The efficiency of land-use in a developing city: Traditional vs modern tenure systems in Kampala, Uganda
Julia Bird, Anthony J. Venables,
Land rights and tenure systems are a main factor behind poor housing and inefficient land allocation in developing country cities. In Kampala, Uganda, four systems of land tenure coexist, allowing a detailed study of the effects of these on household and firm location decisions. Spatially disaggregated data across the city suggest that the presence of a traditional land tenure system, mailo, is strongly associated with the location of informal housing, and prevents business services from locating in certain areas of the city. Using a structural model, we reveal that this relationship is due only through mailo land encouraging informal housing. This could be attributable to rent caps for households in mailo areas, or other tenure specific amenity benefits. We use the model to simulate a policy experiment in which all mailo land in the city is reformed. The results suggest that manufacturing firms move into these areas, forming new clusters of activity and creating additional productivity gains. This drives up urban wages, particularly among the low skilled, and boosts aggregate urban welfare by as much as 8.7% under the assumption that the benefits of mailo land to households are due to local rent caps. This is equivalent to generating a total of USD 16,200 per hectare of land converted.
Only personal, non-commercial use of this document is allowed.