Recognition and protection of private property is the bedrock of land development as seen recently in areas initially perceived inhabitable.
However, depending on its interpretation, the new Constitution undermines this protection by broadening the government’s compulsory acquisition and regulatory power to acquire and regulate private property.
The economic justification embodied in compulsory acquisition is to address the holdout problem associated with provision of public goods by forcing nonconsensual transfer.
For instance, large developments like construction of highways and ports often involve assembling vast land.
The holdout problem comes from the fact that once the assembly becomes public knowledge, each landowner realised they imposed a substantial cost on the provider by refusing to sell.
Such knowledge confers monopoly power on owners, who can cling to their parcels for prices in excess of the true value, causing a distortion.
The compulsory acquisition doctrine is enshrined in the so-called ‘taking clause’ in Article 40 of the Constitution.
The clause grants the government limited power to acquire private property without owner’s consent.
However, the limits encompass the following elements.
The acquisition must be for public purpose or in the public interest with a prompt full payment of just compensation.
The clause introduces two other elements; it allows for court accessibility to any person who has an interest or right over the property in question. It also provides for the compensation of the potential squatters of land in question.
Squatter problem
The compensation of squatters applies only to those whose occupancy has been in good faith.
However, this provision coupled with other Constitution protection is likely to exacerbate the squatters’ problem in private land which has been on the rise.
A case in point is the recent landmark case, where squatters managed to obtain a conservancy order to restrain the Nairobi County Council from evicting them from the informal settlement with adequate notice.
The informal settlement was part of public land vested in the Nairobi County Council.
However, the controlling case that informed the court’s opinion is a South African one involving informal settlement in private land. Inferably under similar circumstances, the court ruling would apply to private land that would seriously undermine the level of investment in private land.
Compulsory acquisition
Additionally, the Constitution has granted government broad regulatory power to deal with negative externalities that may be unwillingly imposed on the public.
Unlike power of compulsory acquisition, exercise of regulatory power by the government is non-compensable.
Presumably, the government’s motive to regulate use of private property is driven by efficiency consideration but in reality that may not be the case.
Regulation may be driven by other factors like regulatory capture that emanates from rent-seeking behaviour of the owners to protect themselves.
Kieyah is the principal analyst at Kippra. E-mail: [email protected].
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