupation of land without legal property rights represents the only alternative for many
urban dwellers. In practice, this situation gives rise to the following broad categories:
a.   Private, registered properties occupied by owner legal situation.
b.   Housing built on private registered land but belonging to another owner illegal.
c.   Urban land occupied and improved before 1950: no title but can be legalized if beneficiary
wishes it.
d.   Rural land occupied for 10 years: same as above.
e.   Urban land occupied and improved since 1950: illegal occupation of land belonging to the
private domain of the state.
f.    Registered land (private state lands) occupied by squatters: ilegal.
It is estimated that 85 percent of new construction activities are carried out informally.
of the developing world, middle persons are involved in informal systems.3 Consequently, the
operation of such systems cannot be understood without taking into account the roles of such
middle persons. They may act as wholesale purchasers of land, subdividing and then selling
individual plots. They may organize invasions and be responsible for ensuring plots are
subdivided and demarcated once the invasion has taken place; they may be lawyers completing
transactions and using forms and procedures similar to those used in official transactions to give
a simulacrum of an official legal transaction; they may be party officials who settle disputes
unofficially in informal settlements; they may be persons holding a customary office who perform
some role on behalf of a customary landholder allocating land to a person; or they may be state
officials or public servants supplementing their income through extracurricular activities
undertaken on behalf of informal settlers. There may be a combination of such persons involved
in an informal settlement and relations and transactions between such persons are all part of the
informal system of tenure.
4.15         Keeping these complexities and pluralities in mind, it is nonetheless possible to
make a broad distinction between two sorts of informality: that which arises when lawful tenure
under the official formal regulatory system is not practiced and that which arises when tenure
does not comply with the official formal regulatory system. We will focus here on the former.
4.16         Informality through Tenure Not Lawful under the Official System. A further
distinction may be made in this type of informality between (a) tenure obtained in disregard of
3. For other information conceming these middlepersons, see Payne, 1989 and Serageldin, 1990.



41
any system of tenure relations (an invasion of land), (b) tenure considered lawful by one system
of law (i.e., customary or Islamic law) but unlawful under another system or not recognized by
the official system, and (c) tenure obtained through processes that the informal system recognizes
as sufficient to give valid possession or even ownership but that the official system does not
recognize as creating any such interests. Illustrations of the latter include sales of land carried
through in accordance with standard informal procedures but the land cannot be sold or
developed for urban purposes (as is the case with the ejido land in Mexico), or official
permission is needed before the land can be transferred (as in Zambia under the Land
[Conversion of Titles] Act 1975,) or the sale takes place outside the official system for
transactions in registered land, which the land is officially deemed to be (as in Jamaica, where
the Registration of Titles Act 1889 applies to all land in the country).
4.17       The best-known examples of complete illegality are the land invasions that have
occurred in several Latin American countries. Despite the illegality of such invasions, it would
be a mistake to assume that they are without order or that some kind of system for conducting
tenure transactions and resolving disputes does not quickly develop. As the invasions in
Venezuela illustrate, informal settlements do not exist in a Hobbesian state of nature. First, some
system of ordering interpersonal relations concerned with tenurial issues and other matters
quickly comes into being. Second, the institutions involved in such a system come from both
inside and outside the informal settlement-those outside the settlement being part of the official
formal system of governance. In practice, they may be local government institutions (as in the
Caracas example, and as in the land-sharing operations in Bangkok); party officials (as in the
informal settlements in Lusaka and Dar es Salaam and in many Indian cities); organizations of
lawyers, either official ones (as in Caracas), quasi-official ones like the legal aid society formally
registered in accordance with governmental regulations (such as the Legal Advice Center in
Nairobi), or unofficial groups of lawyers willing to give their time free or for a fee to persons
within the informal settlements (as in Bangalore); NGOs; or in areas where customary law
applies, those with authority over land and people within the customary system (as in Douala,
Bamako, and Accra). Third, although there may be some reference to formal legal terminology,
concepts, or practices within the informal systems, develop and operate in an eclectic and
consumer-orientated way; they aim to satisfy their clientele, keep the peace and uphold claims
and interests to land and housing. Fourth, assuming that some official involvement in ordering
informal tenure relations betoken official tolerance of the informal settlement, a fair degree of
security of tenure may be obtained from external forces-such as eviction or demolition. Even
security of tenure from internal forces-landlords-may be strengthened by the existence of
official involvement. With respect to absolute illegality, there may be a difference between
occupation of privately owned land and occupation of publicly owned land. The Venezuelan
example makes that distinction and emphasizes that the authorizations, issued by the junta
communal, to occupy a plot of land are relevant only in dealing with others who live in the
barrio. Similarly, in Thailand, unlawful occupation of privately owned land is likely to be
challenged by the landowner, even if, with the intermediation of official bodies, the ultimate
solution is land sharing, which confers considerable security of tenure on the erstwhile illegal



42
Box 42 Invasions of Urban Land: The Case of Venezuela
The great majority of the dwellings in a barrio in Venezuela have been built on land owned by somebody else
since barrios are often the result of squatting.The title to the dwellings and the title deeds of the land on which they are
built were vested in the same person in only 28.2 percent of the cases investigated and whereas 80.7 percent of the
respondents said that they, their wives, or their relatives owned the dwelling, only 21.6 percent owned the land. Official
law dealing with this situation is still based on traditional European law as set out in the Civil Code of 1804 under which
the landowner becomes the owner of whatever is built on the land. However, the reality being that occupation is the result
of a well-planned and organized invasion in which the occupiers are prepared to resist eviction by force, "the landowner
faces difficulties in actually achieving the advantageous position which formal legal regulations award him ... the law
puts the landowner in a very advantageous position while simultaneously the bodies charged with the duty of setting it
in motion render it ineffective." At the same time, in order to protect the occupants of barrios from exploitation, the
official law forbids the renting or seling of ranches-houses in barrios-thereby rendering the most important possession
of the occupants nonnegotiable in the markets. Thus if we keep to the letter of the law, the position of the builder or
owner of a rancho is an insecure one: he cannot carry out any legal transactions involving the rancho and, since he does
not hold any legally valid title to the dwelling, there is no machinery to which he can resort to prevent anyone depriving
him of it. But barrios are not a legal jungle. Research by Karst and others have "pointed to the creation of a spontaneous
law . . . which is the result of the social situation itself brought about by the formation of barrios and the influence of
formal law with which inhabitants of the barrio have many contacts. The barrio 'junta,' a body having no official
representative standing . . takes ... the principal role in resolving disputes and its method of creating and applying the
law is similar to that of a judge in common law." In addition, official local bodies are involved in settling disputes;
indeed, even Karst's own figures show that more than three times as many people in a barrio would go to an official body
as would go to a barrio junta if there was a dispute over their dwelling. The lowest official local body is the junta
communal, and research has indicated that while such juntas have no specific official role in such matters, their "most
important activity is in actions aimed at avoiding conflicts breaking out, or at least to set up machinery to enable itself
to solve any conflict that does break out or put it on the path to resolution." In legal procedures associated with formal
law, these activities would correspond to the checking and supervision of documents drawn up by lawyers. Of these
activities, the issuing of "authorizations" appeared to be the most common. These covered land occupation, rancho
occupation, and nuisances to neighbors. There appeared to be no fixed rules governing the juntas' decisions. Another
body involved in dispute settlement is the Seccion de Asistencia Juridica de la Sindicatura Municipal (the Legal Aid
Section of the legal division of the Municipal Council). Lawyers from this office act as mediators and conciliators. Being
a lawyer from an official organization, his/her opinions carry great weight; so that while the records indicate that solutions
to disputes are reached through agreement between the parties, in reality "there is some element of coercion in the
decision." Cases involved property relations (squatting, occupation of dwellings, nuisance, rights of way) and contractual
relations (renting, buying and selling, gifts).
Some general points arise out of what is described here. First, "it is possible to speak of an informal official
system of regulations in the barrios. We use the term 'official' because those who run it and who prevent and resolve
conflicts, are public servants.... We use the term 'informal' to contrast it with the formal law which is easy to identify."
Second, the criteria for decision-making are by no means clear. Juntas communals appear to use political factors-support
for a particular party, e.g. With respect to criteria used by the Legal Aid Section "while continuing to use legal terms,
the lawyers appear to have been obliged by the situation to create solutions that are adapted to the needs of life in the
barrios and to the particular circumstances in which the parties to the conflict find themselves." Third, "the scanty
legislation (that is, official legislation dealing with barrios) has effectively avoided commercial speculation in dweUings
in barrios.. . . Moreover the informal systems have avoided the mountainous and cumbersome paperwork that surrounds
conveyancing in commercial and bureaucratic spheres. If the high cost and the slow pace of the formal system of
preventing and resolving conflicts is considered, the system as it operates has solved many of the basic problems connected
with dwellings, including security of tenure and ease of conveyancing."
Source: Perez-Perdomo and Pedro Nikken, with Elizabeth Law (1980).



43
occupiers. In many countries, it is not possible to ignore or overlook constitutionally based
protection of private property. To deny a private landowner a remedy to evict squatters would
be, in effect, to acquire compulsorily his/her property without compensation for the benefit of
other private persons. As noted in the Venezuelan case study, the state may be prepared to
acquire compulsorily the squatted land, or the landowner may be prevailed upon by political
pressure to come to some arrangement with the squatters, but these approaches cannot be relied
upon, and therefore an element of insecurity remains. Second, insecurity can be a problem even
on publicly owned land. Illegal occupation of land earmarked for a prestigious sports stadium in
Accra was summarily ended by the authorities; similarly, the demolition of some informal
settlements in Nairobi affected those on public land. Public land earmarked for some specific
project for which funds have been allocated and that is ready for implementation is highly likely
to be cleared of informal settlements. The difference between this situation and private land is
that the public authorities may be more inclined to provide alternative accommodation for those
evicted from public land.
4.18        At the least, official tolerance of informal settlements is the vital sine qua non of
the development of internal processes, structures, and institutions that between them provide for
a recognizable system of land tenure. This tolerance may be absent for a variety of reasons, all
of which will need to be addressed in any policy attempting to regularize or integrate formal and
informal systems.
4.19       Do these generalizations indicate a way forward, an approach to issues of tenure in
informal settlements? Can prescriptions be based on them? We think the answer is yes. What the
generalizations show is that informal settlements are likely to be or may grow into ordered
communities with institutions and instruments at least of a quasi-legal nature available to protect
and secure the interests of community members. Furthermore, tenure matters are in many cases
handled through contacts and links between institutions and people within the informal
settlements and institutions in the formal official system of governance. In sum, informal
settlements, despite their formal tenurial illegality, are already a part of the urban polity and
society. Thus it seems logical to integrate the two systems, formal and informal, in a way that
will preserve the simplicity and user-friendliness of the informal system yet provide a sufficiently
authoritative declaration or backing of existing tenure arrangements within the informal
settlements so that security is enhanced, transactions are possible, and credit for house
improvement or purchase becomes easier and cheaper to obtain.
A Third Set of Tenure Systems: The Survival of Customary Systems
4.20        Although noncustomary informal systems of tenure are not officially recognized,
customary systems of tenure can claim a legitimacy that other informal systems cannot. Just as
there are many shades of informality, customary tenure varies greatly in urban situations, three
types being of particular note. First, the peri-urban case arises when the town extends outward
beyond its official boundaries onto land officially subject to customary law. Second, an urban
area may have a customary enclave consisting of a group of people from the same community
living in one area in town, and their interrelations including tenurial relations, are regulated by



44
customary law. This is the situation in some parts of Port Moresby. A variant of this occurs
where, although statute law has replaced customary law as the law governing tenure in urban
areas, many people still abide by the laws of customary tenure. This is the situation in Jakarta,
where although officially abolished and replaced by the basic Agrarian law, Adat law still holds
sway in many areas. According to a recent study, persons holding land under customary law that
gives the holder of a right "a perpetual and complete right of ownership but one which has not
been registered and certified by the National Land Agency" represent about one-third of all
residential landowners (Hoffman, 1990). Third, customary law may play a role in transactions
affecting people's rights to land under the official system and may therefore lead to a mixed
formal-informal arrangement.
4.21       Examples of this third arrangement may be found in Ghana and Nigeria. A family
has to agree to a sale of land to be carried out in the formal system; a sale without such
agreement will create instability in tenure relations, which may continue for years and make it
difficult to determine the position of the land and what system it comes under. An important
traditional ruler, such as the Asantehene in Kumasi, has to be involved in land allocations that
are determined by a mixture of traditional and statutory criteria. In Tanzania, on the other hand,
land subject to customary law on the peri-urban fringe of Dar es Salaam is bought and sold
without the tites being recorded. The phenomenon of customary tenure combined with urban
land tenure has met with a variety of official responses. Some countries have attempted to
legislate the problem out of existence via land nationalization. But nationalization has not
eliminated customary tenure, in part because centralized systems of land allocation tend to be
inefficient. If land cannot be obtained through the official system, then an unofficial system will
be used. Those who claim to have rights in the land will be approached and will sell the land.
4.22       Other countries-Ghana is a good example-have tried to incorporate the customary
system into the official system. Ghana officially recognizes two categories of customary land,
vested land and stool land. Vested land is stool land that has been vested in the president as
trustee, the beneficiary being the indigenous community on the land. Vested land of this kind is
managed by the Lands Commission. Stool land is vested in and managed by customary allodial
title holders but a transaction in stool lands "shall not pass an interest in or right over any stool
land unless it was executed with the consent of the Lands Commission" (PNDC law 42, sec.
47).4 The same law sets out the proportion of money received from a sale or lease of stool land
that goes to the stool, that is, to the chief and to other agencies. Although the system appears
rational on paper, it does not work well in practice. Chiefs require unofficial payments (drink
money) for their services in land transactions. In Accra, constant disputes arise over who is
entitled to receive this money and the boundaries of land being allocated; the Lands Commission
is too centralized and takes too long to approve transactions. The system is not geared to cope
with the allocation of small plots to the urban poor.
4. Allodial: Opposite of feudal; pertaining to an allodiun i.e., land not held of any lord or superior.



45
4.23       The third approach is basically to do nothing while perhaps deploring the system
verbally. Chiefs or other traditional landholders allocate land for urban purposes as they see fit,
paying as much attention to the formal system of plans, title registration, surveys, and
infrastructure provision as they see fit. As a result, ill-planned, unsanitary developments have
sprung up on the outskirts of many towns and officials or local authorities have been unable or
unwilling to do anything about the situation. This approach tends to occur in those countries
where, whatever the formal constitutional or legal position, chiefs still exercise considerable
political power.
4.24       Customary tenure systems in urban areas are fraught with problems in part because
of the general ambivalence toward customary law and traditional practices. Should they be swept
away as anachronistic instruments or considered authentic expressions of cultural inheritance?
Only Botswana has attempted to follow the example of Indonesia's agrarian law, which tried to
establish a statutory system of land law firly grounded in traditional principles. That law is still
not universally followed in practice, but the approach is surely a sound one.
4.25       The role of customary landholders (chiefs) has also proved troublesome. In some
countries chiefs are still part of the official government and can seemingly play a role in land
management. In other countries, they have no official position so their land activities fall outside
the state system. In both cases, many chiefs retain a traditional "social" approach to land rather
than a more market-oriented approach. Thus, quite apart from the wider political question of the
role of chiefs in modem governance, the differing approaches to land are a potential source of
conflict-some consider it a source of political power or a resource for a particular social group
only, whereas others see it as an economic asset of national interest, to be subjected to market
forces. Where chiefs still play an official or a recognized role in urban land management, they
must be provided with some benefit or compensation for giving up their political role in the
process. If the political, financial, or other benefits from operating outside the formal system are
greater than those obtained from operating inside, chiefs will continue to operate outside and
informal settlements will continue to take place customary land without regard to the official
system. Even where traditional land right holders sfill exercise power or influence over land
management unofficially, the question of how to handle the matter should be approached from
the perspective of those who have obtained the land and are living on it, rather than be treated
as a challenge or an affront to the official system.
4.26       If customary land tenure is dealt with in a positive way, what, in the past, have been
considered disadvantages may be treated as indications of the need for integration with the
official system. The communal element in customary land tenure could be developed into
cooperative ownership and joint tenancies of urban land; community mortgages along the lines
of those developed in the Philippines could then be used to fmance the building and improvement
of housing; and the multiplicity of interests that can exist in customary land tenure could form
the basis for ensuring traditional right holders some residual rights in the land and for ensuring
that women have certain rights in urban land. The existing structure for regulating
decisionmaking pertaining to customary land could be harnessed to perform the same tasks in
urban areas. The customary system could be used to keep a register of who is on which plot of



46
land; to enforce minimal and basic land-use guidelines to ensure that public health requirements
are met and that land for essential utilities and services is reserved; and to settle minor disputes
on boundary and nuisance issues. In this way, customary authorities could become the bottom
layer in the hierarchy of an urban authority, but would derive legitimacy from below as well as
from above. The first necessary step would be to accept and work with customary tenure and
authorities before more formally regularizing tenure to facilitate access to credit and security of
tenure.
Policy Issues Related to Tenure
Freehold versus Leasehold
4.27       The debate on the respective merits of freehold versus leasehold tenure is not
confined to developing countries. Nor indeed is it a recent debate; it stretches back to the
nineteenth century in England, it has gone on in Australia since the colonization of that continent
in the nineteenth century, and it sparked an early clash between settlers and the colonial
authorities in Kenya.
4.28       To all intents and purposes, freehold tenure is absolute ownership of the land. No
land-right holder is superior to the freeholder. A freehold is of indefinite duration and is
inheritable. Leasehold tenure, in contrast, involves a landlord and in most cases the tenure is of
fixed duration. According to Simpson (1978),
A lease may be defined as a contract granting the exclusive right to possession of land for a
fixed or determinable period shorter in duration than the interest of the person making the
grant. The interest created by the grant is formally called a "term of years" but is more usually
referred to as a "lease" or a "leasehold interest." The grantor is called the "lessor" or
"landlord," and the grantee the "lessee" or "tenant." All leases are necessarily derived directly
or indirectly from the freehold. Thus A, the freeholder, may grant a lease to B for any period
of years he thinks fit. B may then grant a lease to C for any period ending before the
expiration of his own term. B's lease is then known as the "head lease," and C's as an
"underlease" or "sublease." C in his turn may grant a "subunderlease" to D for a period less
than his own term, and so on without limit, provided that the term of each lease is always
shorter than the term out of which it is granted. The interest which remains vested in the
landlord after a lease has been granted is termed a "freehold reversion" if the landlord is the
freeholder, and a "leasehold reversion" if he is himself a lessee. Perpetual leases, after the
fashion of the emphyteusis of Roman law, are unknown to strict English law (though they are
allowed, for example, in Australia), but there is no legal limit to the term of years for which
a lease may be granted, and therefore no technical difficulty in making it virtually perpetual.
Obviously a very wide variation is possible in the duration and importance of leasehold
interests. Leases for 999 years are common.
4.29       Note, too, that while English legal terminology has been used to describe the lease,
other systems of land tenure recognize a division of rights in land that resemble a lease, such as



