How do we determine fair compensation? It is wise not to leave this to a case-by-case discussion
By Prof. Mahmood Mamdani
My task, as I understand it, is to initiate the terms of today's discussion. I would like to begin with a reflection on the wider context in which this discussion is taking place. I have three observations.
First, we are living in rapidly changing times, not only because the technology is changing at an incredible speed, or because we are destroying the environment, shooting ourselves in the foot as we move slowly to the head. This is also a time of rapid political change when the hegemony of a single global power is rapidly eroding. The situation is pregnant with dangers and possibilities. On the positive side, there is growing interest in Africa, reflected in intense competition between old and new powers. The terms of engagement over Africa are rapidly changing. One result is the rapid growth of infrastructural development.
Second, this changing external environment has triggered internal changes. We are in a period of rapid accumulation of wealth. For those with hands on the levers of power, this has taken two forms: violent appropriation, as of cattle and land in areas of insecurity and armed conflict, and gross corruption in the rest of the country. Our leaders are rapidly losing interest in small projects, so much so that we seem to be making a fetish of big ones.
Why are our policymakers so interested in building a single hospital costing half a billion dollars, when half that money can build viable health centres in every district in the country? Our leaders have learnt that the bigger a project, the larger the cut. But in this case, the point may not be the cut, for this project may never be realized. In that case, the point will be the compensation demanded by the proposed investor. As we all realize, compensation is at the heart of the issue we are discussing today.
Third, as the race for accumulating wealth gathers pace, owners of big property are divided into two groups: if the old group is still interested in productive investments, the new group has a keen roving eye for speculative gain. The search for speculative gain is articulated in different languages: one side claims to stand for development whereas other side champions rights of private property in absolute terms. Both claims can be heard in the debate on compulsory acquisition of land, the subject of the discussion today.
Proponents of development have often couched private interests in the language of the public good. Developmental talk needs to be put to public scrutiny: how aligned is it to the public good? Does the half-billion-dollar hospital I just talked about serving the public good? Does every infrastructural project serve the public good? I hope you will hold a discussion on this another day. For today, I will focus on claims regarding the right of private property.
The right to property is not absolute. It is subject to eminent domain, an essential part of state sovereignty, whose exercise is subject to one qualification, the goal must be the public good. Eminent domain is subject to two essential conditions: private property is to be taken only for public use and just compensation must be paid for the property taken.
Eminent domain must be distinguished from expropriation. The distinction does not lie in consent. Eminent domain is not a willing seller /willing buyer arrangement; it is not a market sale. Neither is it outright expropriation. The difference lies in just or fair compensation.
How do we determine fair compensation? It is wise not to leave this to a case-by-case discussion. Instead, we need to look for a methodology that can apply to all cases.
Should we make a distinction between different kinds of property owners, large and small, when discussing compensation? Are there different kinds of demands for compensation, some just but others not?
Take, for example, the question of procedural delays which are said to hinder development projects and cost the authorities billions in damages. Procedural delays can be turned into a deliberate strategy for extortion, especially by those who are wealthy enough to afford to wait for compensation. Cullingworth (1980) cites a UK case where the Minister of Transport in a memorandum in 1958 to the Minister of Housing and Local Government suggested adding 30% to market value of property subject to compulsory acquisition - hoping this would induce property owners to throw fewer procedural hurdles in the way of the process. His hoped to bribe speculators, a strategy that is likely to be self-defeating.
The point is that only owners of large property have the resources to ride procedural delays; the small bibanja-owner does not.
Can we distinguish the speculator from other large property owners? Can we level the playing field for the small bibanja owner and the large property owner, say of a taka? I will come to this issue after drawing some lessons from examples around the world.
Step 1: Negotiation. Compulsory negotiation before exercising compulsory acquisition. This is accompanied by advance information: Compensation details are available for review in the US for a month before action is taken
Step 2: Consider alternatives to monetary compensation. Where sales are few and markets are imperfect, the market price is likely to be lower than market value. Roughly, market value is the replacement value of a property, the value of purchasing a roughly equivalent piece of land. Should the payment thus be in kind, rather than as cash - with payment in the form of a roughly equivalent piece of land?
For a kibanja-owner, i.e., the owner of a family farm, there are strong reasons to favour compensation in kind rather than cash. First, it provides some safeguard against patriarchal privilege: to avoid a loss to family members, should the head of the family appropriate all compensation. It is also a safeguard against other contingencies: to avoid loss in case of failure to find an adequate replacement, etc.
There are many examples of Compensation in Kind: land for land (Australia), home for home (Canada, India). The strategy works where there is sufficient Crown land available to the state.
Step 3: Compensation in kind is often accompanied by a supplementary compensation in cash - this is compensation for other losses, say emotional: loss of ancestral lands and burial grounds kinship ties, friendships. American courts acknowledged the general rationale until 1919.
