Urban land markets and city development: Sub-Saharan Africa

Rapidly growing cities in sub-Saharan Africa face immense population pressures. Weak institutions and outdated regulations inherited from the colonial era threaten to stifle their progress. This paper examines the institutions underlying the operation of urban land markets in Sub-Saharan Africa, focusing on property rights, the evolution of cities and their spatial layout, planning, and property taxes. Countries typically have a dual system of property rights, with in theory formal rights in cities, communal tenure in rural areas, and a transition between the two systems at growing city boundaries. However, large portions of cities operate outside these systems under informal rights. Using case studies and within city variation, we review the historical evolution of these systems in a number of African cities. We argue that cities lacking formal property rights tend to build lower and less intensively, often with slums persisting near the city center, where there is much higher value alternative use. We further explore the relationship between lack of owner occupancy and wealth inequality, as partially affected by the transition to private property rights. Next, we discuss the critical role of planning. Francophone countries for instance historically imposed comprehensive planning on urban land markets compared to Anglophone counterparts. This resulted in greater contiguity and density of land use, gridded urban layouts, and less leapfrogging in new developments. Where planning is weak, special initiatives such as sites and services may impose planning on certain greenfield neighbourhoods, with benefits accruing in the future. The paper then examines problems in property tax enforcement and collection, discussing reforms to improve collections. The paper concludes with a discussion of policy considerations and a research agenda.