47
the hat guna usaha of the Basic Agrarian Law of Indonesia, the strangers usufruct of certain
systems of customary law in Ghana, and the Ijarah or Ariyah of Islamic law.
4.30       Essentially, the crux of the legal difference between freehold and leasehold is that
the freeholder is bound by the laws of the land and nothing else, whereas the leaseholder is
bound, in addition, by the terms of the lease laid down by the landlord. The leaseholder is then
less free and unrestricted in his or her use of land than is the freeholder.
4.31       This is the formal legal position, and much debate has been conducted on that
somewhat unreal basis. For instance, the supposed fundamental issue of more or less "freedom"
is overdrawn. Few if any states allow the freeholder freedom to do what he or she likes with the
land; few if any states allow the landlord unrestricted power to impose whatever terms on a lease
he or she chooses. The issue is not freedom versus restriction but the degree and nature of
restrictions imposed on land tenure and land use and the best method of implementing such
restrictions. Again, it is sometimes argued that leaseholds are unpopular with property developers
and financiers because of the inherent risks of terms coming to an end and landlords, particularly
public sector landlords, interfering. But, as noted above, a lease can last for as long as 999 years,
which is ample security for a loan (in Singapore, Hong Kong, Canberra, and Lilongwe they are
for shorter terms yet do not appear to inhibit property development). Moreover, the risks of
public sector interference in development depend far more on the nature of the public sector and
governmental attitudes to private land development than on whether development is based on
leasehold or freehold tenure. Where leaseholds are for long periods, or become very common,
the distinction between them and freeholds becomes less clear. When a significant proportion of
the residents of an urban area have the municipality as their landlord, the city will almost surely
be subject to political pressures that may distort the theoretical economic and functional
advantages of its being a landlord. It is true, however, that if leaseholds become a common forn
of tenure, amendments to banking legislation may be necessary to define clearly the conditions
under which financial institutions may accept leaseholds as legal collateral.
4.32       Another common criticism of leasehold tenure in developing countries is that where
the freeholder is the state or a public body, it requires scarce resources of skilled manpower to
manage the leases, whereas no such resources are needed if freehold is the norm: the land is
allocated and that is the end of it. This argument, too, seems misguided. If it is possible to
register titles to land, then the same officials are needed to register leasehold as freehold titles.
If some form of annual or more frequent rent has to be paid, so too, more than likely, will there
be some form of payment by installments for a freehold; both will require officials to process and
record payments. It was pointed out several years ago that land use can be controlled more
efficiently and at less cost via conditions on a title (i.e., conditional freehold or leaseholds) than
via statutory planning and development procedures (Willcox).
4.33       What, then, are the substantive arguments for freehold tenure, since it appears to
elicit strong cultural support in many parts of the world? First, whatever the rational arguments
may be, the general feeling is that leaseholding is less safe, less free. Second, where the
freeholder is the state, there is every likelihood of becoming entangled in a slow, inefficient



48
bureaucracy. Third, the question from a personal point of view is what happens at the end of a
lease: Will it be renewed? On what terms? What redress does one have? If the tenant dies, can
the spouse or children remain on the land? Fourth, since all buildings and other improvements
to the land revert to the landlord at the end of a lease, there is a strong tendency to disinvest (that
is, to let buildings deteriorate) in the final years of any leasehold. Fifth, are the problems related
to landlord-tenant relations?
4.34       What are the arguments for leasehold as the basis for land development? If land
development is to be planned and controlled, it is preferable to do it from a position of ultimate
owner than from a position of statutory regulator. With respect to building or long leases, regular
rent review clauses can ensure that the financial benefits of capital appreciation can be shared
between the developer/tenant and the public sector/landlord. This, too, is a better way of
managing urban land than trying to recoup betterment via taxes, levies, and charges. Furthermore,
redevelopment of land can proceed in a coherent planned manner as leases fall in rather than in
a haphazard way that depends on the fortuitous circumstances of freeholds coming onto the
market or using compulsory acquisition powers. In addition, controls on transactions in land (e.g.,
high-income speculative purchases in low-income housing schemes) can be better operated via
conditions in a lease than via statutory control boards.
4.35       As already mentioned, the leasehold system has parallels in customary land tenure.
In those countries where the customary approach is still an important mode of tenure, use of the
lease may be the key to reconciling customary concerns and rights with a more market-oriented
system. A close parallel is the development of agricultural land owned by traditional landowners
for industrial, mining, and residential purposes in England in the nineteenth century. This land
was all on leasehold, and to this day the freehold of large parts of central London and other cities
are still owned by the descendants of these landowners; this has not prevented the development
and redevelopment of the sites. The leasehold concept might also be a way around the problems
of informal settlements developed on privately owned land, without the owner's permission-the
classic squatter settlements. Rather than going with the two choices of evicting squatters or
buying out the landowner, compulsorily if need be, policymakers could seek a solution based on
using the lease, with the public authorities and the settlers each paying a proportion of rent to
the landowner so that he or she could obtain a fair return from the land, yet no one would be
dispossessed.
4.36       "Feelings" about tenure are important, and governments ignore them at their peril.
In Kenya, for instance, the rural land reform program of the 1950s and 1960s was based on the
conversion of customary holdings to freehold; it would now be quite impossible to change policy
and move to leaseholds. Where feelings are strong about freehold, then it would be best to stay
with it or move to it; where feelings appear neutral, there is some merit in basing a modern land
tenure system on leasehold, with the state holding the freehold reversion and exercising
management powers via that interest in the land. Significantly, the People's Republic of China
is reforming its urban land tenure system replacing thereby "socialist freehold" with arrangements
which resemble a market oriented leasehold system. It is vital, however, if that choice is made,
to develop efficient systems of urban leasehold management that assist the operation of land



49
Box 43 Urban Land Tenure Reform in the People's Republic of China
Under the prior system of strict public ownership, land was clearly not treated as a commodity; it could not be
sold, leased, mortgaged or inherited. Instead, land in urban areas was bureaucratically distributed through a two-step
administrative allocation process (xingzherg huabo), emulating the standard form of Soviet land utilization. In the first
step, the economic planning authorities approved the enterprise and in the second, the local land administration
bureaus appropriated the required land for the users. Through this process, state agencies, social organizations, and
public and private enterprises were able to obtain the right to use land free of charge for indefinite periods of time.
Thus, except for the fact that these rights were inalienable, it seems that the user received rights of virtual ownership
while the state retained only nominal title.
This system of urban land allocation, modeled after the Soviet system, suffered from the shortcomings typical
of a non-market allocation process. Gratuitous and perpetual land use, with its lack of cost discipline, tended to foster
waste, inefficiency, and rigidity. Because users could obtain land free of cost, they demanded, and were frequently
granted, far more land than they needed.
The new assignable land use rights system is modeled after that of Hong Kong, whereby the state retains
ownership of the land and leases out the land use rights. The process used to accomplish this is the reverse of that
under the intermediate system of "payment for land use allocation" (tudi piyong). Under that system, the prospective
user initiated the process and the approval of the investment project preceded the allocation of the land. Under the
new system, however, the state first parcels land to be developed and prepares a draft granting contract accordingly;
detailed construction plans are approved afterward. The draft contract is prepared in accordance with state economic
plans and municipal development requirements. It is then offered to prospective developers and users either by
negotiations, by invitation to tender, or by open auction, depending on the circumstances.
As in Hong Kong, the government imposes terms and conditions as covenants on the lessee and the assignee
in order to effect land development according to its land use planning. The lessee may still mortgage or otherwise
assign the land.
The major breakthrough in China's urban land reform is the development of assignable land use rights,
facilitating sale, exchange, mortgage, gifts and inheritance. Al land regulations, however, place some restrictions on
assignment.
The advantages of this system compared with the old are manifest rigidity, waste and inefficiency have been
replaced with flexibility, prudence and productivity. Assignability makes possible the voluntary transfer of land to
more productive uses. The clearer definition and increased protection of proprietary interests in land wil enable
planning and encourage long term investment by land users while the ability to mortgage these interests will facilitate
the growth of the capital markets needed to fund such investments.
The transition from the traditional method of state bureaucratic land management to a system in which land
use rights trade in a commodity market was as innovative ideologically as it is economically. The key to making the
development of a commodity market ideologically consistent with socialist concepts of public ownership was the
recent theoretical discovery that "use and management" could be separated from "ownership."
From this point of view, the emerging urban land system in China is not fundamentally different from what is
common in the West: land will be managed and operated on a decentralized basis by more or less autonomous
individuals and corporate economic agents, subject to the planning requirements of the state. What distinguishes the
two systems is their differing points of departure. In the West, where land has long been privately owned, the state
exerts control by regulation; in China, where the point of departure is state ownership, similar results are achieved in a
more proprietary manner-through the use of leasing contracts.
Tung-Pi Chen, Emerging Real Estates Markets in Urban China (1990)



50
markets, deliver land to the urban poor with a minimum of bureaucracy, and ensure a fair return
to the public exchequer from rents and lease payments. Such systems have worked in Singapore
and Hong Kong; that such systems need to be developed is evident in far too many developing
countries that have opted for the leasehold system, yet manage that system in an inefficient and
inequitable way.
4.37       Freehold versus leasehold is not an all or nothing decision. "Selective" leaseholds
are an alternative policy. Possibly, a distinction can be made between leaseholds on (a) industrial
and commercial sites, and (b) sites of special importance such as the old central area, historical
districts, areas around major monuments, and transportation gateways, as opposed to leaseholds
on all property.
Landlord-Tenant Relations
4.38       It is now widely recognized that the majority of the residents in informal settlements
and in many sites and services and upgraded areas are tenants of private landlords. Paradoxically,
it is the growing acceptance of informal settlements by governments, the considerable amount
of public investment from aid sources that has gone into such settlements, and the increasing
integration of these settlements within the formal
systems of tenure that have contributed to this fact. As settlements become more accepted, private
capital invested in the settlements will clearly become secure. As more private capital is invested,
so other sectors and classes in the community besides those residing in the settlements will
develop an interest in the maintenance and upgrading of the settlements, as opposed to their
demolition. Another important factor is the rate of return on private capital invested in low-
income residential accommodation. Where there is great pressure for such housing, where too
little land is being made available for low-income groups, rates of return are likely to be high,
for there will be little alternative to the accommodation offered by landlords, who will have the
resources to obtain what land there is.
4.39       This input of private capital into low-income urban land development raises several
issues. On the one hand, it may look as though such an input will increase the amount of
accomnmodation available to low-income groups, so the management of urban land should
facilitate the growth of a market in private rented accommodation. If, however, the growth of
rented accommodation has been brought about by the purchase of property originally allocated
on an owner-occupier basis to individual families (as has occurred in Dandora in Nairobi), or by
the acquisition of plots in developments originally set aside for owner-occupation (as in
Traditional Housing Areas (THA), in Lilongwe), or by the purchase of houses in informal
settlements, then it may well be that any overall growth in available accommodation will only
be obtained by putting more people into the property so acquired-that is, by reducing the space
made available to persons offered accommodation.
4.40       This leads to the broader question of the extent to which the market for rented
accommodation should be subject to some sort of regulation, and if so, what kind, and what
institutions should be used to implement regulation? Those who are opposed to any form of



51
regulation argue that there is a need to attract private capital into low-income urban land
development and to ensure the economic viability of low-income housing schemes funded by
public funds. Rented accommodation can meet both those needs, and nothing should be done to
hinder its development. Note, too, that regulations don't work; they increase costs and bring no
benefits to anyone. Exploitation will not be stopped by regulation but by increasing the supply
of developable urban land and by expanding the facilities for obtaining title and credit.
4.41       It is necessary to be clear about what may be covered by the notion of regulating
rented accommodation. Three broad areas are usually covered; rent, security of tenure, and
quality of accommodation. Studies of formal rent control in developing countries are not, on the
whole, sanguine as to the benefits of such regimes, which in any event do not generally reach
down to informal settlements. A better case for regulation can be made on equity grounds in the
areas of security of tenure and quality of accommodation, and in the latter area, on public health
grounds as well. Unfortunately, for various reasons, the reach of such regulations is unlikely to
be any more effective than the reach of rent control. First, there are a variety of informal and
formal landlord-tenant relationships in both the formal and informal sector. In some of these,
customary factors may play a role in determining the beginning and the end of a relationship; in
others, political affiliations may be important. Furthermore, large-scale landlordism differs
significantly from the small-scale tenancies characteristic of most African and Latin American
cities. Regulation of the former, however difficult, may be more justifiable than regulation of the
latter. In any event, it would be extremely difficult to design and operate a regulatory system for
such a melange of relationships. Second, those who have to design and operate a regulatory
system may be those against whom such a system would have to operate: their enthusiasm for
an effective system is accordingly muted. Third, even if the first two hurdles can be overcome,
an effective formal regulatory system would greatly consume resources that could probably be
better spent on more positive activities to increase the supply of urban land.
4.42       Does this mean that no form of regulation can be contemplated and that we must
rely on the chancy results of market forces or political patronage to ensure fair play for tenants?
A comment on that "solution" comes from a study of squatter landlords in Nairobi: "It is in the
interests of the ruling elite to continue to prevent easy access to land by the urban poor because
controlling access to land as a scarce resource provides a source of cash income and political
support" (Lee-Smith, 1990).
4.43       This statement applies not just to Nairobi. It suggests that market forces do not
work without manipulation from one source; some countervailing force via regulation may
therefore be both justifiable and necessary.
4.44       The appropriate solution in this area was mentioned earlier in the chapter: build on
what exists; develop local forms of regulation rather than try to impose, however well-meaning,
institutions from the center that are modeled on English, French, or other institutions. Informal
settlements have bodies that can help settle disputes, including landlord-tenant disputes. Such
bodies could be encouraged or empowered to extend their remit in this area. It has been
suggested that neighborhood councils could play a role in setting rents (Malpezzi, quoted in Amis



52
and Lloyd, 1990). Urging that legislation defining the rights of tenants vis a vis landlords should
be considered in the cities of developing countries, Doebele (1988) argues, "What is needed is
legislation that can be activated by the aggrieved tenant at wiUl. In other words, those who wish
to exchange lower standards for less rent should be able to do so by foregoing the right of
complaint. Those who are being unfairly treated should have the possibility of recourse."
4.45       Thus, systems of regulating the landlord-tenant relationship should be geared to the
type of landlord-tenant relations that exist; on the one hand, small tenancies may need no more
than a local reference point for ironing out small disputes; large-scale commercial landlordism,
on the other hand, may need more formal centralized regulation. In the final analysis, proponents
of regulation agree with proponents of market solutions that "the best form of rent control is to
facilitate access to home-ownership. This relieves the pressure on the rental market and
automatically leads to lower rents" (Edwards, in Amis and Lloyd, 1990) and "to a considerable
degree the market may be able to provide adequate protection and tends to be much more
sensitive to trade offs of standards versus price than legislation" (Doebele).
Restrictions on Transactions
4.46       Many countries impose various restrictions on transactions in land. Restrictions on
the sale of Malay reservation land to non-Malays has parallels in many African countries with
restrictions on the sale of land owned by Africans to non-Africans, and similarly in Fiji, which
has a considerable body of law and administration governing land transactions between
indigenous and nonindigenous people. Aside from controls on land sales between different racial
groups, many countries restrict or prevent noncitizens from purchasing land.
4.47       A second form of restriction applies to the amount of land a person may own, which
in Nigeria is limited to half a hectare of urban land. In India, under the Urban Land (Ceiling and
Regulation) Act of 1976, owners are restricted to vacant landholdings of 500 square meters in
Bombay, Calcutta, Delhi, and Madras; to 1,000 square meters in other cities with a population
of one million or more; and up to 2,000 square meters in towns with a population of 200,000 to
500,000. Landholdings in excess of those amounts are subject to acquisition by the state at a
price less than the market price.
4.48       Third, the price of the land may be examined to determine if it is a fair price; the
terms and conditions of the sale may be examined or, indeed, may be determined by a public
authority. There may be restrictions on when a sale may take place; in a site and service scheme,
settlers may be forbidden to sell their plots for a certain number of years or be required to sell
them only to those on a waiting list. These restrictions may be applicable in both informal and
formal settlements, especially those on land governed by customary tenure.
4.49       These restrictions stem from a variety of motives. Restrictions designed to protect
the economically weak or unsophisticated members of the population from the economically
strong or sophisticated are motivated in part by the desire for equity,as are those designed to limit



53
the amount of urban land any one person may own. More general restrictions are often based on
a suspicion of the market.
4.50        Although such motives are in many cases understandable and even admirable, there
is a good deal of evidence that the restrictions do not work. Either they are evaded, as in Nigeria,
or the effort to enforce them succeeds not in making more land or cheaper land available for
development but instead causes the reverse to occur: the restrictions force prices higher for less
land (as in India), or they ultimately begin to penalize those they were designed to protect (as
in the case of Malay reservation land), or attempts to enforce restrictions are quietly abandoned
in the face of market pressures (as in several sites and services schemes, e.g., in Dandora in
Nairobi).
4.51       Should all such restrictions, then, be swept away as being incompatible with a free
market in land? Should the aim of all reforms be to make all urban land freely available to the
highest bidder, and, conversely, should economically weaker sections of the population be forced
to live in the least salubrious areas or those furthest from the city center, always liable to be
forced out by market forces even after having upgraded where they are living through their own
efforts. Is there not a case for deliberately retaining some restrictions or even informal settlements
with no security of tenure so that the urban poor are protected from market forces, which would
otherwise operate against their interests? In the low-income urban developments in Lusaka, for
example, restrictions on sales do seem to have permitted low-income groups to continue living
in and to buy into the upgraded areas (Rakodi 1987); and the Caracas case study discussed earlier
suggests that continued informality discouraged speculative buying of land in the settlements.
4.52       Although there can be no single universal answer to these questions, some general
points may be made. Where all the evidence points to widespread evasion of restrictions or a
failure of restrictions to achieve their stated purposes, serious consideration should be given to
drastically overhauling or even abolishing them. This is not a recommendation that principles of
equity be abandoned in connection with urban land management, but only that, since the chosen
instruments are not delivering equity, consideration needs to be given to new instruments or new
policies to achieve that desired goal. Financial instruments, for instance, may be much more
effective in preventing land hoarding and speculation than ceiling legislation. A planned and rapid
release of public lands in urban areas in realistically small lots is a more positive way to provide
land equitably than trying to prevent certain classes of people from buying certain types of land.
Second, Brookfield et al. (1991) pointed out in their study of Malay, restrictions need to be kept
under constant review for even where they are being complied with, they may no longer be
serving their original purpose and indeed may be hurting those they were designed to protect.
Third, where for reasons of national policy, restrictions are to remain, their implementation must
be managed efficiently; an overcentralized process such as exists in Ghana and Zambia invites
evasion, or alternatively increases land prices through delay.



