Besigye wrong on land allocations to investors
Jul 23, 2006
Reference is made to Col. Dr. Kiiza Besigye’s article in the Daily Monitor of July 17, 2006 on page 10, titled “Grabbed land is recoverableâ€. In this article Besigye makes one simple but clear point that public land is being allocated illegally by government to the “so-called investors†an
Reference is made to Col. Dr. Kiiza Besigye’s article in the Daily Monitor of July 17, 2006 on page 10, titled “Grabbed land is recoverableâ€. In this article Besigye makes one simple but clear point that public land is being allocated illegally by government to the “so-called investors†and that this allocation is evidence of “macro-corruption†in Uganda. Besigye offers no evidence in the article to back his claim. He states that “stories have appeared in the press about allocation and privatisation of public land. I do not intend to make a detailed examination of any of actual illegal allocations of public land here.†He makes a general statement about “illegal allocation of forest reserves, wetlands… “ etc. He cites no single example but cleverly goes on to say that allocation of “Shimoni Demonstration School, CMI Hqrs ... etc.) have caused a stir…. and that allottees have paid nothing for the land.†He concludes with a warning that if there is regime change “the grabbed land will be returned to its original ownersâ€.
I will address two issues arising out of this claim, viz:
lWhether the allocation of public land to investors by the Government of Uganda is illegal or not, and
lWhether this allocation is or is not in public interest.
Is allocation of public land by
government illegal?
The Constitution, in Article 237(1), provides that land in Uganda belongs to the citizens of Uganda and shall vest in them in accordance with the land tenure systems provided for in the Constitution.
Public land is vested in the Government of Uganda through Uganda Land Commission. Article 239 of the Constitution and S.49 (a) of the Land Act (cap 227), provide that the Uganda Land Commission shall hold and manage any land in Uganda vested in or acquired by the Government of Uganda in accordance with the provisions of the Constitution and shall have such other functions as may be prescribed by Parliament. Accordingly, Parliament in S.53(c) of the Land Act, gave power to the Commission, for the purpose of performing its functions under the Constitution and the Act, to sell, lease, or otherwise deal with the land held by it.
Furthermore, Article 242 of the Constitution gives power to the Government to, under laws made by Parliament and policies made from time to time, regulate the use of land in Uganda.
The Government of Uganda, many years ago, adopted a policy to promote investment in Uganda. The Investment Code Act was enacted to encourage investment by providing favourable conditions for investment. Priority areas are well stipulated under the 2nd Schedule of that Act which include among others, tourism industry, construction and building industry. It should therefore be understood that the allocation of land today is in pursuance of this policy. Investment under the Act is defined as the creation of new business assets and includes the expansion, restructuring or rehabilitation of an existing business enterprise.
The Uganda Investment Authority has the mandate to identify public land for purposes of availing it for investment. In executing this mandate, the UIA has met some obstacles. For this reason they have sought presidential intervention to deal with the obstacles. Such interventions by the President are carried out in exercise of his executive authority provided for in Article 99 of our national constitution.
Dr. Besigye is, therefore, wrong in his claim that the allocation of public land to investors is illegal.
He is also wrong in suggesting that allocation of land is permanent. Under Article 237(2)(c) of the Constitution, it is provided that non-citizens may acquire leases in land in accordance with the laws prescribed by Parliament. This is echoed in S.40 (1) of the Land Act. S.40 (3) of the Act provides that a non-citizen shall not be granted a lease exceeding 99 years.
The implication of this provision is that allocation of land to foreign investors is not permanent because at the expiry of the lease, the land and developments thereon revert back to the Government. The allegation is therefore not true.
Is it illegal as Besigye implies for the allottees to have paid a nominal value for the land or nothing at all?
A lease tenure as provided for in S.2 (5)(d) of the Land Act is a form of tenure usually but not necessarily in return for a rent which may be for a capital sum known as a premium or for both a rent and a premium but may be in return for services or may be free of any required return. In essence therefore the issue of payment of consideration is dependant on the leasehold agreement.
In conclusion, it is clear that the allocation of land is being done well within the provisions of the law and government policy to promote investment. I wish to assure the investors both foreign and local to whom any public land has been allocated by the Uganda Land Commission that they have good title. In any case (Besigye obviously does not know this) even if an investor acquired title innocent of any fact that may arise and cast doubt on the right of the government to have sold or allocated it, the law treats the investor as bona fide and his or her title is not tainted. Any claim by any one who says is the true owner would be against government for recompense and the investor would retain the asset.
If Besigye was serious and he thought that his allegations were true, he would, as he very well knows, challenge the allocations in the courts of law. But in court the rule is that the party making any assertion must prove it. Since clearly he has no evidence to prove his claims, he will be loath to take that path.