Step 4: Where compensation is in cash, a direct purchase is often considered as preferable to compulsory acquisition. In Vietnam, local authorities often sell land at competitive land auctions to determine the market price. Compulsory acquisition is the last resort where the owner refuses to sell, but for the word compensation to be meaningful, it has to compensate!
Step 5: To acknowledge the fact of disagreement, one may need to go a step beyond the proposal in the Minister's statement on the proposed constitutional amendment with regard to Article 26 of the 1995 Constitution. This would be to deposit with the courts, not just the amount offered by the government but an additional amount which would be subject to negotiation or arbitration. In addition, there would be need to rationalize the Appeal process so it does not consume undue time. In Kenya, appeals used to go to the High Court till 1990, after that the law created specialized Compensation Tribunals.
Step 6: Should compensation be the same for all? Political philosophers talk of two types of compensation: individualistic and social.
Utilitarian or individualistic thinkers call for equal Justice for each individual. Critics say this disregards the difference between different categories of individuals. The alternative has been formulated by the Harvard philosopher John Rawls. He calls for justice as fairness - as social justice. Lay juries in the US before 1919 tended to select a measure of fairness which would ensure that the worst affected group would end up marginally better off. They thus added at least 10 per cent of the market value, but only for the worst off group.
The idea is that the worst off group should end up slightly better off with compensation. Compensation should thus involve an element of social redistribution. Rawls justified this as an emphasis on the public good. This is justified as a consideration of the public good.
The Question of History - focus on Uganda
We have learnt that one size does not fit all. Questions may be universal, but answers are not. No one answer is true for all times and places. All answers are historical and contextual. It is true that we can learn something from the study of other times and places, but that cannot be a substitute for a study of this time and this place. So let us focus on Uganda.
I will begin with a history of compulsory land acquisition.
That history begins with the 1900 Agreement and the expropriation of 8,000 square miles of land in which all customary rights of bibanja-owners were abrogated. These rights transferred to roughly 1000 recipients of mailo land, owners of taka. Rather than an exercise in the right of the public domain in the public interest, this needs to be understood as an exercise in the right of conquest. The conquering state turned the right of eminent domain into an exercise in the expropriation of land rights of the vast majority; it was an expropriation without compensation.
The expropriation of the property was part of a larger injustice: ethnic cleansing. The most notorious act of ethnic cleansing was the forced removal of Catholics from Mengo and its surroundings to Masaka.
In all cases, whether or not they were forced to move, the peasant in the kibanja retained the traditional right to use the land. But in all cases, this became subject to the right of property which was now vested in the taka owner.
The next major exercise in the right of the public domain was the 1928 Busulu and Envujo Law. With its passage, the state put a statutory limit on the ground rent (obusulu) and the rent on cash crops (envujjo) that the taka holder could demand from the bibanja owner. The result was to qualify the right of private property: there was some restitution for the previously expropriated majority without any compensation to landowners. The justification was historical: partially correcting an injustice whereby mailo landowners had been beneficiaries of state-initiated political largesse, rather than any market-based transaction.
The third notable exercise in the public domain was the 1975 Land Act under Idi Amin. It declared all land as state land and all landowners and users as lessees and sub-lessees of the state. From this point of view, the 1975 Act should be seen as building on the 1928 Busulu and Envujjo Law.
The final act in this historical chain was the 1995 constitution which restored the rights of landowners at the expense of kibanja-dwellers. In restoring the privileges of mailo landowners, the 1995 constitution undermined the rights that bibanja-owners in Buganda had earned in 1928 and peasants throughout Uganda had won in 1975.
If we pass judgement on these developments, we can draw some lessons from this history.
One, 1900 was unjustified: the colonial state turned the right of eminent domain into an exercise in the expropriation of small peasants without any compensation.
Two, in contrast, 1928 was justified: the colonial state used the sovereign right to make a law to provide some restitution - justice - for those who tilled the land.
Three, 1975 was justified, broadly speaking, since it built on 1928 and abrogated the remaining privileges conferred on taka owners in 1900.
Finally, 1995 was a return to the 1900 Agreement in the interest of owners of big landed property. The 1995 constitution should thus be seen as a negative development. In undermining the legitimate rights of the peasant majority throughout Uganda, it had the impact of a counter-revolution.
There is also a history of expropriation outside Buganda, especially in the north and east of the country. In all these cases, whether in the colonial period or after, as during the counter-insurgency in Karamoja, Acholi and Teso, expropriation was without compensation. These cases of historical injustice have been documented by students at Makerere Institute of Social Research in numerous research studies. Questions of historical injustice need to be dealt with separately, at a time when the political climate is right.