54
Techniques of Tenure Reform
4.53       Two possible models of reform are of interest here: (a) to develop a code of land
law, which, like the Malaysian National Land Code or the land law reforms in Trinidad and
Tobago, does attempt to cover the whole field of basic land relations between citizens, or (b) to
move forward on a more piecemeal basis and even to develop, as Zambia did, a separate system
of statutory land law as one part of a program of integrating informal settlements into the formal
system. There are arguments for and against both approaches. A uniform code simplifies land
management and facilitates the market for land; whenever you are, whoever you are, you use the
same procedures, the same forms, visit familiar-looking offices, and achieve the same result. The
system is easier to follow and to monitor.
4.54        Or one could argue that society might not be ready for such a uniform code; some
areas or groups of people might find such a code too sudden a change from existing patterns of
life. Even in Malaysia, for instance, the National Land Code does not apply in Sabah and
Sarawak. A uniform national code that is not observed by many people will not facilitate the
operation of a market for land or land management. Where the cost of introducing the code is
high or land- related professions are not convinced of its necessity-both reasons given as to why
the land law reforms of Trinidad and Tobago have not been introduced nine years after their
enactment-the case for a code is weakened.
4.55       Certain criteria need to be met before the code approach is adopted; first, those who
operate the land market-both public sector officials and private sector land-related
professionals-have to be convinced of the desirability of the approach and committed to make
it work. Second, the costs and benefits of moving in this direction have to be carefully assessed.
Third, and with particular regard to informal settlements in urban areas, there has to be some
reasonable evidence that such an approach will be functional in such settlements, that is, that
people will begin to order their land relations in accordance with the code.
4.56       This brings us to the alternative approach: a "junior" or simplified system of
statutory land tenure for low-income urban areas that runs alongside the full statutory system.
This would build on existing informal or customary systems and make the transition from the
latter to the formner less abrupt. A simplified system would be more easily managed by a local
authority or even a community organization, and thus aid in the devolution of power from the
center. Finally, a simple system of statutory land tenure could be part of a total package of a
simplified legal regime applying to informal settlements as part of a program of regularization
and integration.
4.57       The arguments against this approach are, first, that multiple systems of land tenure
(and regulatory regimes relating to land and buildings), even if they are statutory, are confusing
to manage and deleterious to the operation of a land market. There are inevitable complications
in land being "transferred" from one system to another; two or more land title registries may
have different information on them and so different degrees of security of tenure; two or more
sets of rules about boundaries and the degree of accuracy of surveys, about specifications and



55
standards for buildings, about the modalities of transactions, will not help people adjust from an
informal to a formal system. Second, formally to accept a system of "lower standards" for the
urban poor is to go backward; the aim of policy is to improve their lot, not to confine them to
a legal ghetto. It is probably better to have one unified system that can be applied in various
ways than multiple systems.
4.58       Arguments against the development of "junior" systems tend to see matters from
an official point of view; those in favor tend to favor the consumer. The criteria to be applied
here are the same as for codes: convince the officials and professionals, assess the costs and
benefits and what would be functional within informal settlements. If the overall objective is
integration, regularization, and the operation of an efficient and equitable land market, it would
be reasonable for the long-term goal to be a national unified system of land tenure backed by
law. The method of achieving that goal will depend upon the circumstances of each country and
the state of land tenure and its management when the overall policy objective is adopted. There
should be no assumption that one approach or the other is the "correct" one. If there is one
guiding principle that should inform the choice of approaches, it is that the approach to be
adopted should be the one most apt to benefit the consumer. In some countries this may mean
offering a choice of systems, in others providing a unified system.
REGISTRATION OF TRANSACTIONS AND TITLES
4.59       Why is land registration important and what functions is it supposed to fulfill in
relation to market operations? What are the costs and benefits of registration? What are the main
problems associated with existing registration or the lack of it? What can be done to improve the
situation?.
What Is Land Registration?
4.60       Land registration is the overall process of recording information about land parcels
for the purposes of land ownership. This information is recorded on official registers of land
transactions and real property rights. They may be solely concerned with private lands, with
public lands, or with both. By recording a land transaction in a registration system open for
inspection, the state gives public notice to the community that a transaction has taken place and
that land rights have been exchanged. In conclusion, one of the primary functions of land
registration is therefore to facilitate the processes of transfer of property rights over land between
parties: the conveyancing process. It serves to make infonnation available to all parties in the
transaction so as to lessen the risks they run in deciding to transact or not. It supports the task
of proving legal title and allows notice to be given of encumbrances on a piece of land. The
secondary function of land registration is to provide information. Many such registrations will
produce cadastral maps that portray the legal parcel and framework of an area. The cadastre as
a public register of the quantity, value, and ownership of land has its roots in antiquity, although
its present form dates from the late eighteenth century. Within Europe, the modern cadastre
serves mostly taxation purposes, while in much of the English-speaking world, the cadastral
activities have been directed at protecting property rights. Within the developing world, the



56
cadastre has bee used to support land settlement and sort out land ownership, since there was
a need for colonial powers to alienate the land from indigenous people. Today, three main
systems for recording rights in land remain:
a.    The Deeds registration system in which the documents of transfer are
recorded. Land documents (bills of sale, mortgages) were recorded or
registered 2,000 years ago, as evidenced in the Bible. In the sixteenth and
seventeenth centuries, copies of transactions were kept in an official office
or a courthouse. This filing system was introduced into the colonies in the
nineteenth century. It became a public record known as a registration of
deeds system.
b.    The Title registration system which shows the evidence of the person's right
to property and in which the land parcel is the focus of the records. In the
nineteenth century, a new system of land registration, known ad registration
of title, was introduced in the United Kingdom and Australia. Under this
system, the state actually declares which people have rights in land for a
particular parcel, and this right is shown on a certificate. "A register of title
is an authoritative record, kept in a public office, of the rights to clearly
defined units of land as vested for the time being in some particular person
or body, and of the limitations, if any, to which these rights are subject"
(Simpson, 1978). The register provides the following information: definition
of the parcel of land, name and address of the owner, and any particulars
affecting the parcel enjoyed by someone else. The register is divided into
three sections: property, proprietorship, and encumbrances. Under most
systems of title registration, the information on the register is guaranteed by
the state so that in the unlikely event of fraud or error, anyone affected will
be compensated. Two different systems of tide registration emerged in the
nineteenth century: the Torrens system (Australian system) and the English
system.
C.    The private conveyancing system: The formal system most common in
developing countries is the registration of deeds. However, most transactions
are not registered and private conveyancing is the norm. About 10 to 20
percent of transactions are registered (e.g., in Ghana, Pakistan, Bangladesh)
with the remaining transactions either formally or informally conveyed, with
or without a person of legal training involved. In the days when communities
were small and people knew their neighbors, an oral declaration and a
symbolic payment were sufficient evidence of the transfer of land. The basic
rules for conveyancing and registration that have evolved in most societies
are that land transactions should be written (though not necessarily in
informal urban areas) and that a witness is needed to testify that a
transaction has taken place between the parties. In some customary and
traditional land administration systems in Africa, there may be a recorder of



57
rights for the clan or the tribe. This notion of publicity has grown into a
witnessed document or deed, a copy of which is lodged with some official
office, which may or may not be open for public inspection.
Why Is Registration Important?
4.61       Registration can stimulate land markets in the following ways:
a.   It can help monitor land markets.
b.   It can facilitate the conveyancing process and subsequently ensure the
transparency of the transactions.
c.   It can make records available for land market operations.
4.62       It is estimated that each year 5 to 10 percent of all private urban land in most
markets (both formal and informal) is traded; this is the equivalent to 10 to 20 percent of GNP.
The transfer of such vast assets requires security in trading and assurance that the actors are
dealing with the registered legal owner of the property.
Costs and Benefits of Registration
Registration: For Whose Benefit?
4.63       Any discussion of land registration must clearly distinguish between the public and
private function of registration. As rightly pointed out by Simpson (1978), "The former relates
to the welfare of the state or community as a whole, the latter to the advantage of the individual
citizen. On one hand, registration may be used by the state as an inventory tool of the national
land resources for fiscal purposes or it can be used to ensure the rights of the owner or occupier
of land and to enable him or her to conduct transactions safely, cheaply and quickly." This is an
important consideration when thinking about improving the registration system. For whose benefit
is land registration being urged? For the benefit of the individual citizen, consideration should
be given to whether other alternatives to the title registration may not be more appropriate under
the circumstances.
Registration, Security of Tenure, and Resolution of Disputes
4.64 Typically, the absence or presence of a title document or the quality of documentation
attesting to landownership constitute the main basis for characterizing property claims as secure
or insecure. How accurate an indicator of security or insecurity is the presence or the absence
of title? Documented titles (1) publicly and officially associate specific pieces of land; (2)
precisely define a property's physical boundaries, thereby reducing potential disputes; and (3)
carry the implicit backing of the state against any challenges to granted property rights (Lemel,
1988). In areas of long-term settlement, underlying respect of each other's boundaries will often



58
prevail; however, programs designing specific boundaries have sometimes stimulated conflicts
among neighbors.
Registration and Revenue-Raising
4.65       Land records for tax purposes date back to ancient times. Historians of ancient
Egypt have shown that as early as 3400 B.C. measures of length were in regular use and that a
cadastral record was in existence by about 3000 B.C.. And of course, the Domesday book in
England compiled 20 years after the Normans had defeated the Saxons at the battle of Hastings
in 1066 is a perfect example of an early comprehensive attempt to set an inventory of national
resources for fiscal purposes. In a sense, it gave birth to the cadastre of today. How does the
cadastre fit in with the registration of deeds and title? The cadastre originated much earlier than
the registration of deeds and was instituted to serve the needs of the state for the purpose of
assessing and collecting revenue, whereas the purpose of registration of deeds was to protect the
interests of landholders. As a result, cadastres may differ from registration in the following
respects:
*     A cadastre is necessarily complete, while the compilation of a deeds register
is sporadic since transactions occur here and there and are recorded as they
happen.
*     A cadastre requires classification and valuation so that the tax can be
assessed, whereas registration of deeds is not concerned with value.
i     Deeds registration is intended to make land dealing public but does not itself
prove ownership (unlike title registration). The original and principal purpose
of the cadastral record is not to prove ownership, but to assess the liability
for tax and determine the responsibility for payment.
4.66       The relationship between registration and revenue raising is not as obvious as it
would seem. On one hand, registration represents an extremely valuable tool on which to
capitalize to set up property taxation; on the other hand, the political liabilities linked to property
taxation are so high that any registration system linked to fiscal objectives has difficulty being
accepted and implemented. Even a property tax generates little revenue in most developing
countries. Property taxes account for an average of only 1.3 percent of total public sector tax
revenues in developing countries, according to the International Monetary Fund's most recent
survey. It typically accounts for less than 20 percent of municipal recurrent revenues in
developing countries (Dillinger, 1991). The low yield of the property tax is the combined result
of inappropriate policy and poor tax administration. In the sequence of property tax
administration, registration has a vital role to play in the discovery stage of this process. Base
maps that could be used to discover and identify property are nonexistent. Data on property
ownership is inaccessible, either because ownership is disputed or because deeds registries are
unwilling or unable to cooperate with taxing authorities. The rapid growth of the city and the
ever-changing informal development make it all the more difficult to administer the property tax.
The standards required of a property tax map are modest. Parcel boundaries need not be mapped
with precision. The standards of accuracy that would apply to a legal demarcation of boundaries



59
are inappropriate to a tax map. A tax map does not constitute recognition of a legal claim to
property ownership. Precise boundaries therefore do not need to be determined on the ground,
nor accurately represented to scale on a map. Registration can provide important support in
updating property information for tax purposes. To monitor changes in the physical characteristics
of the tax base and changes in ownership, all developing countries use a combination of field
surveys and cross-referencing. Cross-referencing is often mandated by regulation. In the
Philippines, surveyors (private or public) are required to provide the taxing authority with copies
of approved subdivision plans within 30 days of their receipt from the Bureau of Lands. When
property is sold, the registrar of deeds is required to provide the taxing authority with a copy of
the deed of sale, and both the purchaser and the seller are required to notify the taxing authority
within 60 days. Tax clearance systems are more effective in the sense that the taxpayer is
required to obtain certfication from the taxing authority before seeking a building permit, a
subdivision approval, or a registration of deed. Such is the case of the tax clearance imposed by
cartorios (deeds registrars) in Brazil as a condition of deed registration.
4.67       Experience with cross-referencing is mixed because many of the changes in the
property tax base fall outside the system of permit and registration. Taxpayers may also be
induced to voluntarily supply information directly to the taxing authority. Where ownership is
subject to dispute, purchasers will register their property with the taxing authority in an attempt
to strengthen their claim. Registration with the taxing authority does not legally constitute
government recognition of a taxpayer's claim, but in the absence of evidence to the contrary it
is often accepted as such by the courts.
Registration and Improved Environment for Investments
4.68       Unregistered private conveyancing conducted in the informal sector constrains the
use of institutional formal housing finance systems. The most favored form of collateral for
securing loans is real estate, yet if documents are not reliable or are unavailable, credit may not
be available or the costs may be much higher. A study of the Thailand titling project (Feder et
al., 1988) concluded from the effects on farm productivity following the provision of security of
land ownership through the issuing of registered title that landowners benefitted in particular from
access to cheaper credit after being able to produce evidence of secure land ownership.
What Hampers the Reform of Registration Systems in Developing Countries?
Institutional Problems
4.69       Many countries do not have enough skilled staff, the various agencies involved are
poorly coordinated, and there is little open debate concerning the scope for privatization.
Skilled staff: The issue of land registration inevitably leads to the question
of land offices. The whole process of land registration tends to be operated
by the public service: the Survey Departnent, the Registrar of Titles, the
Valuation Office. The evidence from many countries indicates that these



60
Box 4.4 Zanzibar
Zanzibar has never had a comprehensive system of land registration, despite various efforts dating back
to 1912 when, for the first time, the government initiated a study of the issue. Land registration on the island
was essentially a system of voluntary deeds registration. It was only when such lands changed hands that
entries would appear in the register, if one of the parties (usually the purchaser) wished to have the transfer
registered. The registrar was not required to make a thorough investigation on the legal position of the vendor
or the root of the title. In many cases, property boundaries were defined with reference to the names of
adjoining owners, and no survey plan was attached to the deeds. The register was maintained under the
Registrar's Office, which also kept other registers, such as those of births, deaths, marriages, companies, and
wills. In 1989, the government of Zanzibar took steps to establish land administration machinery on the
island, by creating the Commission for Lands and Environment with three departments: (a) Department of
Lands, (b) Department of Survey and Urban Planning, and (c) Department of Environment. Three pieces of
legislation designed to facilitate the land registration process were enacted: the Land Survey Act (specifically
designed to facilitate the involvement of private surveyors and to introduce flexibility in survey standards for
title registration), the Land Adjudication Act, and the Registered Land Act. A new land bill was drafted for
enactment in 1991. The new legislation and machinery established a framework for a comprehensive land
registration system through systematic adjudication, survey, and recording.
Among the constraints was the inadequacy of the required relevant skills at all levels of management.
Zanzibar, being a predominantly Islamic society, widely preferred the Islamic way of inheritance, and in some
respects the registration program went against that tradition. Large numbers of uncontrolled settlements in
the urban areas posed an intimidating dilemma with regard to how and where to start; in addition, there were
not enough funds to effectively tackle a problem of such magnitude.
Source: UNCHS (1990).
offices do not have the quantity or quality of staff they need. Huge backlogs
exist in title registration or in surveying of land or in valuation for tax
purposes. Jamaica, Zambia, and Pakistan may be cited as examples. The
shortage of management skills, reluctance to take risks, ignorance of the true
needs of users of the system, inability of the system to respond rapidly to the
demand, failure within departments or governments to treat information as
a resource are among the many complaints.
Lack of coordination: An even more complex problem  is the lack of
interministerial or interdepartmental coordination. There is often no
coordinating mechanism among the relevant arms of government to deal with
land registration.
Scope for privatization: Services offered by the state vary from  a near
complete service ( as in Thailand) that includes searching, contract
preparation, registration to the more conventional receipt of a contract-like
document prepared by a private sector lawyer or notary, followed by
registration in a state or county agency ( as in the United States, Hong Kong,



61
Box 4.5 Private Sector Land Registration in Brazil
The registration of transactions in Brazil is undertaken by private registration offices, or Cartorio de
Imoveis. There are more than 3,000 such offices in the country; Rio de Janeiro, itself, is subdivided into 12
cartorio districts. Transactions of private lands (not public or parastatal lands) are registered there under
federal regulation and monitoring. The "Caurara escritura" constitutes the document of transfer or conveyance
prepared by the notary and is added to other conveyance abstracts concerning the parcel. The information
in the Cartorio de Imoveis is open to the public upon request and a copy of every transfer has to be supplied
to the Treasury for income tax purposes.
the Netherlands). The difference in state intervention can also be described
in terms of active and passive (Jeffress and Holstein, 1991): in the active
case, the state checks the transaction, files it, indexes it, updates the
appropriate title file, and in some cases provides some warTanty; in the
passive case, the state provides a central depository so transaction records are
available for public inspection. The private sector intervenes frequently in the
conveyancing process with a large array of actors such as lawyers, real estate
agents, assessors, land surveyors, and land developers. In formal societies the
function is regulated by governments, although it may be delegated to the
private sector. In Brazil, for example, the function has been franchised to the
private sector and supported by both federal and state laws. There are more
than 3,000 cartorios for the registration of transactions involving immovable
property. There is therefore scope for privatizing some registration functions
that could be supported if this service could be self-financed.
Technical Problems
Choice of systems: For the most part, efficient systems are rare in
developing countries. Instead they tend to be incomplete and greatly
outdated. There is little agreement on the level of sophistication needed in
any given system since the greater the precision and amount of information
collected on each piece of land, the more expensive is the process. A number
of countries are still debating whether to improve the existing deeds
registration system or introduce a new system based on the registration of
titles. Although some argue that deeds registration is adequate and far less
costly to administer, the deed system is readily open to fraud. The main
differences are the extent of state affirmation of the existence and ownership
of interests.
*     Survey laws and regulations: High standards for surveys imposed by
regulations often create formidable bottlenecks in the land registration
process. Survey regulations and requirements need to be made more flexible
and the desired precision should be achieved in stages.