Is the allocation in public interest?
Besigye claims in his article that “most allottees have paid nothing ... for the public land. Some have paid nominal sums.†He implies that the land allocated has economic value that should have been exacted as the price for the allocation.
This, of course, is an interesting point, which has been at the centre of the debate over the privatisation policy of government generally. But let us examine this claim a little more deeply.
As experts will tell you (space constraint denies me attribution), land value can be thought of as the relationship between a desired location and a potential user. The ingredients that constitute land value are utility (the quality or state of being useful for something), scarcity and desirability. These factors must all be present for land to have value.
Land that lacks utility and scarcity also lacks value, since utility arouses desire for use and has the power to give satisfaction. The air we breathe has utility and is generally considered important, since it sustains and nourishes life. However, in the economic sense, air is not valuable because it hasn’t been appropriated and there is enough for everyone. Thus there is no scarcity — at least at the moment.
By themselves, utility and scarcity confer no value on land. User desire backed up by the ability to add value must also exist in order to constitute effective demand.
A land site should be made available to the users who can make the highest and best effective use of the site and maximize the site benefits for all people. Before an assessment can proceed, the highest and best use must be determined for each site.
The economics of production should provide the atmosphere for the most efficient use to be made of all land. The assessment process is based on the highest, best and most profitable use of land. The use that meets these criteria and produces the greatest net earnings (best returns) is the highest and best use.
Let us take the example of the former Ministry of Information. That ministry is obviously very valuable to government and to the public generally. So is a hotel of international standards. In this case value can be demonstrated by choice or a willingness to sacrifice something that is desirable (i.e. the ministry) in order to obtain some other item that is also desirable (i.e. the hotel). When one considers that the hospitality industry (hotels, etc.) promotes tourism which is one of the main foreign exchange earners in most of the developed economies, provides employment for Ugandans, etc, then one surely can easily see why for Uganda constructing a modern hotel is the highest, best and most profitable use of that particular site. Uganda loses nothing by relocating the Ministry to another site. The capability of the Ministry of Defence to defend Uganda was not in any way undermined by its relocation from Bulange (former Republic House) to Bombo.
Conclusion
It is obvious that Besigye knew or ought to have known that his claims are false. It is clear therefore that he is resorting to scaremongering in an attempt to discourage investment and slowdown economic progress in Uganda. No wonder he is making unrealistic claims that the NRM government is about to collapse. He wants to create the impression that there is no stability in Uganda and it is not safe to invest in the economy. All this is obviously false.
It is well known that it is the NRM, in the history of independent Uganda, that has established stability and security of person and property. All efforts by negative forces with the support of foreigners to undermine this have failed. It is also because of the NRM government that there is constitutional protection of private property under Article 26. It states that no person shall be compulsorily deprived of the property or any interest in or right over property of any description except for very limited purposes like national defence, public safety and national health. Investors can, therefore, confidently go about their business in the full knowledge that their investment is absolutely safe in Uganda.
Ends
I will address two issues arising out of this claim, viz:
lWhether the allocation of public land to investors by the Government of Uganda is illegal or not, and
lWhether this allocation is or is not in public interest.
Is allocation of public land by
government illegal?
The Constitution, in Article 237(1), provides that land in Uganda belongs to the citizens of Uganda and shall vest in them in accordance with the land tenure systems provided for in the Constitution.
Public land is vested in the Government of Uganda through Uganda Land Commission. Article 239 of the Constitution and S.49 (a) of the Land Act (cap 227), provide that the Uganda Land Commission shall hold and manage any land in Uganda vested in or acquired by the Government of Uganda in accordance with the provisions of the Constitution and shall have such other functions as may be prescribed by Parliament. Accordingly, Parliament in S.53(c) of the Land Act, gave power to the Commission, for the purpose of performing its functions under the Constitution and the Act, to sell, lease, or otherwise deal with the land held by it.
Furthermore, Article 242 of the Constitution gives power to the Government to, under laws made by Parliament and policies made from time to time, regulate the use of land in Uganda.
The Government of Uganda, many years ago, adopted a policy to promote investment in Uganda. The Investment Code Act was enacted to encourage investment by providing favourable conditions for investment. Priority areas are well stipulated under the 2nd Schedule of that Act which include among others, tourism industry, construction and building industry. It should therefore be understood that the allocation of land today is in pursuance of this policy. Investment under the Act is defined as the creation of new business assets and includes the expansion, restructuring or rehabilitation of an existing business enterprise.
The Uganda Investment Authority has the mandate to identify public land for purposes of availing it for investment. In executing this mandate, the UIA has met some obstacles. For this reason they have sought presidential intervention to deal with the obstacles. Such interventions by the President are carried out in exercise of his executive authority provided for in Article 99 of our national constitution.