I would like to return to the question of whether all landowners should be treated the same. For a start, landowners are not all the same. There are three kinds of land-owners: the speculator, the owner of small property and the big property owner.
The speculator is one who has bought the land with the foreknowledge that compulsory acquisition is on the agenda and the expectation of turning a handsome speculative gain through compensation. My suggestion is that speculators need to be penalized rather than rewarded: all land bought in anticipation of the announcement of a project by those in a position to access such information, or bought after the announcement of the project, also with the expectation of making a speculative gain, need to be identified and penalized. I suggest that all those who bought the land during a year (or even two) before the announcement of the project be paid no more than the sum at which they bought the land as just compensation.
This leaves two groups with a rightful claim to fair compensation. The first is the kibanja-owner: one for whom land is the principal source of livelihood. Property for the kibanja-owner is not only an economic asset; it also has emotional and sentimental value because the loss of and is also a loss of ties to an area and a loss of friendship and kinship ties. In my view, this is the group with the most legitimate claim on compensation, one that goes beyond the market value of the land to include financial compensation for non-monetary injuries (such as loss of ancestral land, disruption of kin relations, etc.).
Finally, there is the large-scale property owner for whom the land does not constitute the main source of income or livelihood. This is the owner who both has a claim to fair compensation and the resources either to wait to clear procedural hurdles or to make a contribution to the public good. The real challenge is how to handle this group. This, in my view, is a political challenge. To understand its nature, we need to return to the two cases where the state was able to use eminent domain to qualify the rights of owners of taka in the interest of kibanja-owners.
Let us begin with the background to the 1928 Busulu and Envujjo Law. The 1900 Agreement needs to be analyzed as a political document. The British understood that they would not be able to rule Buganda alone; they needed allies. The 1900 Agreement first and foremost spelt out the terms of the alliance between the British and the pro-British faction of landlords in Buganda.
The 1900 Agreement was at the expense of three groups in Buganda. The first loser was the Kabaka, who ceased to be a trustee of all land in Buganda as the Ssabataka, but was now turned into just another landlord, even if the biggest. The second loser was the group of the bataka, the clan heads who traditionally had a role as trustees of clan land and who were now totally marginalized. The largest group to lose were peasants (bakopi), who were now turned into tenants of landlords with absolute private property rights in mailo lands, rights these landlords never possessed before but which they could henceforth use to evict tenants at will.
Two important changes took place in Buganda from 1900 to 1928. First, colonial power stabilized with the help of mailo landlords. Second, these mailo landlords began to flex their economic muscles and demand more rent from tenants, as both ground rent (obusulu) but also rent on cash crops (envujjo), the main one being cotton. They even took to expelling those who were either unwilling or unable to pay the increased rent. The result was a decline in peasant production of cotton in Buganda.
Figures collected by the colonial government showed that the acreage of cotton planted in Buganda and Eastern Province was roughly the same in 1911-12. But in a short space of five years, it had declined in Buganda from 27,380 to 20,100 acres but increased in Eastern Province from 29,720 to 97,961 acres. Even worse, there was the possibility of a political crisis, since the bakopi in Buganda were being organized by The Bataka Association who demanded that the 1900 Agreement be revised.
It is in this context that the colonial government decided to redefine, actually cut down, the powers of mailo landlords. They did this through two changes. To begin with, the colonial government claimed the right to appoint all chiefs in Buganda, as in the rest of Uganda, and to define their job description. Led by the Katikiro, the big chiefs resisted. In the confrontation between Postlewaith, the Acting Provincial Commissioner, and the Katikiro, Sir Apollo Kagwa, most leading chiefs, including the katikiro, the omuwanika (treasurer) and the Secretary to the Lukiko (Yusufu Bamuta) were dismissed. Martin Luther Nsibirwa, the former clerk in the Protectorate Government, was appointed the new katikiro, and Serwano Kulubya, an interpreter and a former inspector of schools with the Protectorate Government, was appointed the new omuwanika.
Once the Protectorate Government had broken the political backbone of the mailo landlords, it set about undermining their economic position. That was done through the 1928 Busulu and
Envujjo law. The law not only set a limit on the rent the landlord could demand from the tenant, but it also gave the tenant effective security of tenure.
These changes had an immediate and positive effect on Buganda. Peasants responded by increasing production.
Amin's 1975 law also needs to be seen as political development. Amin was able to neutralize the opposition of taka owners because of the enormous political capital his regime had accumulated in the aftermath of the Asian expulsion of 1972. Amin was seen as the one who had brought economic independence to Uganda in 1972.
The lesson for the NRM today is to deal with the opposition of taka owners to compulsory acquisition, not as a developmental challenge, but as a political challenge.
The writer is the director of Makerere Institute of Social Research (MISR) and made this keynote address on compulsory land acquisition at Skype Hotel on March 21, 2019.