62
Box 4.6 Malawi: From Deeds Registration to Title Registration
Land interest in Malawi can be categorized under three main kinds of holdings: customary landholdings,
government and public landholdings, and private landholdings. Prior to 1962, interests in land were registered
under the Deeds Registry system. Owing to the inaccuracies and imperfections of deeds as legal documents,
the system was replaced with the registration of titles system in 1962. The Land Title registration system
was therefore the only system of land registration existing in Malawi. One of the main bottlenecks it suffered
was in the land survey regulations, which required a fixed boundary survey for issuance of land title in the
urban areas. The delays and costs involved in that process, particularly in the checking and exarnination
process, are enormous and have the effect of deterring people from undertaking the process. For the rural
areas, however, the government relaxed the requirement for a fixed boundary survey, and land titles could be
issued in those areas on the strength of sketch plans. Resistance by the traditional chiefs was another major
constraint in the advancement of the land registration system in Malawi. The government had passed the
Customary Land Development Act with a view to adjudicating and bringing that category of land under the
land register. That policy and program led to a curtailment of the powers of traditional chiefs whose powers
were closely linked to their control and administration of customary lands. They consequently strongly resisted
the program, and in some areas such as Lilongwe they actually held up development projects for long periods
of time.
Source: UNCHS (1990).
Financial Problems
4.70         Most land registraticn programs are highly subsidized and it has often been assumed
that land registration should be a public good. Indeed, little research has been undertaken to
assess the cost of the real property transaction recording process. A survey of these recording
costs (Jeffress and Holstein, 1991) suggests that title registration and transaction recording, once
in operation, need not be subsidized by the government. In fact, land registers can also bring in
substantial transaction fees. In Thailand, for example, the government spent roughly US$20 for
each parcel of land registered in nine provinces. It charged property owners only a small fee
(US$4) at the time of the action, thus heavily subsidizing the effort. But authorities correctly saw
that the government could gain a great deal later by charging transfer fees as a percentage of the
sale price at the time of subsequent land transactions. Because of high turnover (10 percent of
properties are sold every year), the government brought in US$200 million in 1988 alone, the
bulk from transfer fees amounting to about 10 percent of the sale price of each transaction,
against an agency overhead of US$24 million.
Motivation Problems
4.71         Land registration runs into considerable difficulty when under the pressure of
development standards, cost recovery, or a change in cultural patterns. "For the individual, the
hassle and cost of regularization must be balanced by prospects of immediate benefits. Experience
has shown that access to housing or small business credit finance alone, is often not a sufficient
incentive to prompt title registration. More tangible benefits are needed namely: improved



63
security of tenure; validation of inheritance rights; and most importantly higher property values"
(Serageldin, 1990).
LAND-USE REGULATORY FRAMEWORK
4.72       The problems related to land-use regulation are well-known. Existing regulations in
developing countries are criticized for both their rigidity and the high costs that they impose on
the builder or developer and ultimately the purchaser. The most common grievances fall into six
main categories:
a.   Most regulations are based on outdated and inappropriate planning legislation
or urban planning codes that are reminiscent of colonial times. These
systems were inspired by the traditional European models that emphasized
centralized public interference according to which government permission is
required for any kind of land development initiative.
b.   Master plans take too long to prepare; they seldom offer guidance on the
phasing and techniques of implementation; they seldom evaluate the costs of
the development they propose or try to determine how they would be
financed and pay little or no attention to the necessary resource allocation
and financial feasibility of policies and programs; master plans are seldom
based on realistic appraisals of the city's economic potential or likely
population growth; community leaders and implementation agencies are
seldom meaningfully involved in the master planning process; master plans
are infrequently updated and their static nature cannot keep up with the
dynamic process of urban growth in the developing world. In the majority
of cities with master plans, the supply of shelter for the low-income
population is built in spite of the master plan, not because of it. In brief,
master planning and comprehensive planning techniques are primarily
concerned with the product rather than process and do not adequately address
implementation issues, the increasing complexity of land markets, the role
of the public sector versus private sector actions, and the links between
spatial and financial planning.
c.    Centralization: the preparation and enforcement of spatial plans are often
based on obsolete planning ordinances that place all planning powers and
responsibilities with the central government. This centralization has often
widened the gap between the planning process and the executive system at
the local level.
d.   Institutional fragmentation: The ministerial location of the urban planning
function is another common issue. In many countries, the responsibility for
spatial planning has been shifting from ministry to ministry, in some cases
being attached to the Ministry of Lands, Public Works, Housing, Economic



64
Box 4.7 Land Use Regulatory Framework: Some Definitions
The most common forms of land-use regulation and control are (1) zoning, (2) subdivision
regulations, (3) building regulations, and (4) urban planning. They regulate such things as the shape,
volume, density, placement of buildings, height limitations, setback requirements, and requirements for
open space around buildings.
*    Zoning is the demarcation of a city by ordinances and the establishment of regulations to govern the
use of the zoned land (Courtney, 1983). Zoning is the division of a community into districts or
zones in which certain activities are prohibited and others are permitted (Fischel, 1985). According
to Fischel, zoning should be thought of as a collective property right, vested in conmmunity
authorities. It also includes general rules about location, bulk, height, and thus plot ratios, shape,
use, and coverage of structures within each zone. It is an attempt to organize and systematize the
growth of urban areas into categories, classes, or districts of land in the community. Early zoning
ordinances were based on a scale of intensity ranging form single-family residential to heavy
industrial use. Older zoning ordinances regulated the shape, volume and placement of buildings by
height limitations, setback requirements, and requirements for open space. Zoning is one of the
community's "police powers," probably the most powerful device because it permits the community
to exclude many uses altogether. Under a valid zoning ordinance, developers do not have the right
to erect any structure not conforming to the zoning district. Zoning is an eminently political process
that may be the most important municipal function in many communities.
Subdivision regulations govem the development of raw land for residential or other purposes and
prescribe standards for lot sizes, layout, street improvements, and procedures for dedicating private
land for public purposes. Subdivisions can be effectively applied only to areas being urbanized for
the first time, and even then there are difficulties of enforcement. Their importance lies in the fact
that they enable the community to force the developers to pay for some of the community
infrastructure occasioned by development. They have been powerful tools in Europe, but have not
found an equally successful application in most developing countries.
Building regulations limit or define the way new structures are to be built and the materials to be
used. Building regulations are one of the oldest and most common methods for controlling land
development
Urban planning: it is the process by which decisions ar made regarding the global configuration of a
city and its projections for expansion. The plan is the reference framework which used for the
application and the use of the regulatory instruments mentioned above.
Planning, or Local Government. This issue of the ministerial responsibility
has contributed to the isolation of the planning function and its lack of
coordination with the work of the infrastructure delivery agencies. This in
turn has caused a proliferation of parallel interventions and wasteful
investments. The problem is compounded in the case of metropolitan areas.
e.     Lack of coordination with financial planning: traditional planning has too
often set forth development goals that have no bearing on their cost
implications. But the reverse is also true, in that budgetary exercises



65
frequently have little do with the spatial implications of investment decisions
(Peterson, Kingsley, and Telgarsky, 1991).
f.    Approval process and procedural delays:The control over development rights
is enforced primarily through approval by government agencies. As discussed
in Chapter II, this problem is easy to document. In many countries-such as
Ghana, Rwanda, Madagascar, Malaysia, Pakistan, and Peru-the approval
process can take from 15 to many more steps, with an average time frame
of two to seven years. This tedious process of approval adds substantial costs
to any development ventures, and this explains why only 10 to 20 percent
of development is formally approved under these regulations.
4.73       A World Bank housing sector study in Malaysia revealed that housing prices
increased by an annual rate of 18.9 percent between 1972 and 1982. Among the reasons
mentioned are high housing standards and overly complex and time-consuming housing project
approval procedures. In Malaysia, it can take between five and eight years to obtain all the
necessary permits from 15 to 20 government agencies for subdivision approval. In Thailand, in
contrast, it takes about five months to secure subdivision approval from five government
agencies.
Impact of These Constraints on the Land Markets
4.74       How do government policies and regulations affect land and housing markets? By
controlling the supply of land and altering the costs of development.
Supply of Land
4.75       Zoning can have considerable impact on land supply. The supply of residential zones
can be limited, for example, when communities attempt to maintain environmental quality or
fiscal improvements by designating land for open space or agricultural use, or commercial and
industrial use. In India, the Urban Land Ceiling Act adopted in 1976 to control speculation has
apparently caused significant reductions in the supply of land for residential development, leading
to the creation of a large informal market and making housing less affordable. Another case in
point is Serpong in Indonesia (Bertaud and Hoffman, 1991). In the Serpong area (southwest of
Jakarta), the zoning plan restricts residential use to only 34 percent of the total land area.
Furthermore, a large part of the area zoned residential is not accessible by road. Because no
developer will risk acquiring land in areas without road access, the area of developable land that
is in fact on the market is further reduced to about 15 percent of the total land area. In addition
to land- use restriction, zoning regulations impose a control on population densities. Planned
densities are usually much lower than the actual densities in middle- income residential
developments. For instance, planned densities in residential areas in Serpong have an average of
56 persons per hectare. By contrast, densities in middle-income developments of the type
financed by the National Mortgage Bank vary from 300 to 500 persons per hectare, which
correspond to plot sizes ranging from 60 to 90 square meters. The amount of land per household



66
that corresponds to the permissible density is about 830 square meters; this would produce an
average plot size of 500 square meters, which would be affordable by only 5 percent of the urban
population.
Costs of Development
4.76       Costs associated with land regulation include: (1) the costs incurred by the
government in administering and enforcing the regulations, (2) the cost to households and
enterprises incurred in complying with the standards set by those regulations.
a.       Costs to government: Although there is little empirical evidence, one can assume
that the bureaucratic procedures involved in the administration and enforcement of
regulations are costly for the government. Furthermore, confronted with long and
costly delays, many developers and households make informal payments to
government officials to expedite the process. The process of making informal
payments to obtain in a shorter time what is authorized by the law is said to be
inefficient and to discriminate against the poor. It is also a substitute for direct
payment to government operations and the cost of maintenance.
b.      Costs to households: They are (1) direct costs to meet minimum standards, (2) costs
in time and manpower to obtain necessary papers and permits, and (3) informal
payment costs.
4.77      It has been argued that the regulatory environment has a negative effect on the poor
for two reasons: (1) the cost to comply with the law is often beyond the means of poor
households and (2) many regulatory practices create distortions in the land market and in the
distribution of urban services. In Jakarta, the minimum legal standards for a dwelling unit result
in a minimum cost of about RP 4 mnillion per unit (internal World Bank document, 1989),
establishing thereby a "minimum standard income" and preventing a large number of low-income
households from receiving the benefits associated with the formal sector. A private developer,
intending to develop a parcel of land, first has to obtain a "location permit" and second a "land
rights grant." The two different committees from which these permits are requested have to
decide whether the proposed use is consistent with government policy and conforms with existing
land-use plans. In Indonesia, the major cost is not incurred by the minimum standards per se but
is the result of the complex administrative system of subdividing land.
4.78      In Karachi, extensive land subdivision regulations stipulate large residential plots.
All the plots allocated by the KDA are more than 60 yards square. In Malaysia, the area per
house provided for roads is up to four times greater in the typical Malaysian subdivision than in
comparable North American or European projects.
4.79       In many cases, then, zoning regulations have no technical justifications and
resemble the rules of a private club, which indirectly eliminate those who do not belong.



67
Box 4.8 Land Development in Indonesia
Trade and development of urban land takes place within two parallel markets: first, the formal market is
heavily regulated and allows access to formal housing finance facilities with mostly subsidized interest rates,
and, second, the informal market operates under minimum regulatory constraints but requires cash transactions
or is restricted to the informal finance system. The formal market emerged only recently with the availability
of Bank Tabungan Negara (BTN) mortgage financing. About 20 percent of the dwelling units built annually
are provided through the formal markeL The present dual land development system has the advantage of
providing easy access to land for many middle- and middle- to low-income households. The disadvantage is
that it slows down the development of infrastructure, making it difficult for small developers to enter the
housing market and restricting access to housing finance to a small group of households. The land
development process takes an average of 32 months and the direct and formal costs associated with getting
the necessary permissions vary from 10 to 30 percent of the cost of land.
Source: Hoffman.
Minimum plot sizes or maximum densities are a good example of exclusionary rules based on
income.
4.80         Informality has its costs as well:
a.    The costs of avoiding penalties: considerable resources are devoted to
corrupting the authorities and bribes often replace the taxes that the
informals do not pay.
b.    The costs of transfers: the purchasing power that informals lose by keeping
cash in hand is a transfer of resources to formal activity as they bear the cost
of inflation. The disparity in the cost of money is also caused by the
informals' lack of access to formal and cheaper credit. There is a large
difference in the interest rate between formal and informal credit.
c.    The cost of not having property rights: In the case of Lima (De Soto, 1989),
it has been estimated that secure property rights did encourage holders to
invest in their property. In a sample of 37 settlements surveyed, the ratio of
the value of settlements with title and those without is 9 to 1.
These are the costs of being informal or illegal. In other words, if the law was changed to allow
smaller plot sizes than the ones used in the illegal subdivision, the costs of informality would
immediately disappear. This is true for any land dimension standards, although it may not be true
for qualitative standards for infrastructure (e.g., an underdesigned sewer system has inherent costs
related to maintenance or bad performance that are independent of whether the standards are legal
or not).
The Way Forward
4.81         At the root of the problem  lies the fundamental dichotomy between the basic
function of land development control and the objectives set in the current practice of city



68
planning (Guarda, 1989). Some have argued that land development controls should not go further
than promoting private property interest and protecting its market value. This, in turn, does not
produce what urban planners regard as desirable land-use patterns. This dichotomy is to some
extent reflected in the differences between the European and American planning systems. In the
European system, the promotional function of planning through the development control
mechanisms, and through conferring to the master plan the normative authority of a statutory
document, assumes total controllability of the land market. The American city plan is less
ambitious in that it does not pretend to acquire the force of law. It only represents a working
document for the local administration. The contrast between the American and the European
attitude toward public intervention in the land market in a sense illustrates the tone of this
controversy, the first being firmly entrenched in the free market/private enterprise ideology,
viewing land-use control mainly as a local, voluntary device to protect individual property rights
and to promote development, whereas the second, led by the British and French planning schools,
is inspired by public interference according to which government permission is required for any
type of land development initiative.
4.82       Ideally, what should we expect from land-use regulations and urban planning?
*    Better coordination in land management.
e    Integration of spatial planning with financial, sectoral, and institutional
planning.
*     Definition of a collective rationale for intervening in the land markets.
e    Better protection of the environment.
-     Economic efficiency to maximize the benefits of urban development
*    Equity considerations: Land-use regulations should not contain any absolute
minimum  threshold of land consumption that would eliminate poor
households that cannot afford the minimum level of consumption set by the
law.
* Cost effectiveness to minimize public costs and to recover them.
Is Deregulation the Way to Go?
4.83       It is now widely recognized that there is a direct and reciprocal relationship between
informal housing production and government regulations. One has to be cautious, however, about
deliberately promoting deregulation. Many efforts to demonstrate the constraints imposed on the
market by land-use regulations have given rise to the assumption that "free markets are beautiful"
and that, in many ways, informal settlements have found a proper answer to the problems of the
urban poor. This ignores the fact that development generates externalities such as water pollution,
traffic congestion, and sanitation hazards, and furthermore that residents demand public services
such as infrastructure, schools, and health facilities. After making the mistake of trying to apply
to developing countries a regulatory model that was successful in Europe, one should not rush
into a deregulation model that may not be applicable in many developing countries. The relevant
question then is: What are the minimum levels of regulations that will be compatible with easy
access to housing and services and yet preserve community wide interests and the environment?



69
We would suggest a "bottom-line'" approach to this problem, which would be based on a
preliminary identification of those public concerns on which no compromise can be made (i.e.,
environment). This preliminary identification of public concerns would help distinguish necessary
regulations from the unnecessary and burdensome ones. In reviewing land-use regulations,
policymakers should address the following questions:
*    What purpose(s) do the existing regulations serve?
*     How much do they cost?
*    How many households cannot afford to pay the cost of meeting these
regulations?
*    What will happen to these households?
*    What would be the impact of not having these regulations?
What Should Be the Role of the Planner?
4.84       Opinions differ as to the proper role of the planner.
4.85       For some, the planner should exert both regulatory and promotional functions: the
regulatory function involves collaborating with the lawyer and the politician in identifying a
system of land controls that actually preserves property rights, reduces disputes, and sets out
standards for private development. The promotional function consists of helping public authorities
prepare capital improvement programs.
4.86       According to this point of view, the main activities of a planner should be the
following:
a.    To help the representatives of the community interest groups mitigate
potential conflicts in development through a set of mutually agreed
performance standards. The instruments do not need to be reinvented: zoning
ordinances, subdivision regulations, building codes that establish the
developer's modus operandi and must be subject to a process of review,
appeal, and adjustment.
b.    To advise local officials and departmental agencies on how to prepare project
plans and capital improvement programs. This activity consists of
multisectoral coordination (multisectoral investment planning) that brings the
planner in close contact with the financial and fiscal constraints of the local
administration.
4.87       For others, a totally new approach is required, and the functions of the planner
should then include:
a.    Systematic monitoring of land use, of supply of developed land, shelter,
public facilities, and utilities consumption.



70
b.    Systematic monitoring of land prices, rents, shelter prices, property tax and
other local tax yield per unit of land.
c.    Keeping urbanization prices low by stimulating supply, by providing trunk
infrastructure, by progressively upgrading the infrastructure of existing
neighborhoods, and by increasing the capital available for housing finance
and municipal finance.
There is considerable truth in the observation that planners in developing countries have been too
much concerned with regulation and promotion and too little concerned with being "monitors"
of the land supply situation. Undoubtedly the latter role should become increasingly important.
DIRECT PUBLIC INTERVENTION IN THE ACQUISITION OF LAND
4.88       Governments use three principal instruments for the acquisition of land: (a)
nationalization of land; (b) eminent domain, or the compulsory acquisition of land, and (c) land
readjustment.
Nationalization of Land
4.89       The nationalization of land certainly represents direct intervention in the market;
indeed in some countries it is designed to eliminate the market and replace it with the
administrative allocation of land. In other countries, nationalization is less dramatic and merely
transfers the ultimate or freehold title of land to the state so that thereafter, market transactions
can only be in leasehold.
4.90       Algeria provides an example of the former and Cameroon an example of the latter.
4.91       Until recently (November 1990) land policy in Algeria was based on 1974
legislation that promoted both the nationalization of all lands and a highly decentralized land
management system to the benefit of the local governments. All lands exceeding the "personal
needs criteria" was nationalized, and local governments were given full control over land
transactions. The implementation of this policy has proved to be highly problematic. Designed
to meet the increasing demand for land, reduce speculation, control urbanization, and preserve
rural lands, it has not had the intended impact.
a.    Local governments did not have the expertise or the long-term management
concerns that were required to carry out this policy. Until recently, the
Communal Popular Assembly (APC) and its executive council were elected
on the basis of a list proposed by the party. The president of the local
assembly was himself elected by the council. The institutional and political
organization preempted any control over elected local officials with respect
to their management of state lands.



71
b.   The land reserves that they were supposed to manage were often wasted and
given away to individuals in accordance with allocation procedures that were
not accompanied by legal acts of transfer of property. This explains the lack
of accurate and complete information on land reserves transactions.
c.    Some built-in unjust features-related to the nationalization of lands, the
creation of land reserves, and the reallocation of state lands to
individuals-quickly became apparent. While inappropriate compensation
fees (when given) were given to people whose land was nationalized, the
amount of land that could be acquired by individuals through the public
allocation of land reserves was not limited.
4.92       This unhappy state of affairs led to severe price distortions and profound
cisequilibrium in the supply of land available on the market. As mandated by legislation, the
price of land purchased by the state for integration into the national reserves varied from US$0.73
to US$5.4 per square meter. Because prices were so low, private landowners often refused to sell
to the state, and therefore contributed to a shortage of land on the market and a global
phenomenon of land retention. Prices of land sold through state allocation were grossly under
market value, ranging from US$1.3 to US$18 per square meter, depending on the level of
servicing, as compared to much higher prices in the informal market ranging from US$200 per
square meter in secondary city centers to US$4,000 per square meter in the center of Algiers. An
immediate consequence of such a situation has been the emergence and continued growth of
illegal transactions through "Actes sous-seing prive" and inflated land prices in the informal
market.
4.93       Although the story is different in Cameroon, the end result is similar. In 1974,
Cameroon adopted a set of land laws that provided the framework for land nationalization. The
1974 legislation introduced a new tenure typology that still prevails, including national lands
(Domaine National), state lands (Domaine Public et Prive de l'Etat), and private lands (covering
basically the minority of land parcels for which titles had been previously granted and were
registered in the Lands Book, Livre Foncier). The two basic aims of this legislation were (a) to
come to terms with the traditionaVcustomary rights to land and (b) to improve the management
of the "Patrimoine Foncier." This is basically the story of many African countries that decided
in the late 1960s and early 1970s to follow the path of nationalization. In most cases, the results
of these policies have been diverted from their initial goals. Instead of protecting national lands,
they have grossly mismanaged them and wasted vast assets; instead of resolving the political
interference of traditional authorities, governments have allowed a pluralistic system and overlays
of bureaucracies to emerge; instead of providing adequate land and housing, countries have
experienced an ever-growing shortage of both, poorly compensated by the informal market.
4.94        Correcting past nationalization policies will be a major challenge that a large
number of developing countries, and indeed today the Eastern European countries, will have to
face up to. Some pointers in this direction have been discussed in the section on land
administration agencies.