Dr. Besigye is, therefore, wrong in his claim that the allocation of public land to investors is illegal.
He is also wrong in suggesting that allocation of land is permanent. Under Article 237(2)(c) of the Constitution, it is provided that non-citizens may acquire leases in land in accordance with the laws prescribed by Parliament. This is echoed in S.40 (1) of the Land Act. S.40 (3) of the Act provides that a non-citizen shall not be granted a lease exceeding 99 years.
The implication of this provision is that allocation of land to foreign investors is not permanent because at the expiry of the lease, the land and developments thereon revert back to the Government. The allegation is therefore not true.
Is it illegal as Besigye implies for the allottees to have paid a nominal value for the land or nothing at all?
A lease tenure as provided for in S.2 (5)(d) of the Land Act is a form of tenure usually but not necessarily in return for a rent which may be for a capital sum known as a premium or for both a rent and a premium but may be in return for services or may be free of any required return. In essence therefore the issue of payment of consideration is dependant on the leasehold agreement.
In conclusion, it is clear that the allocation of land is being done well within the provisions of the law and government policy to promote investment. I wish to assure the investors both foreign and local to whom any public land has been allocated by the Uganda Land Commission that they have good title. In any case (Besigye obviously does not know this) even if an investor acquired title innocent of any fact that may arise and cast doubt on the right of the government to have sold or allocated it, the law treats the investor as bona fide and his or her title is not tainted. Any claim by any one who says is the true owner would be against government for recompense and the investor would retain the asset.
If Besigye was serious and he thought that his allegations were true, he would, as he very well knows, challenge the allocations in the courts of law. But in court the rule is that the party making any assertion must prove it. Since clearly he has no evidence to prove his claims, he will be loath to take that path.
Is the allocation in public interest?
Besigye claims in his article that “most allottees have paid nothing ... for the public land. Some have paid nominal sums.†He implies that the land allocated has economic value that should have been exacted as the price for the allocation.
This, of course, is an interesting point, which has been at the centre of the debate over the privatisation policy of government generally. But let us examine this claim a little more deeply.
As experts will tell you (space constraint denies me attribution), land value can be thought of as the relationship between a desired location and a potential user. The ingredients that constitute land value are utility (the quality or state of being useful for something), scarcity and desirability. These factors must all be present for land to have value.
Land that lacks utility and scarcity also lacks value, since utility arouses desire for use and has the power to give satisfaction. The air we breathe has utility and is generally considered important, since it sustains and nourishes life. However, in the economic sense, air is not valuable because it hasn’t been appropriated and there is enough for everyone. Thus there is no scarcity — at least at the moment.
By themselves, utility and scarcity confer no value on land. User desire backed up by the ability to add value must also exist in order to constitute effective demand.
A land site should be made available to the users who can make the highest and best effective use of the site and maximize the site benefits for all people. Before an assessment can proceed, the highest and best use must be determined for each site.
The economics of production should provide the atmosphere for the most efficient use to be made of all land. The assessment process is based on the highest, best and most profitable use of land. The use that meets these criteria and produces the greatest net earnings (best returns) is the highest and best use.
Let us take the example of the former Ministry of Information. That ministry is obviously very valuable to government and to the public generally. So is a hotel of international standards. In this case value can be demonstrated by choice or a willingness to sacrifice something that is desirable (i.e. the ministry) in order to obtain some other item that is also desirable (i.e. the hotel). When one considers that the hospitality industry (hotels, etc.) promotes tourism which is one of the main foreign exchange earners in most of the developed economies, provides employment for Ugandans, etc, then one surely can easily see why for Uganda constructing a modern hotel is the highest, best and most profitable use of that particular site. Uganda loses nothing by relocating the Ministry to another site. The capability of the Ministry of Defence to defend Uganda was not in any way undermined by its relocation from Bulange (former Republic House) to Bombo.
Conclusion
It is obvious that Besigye knew or ought to have known that his claims are false. It is clear therefore that he is resorting to scaremongering in an attempt to discourage investment and slowdown economic progress in Uganda. No wonder he is making unrealistic claims that the NRM government is about to collapse. He wants to create the impression that there is no stability in Uganda and it is not safe to invest in the economy. All this is obviously false.
It is well known that it is the NRM, in the history of independent Uganda, that has established stability and security of person and property. All efforts by negative forces with the support of foreigners to undermine this have failed. It is also because of the NRM government that there is constitutional protection of private property under Article 26. It states that no person shall be compulsorily deprived of the property or any interest in or right over property of any description except for very limited purposes like national defence, public safety and national health. Investors can, therefore, confidently go about their business in the full knowledge that their investment is absolutely safe in Uganda.
Ends