Replacing 33 yrs land leases with 99yrs titles shall boost investments

-opening the Mara regional ands office. The ministry has so far put up 12 such offices and will in a few months complete the exercise countrywide.

The title or leasehold improvement exercise refers to land occupancy rights for approved, surveyed plots in which case they don’t fall under the customary law ambit. In the latter case one has inherited land which hasn’t been mapped. In many cases surveyed plots are close to expanding urban areas where municipal or town authorities compensate original owners for them to leave. In that case the customary land holding regime withers on its own, and land bought by migrants in the traditional format is soon surveyed, given titles; now the lease span on government land (the rightful owner of land) is being prolonged for everyone, not just those with investor permits whose land occupancy was accorded privileges.

Moving from title deeds reflecting 33-year occupancy rights is not just a matter of amending such titles but is potentially a completely new situation. There is all the same a margin of difference between the 99 year lease and private ownership of land. It is going to be felt by some categories of foreign investors in particular, while largely facilitating local investments, as here this expression of occupancy right largely suffices.

Initial reports said that about 50,000 land occupants in Mara Region had not followed up their title deeds, those tied to original 33 years entitlement. Memory has it that the idea of prolonging the title deed period was mooted to apply for the new capital as shifting government offices there was hotting up in 2018 in particular. But the doing business ‘blueprint’ that the government is committed to implement envisages that local people find it easier to obtain bank loans with land as collateral.

Banks can’t issue large loan amounts and later collect collateral whose periodicity is minimal as investors for instance putting up buildings don’t expect return too soon save in exceptionally profitable areas like  central business districts. Even then a change occurred with the ratio of government expenditure given to bureaucratic socializing was cut down significantly, in which case lots of goods and services they were routinely using lost plenty of their value, including the land on which real estate is based, like hotel, apartment blocks, undeveloped plots etc.

While this shift shall ease access to loans by those holding land, lending will not reach optimal levels without business being reasonably brisk, and thus the potential for repaying the loan. Banks seek collateral only as last resort, unlike street money lenders who trade in real estate or can acquire such properties for years to trade for instance when land prices are higher, unlike at present.

Still it must be said that the Ministry of Lands has done the part of business environment uplifting that falls to it, as other matters belong elsewhere. Only when these reforms are coordinated and synergetic can they be expected to bring about the desired outcome, of boosting local and foreign investments. Those who hold significant chunks of land can invite foreign partners now that their lease shifts to 99 years without having to apply for renewal, as that would prejudice foreign partnerships.