72
Compulsory Acquisition/Eminent Domain
4.95       Unlike nationalization, which represents a full-fledged state monopoly over property
rights and transactions, compulsory acquisition is a government tool used sporadically for two
main purposes: land banking and resettlement. Because of its widespread use and interference in
the land markets, such a policy needs to be carefully assessed.
The concept of expropriation is based on a sovereign's power of eminent domain; this power
is generally accepted worldwide and allows the state to take private land for the good of the
state. Much of the laws pertinent to eminent domain in developing countries is inherited from
former colonial powers. The cost and time required to implement these outdated laws make
them almost useless. According to the World Bank, the majority need drastic revision, if they
are to be effective during periods of rapid urban expansion. Furthermore, it is necessary to
adopt and modernize comprehensive land-acquisition legislation and policies, through
democratic processes to secure the kind of public support needed for compulsory acquisition.
(Kitay, 1985)
4.96       By way of example, those countries that draw on the common and statute law
inherited from England follow a fairly similar format. Indeed, many countries derive their basic
law from the model of the Land Acquisition Act of India, enacted there in 1894 and applicable
both there and in Pakistan. The problems of the 1894 act are notorious and well documented:
As it stands today, the act neither passes land quickly to the State, nor does it ensure timely
payment of compensation. The Commission feels that the act be so amended that while, on the
one hand, the purpose of acquisition, the scheme for compensation and rehabilitation, and the
details of the project are prepared and published for inviting objections at the very outset of
initiation of acquisition proceedings, on the other, the land must actually vest in government
without delay and the major part of the compensation should be paid to the landowners at the
time of vesting and even prior to a final award. (National Commission on Urbanization, Delhi,
1988)
4.97      In Ghana, delays in completing the procedures of compulsory acquisition and in
paying compensation in some cases cover a span of more than 20 years; organizations and
officials do not know the procedures they have to follow; land is acquired by public organizations
that do not have the financial capacity to pay for it or develop it, and the public's objections are
ignored. There is consequently greater resentment over the exercise of these powers.
4.98       Similarly in Colombia, a recent comprehensive reform law on urban land is likely,
in the view of one commentator, to run into difficulties on expropriation since
Expropriation procedures in Colombia have traditionally been very time-consuming and
cumbersome. These difficulties stem from a system that intends to offer extensive protection
to private property rights; such protection translates into an obligation to offer to the owner
sufficient opportunities to challenge the taidng of his property and to obtain fair treatment and



73
adequate remedies. The constitutional formula for this protection is the requirement of judicial
intervention and prior compensation. Although the imnportance of giving landowners adequate
protection when expropriated cannot be underestimated, it is well established that without
reasonably efficient procedures, most tenure reforms are impractical and unsuccessful. In
Colombia, the problem arises from the complicated, rigid, and formalist traditions deeply
rooted in its judicial system. (Vargas, 1989)
4.99       The examples could be multiplied and serve only to reinforce the basic point that
expropriation is deeply unpopular in all states and among all classes in the community. At the
same time, such a power cannot be fully abandoned: it has to be available for use on occasions
and the task is therefore to (a) pinpoint those special occasions that do require compulsory
acquisition; (b) try to find out why the expropriation is unpopular, and (c) address those with
appropriate remedies.
4.100      A particular problem in the purchase of land by public authorities is that of
publicity. Most countries require that public authorities give public notice of their intention to
buy land; this practice has a tendency to escalate prices and encourage landowners to hold out
for higher prices. In Thailand, for instance, "The National Housing Authority will publish its land
requirements from time to time and invite voluntary tenders. It might publish a call for 1000
hectares in the Northwest of Bangkok for instance. After that it must wait for the private sector
to present offers. It often takes months, even years before the NHA is satisfied that the
landowner's price is justified. After months and months of official deliberation over whether to
pay the price the NHA often finds that the landowner has then escalated his demand because of
inflation" (Kitay, 1985).
4.101      Few private land developers would advertise their intentions to purchase land in that
way. While recognizing the need to prevent secrecy being a cloak for corruption, more
consideration should be given to devising modalities of purchase that will allow public authorities
to take advantage of and follow normal commercial practices in large-scale purchases of land,
using, for example, intermediaries such as private realtors, or alternatively devising incentives
to encourage private landowners to sell their land- as tax relief mechanisms, priority service in
respect of land title registration, or permission to develop other land. Penalties have a role to play
as well; an idle-land tax, if stiff enough and vigorously enforced, might also act as an inducement
to sell. Kitay (1985) sums up the position thus:
The techniques used by the public sector to purchase land in a voluntary-sale procedure will
affect the success of a land-acquisition program. Public officials should study carefully the
strategies of individuals and organizations in the private sector who have developed successful
techniques for acquiring land in the complicated and risk-prone real estate market.
Understanding such techniques may well provide some guidelines for similar ventures in the
developing countries. While assuming the same degree of risk may not be suitable for
government-directed activities, some of the methods used by the private sector may be suitable
for government-directed acquisition programs.... Under the best of circumstances, compulsory
acquisition takes time, causes political resentment and creates hidden costs. Developing



74
countries, therefore, should invest time and resources to ensure a workable system for
voluntary acquisition. It is rare for a voluntary system to work well in developing countries
without some positive incentives to sellers. Any attempt to revise laws and regulations for
public land acquisition will be seriously deficient unless the bulk of the effort is concentrated
on how to make voluntary transactions the major tool of public land acquisition.
What Is the Purpose of Compulsory Acquisition?
4.102     Land may be acquired for a variety of purposes, compulsorily or otherwise. Two
that have given rise to considerable controversy are advanced land acquisition, or land banking,
and slum clearance and redevelopment.
Land Banking
4.103      The principal purpose of land banking is to acquire land for urban development,
public or private, in advance of need so that the land can be acquired relatively cheaply. A
secondary purpose is to influence the direction of urban development. That is, advance
acquisition followed by the development of urban infrastructure-roads, sewerage facilities,
electricity- will inevitably affect the direction of urban growth in the future.
4.104      Several issues need to be addressed in connection with land banking. For
convenience, they may be broken down into two broad groups, those external to the operation
of the process and those internal to it, that is, those having to do with the modalities of the
process. The external factors are well summed up in a discussion of Korean Land Acquisition
Policies:
"The effectiveness of public land acquisition policy depends heavily on the overall structure
of decision making for land use. Specifically the extent to which land acquisition can be
successful in providing land more efficiently and equitably is determined by (a) the direction
and management of implicit land use policies, (b) the structure of demand-and-supply-side
programs and (c) the relationship between land acquisition and other policy instruments" (Gill
Chin Lim, in Kitay, 1985).
4.105      Thus land banking has to be developed on a national scale as an integral part of
land-use policies and has to be used as one of a number of instruments to advance those policies.
It cannot be used as a substitute for national land policies, nor can it be used in isolation of other
instruments. Following the logic of the above quotation, it may be said that where other land-use
instruments are very weak, in the sense that although they are largely ignored, either because they
are circumvented by major landowners or because they are irrelevant to the needs of the urban
poor, land banking is likely to achieve neither efficiency nor equity in the supply of land for
urban development, since its operation will be likely to be skewed by the same defects that affect
other instruments-weak implementation, over bureaucratization, abuse of power.



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Box 4.9 Korean Land Development Corporation
The KLDC was established in 1979 to engage directly in the acquisition and disposal of land. Its
establishment reflected the recognition of the limited effectiveness of incentives and regulatory approaches
to land markets. It was given large powers such as preemption, eminent domain and designation of idle
land which are necessary for acquisition, development and disposal of land. Initially, it relied mostly on
negotiation for land purchase. Since its establishment, and especially since the enactment of the
Residential Land Development Promotion Act of 1980 the use of land development i.e. acquisition by the
KLDC and sale or lease to users, has rapidly overtaken the use of land re-adjustment as the principal
technique of residential land development, going from under 10% in 1976 to 80% in 1986. The rapid
increase in the land acquisition method of land development as opposed to the land re-adjustment method
has speeded up land development-a project takes 3-5 years for completion whereas a land re-adjustment
project often took more than 10 years-but several criticism have been made the process. The most
serious criticism is the propriety of public acquisition of private land without due process. Equally serious
is the issue of just compensation. The difference in land price before and after the project is substantial
and the original land owners do not feel justly compensated for their properties. This feeling is
particularly strong among the land-owners whose properties were expropriated.. The third problem has to
do with improper relocation in the project areas. The re-locatees are often either rural-to-urban immigrants
or unskilled farmers. The monetary compensation is not always sufficient enough for them to resettle
elsewhere. Psychological problems resulting from deprivation of their living grounds cannot be
compensated. Similar criticisms, have been made in respect of urban re-development of green belt
villages. These criticisms made after a decade of land development programs and of activities by the
KLDC temper the more optimistic early 1980s assessment of Gill Chin Lim that "existing evidence
indicates that the quantitative goals in land acquisition has been satisfactorily met. This fact demonstrates
that the KLDC is basically capable of attaining its most essential objective-an achievement which few
other public land agencies in developing countries can match." Even this assessment however notes that
there are problems of making land prices affordable for low income households; and there is a need for a
careful co-ordination of land acquisition with other land use policy instruments.
Source: Gill Chin Kim, op. cit., Hyun-Sikc Kim 1991.
4.106        There is another more fundamental issue here. Is land banking to be used as a
substitute for the operation of a land market (i.e., as something approaching total public
acquisition of land needed for urban development) or as an aid to a land market? In the first case,
private land developers are virtually eliminated; in the second case, a degree of cooperation
between the public and the private sector will be necessary. The record of land banking as an
instrument for acquiring and operating a public monopoly of urban land supply is not one to
inspire confidence, so land banking as an instrument of public-private partnership in land
development is definitely preferred, if it is to be used at all.
4.107        Should land banking feature at all as an instrument available for use in land
markets? At a time of increasing skepticism because of the record of poor performances by
public land acquisition agencies, problems have been identified as to actual practices in land
banking, for example, its seeming lack of positive impact on land prices, the amount and type
of compensation offered, coordination with other policies and instruments. This case reaffirms
that countries should move slowly down the road of land banking.



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4.108      The principal issues pertaining to the internal aspects of land banking are those of
appraisal and accountability. Appraisal is concerned with making informed judgments about the
costs of any program of land banking, about how much land to buy in which area and how much
to pay; about when to commence releasing land by what method, and on what terms; about likely
future trends in the economy in general and in the specific urban economy in which one proposes
to operate. Accountability is concerned with the manner with which the operations of land
banking are conducted; the transparency of the process; the probity of the selection of land for
acquisition and of the negotiation for its purchase and ultimate sale; the delicate but necessary
balance between market efficiency (speed of operation with a minimum of bureaucracy) and
conformity with the normns of public administration (checks and reviews, compliance with rules
on procurement). These matters have to be addressed and determinations made about them before
a program, selective or general, of land banking is begun. Are there sufficient professionals with
the right skills and experience available to staff a land banking agency or manage a land banking
program? Is there sufficient informnation available about land markets, trends in the economy, and
population projections to make informed decisions on the forward purchase of land? What is the
track record of public administration in general and urban land management in particular with
regard to the economy, efficiency, and probity? Are there alternatives to land banking by public
agencies that need to be explored-public/private joint ventures, or taxes and financial incentives
to ensure land is made available for development? Candid and honest answers to these questions
are an essential condition to embarking on land banking.
Clearance and Redevelopment/Resettlement
4.109      The policies and practices concerned with urban land management in the past two
decades have generally been opposed to large-scale demolition and clearance of "slums" followed
by redevelopment. It would be a mistake, however, to assume that such practices are a thing of
the past. In many countries the bulldozer is still seen as an important tool of urban land
management.
4.110      Clearance and redevelopment is by and large an outmoded way of dealing with
informal settlements, although the practice is certainly used in connection with informal
settlements and with other types of settlement and for more positive purposes than merely
clearing away the "eyesore" of informal settlements. Thus there have been a number of
highly visible clearance and resettlement operations such as the redevelopment of green belt
villages in Seoul to a higher density to pave the way for rapid urbanization. The Lesotho
Highlands Water Project also involved the clearance and resettlement of several highland villages
in the area of the project; and a considerable amount of clearing and redevelopment/resettlement
has taken place in the Singrauli region of India in connection with industrial development. The
development of the new capital of Nigeria at Abuja also occasioned considerable clearance and
resettlement of residents in the areas allocated for the development of public buildings. Indeed,
major public works-dam, roads, airports, public buildings sewerage and waste disposal facilities,
power stations-are now probably the principal cause of the public acquisition of already settled
land. The question of interest here is not whether such activity should take place but how it



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Box 4.10 Resettlement in Abuja, Nigeria
Abuja was chosen as the new capital of Nigeria in 1976. It was decided to start the town without
incorporating existing infrastructure and settlements. Existing land-use pattems consisted of dispersed clusters
of dwellings with very light population density. "Land use was in equilibrium with the ecological capacity
of the environment." The Federal Capital Authority was charged with resettling those people who wished to
remain within the Federal Capital Territory.
A master plan for each resettlement area was prepared. It was proposed that "the population should
be rehoused at minimum cost and the housing and the environment should be acceptable to the people."
Practice, however, departed from the plan. Corrugated iron sheets instead of thatch were used on the roofs
of the houses. "Since the houses were not adequately ventilated they are unbearably hot during the season
of maximum isolation. In addition, the housing units are congested, with houses standing only about 10 meters
apart. This pattem of housing has seriously eroded the privacy which the people highly regard. Population
density within the small area of the housing units has been very much increased, thereby affecting land claims
and land use in the resettled area. Households are restricted to minute holdings which are usuaUly insufficient
for cultivating and grazing . . . also, a serious omission in the housing arrangement was the lack of
recognition of the differential status of households in the allocation of houses. Perhaps the most serious
omission in the resettlement housing units is that there was no provision for granaries and animal shelters.
Many households have suffered losses in grain as a result of inadequate arrangements for grain storage in the
resettlement units. Consequently, the incidence of famine resulting from prolonged shortage of stored grains
has been reported in the two settlement units. Villagers who are unable to tolerate this increased hardship
have migrated or joined the nomadic group.... The speed at which the resettlement program is being carried
out does not allow a thorough study of the ecological variations in the resettled areas in order to guard against
their disruption."
"When all factors are considered, the Abuja resettlement program has not been able to provide an
environment within which the peasants will quickly re-establish the ecological balance already attained in their
previous settlements. This would require a greater involvement of the affected population in the decision-
making process over matters affecting such issues as farm organization, land allocation and design of dwelling
units. Planning and implementation of any resettlement program should be based on participation of the
people involved."
Source: Okafor (1988).
should take place. Two case studies, from Barbados and Nigeria, highlight various issues in
resettlement.
4.111        The contrast between these two examples is instructive. In Barbados, after an initial
top-down false start, the government adopted a more participative and cooperative approach to
resettlement in which the concerns of those being moved were taken into account and responded
to. Efforts were made to resettle the community as such and although there was some inevitable
unhappiness at moving, the exercise was, as a consequence, deemed successful. In Nigeria, the
opposite was the case. A top-down Master Plan was the blueprint for action; little attention was
paid to the needs, concems, or life-styles of those being moved, with the result that resettlement
has destroyed communities rather than preserved or enhanced them. In Barbados, time was taken
to get it right; in Nigeria, speed of resettlement was emphasized.



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Box 4.11 Resettlement in Emmerton, Barbados
Emmerton is an area of land immediately adjacent to Bridgetown, the capital of Barbados. The
country's Physical Development Plan of 1971 judged Emmerton the city's worst slum area, and made it a
high priority for clearance and renewal. Thus it was not surprising that after considerable time was put into
design development and economic considerations, it was decided to use 5 acres of the Emmerton area for the
construction of the sewage (wastewater) treatment facility for the city's first sewerage system. At the time,
some 560 people were living in the Emmerton area, predominantly in chattel houses, many of them in a
dilapidated condition. Social surveys showed that a majority of the residents did not wish to leave Emmerton
but "in general, the persons to be removed accepted it as a measure which the government had to take, but
were insistent that uprooting them from their leisurely happy way of life should have its compensations in
better standards of living and the minimum dislocation from their livelihoods."
A loan for the construction of the sewerage system was to be provided by the Inter-American
Development Bank, on condition that the govemment would provide a program and schedule for the
relocation of persons from the site before any disbursement of the loan. The government selected a site 2X
miles from Emmerton and formed an interdepartmental committee of senior officials to plan the logistics of
the clearing and the compensation "of landlords who may have suffered any loss as a result of clearance."
The National Housing Corporation was designated as the agency to execute the relocation. This early planning
for clearance and "rumors of crude methods to be employed by govemment in the implementation of the
removal of residents brought very sharp resentful and hostile reaction from the persons concerned in the
removal as well as from several sectors of the Barbadian community."
The government recognized the need for a different approach. The Community Development Division
was brought in, and a citizens' committee representing residents to be removed from Emmerton was
established. The functions of the committee were to mobilize the entire community; learn about its problems,
needs, and concems; discuss the govemment's plans with its residents; and represent their views to the
government. The Community Development Division's function was to "obtain the active and positive
participation of the people of the Emmerton Community" and, via in-depth interviews, become familiar with
their concerns about moving. The government responded to the views and concerns expressed by the citizens'
committee and, among other things, agreed to provide improved amenities and utilities at the relocation site
rather than, as had been initially determined, the same standards as existed at Emmerton. The conclusion of
the commentators on the whole operation was that it "cannot be otherwise described but as a successful
coordinated operation" even though surveys after the move showed some dissatisfaction with some aspects
of it. In general, however, "the early recognition by the Government of Barbados that the people of
Emmerton should become actively involved in the matters of resettlement which concerned and influenced
their lives and welfare, contributed to the establishment of a harmonious relationship with widespread co-
operation and the willingness by most to sacrifice some of their prejudged suspicions and recalcitrance. The
establish of the Citizen's Committee helped to engender that feeling of belonging and participation in the
sewerage cum resettlement project which helped both the Government and the residents affected in clarifying
roles, solving problems and to prevent the spread of unfounded rumor and faulty beliefs among the residents.
The interchange of ideas and goals led to more effective decision-making by government."
Source: Alleyne, Archer, and Walters (1990).
4.112         These examples of clearance and resettlement provide an idea of some appropriate
principles of administration. To begin with, there is a need for administrative systems that



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encourage the participation of local communities and their organizations, that expand the concept
and scope of compensation, and that are open, flexible, and responsive in operation.
Land Readjustment
4.113      One of the principal disadvantages of compulsory acquisition is that it sets up a
confrontation between the government and the people so that needed public development runs
the risk of being stigmatized as something undesirable before it even gets off the ground. The
aim of reforms is to reduce the element of confrontation and increase cooperation and
participation in the process. The same results can be achieved through land readjustment, rather
than public land acquisition via compulsory processes. Readjustment, developed for urban
purposes in Japan and Korea, took over the procedures first used principally for rural purposes
in Germany in the nineteenth century, and now is spreading to other countries as a way of
harnessing private and public initiative in land development
4.114      Land readjustment/pooling-"a technique for carrying out the unified servicing and
subdivision of separate landholdings for planned urban development," has a number of
advantages:
Each pooling project involves the consolidation of a group of adjoining landholdings in an
urban fringe area for their design, servicing and sub-division as a single estate into a layout
of streets, open spaces and building plots (sites) for the planned urban uses of the lands. Some
of the new plots are sold to recover the project costs and the other plots are re-distributed to
the landowners to sell or to build on themselves. Each pooling project is therefore a
compulsory partnership of the landowners for unified land sub-division with the sharing of the
project costs and returns between the landowners and with the recovery of the costs out of the
land value increases, generated by the project. Land pooling provides an alternative to private
land sub-division on the one hand and to government land acquisition and sub-division on the
other. (Archer, 1987).
Land re-adjustment is attractive because of the extent to which it mobilizes existing resources
and facilitates development rather than restricting it, as is the case with many of the forms of
land use control that have been derived from western models. Secondly, land re-adjustment has
social benefits in that it imposes a kind of betterment levy on landowners who are compelled
to sacrifice some of their property in order to keep the capital gains that occur as a result of
comprehensive development . .. certain basic prerequisites must be kept in mind. First, it is
essential that there should be an appropriate legislative framework.... A second prerequisite
is for an effective system of cadastre and title registration operated by a body of well trained
and objective real estate appraisers.... Last but not least there is a need for dedicated and
energetic staff. (Masser, 1987)
4.115      A disadvantage is that since that land readjustment reduces the area of every
owner's property, it will be attractive only where infrastructure is difficult to obtain by other



80
means, and where the demand for serviced land is strong enough to compensate the owner for
the loss of area by making the remaining property more valuable, even though it is smaller.
4.116     The two most important advantages of land readjustment as opposed to land
acquisition, compulsory or voluntary, are the involvement of the landowners and users in the
process and the reduced costs to the public authorities for the provision of infrastructure or public
buildings. This would suggest that readjustment may in some cases be appropriate for the
upgrading and/or redevelopment of informal settlements and inner city high-density low-income
settlements. Land readjustment is, in fact, used for this latter purpose in Japan, where the time
taken by a project, which may be considerable, is not regarded as a disadvantage. As with land
acquisition and indeed other policies requiring an input into the land development and land
markets by public authorities, it is necessary to translate principles of cooperation and
participation into structures and processes that require officials to act so as to facilitate such an
approach. While a small element of compulsion may be unavoidable in a land readjustment
project-a decision based on a majority vote of residents in a readjustment area or a decision by
an adjudicator on a dispute unavoidably forces some person or persons to do what they would
prefer not to do-a land readjustment project that is not based substantially on the voluntary
cooperation of the residents and/or landowners in the area selected for the project will arouse as
much resentment as an old-style top-down compulsory acquisition exercise, and may lead to
delay and unnecessary expense through litigation or political intervention. Here, as elsewhere,
efficiency, economy, and equity march together.
THE WAY FORWARD
4.117      The first point to make relates to the need to adapt and modernize land acquisition
policies and procedures through democratic processes to secure public support. Part of the
public's hostility to expropriation is that it is seen as one of the most arbitrary actions that a
govemment can take against a citizen; where governments lack legitimacy, either through an
absence of democratic processes or through a lack of transparency and equity in the
administrative process, the seizure of a citizen's land, with minimal notice, minimal rights of
objection, and minimal compensation paid long after the act of expropriation, is bound to fuel
resentment. In countries where courts are available to the population and are regularly used by
them, they will be used to block expropriation. In countries where courts are not so regularly
available to the population, other ways of expressing objection to expropriation-refusing to
leave the land or attacling officials-will be resorted to. Thus there is a clear need to examine
the procedures and purposes of expropriation with a view to developing more efficient and
equitable processes.
4.118     What should be the criteria for developing such processes? A UNCHS (1985)
publication has set out the desiderata of an effective land acquisition law. It must
a.   Be precise in conceptualization and wording
b.   Be capable of review and updating
c.   Be enforceable



81
d.   Be understandable to the layman
e.    Be fair in its application and impact on the various sections of the
community
f    Respond to the cultural, social and economic reality of the people.
4.119      These may be summarized as clarity, certainty, transparency, and fairness. Clarity
requires that an expropriation law be set out clearly, including the duties and responsibilities of
officials and public bodies, the rights of the citizens; the criteria to be used in determining
whether to acquire land and how to assess compensation; the procedures to be followed and
forms to be used, which must all be set out in language that can be comprehended by ordinary
people and does not leave any doubt as to what is to be done.
4.120      Certainty refers to discretion. Many laws state that land may be acquired for a
"public purpose" but then leave the definition of a public purpose to the Minister or some
official. Their certificate or ruling is final. Such a wide discretion invites arbitrariness. Some laws
place few time limits on actions by public authorities, with the result that proceedings can drag
on for years. Clear time limits, by which actions must be taken-with the penalty that failure to
act will abort the whole procedure and free the targeted land from the threat of expropriation for
a stated period-might go some way toward overcoming the apparent arbitrariness of actions by
public authorities. Where discretion must be provided for, it should, wherever possible, be limited
by stating the criteria to which its use must have regard.
4.121      Transparency requires that officials be forthcoming and open about the purposes of
expropriation, how the procedures are going to operate, and what assistance is to be given to
dispossessed people. Citizens are more likely to respond positively, or at least with less hostility,
if they can understand how the taking of their land fits into some wider scheme of public benefit,
what alternatives were considered, how they are going to be treated, and what opportunities for
redress and/or compensation they have. Transparency in expropriation procedures will also reduce
the opportunities for corruption or abuse of power and so help to legitimize the process.
4.122      Fairness is perhaps the most important and most comprehensive principle, and
arguably it embraces all others. Here there is both procedural and substantive fairness. Procedural
fairness covers the areas discussed above: opportunities to challenge the decision to acquire one's
land; assistance in understanding and complying with procedures; opportunities to participate in
processes and decisions that lead up to the need for land acquisition; the provision of bodies,
judicial or quasi-judicial, which can give an independent decision on those many issues brought
about by expropriation; minimal delay in the payment of compensation.
4.123      Substantive fairness concerns compensation. If land has to be taken, if the challenges
have been met and the case for expropriation satisfactory put forth then compensation becomes
due. It is failure of compensation that gives rise to so much hostility to the whole process. The
solution is not an easy one. India's Land Acquisition Act of 1894 has had since its enactment a
provision requiring the payment of a solatium of 10 percent of the market value of the
land-raised to 30 percent in 1984-"in consideration of the compulsory nature of the



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Box 4.12 Compensation Provisions in the
Lesotho Highlands Water Project
The Lesotho Highlands Water Prject will reverse the flow of the Senqu/Orange River in the
Lesotho Highlands, create dams to store the water, redirect its flow in measured quantities into South
Africa to provide irrigation for farmland in the Orange Free State, and to develop hydro-electric power for
Lesotho. Many highland people-predominantly cattle farmers-will lose their land and their livelihoods
as a result of the project. The Lesotho Highlands Development Authority has developed, after widespread
consultations with the highland people, realistic and novel form of compensation set out in a policy
document of the Authority:
"Where a field is acquired by the project, LHDA should replace the income thus lost by the
affected household and its descendants. Such compensation for the loss of land rights must
be directed to both the individual and the community. Compensation should take the form of
replacement income rather than replacement land .... During a transitional period while
these alternative forms of income are being introduced, there should be direct replacement of
the agricultural income which has been lost. This direct replacement income should be
provided to the head of the household, annually for not more than 15 years from the time the
field is lost.... The Government of Lesotho should make an explicit long term commitment
to devote a major portion of its revenues from the sale of water from LSWP to the welfare
and economic development of the communities affected by the project... Where it is
necessary for LHDA to acquire residential property, it should where possible arrange with
the chief of the affected village for a new residential site or sites to be allocated to the
household in question within the same chief's area of jurisdiction... Where LHDA acquires
residential property comprising of one or more single room dwellings it should build a new
house or houses, totalling the same internal service area as those acquired, on the new site...
Any person aggrieved by compensation arrangement made or not made by LHDA in
connection with his loss of land, income or other assets or rights because of the LHWP
should be permitted to appeal to the land tribunal established by s. 64 of the Land Act
1979... if his representations to the LHDA do not satisfy him."
acquisition." This additional payment has not prevented constant challenges in the courts over
the years to the operation of the act by those whose land is being expropriated. So the issue is
not just the amount of compensation, or that the amount of compensation is not just; it is, we
would suggest, the nature of the compensation and the manner in which it is determined.
4.124        What needs to be done is to rethink the conception of compensation, the manner of
its determination, and the persons who are to receive the new compensation. Compensation must,
in the words of the UNCHS (Habitat) publication quoted earlier, "respond to the cultural, social
and economic reality of the people." If expropriation will destroy a community, then
compensation should take the form of rebuilding that community elsewhere. If expropriation will
destroy livelihoods, then income support and retraining programs should be introduced. Where
people view land as having a meaning beyond a capital asset, then land must be replaced by land.
Second, people and communities must be involved in making decisions about the nature of the
compensation to be made available to them and the modalities of that availability-when, how,
what, where. Third, facts-not law-should determine the persons who are to obtain



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compensation; those actually living on the land, deriving a livelihood from the land, have an
equal if not a greater claim to compensation than those with "rights" to the land who are not
physically on the land; in other words, persons in informal settlements who had invested their
capital-sweat equity, money-in their homes should receive compensation in some
form-usually new homes, building materials, or assistance in developing new community
facilities, if their settlement is to be demolished.
4.125      There are some signs that this approach to compensation is beginning to be given
serious consideration. A good example comes from the Lesotho Highlands Water Project-a
massive project funded by the World Bank to reverse the flow of the Senqu/Orange River in the
Lesotho Highlands.
4.126       Although there will always be those for whom the loss of their land is so traumatic
that they will fight to the bitter end, a policy framework and an open administrative system along
the lines set out above could go a long way toward reconciling both landowners, their advisers,
and the courts to the exercise of the powers of compulsory acquisition.
WINNERS AND LOSERS
4.127      It is time now to stand back from the details of the preceding sections and try to
pinpoint who are the winners and losers in the existing systems of urban land management. This
needs to be done both to direct attention to what reforms might be necessary to convert losers
into winners and, equally important, to identify what blockages might be expected to such
reforms if winners think that reform will turn them into losers.
4.128      At one level, the question of who are winners and losers is simple to answer.
Winners are those who have land or access to land or access to those who can grant them land
or access to resources that will enable them to buy and develop land; or who are part of the
administration of the system with regular jobs and an income. Losers are those who have none
of those things. Winners are politicians, public servants, traditional rulers, existing landowners,
both individual and corporate, regulators land-related professionals-lawyers-and fmanciers.
Losers are, in many countries, the rest-preeminently the urban poor living in informal
settlements among which women-headed households must be specifically highlighted; if these
are, using Indian terminology, the economically weaker sections (EWS), losers are also to be
found among the lower-income groups (LIG) who may be in formal housing or upgraded
infornal and now officially recognized settlements, and even in some countries among middle-
income groups (MIG) where land allocation procedures are so inefficient or corrupt that too little
land is made available for such persons to obtain adequate housing.
4.129      It is impossible to limit answers to that question to the narrow confines of land
management or land tenure. Let us take a straightforward example. A has a university education,
is in a reasonably well-paid, secure job in the public sector, with prospects of advancement and
a pension. His wife is employed as a teacher. B is a daily wage laborer on a building site. The
job is not secure; he has little formal education. His wife has an uncertain income from an



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informal wayside stall selling consumer goods in small units. We do not have to presume any
corruption, or any inefficiencies in the land management system to realize that A has a much
better chance of obtaining adequate affordable housing in a pleasant environment than B has. A
will have better access to credit and to professional advice and assistance than B will have. Both
the public sector and private developers are, on past evidence more likely to provide housing for
A than for B. Relevant factors here are A's educational background, which gives him his start
on the ladder, the nature of the socioeconomic system that awards A with a steady and secure
income and the nature, almost certainly, of the political system that pays more attention to the
need to satisfy the aspirations of the vocal middle class to which A belongs than of the
inarticulate and intermittently unemployed working class to which B belongs. To suppose that
a bit of tinkering with land tenure systems on its own will bring about a significant alteration to
the respective positions and life-chances in society of A and B is bordering on the naive.
4.130     In fact, we know that the "ideal" position of A and B is rarely in evidence. A will
have relatives in positions who will be able to help him; will be able to afford to lubricate the
wheels of the bureaucracy if that is the way to get things done; will have easier access to
politicians and fellow public servants if that is necessary; and may well be already living in
subsidized accommodation, which increases his disposable income to purchase land and build a
house. B will rarely, if ever, have any of these advantages. Even this scenario is, in many
societies, too idealistic. Unless A is in the top 10-15 percent of the income groups in urban
society, or has a clear inside track to those who allocate land or credit, he too will experience
considerable difficulties in obtaining land or a house and may be driven to go outside the official
system. In sum, urban land tenure systems that reward A and penalize B are a symptom and not
a cause of the respective position of A and B in urban society. Behind both "A" and "B,"
although no doubt closer to "A" than "B" are those who are the principal beneficiaries of many
current systems-politicians, both civil and military, large private and public landowners, senior
public servants. These are the gatekeepers to urban land and these then are the persons who
above all others will have to be convinced of the need for change.
4.131     It is also important to remember that politicians, large landowners and senior public
servants are not the only persons who have a major interest in the status quo of the existing legal
and administrative complexities of urban land transactions. Armies of lower and middle civil
servants and thousands of middle persons who make a living by guiding both the poor and the
middle-class through the masses that we have described, all of these have a substantial stake in
the confused, multi-layered and irrational systems that now exist. Experience with attempted
reforms in many countries has been shown that all of these groups will resist simplifications and
reforms no matter how sensible they may be. Devising incentives that will defuse the opposition
of these groups will not be easy, but may be necessary for the political viability of reform.
4.132      Convincing the gatekeepers is a necessary but not a sufficient condition for change.
Two other categories of persons need to be convinced. The first are those-the As of this
world-who are doing reasonably well out of the present system. Will change improve their lot
or at least not make them any worse off? Second, the officials who operate the system, are often
quite humble people closer to B than to A. Will their jobs be at risk from change; will their



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unofficial "perks" disappear, will they themselves be better off from change? The generalizations
about "deregulation" or "improving efficiency," or "reordering priorities" have to be translated
into specific proposals for action that do not threaten those who are or see themselves as winners,
or that provide them with compensating benefits for any losses they may sustain.
4.133      A possible approach to this task is to aim to extend the facilities already available
to the winners to the losers. Let us take the example of access to credit and access to professional
services: There is a need to develop or assist in the development of small-scale revolving credit
organizations ( such as Sou Sou in Ghana) in urban areas catering to the urban poor and to
encourage professional organizations to establish facilities for making their services available to
the urban poor, and to assist in the designing and development of simpler forms, standards, and
practices for use in their work generally. This approach can be replicated in other areas.
Similarly, regarding administrative reorganizations and deregulation, retraining and upgrading
programs leading to higher status and qualifications and incentive payments rewarding increased
productivity will be important ways of winning the cooperation of those officials without whose
cooperation such reorganizations will be ineffective. Recognizing the abilities and skills of the
middlemen and incorporating them into new land management arrangements aimed at facilitating
access to and the development of land will ensure their support for new approaches.
4.134      The key issue, however, will be what can be offered to the gatekeepers to induce
their cooperation? To be specific, what can be offered to senior officials who effectively control
access to urban land throughout the country, and have in that capacity built up networks of
contacts and "banks" of favors owed for past services rendered? Why should such officials
cooperate in any program designed to make access to urban land more simple, more transparent,
and more free since this would undermine their own positions and powers? Lee-Smith's point
based on research in Nairobi is still pertinent: "It is apparent that maintaining control over
informal systems of land allocation is easier and more rewarding for individuals within a ruling
elite than formal systems of land allocation to the poor," as it generates both cash and political
support.
4.135      Doebele has suggested that the best occasions to try to bring about changes in land
management practices are in what he calls "moments of transition"-occasions when some
specific change in the status of land is about to take place-the subdivision of rural land into
urban-sized plots; the provision of infrastructure; the commencement of actual construction; and
the reassembly of lands for redevelopment. To this may be added the fact that external events
may also trigger a moment of transition, for example, "the impact of falling foreign remittances
on people's propensity to invest in land," which in the specific case of Jordan led to a willingness
to contemplate reducing plot sizes so as to maintain land development, albeit with lower profits
for developers (Clarke). This is a useful approach and can be developed in this context. Just as
there are moments of transition in land management, so there are moments of transition in the
wider context of governance, either exogenous (i.e., structural readjustment programs) or
endogenous (i.e., a fundamental change of government from military to elected civilian or from
one party to multiparty or from a command-economy government to one committed to
introducing market forces). These moments of transition can be used to explain the advantages



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of more equitable and efficient urban land policies and management practices to the incoming
gatekeepers-sometimes even to some of the outgoing gatekeepers who hope to hang on in the
new government. There will be, and have been, occasions when the ready availability of such
new policies and programs for implementing them-which seem likely to provide an immediate
and positive political return to a new government or an existing government having to implement
a series of policies imposing heavy costs on the usual losers-will be taken up and acted upon.
This is perhaps the best that can be hoped for.
4.136      Must strategies for improving the lot of the losers focus on the winners? As a matter
of tactics, the answer is yes, since the winners, by definition, control those institutions and
process that can be used to block or bring about the changes needed to benefit losers. But tactics,
it must be realized are a means to an end. The end, is, as was set out in section I of this paper
the orderly development of land markets, the integration of formal and informal land markets and
settlements, the creation of flexible consumer-oriented systems of land management and the
commitment to transparency, probity, equity and value-for-money in administrative processes,
so any overall problem or set of policies for change or reform must be geared to achieve those
goals. If they are all achieved, all will be winners for even those who have lost some powers and
privileges in the transition from the old to the new system will have opportunities for legitimate
rewards and benefits in a more open and market orientated system of land management. This
point must be kept in mind in the inevitable processes of bargaining which will be an integral
part of the introduction of new systems of land management.



V. THE PATH OF REFORM
SUGGESTED FRAMEWORK FOR POLICY FORMULATION
PRIORITIES AND REFORMS
5.1        This report does not attempt to provide a detailed framework for policy formulation,
but rather offers some basic principles that can be used to this end and to examine the institutions
and instruments of land markets. This chapter merely presents a conceptual framework for
consideration. Future guidelines will address some of the issues raised here in greater detail.
The Basic Issues in Urban Land Management
5.2        What are the issues that need to be addressed? The issues concerning administrative
institutions revolve around (a) the appropriate functions to be undertaken by central and local
government and the desirability of locating as many functions as possible at the lowest feasible
level of government, and (b) the development of frameworks and practices of consultation and
dialogue with the private sector, including NGOs, about the operation of land markets. As for
legal institutions, the issues pertain to the development of (a) better access to more user-friendly,
expert, and speedy systems of adjudication; (b) more relevant systems and codes of laws relating
to land and their wide dissemination via media, targeted to specific groups in the community; and
(c) a heightened awareness by lawyers of their responsibilities toward the whole urban
community in respect of land matters. Where private sector institutions are concerned, the issue
is how to integrate them into the urban land management system, both at the center and at the
local and sublocal (ward or community) level, and make use of their skills and perspectives.
5.3        Turning now to instruments, the overwhelming issue regarding land tenure is to
accept the ordinariness and regularity of tenure in informal settlements and work toward an
integration between formal and informal systems of tenure. This in turn involves subissues of
working with residents and their organizations, middlemen, and traditional landholders, and using
the last group and NGOs and CBOs as the first line of management of urban land, and, second,
devising forms of tenure that meet and accommodate the various interests of different groups in
sections of the community, including gender questions. Following on from land tenure in general
terms is the matter of security of tenure. Here the question is how to develop simplified, cheap,
and locally manageable systems of land title security, which would usually be some form of title
registration. This in turn involves the subissues of surveying practices and rules; second,
compiling legal definitions and requirements of such matters as "title," "boundaries," interests
in land that may be registered, and security; third, the location and management of and staff skills
and incentives in offices providing title security services; and fourth, the balance between public
and private sectors in the provision of this service.
5.4        The second group of instruments are those relating to transactions in land, the
instruments that provide the machinery of a private market in land. Here the issue is to develop
a set of instruments and the modalities of using them that-also in some cases arising in security
of title-is the question of the monopoly of the legal profession to undertake transactions in land.
A second issue is the development of new instruments-innovative instruments-that can give
backing and authority to innovative ways of providing and developing land for the urban poor.



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5.5        The third group of instruments are those covering the regulatory framework, and the
direct involvement of the public sector in land development. The basic issue concerning
regulatory frameworks is their nature, scope, purpose, and implications on the ease of entry into
the formal system. There is an urgent need to assess the costs and benefits of regulations; and
to identify regulatory policies that do not impede the facilitation of market operations. On
instruments of direct involvement, two basic issues pertain to the impact of compulsory
acquisition on the availability of land released on the market and equity in resettlement programs.
Strategies for Action
5.6        This section is about how to address these issues, what practical steps might be
taken to move away, over a period of time-since important changes cannot come about
overnight-from present policies and practices, which are deleterious to the efficient and
equitable operation of land markets, to the enabling environment and transparent administration
that will facilitate their efficient and equitable operation.
5.7        Before considering these practical steps, it is necessary to formulate and explain the
principles that inform them. Formulating principles is no mere academic exercise; the principles
provide the underlying rationale for the practical proposals and suggestions to be offered and the
measuring rod for judging their worth and consistency. They will make explicit what will be
implicit in the practical proposals; in effect, they will provide the essential transparency to this
part of our discussion and, if acceptable to governments and aid agencies, will provide the sets
of objectives at which both should aim.
5.8        The institutions and instruments that provide for the management and operation of
urban land markets should be based on the principles of equity, efficiency, flexibility, and
participation, the general aim help all citizens, and especially the urban poor, to gain access to
affordable and appropriately located land with adequate security of title and occupation and
adequate development rights, that is, rights to use the land for a wide variety of purposes,
restricted only by essential environmental, public health, and public safety regulations.
5.9        The principles enunciated above merit a brief comment.
Equity
5.10       Equity refers to two matters: substantive equity and procedural equity, or due
process. Substantive equity refers to the need to review and reform institutions and instruments
so that their structure and operations are no longer biased against the urban poor. Instead of law
and administration being used to bolster and maintain a divided urban system between an illegal
or extralegal city of the urban poor and the legal city of the urban elites, they should be used to
facilitate the integration of the urban poor into the legal city. Insofar as they are responsible for
the matter, central government agencies and local authorities should speed up the release of land
for urban development, facilitate the acquisition of title to land, extend the benefit of urban
services and facilities to informal settlements, and develop programs for regularizing rather than



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demolishing such settlements. Institutions of adjudication and dispute settlement need to be
adopted and developed to cater to the real and perceived needs of urban residents, and
professional monopolies that stand in the way of innovative development because of their high
costs and slow delivery of services should be curtailed.
5.11       Due process is an important value that, unless explicitly addressed, may become
submerged in the concern for efficiency and ease of management. It refers to the need to create
a system that ensures, as far as possible, that proper consideration is given to any action that is
likely to have adverse consequences on people before it is taken; that where hearings are
provided for, they are conducted in accordance with recognized principles of administrative
justice; that where compensation is due, it is paid promptly and in full; that there are internal
checks on public officials to ensure that they carry out their duties properly; and that there are
adequate external checks to investigate allegations that they have not done so. One does not have
to subscribe to all the details of administrative law to make the point that, as a matter of
principle, a system that allows some challenge to administrative action is preferable to one that
allows none. It is much more likely to be the poor who wiUl lose out in an authoritarian
adn-inistrative system than the wealthy or weU connected.
Efficiency
5.12      The notion of an efficient system embraces several points; the costs of the system
must not be allowed to grow too large; the costs of development control must be related to some
reasonably identifiable benefit to be gained from control; control of hazardous industrial
processes, for example, may increase the costs of production but the gains in reducing the danger
to life and protecting the natural environment justify those costs being imposed on industry.
Granted that there will be costs attached to such an industrial process, it is likely to be more
economically efficient and certainly more equitable for the costs to be borne by the polluter than
the polluted. In contrast, control over a range of minor works of construction may have no
identifiable benefit and should not therefore continue. EquaUy, this principle would direct
attention to effectiveness. What is the more economically effective way of achieving a particular
end? There is no magic in any one particular system of regulation or management, and there
should be a willingness to devise a system appropriate to the government and society concerned.
Markets may work more efficiently without regulatory mechanisms, which should not therefore
be assumed in advance to be necessary. So, too, there should be no automatic assumption that
a particular activity has to be undertaken by the public or the private sector; the question is: What
works best?
5.13       Efficiency also embraces manageability and implementability. Systems, whether they
are directed to the registration of title to land, to obtaining permission to develop land, to
undertaking a transaction in land, or to complaining about some adverse decision affecting one's
tenure, occupation, or use of land, should be kept simple so that officials can carry out their
duties without mistakes and so that ordinary people are not put off using official forms, or going
to public offices by the intimidating atmosphere of bureaucracy that too often exists.



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Flexibility
5.14       Flexibility refers to the ability of institutions and instruments to accommodate
change and growth, two characteristics of urban processes. The forward planning of land
development must be of a flexible adaptable kind-must act as a guide to possible futures rather
than rigid straitjackets, must be strategic planning rather than master planning. There should be
a willingness to develop multiple systems of title security to facilitate the acquisition of security
of title by people starting from different positions in respect to their occupation of land.
Similarly, with building and land use controls, different degrees and types of control should be
permitted for different urban and economic life-styles. There should be a willingness to
experiment with new forms of tenure, new forms of compensation for compulsory acquisition of
land, new institutions-such as NGOs-to carry out certain tasks of land management and new
ways to overcome old and long-standing problems. Flexibility here embraces both innovation and
the willingness to encourage innovation. It means a constant willingness to review and revise land
management systems in the light of experience and changing needs.
Participation
5.15       Participation is a much overused word and underused activity. It must be understood
here as embracing "involvement in"-NGOs' and CBOs' involvement in managing land
registration systems at the community level; communities involved in setting and then policing
their own land-use standards, in determining where they will be relocated and how they will be
compensated if such action has to occur, in planning the future of their own areas; neighbors
involved in settling landlord-tenant disputes and systems developed to enable individuals to take
action against those who continually flout norms of right conduct, be they neighbors, absentee
landlords, or corrupt officials. Participation involves empowerment and the development of self-
reliance; it requires a system of land management that facilitates people getting together to
acquire land, develop it, and live on it without official harassment. It also involves officials
listening to the people and recognizing that a person's worth and rights do not depend on his/her
socio-economic position. Finally, participation involves transparency of administration; people
must know the bases for decisions, rules, and actions, and these bases must be given in advance,
in a comprehensible form, and must be adhered to. Without transparency and predictability,
people cannot plan their own futures, and markets for land are unlikely to work.
5.16       One further point must be made about these principles: inevitably, attempts to meet
all the principles will encounter the problem that in practice there may be conflicts between them;
equity, for instance, may not always be reconcilable with efficiency. Although there is no perfect
answer to these conflicts, the aim should be to develop systems for the management and
operation of land markets that face up to and encourage decisions to be taken with the full
knowledge of and after full discussion of the conflicts. Decisions taken in that way will be easier
to justify and easier to accept. Conflict resolution is an essential part of the decision-making
process.



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5.17       With these principles and the general strategy for action in mind, we may now give
consideration to a program of action to address the specific issues identified earlier. It will be set
out in the form of a series of objectives to be achieved, followed by the steps or activities needed
to achieve them.
FRAMEWORK FOR REFORMS
Institutional Reforms
Administrative Institutions
5.18       Objective: To define the scope of responsibilities of the public sector and to
improve the capacity of government at all levels to enhance the tasks that it does best.
5.19       Activities
5.20       Activity 1: Decentralize.
a. land registration
b. allocation of public or publicly controlled land
c. all permits and approval needed to undertake development of land via a "one-stop
shop".
5.21       Explanation: Overcentralization of land management is a major cause of delay and
inefficiency. It increases the cost of complying with official laws and procedures and so increases
the likelihood of noncompliance. Management must be made more accessible to the consumer,
and this can be done by decentralizing management outlets. The three activities mentioned above
are key aspects of land management, all of which will provide examples of successful
decentralization that can be referred to as models.
5.22       Activity 2: Confer legal powers on local community level and/or traditional
bodies to undertake local land management tasks.
5.23       Explanation: In many cities, local governments are as remote as the central
government is to the residents of low-income settlements, both formal and informal. As noted
above, there can be practical and political problems in wholesale transfers of power to local
levels. The optimal form of transfer will greatly depend on the context of each community.
Nevertheless, in general, there is a need to push land management down to levels that have
relevance for the majority of the urban population and to empower organizations at the lower
levels to undertake such tasks as dispute settlements, recording land titles and transactions,
policing land uses, and liaising with upper-level governmental authorities on public acquisitions
and similar matters. Where traditional authorities already exercise such powers, albeit
unofficially, consideration needs to be given to integrating them with official management
systems. So, too, with organizations and structures in informal settlements.



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5.24      Activity 3: Develop transparent, simple, and fair administrative processes and
procedures to handle land issues and to involve private sector actors in the process.
5.25      Explanation: Land issues here embrace all those matters on land in which public
authorities are or may be involved-the registration of titles, the recording of transactions, the
granting of permission, the allocation of plots, the compulsory acquisition or voluntary purchase
of privately owned land, land adjudication, readjustment, and fiscal exactions. In all these cases,
those needing or required to have contact with public authorities must know in advance hat both
sides' duties and rights are and must have confidence that procedures will be adhered to and that
desired or required result will follow from such adherence. Processes and procedures will need
to be published in relevant languages and made available to consumers. NGOs, private sector
professionals, and developers will need to be involved in the development of these processes.
5.26       Activity 4: Train local officials and private actors to undertake tasks in the new
administrative environment.
5.27      Explanation: As functions are decentralized, so it will be necessary to train officials
to handle new tasks. If NGOs are to be given specific land management responsibilities, then
members and officials will need training. An administrative culture that has kept informal
settlements and their leaders at arm's length or that has a "policing" orientation, will need to
change; a change of rules alone will not achieve results.
5.28      Activity 5: Develop incentive-based systems of personnel management in
relation to public agencies concerned with land management.
5.29      Explanation: If training is essential to orient officials in the right direction, there is
an equal need to introduce changes in personnel management and organization to ensure that the
agency they work in is also responsive to a more enabling role. Productivity and commitment
need to be encouraged and rewarded, failures penalized. Responsibilities need to be made
transparent.
5.30      Activity 6: Establish a monitoring mechanism or body with joint public and
private sector (including NGO) membership to keep under review the operation of the
decentralized system of land management and to further the progressive involvement of
private sector professionals and NGOs in land management tasks.
5.31      Explanation: There will be a need for some organization outside the bureaucracy to
monitor progress on the relevant activities. Such a body will involve all parties that participate
in land markets-public sector, private sector, and popular sector (NGOs). Given the composition
of this body, it could also be used to investigate and make recommendations on the involvement
of the private sector in land management.
5.32      To improve the capacity for urban land management there must be decentralization,
openness, involvement of the private sector, and training. The balance between these facets of



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management, the emphasis given to one or another, will depend on the present position in any
particular country, but there are few countries that do not need to give some consideration to
some of these matters. Equally, the precise manner in which the activities are undertaken-by
law, by administrative directive, piecemeal, after an investigation or inquiry, wholly internally,
or with the aid of outside consultants-must likewise be left for national decision.
Legal Institutions
5.33       Objective:
a. to develop efficient and expert user-friendly systems for resolving disputes over
land issues; and
b. to create comprehensible, readily available systems of land laws catering to all
sections of the community.
5.34       Activities:
5.35       Activity 1: Land Institutions Audit.
5.36       Explanation: This activity has two dimensions. First, the management of litigation
leaves a great deal to be desired in many countries. Concepts of efficiency, of the costs of delays,
of the management of time are foreign to most systems of judicial administration. Secondin the
actual process of litigation, are the rules relating to evidence, procedure, standing of the parties,
and functions of the judge apt to ensure speedy and satisfactory results? When were they last
examined and by whom? Whose interests do they serve? We are proposing that every country
undertake a "Land Institutions Audit," that is, a systematic study of the legal institutions, legal
instruments, and adjudicative processes that affect all the land issues that we have discussed in
this document, documenting the time, complexity, and costs involved in current systems. The
work of the Instituto Libertad y Democracia in Lima illustrates how important this kind of audit
can be in identifying bottlenecks and inefficiencies in the legal system.
5.37       Activity 2: Create or revive specialized dispute resolution mechanisms for land
suits involving formal courts or tribunals, alternative dispute resolution (ADR) mechanisms,
and traditional and local community mechanisms.
5.38       Explanation: Many countries have developed specialized bodies for resolving
disputes for different purposes: to deal with commercial disputes, labor disputes, disputes arising
out of various welfare programs, and various aspects of land disputes-rent tribunals, land
adjudication committees, compensation tribunals. Land is a sufficiently important and integrated
matter, giving rise to difficult and potentially disruptive disputes, call for the establishment of
specialized bodies with wide powers to deal with these issues. Their composition, procedures, and
powers will need to be geared to their tasks rather than patterned after traditional judicial models.



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5.39       Activity 3: Draft and publish land laws in forms that will make them easily
available to the public.
5.40       Explanation: This activity does not necessarily require a reformed and
comprehensive code of land laws, such as exists in Malaysia, to be introduced. This may be
considered a long-term objective. What is of more immediate concern is the bringing together
in one or more documents of all the legislation relating to land that is scattered about in the
statute books; the consolidation of this law so as to eliminate conflicts, overlaps, and obscurities,
and, if possible,reconcile the laws developed over many years and based on different philosophies
or conceptions of land management. Such an exercise will also provide an opportunity for
simplifying and clarifying the language of the laws. Publication also means keeping the laws in
print and up to date. The example of Malaysia may be mentioned here. Commercial publishers
produce a yearly updated version of the National Land Code and frequent updates of other
relevant laws on land.
5.41      Activity 4: Develop explanatory publications on land laws geared to all levels
of society.
5.42      Explanation: It is not enough that the laws are published; they need to be explained
clearly and simply to users. This already happens in many countries; but the practice needs to
be made universal. It is not enough that textbooks for students and practitioners are published;
there is a need also for handbooks, guides, charts, and picture books aimed at (or produced by)
NGOs and the general public. Again, as well the publication of the laws, this is an activity that
can be undertaken perfectly well by the private sector.
5.43       Activity 5: Develop standard forms for land transactions.
5.44      Explanation: The purpose here would be to simplify, speed up, and reduce the costs
of land transactions. It is the task of a communication professional and not of a lawyer working
in close association with consumers and lawyers to develop user-friendly forms. Once such forms
have been designed, they, too, need to be made widely available. The aim should be to develop
forms and procedures that would enable ordinary people to undertake transactions without having
to make use of the services of professionals-lawyers, surveyors, and the like.
5.45      Activity 6: Train lawyers, legal administrators, judicial decisionmakers, and
draftsmen to equip them to undertake the tasks outlined in the above activities.
5.46       Explanation: In matters such as these, lawyers are no different from administrators;
if new approaches are to be called for, new institutions and procedures need to be introduced,
lawyers will need to be sensitized and trained to operate in the new environment.



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Institutions of the Private Sector
5.47       Objective: To help the private sector to function more effectively in its role as the
primary operator in land markets and to develop its role as an equal partner with public
institutions in land management.
5.48       Explanation: In virtually all countries in the developing world, the private sector,
including the individuals and organizations in informal settlements, is the main actor in land
markets and land development. The objective stated here is based on the assumption that this fact
needs to be recognized and built on.
5.49       Activities:
5.50       Activity 1: Review and, where relevant, revise legal codes governing the
establishment and operation of corporate bodies, housing, and land development
cooperatives to facilitate small-scale, corporate, and cooperative land development activities
and to provide such bodies with access to credit.
5.51       Explanation: A large amount of private sector land development is undertaken by
individuals or famnilies building their own homes. There is a need, however, to create
opportunities for individuals to come together; to pool resources of land, labor, and capital; and
develop land on a collective or cooperative basis. This route is strewn with many obstacles, one
being the inappropriate legal frameworks for such forms of development. Simple forms of
incorporation, and of establishing a housing cooperative and easier access to credit from
banks-usually cheaper then informal lending agencies-will be of enormous assistance to small
developers.
5.52       Activity 2: Liaise with associations of land-related professions to develop
programs for the transfer to or the sharing with such professions of land management
functions.
5.53       Explanation: Where there are no national policy or national security issues at stake,
private sector professionals can take over the operation of many functions in the land
management field. Programs can be developed on a trial basis, and in particular paraprofessionals
can be used in informal settlements as part of the process of integration and regularization.
5.54       Activity 3: Develop links and contacts with associations of urban NGOs,
tenants, and urban land developers, and set up regular meetings to review land
management practices and the operation of land markets.
5.55       Explanation: The purpose of this activity is to begin closing the gap that exists in
too many countries between the private sector, especially that part of it working in informal
settlements, and the public sector land managers. Proposals for new regulations, new
administrative procedures, new standard forms, use of building materials or credit facilities tend



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to be taken in a vacuum with no knowledge of the views of consumers. Regular meetings with
the private sector wil do much to ensure that a consumer viewpoint is taken into account in
policy formulation and implementation. A caveat must however be entered here. Although the
views of the private sector are important, the private sector embraces small-scale as well as large-
scale developers and landowners, tenants as well as landlords. This activity should not be seen
as a signal that the making and implementation of urban land policy should be turned over to a
few large private landowners. Indeed, the aim of this activity is as much to relocate policymaking
away from such groups where, unofficially, it is located in many countries, as it is to introduce
the idea that such policymaking must be shared between the public and the entire private sector.
5.56      Activity 4: Work with traditional landholders and in particular develop and
provide for instruments that permit modern urban uses of their land, the continuation of
traditional residual rights in the land, and a regular income from the land.
5.57       Explanation: This activity is of particular concern for urban land management in
Africa, the Pacific Region, and parts of Asia. It is based on the view that attempts to eliminate
the role, influence, and rights of traditional landholders have on the whole failed, have led to
parallel and unofficial land management and land development activities and need therefore to
be abandoned. The aim should be to work with such persons to explain the benefits of developing
their lands in an ordered way, taking advantage of modern financial and legal tools; and to assist
them in formulating and executing land development projects.
5.58       Activity 5: Develop programs of training for private sector participants in
urban land management and development.
5.59      Explanation: The thrust of all the activities to implement the objective in the private
sector is that new roles and tasks will devolve onto or be transferred to the private sector. This
will require parallel programs of training to ensure that professionals, paraprofessionals,
employees and members of NGOs, small-scale land developers, and members of cooperatives can
undertake these tasks. In addition, training should be part of the programs of regularizing and
integrating informal settlements; officials need to be trained to relate to and work with informal
settlements; builders and "unofficial" administrators in informal settlements need to be assisted
to upgrade their skills. Special programs should be developed relating to the role of women in
land management. Given the very large numbers of women-headed households in informal and
low-income settlements, more women professionals and paraprofessionals are needed in positions
of responsibility to work with such households, and to represent and ensure consideration of their
interests in land management
Reforms of Instruments
Land Tenure
5.60       Objective: To develop a framework for a system of land rights, providing a
reasonable measure of security and a simple and efficient system of affecting land transactions,



97
which is appropriate for use by all sections of the community and which takes into account and
builds on existing traditional and informal systems of tenure, where these exist.
5.61      Explanation: Faced with rapid urbanization and the consequent need to provide land
for urban development, developing countries must base their framework of land tenure on an
enabling philosophy that translates into a policy of making land as widely available as possible,
establishing programs for integrating informal settlements into the formal city without destroying
the community process of management developed in those settlements, and facilitating land
transactions.
5.62      Acivities:
5.63      Activity 1: Assess what is happening on the ground in relation to land rights
in urban areas.
5.64      Explanation: Any changes or reforms in urban land tenure must be preceded by
knowledge of what the present position is. There is generally too little knowledge of the current
operation of urban land markets, both formal and informal, and in particular about who is
operating in the market and how, and who is benefiting or losing from present practices. Both
land market assessments (see UMP paper No.1) and more anthropological and sociological
studies of informal settlements and the management of land therein are needed.
5.65      Activity 2: Review or if necessary establish a special body to review the existing
laws governing land tenure with a view to reforming, updating, reorganizing, and codifying
them.
5.66       Explanation: Activity 3 of Legal Institutions Reform focuses on the codification,
clarification, and publication of the existing laws on the land. That is a necessary first step. This
activity is a second step. In many countries the laws on tenure are a confused jumble based on
different philosophies and catering to situations no longer extant. There is a respectable argument
that to introduce systems of land title registration without accompanying it with reform of
substantive land laws will be to compound inefficiencies and confusions in land management.
Measures to integrate formal, informal, and where relevant customary systems of tenure will need
structures and processes tailor-made for the purpose, and will produce novel interests in land that
will need both protection and the status of market ability. None of this should be attempted
without a review of the present and possible future directions of urban land policy.
5.67      Activity 3: Decide on the course of reforms and choose between the full- fledged
code or a junior system for low-income and informal settlements.
5.68      Explanation: It is important to recognize that there can be different levels or degrees
of security of title. A "Rolls Royce" level of security with fixed and clearly demarcated
boundaries may be necessary for a major commercial or industrial investment in the city; it is
not necessary and a waste of resources to insist on it for every plot in a low-income settlement.



98
In such places, a system of title security is in reality a formal confirmation of what is recognized
and accepted by the community, so it can be a simplified system with general boundaries,
minimal surveying, and reliance on neighborhood knowledge to determine rights and interests.
Such a simplified system-of which there are several extant models to choose from-can be
managed by NGOs and community groups within low-income settlements. The system can also
be used in recording, without attempting to change the status of interests in land held under
customary tenure.
5.69       Activity 4: Develop instruments that will allow customary allodial land rights
holders to benefit from and maintain residual traditional rights in commercial land
development on land held under customary tenure.
5.70       Explanation: Too often, a failure to grapple with issues arising from peri-urban
development on customary lands has left the legal status of the development unclear and so
prevented credit or infrastructure from being extended to them. Where attempts have been made
to sort out problems, they have focused on eliminating customary land rights from developed
land. These attempts have not always been well thought out or successfully executed. The
alternative approach being advanced here would be to use "modern" instruments such as leases
or trusts, or traditional customary instruments such as usufructuary rights, adapted where
necessary, to harness together customary and commercial interests in land development and
management.
5.71       Activity 5: Simplify procedures, mechanisms, and forms used in connection with
land transactions.
5.72       Explanation: The concept of user-friendly procedures, mechanisms, and forms is the
key to activity here. Few people are at home with forms and procedures and they will only use
them if they are available for use and easy to use. Serious contents can be combined with
attractive design and appealing explanations. Vernacular language should be used.
5.73       Activity 6: Develop a system of financial incentives and rewards to encourage
use of the formal land tenure system.
5.74       Explanation: The provision of easy-to-use procedures and forms will not, on their
own, be sufficient to persuade residents in the informal sector to use the formal system of land
tenure. There may well be financial advantages in not using the system-avoidance of fees, taxes,
charges. It will be necessary therefore not merely to explain the advantages of using the system,
which may to many people be speculative, but to provide fmancial incentives to do so that are
real and immediate. These could be remission on fees, taxes, or charges; opportunities for loans
at reduced rates; a cash handout or an equivalent in building materials.



99
Registration
5.75       Activities:
5.76       Activity 1: Assess the existing system.
5.77       Explanation: This assessment should attempt to evaluate the impact of the existing
system on the urban land markets. This should include a look at the fidelity of the transactions
registered in terms of their representation of the actual legal situation or the de facto land
situation, their reliability and their accuracy. What is the quality of the information in the existing
registers in terms of its accuracy as a reflection of the actual field situation in portraying current
ownership and rightholders, the current parcel framework, reliability of the existing records,
coverage of the jurisdiction, maintenance of the system and perception of the system by the users
(especially the finance agencies)? Efficiency of the system should be judged in terms of timely
performance in registering transactions and the time it takes to gain access to or information from
the records already registered. Costs of operation and associated user fees and taxes must also
be taken into account. Consider the equity factors such as access to the registration system by
low-income earners.
5.78       Activity 2: Define the objectives sought from an improved registration system
and make the political choice of improving existing systems or setting up full-fledged title
registration.
5.79       Explanation: The standard assumption is that the only appropriate method of
providing security of title is through a system of title registration. Where this is in place and
works- that is, most people dealing with land use the system so the register reflects with a fair
degree of accuracy what is the position on the ground-it is probably the best system. But where
it has not yet been introduced or where it does not appear to be working well, alternatives need
to be considered. Two such options are deeds registration and title insurance, the latter of which
could be provided by the private sector.
5.80       Activity 3: Deflne the role of the government and expand the scope for
privatization.
5.81       Explanation: The private sector has a role to play in all aspects of the land
registration business. The use of private surveyors, for example, may speed the delivery of the
necessary cadastral services for both public and private lands.
5.82       Activity 4: Address technical issues.
5.83       Explanation: In the technical area, there are two main sets of issues: data acquisition,
including the field survey, and data and record management. Too much time and money are
currently spent on precise surveys in an attempt to prevent problems in the future. The
consequence is a low level of productivity restricting the benefits of the cadastre and land



100
registration to relatively few people and to only a few areas in each country. The challenge is
to encourage a realistic assessment of what is necessary and sufficient rather than what is
technically the best. Both maps and records need to be stored and retrieved, maintained, and
updated in an efficient and cost- effective manner. Consideration should be given to the English
"general boundaries system" used in Kenya, Sudan, Malawi, and some of the Caribbean islands.
A general boundary is one that has not been finally adjudicated in the field. The location and size
of the parcel are determined to the extent that they can be located on a map. Experience in
Zambia and elsewhere indicates that aerial photography can be used as a less costly substitute
for maps. Consideration should be given to more use of "social cadastre" methods, that is, fixing
boundaries by consulting neighbors and then simply recording the results on a map or
photograph.
5.84       Activity 5: Improve institutional arrangements.
5.85       Explanation: As previously mentioned, the lack of coordination and of skills calls
for some basic rethinking of the organizational structure of the land registration functions in order
to improve the efficiency and the delivery of such services but also of the human capabilities to
carry out these functions. Training programs should be part of this rethinking.
5.86       Activity 6: Introduce incentives to use the registration system.
5.87       Explanation: Look at the critical factors that encourage users to register transactions
or that discourage them from doing so. They are fees, distance to the registration office, timely
performance of the registration function, regulation. The registration system should not become
a policeman for checking all other agencies' property approval requirements. Among some
incentives that can be explored are low-cost registration fees, legal aid for low-income owners,
the availability of legal information, and a reduction of taxes for a grace period after registration.
5.88       Activity 7: Improve nonformal land records.
5.89       Explanation: When registration improvements are attempted in urban areas, at least
four types of land with various legal circumstances can be identified: (a) formal parcels with
documents in a registered system; (b) land parcels under customary/traditional administration with
various rights that need adjudication; (c) formal private land parcels with multiple unrecorded
transactions and possible illegal subdivisions; (d) nonformal private and public land parcels with
multiple unrecorded transactions. When a government decides to take action to inventory all
identifiable properties in an urban area as well as to give occupants of land documentary proof
of their land rights and to improve its ability to manage public lands, it needs to adopt a blend
of legal and technical approaches to achieve rapid coverage of the whole area. Progressive
mechanisms have been used in many countries over the past 40 years. These are temporary
occupancy permits (Botswana), certificates of land use (Thailand), preemptive certificates
(Thailand), and certficates of occupancy (Nigeria). Most of these systems allow a number of
years after the initial determination of rights, within which possible unknown claimants are able



101
to register their claims. Some of these methods also allow relaxed methods of parcel
identification and definition recognizing the progressive nature of the process.
5.90       Activity 8: Improve the registration of customary land.
5.91      Explanation: Ghana is a good example of what can be done. In 1986, Ghana
introduced a Land Title Registration law, promoting a system of title registration. The legislation
followed the basic principle formulated in Ghana in 1876 that the customary laws of the ethnic
groups in Ghana were to be observed and enforced. The 1986 law was designed not to change
customary tenures but to eliminate the uncertainty. It allows the registration of various types of
tenure, including allodial under customary law, customary freehold under customary law, freehold
under common law, long-term leasehold under common law and customary tenancy of a long
term nature. The 1986 law does not change the nature of the rights being registered. This
contrasts greatly with the Kenyan legislation of the 1950s and 1960s, which was designed to
individualize property rights.
5.92      Activity 9: Strengthen the dispute settlement process and the judicial system.
Land-Use Regulations
5.93       Objectives: To develop a system for the regulation of land tenure and use that
focuses on essential public health, public safety, and environmental factors, which is transparent
and equitable in operation and which is implementable.
5.94      Explanation: Evidence from many countries shows that the regulatory environment
is deleterious to efficient or equitable land development and the operation of land markets. Too
many regulations are based on outdated and inappropriate models with enforcement being
spasmodic at best, partisan or corrupt at worst The aim is to select regulation to what would be
widely accepted as essential and appropriate, develop more community involvement in their
creation and implementation, and free as much land as possible from the inhibitory and
constraining effects of the regulatory shadow.
5.95      Activities:
5.96      Activity 1: Conduct an audit of land-use regulations.
5.97      Explanation: There has been a tendency to impose an array of regulatory instruments
without regard to the cost they impose on the process of land development or whether they are
enforceable. The purpose of this audit will be to assess the costs and benefits of existing
regulations and to identify those regulations that are or are not essential and have or have not
proven to have a negative impact on the functioning of land markets.



102
5.98      Activity 2: conduct an audit of regulatory authorities.
5.99      Explanation: In the private sector, time is money. Delays in administration add on
to the cost of the product. There is a need to try and replicate this approach in the public sector,
where delays and inefficiencies are not paid for by those responsible for them. An efficiency
audit should be established to set performance standards for regulating agencies, monitor
performance against these standards, and develop incentives and penalties for meeting or not
meeting the standards.
5.100      Activity 3: Define growth management objectives.
5.101     Explanation: Rethink the existing system of regulations and planning in view of
priority concerns. Instead of promoting an array of instruments that may sometimes conflict with
each other, focus on the end-product by asking the right questions, such as : (a) What are the
priority concerns of the city or community? (2) What are the fundamental issues on which
compromise will not be acceptable (i.e., environmental aspects)?
5.102     Activity 4: Design a bottom-up approach.
5.103     Explanation: Design a bottom-up approach to identify those regulations that are
essential for the pursuit of these objectives.
5.104     Activity 5: Decentralize the planning function.
5.105     Explanation: The main objective behind this activity is to avoid bureaucratic delays
and lengthy approval processes. Much of that responsibility can be delegated to local
governments.
5.106     Activity 6: Enhance institutional coordination.
5.107     Explanation: The lack of concerted efforts and miscommunication among the various
agencies involved in the land development process have caused wasteful investments and gross
duplication in the efforts of servicing land.
5.108     Activity 7: Establish zones where development may take place with a minimum
of regulations.
5.109     Explanation: There may be some nervousness about what will happen in a
regulation-free environment. The way forward is to establish trial zones or areas of land where
development can take place with a minimum of regulation to test out new approaches. Lessons
can be learned from countries where this approach is already in operation.



103
5.110     Activity 8: Release all small-scale development from the requirement to obtain
permission to develop.
5.111     Explanation: Too many systems of land-use regulation or development control
require all developments to obtain permission before activity can commence. The increase in the
costs of small-scale development is often, in any event, not observed (so that such developments
are "illegal") and serve little positive purpose. Regulation should concentrate on major
developments with significant environmental implications and leave small-scale developments
alone. Informal community controls can be used to ensure such developments do not
inconvenience neighbors.
5.112      Activity 9: Develop a "one-stop shop" for obtaining all necessary permission
to develop land.
5.113     Explanation: Even when regulatory regimes are reduced in scope, there will still be
a requirement to seek some permission. This process can be greatly speeded up if all permissions
can be obtained from the same office and if that office is a decentralized one. A corollary of this
is that administrative procedures will need to be adapted to ensure inter- and intra-agency liaison,
and forms will need to be designed for use in connection with obtaining just one permission.
5.114      Activity 10: Develop fiscal and other incentives to use the regulatory systenL
5.115     Explanation: As with the land tenure system, it will not be enough to create a
slimmed down user-friendly regulatory regime and expect people to use it. Too many people have
become used to ignoring the system. If the system is to continue and become an implementable
one, there must be incentives to use it. It must become more advantageous to use it than to
ignore it as penalties alone will be insufficient to create the incentive to use it. Tying lawful
development in with security by title would be one possibility; tying it in with loans for
development would be another. Where effective property taxes systems exist, a "tax holiday"
could be introduced and applied to lawful developments.
5.116     Activity 11: Declare a moratorium  on enforcement activities against
unauthorized developments in informal settlements.
5.117      Explanation: Some central and local governments still use the bulldozer as a tool
of urban management. This does not get rid of informal settlements; at best it shifts them from
one place to another. Rather than try to eliminate such settlements by destroying them, the way
forward is to upgrade them and extend urban facilities to them.
Public Intervention
5.118      Objective: To reorganize and improve systems and procedures for direct public
intervention in land markets so as to minimize disruption of the market.



104
5.119     Aciviis:
5.120     Explanation: Evidence indicates that programs of direct public intervention in land
markets, whether wholesale land nationalization or piecemeal compulsory acquisition, too often
fail to take into account the ongoing operation of land markets or of the interests of people on
the land. Without denying the need for some direct public intervention, the aim must be to
examine existing legal and administrative processes providing for public land acquisition and to
develop processes that make more use of market processes and emphasize cooperation with
people.
5.121     Activity 1: Develop an inventory or register of all publicly owned urban land
with information on which public authorities own what land, what the land is being used
for, and where it is.
5.122     Explanation: If publicly owned land is to be used more efficiently or is to be made
available for development, it is necessary to know the existing situation. An inventory or register
is a necessary first step along this route. Many public authorities may not have good records of
their own land holdings. Others may be reluctant to disclose what they own or what it is being
used for. The decision to create an inventory will need to be made at a high political level and
followed through vigorously.
5.123     Activity 2: Prepare a program for the development of publicly owned urban
land, which is zoned or allocated for development but has not been developed.
5.124     Explanation: The inventory in Activity 1 will in all probability reveal publicly
owned urban land which is capable of being developed and the relevant public authority must
be required to release it to those who will develop it in the private or public sector. Where the
land is occupied by informal settlements decisions must be taken either on regularizing the
settlements or in close association with the community, developing a program of relocation and
resettlement if the land is needed for essential public work or is otherwise unfit or inappropriate
for residential development.
5.125     Activity 3: Revise the legal framework empowering public authorities to acquire
land compulsorily so as to enhance consultation and prompt payment of compensation.
5.126     Explanation: Evidence from many countries indicates that laws on compulsory
acquisition of land are outdated and when used give rise to serious blockages in land
development and to social tension, and operate unfairly, especially on lower-income groups. They
are a prime candidate for thorough revision. A totally new approach needs to be developed, one
that emphasizes as far as possible the cooperative approach to land acquisition and builds into
the process maximum concern for those likely to be dispossessed.
5.127     Activity 4: Develop legal frameworks and administrative processes for the
practice of land readjustment.
5.128     Explanation: Land readjustment as a technique for direct public sector involvement
in land development is becoming more widely accepted and used. This activity is directed to



105
those countries that have not yet made provision for the practice. Although it would be unwise
to see land readjustment as a panacea to the problem of public sector land acquisition and
development, it is certainly a useful alternative to compulsory acquisition and as such should be
provided for in the law, and tried out therefore in a pilot project.
EXPECTED RESULTS AND BENEFICIARIES
5.129      What is being proposed here is a major long-term program. It is recognized that not
every objective or activity being suggested here would apply to every country in the developing
world. But it is as well to make clear what the overall message is: a major reorientation of urban
land management as it operates in most countries. There will be changes in the legal and
administrative superstructure; in their day-to-day operations, in the roles the various actors
perform in the process of management and in land markets, and in the philosophical basis that
provides the intellectual justification for the approach to land management. Instead of the public
sector having the dominant controlling role, which is the present official position in most
countries, it will move to a residual enabling role. Instead of the private sector operating at the
margins, especially in areas of low-income settlements where its activities may be technically
"illegal," it will develop into the primary mode of land delivery and development, and will be
facilitated to do this. The effect of this will be that fewer public officials will be needed and
there will be or should be fewer opportunities to manipulate land delivery systems and actions
for political ends. A move toward greater reliance on markets for land delivery and development
is designed to benefit the general population by making it easier for them to obtain and develop
land, but it may disadvantage those in the political and administrative hierarchies for whom
existing secretive and inefficient administrative discretionary systems provide opportunities for
illicit private gain and political influence. This in turn will likely mean that the chief obstacles
to change in the direction being proposed here will be at the wider political level, which in tum
reinforces the point made earlier in this chapter: reforms in urban land management cannot be
divorced from reforms in political and administrative processes designed to bring about more
open accountable and participative governance.






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Urban
Management
_hroof
Current UMP publications:
UMP 1
Property Tax Reform: Guidelines and
Recommendations. William Dillinger.
UMP 2
Energy Environrment Linkages in the Urban Sector.
Josef Letimann.
UMP 3
Alternative Approaches to Pollution Control and
Waste Management: Regulatory and Economic
Instruments.
Janis D. Bernstein.
UMP 4
The Land Market Assessment: A New Toolfor
Urban Management. David E. Dowall.
UMP S
Reforming Urban Land Policies and Institutions in
Developing Countries. Catherine Farvacque, Patrick
McAuslan.
UMP 6
A Review of Environmental Health Impacts in
Developing Country Cities. David Bradley, Carolyn
Stephens, Trudy Harpham, Sandy Cairncross
UMP 7
A Frameworkfor Reforming Urban Land Policies
in Developing Countries. David E. Dowall. Giles
Clarke.
For information about UMP materials contact:
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The World Bank
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Washington, D.C.
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