Impact of property rights in urban Tanzania: the role of infrastructure

Formalising land rights is one market-based tool to alleviate poverty, thought to reduce expropriation risk, encourage investment  and, by enabling the collateral value of land, giving property owners increased access to credit. Despite these assumptions, few studies have examined the impact of property rights interventions in urban areas, particularly in Sub-Saharan Africa. This project is a randomized controlled trial which investigates the economic and welfare implications of offering property rights to the residents of unplanned settlements in Dar es Salaam, Tanzania.

Whilst the government of Tanzania does provide a legal framework for urban households without a formal title to their land, over eighty percent of land in Dar es Salaam comprises informal, unplanned settlements. The Government has developed a strategy for implementing new land laws but progress is slow. To date the Government has issued Residential Licenses – only a two-year and non-transferable property right – to an estimated 60,000 of a total 400,000 properties in unplanned settlements. Full titles, known as Certificates of Right of Occupancy (CROs), are substantially more costly to provide, given requirements of planning and cadastral survey standards.

This project is investigating the consequences of expanding CRO access to two adjacent, unplanned settlements in Dar es Salaam, one of which with a large infrastructure upgrading project currently underway. In collaboration with a local NGO (WAT), we are using economies of scale to bring down the cost of land titles, offering them to residents at this reduced cost with an extended repayment period. To identify credible treatment and control groups, blocks of land parcels were selected at random to receive these offers, although the programme will eventually be rolled out to the entire community.

We have a number of research objectives: Firstly, we wish to measure the medium-term impact of titling on investment in land and on small enterprises located on titled parcels, focusing on how these effects interact with the infrastructure expansion. Secondly, using randomly-allocated vouchers, we have elicited price variation in the CROs, allowing us to estimate demand elasticities. This will be useful in assisting our partners, the Ministry of Lands, in computing the optimal price for land titles in what is considered to be an expensive intervention.

First, we have found that people do respond when the main barriers to land titles are removed, as uptake of CROs of households in treated blocks was nearly 50% for those not receiving any additional subsidies. We also find that households are responsive to subsidies, but only to a point: only 73% of households take up while receiving a 80% subsidy. If the Tanzanian government continues to make cost-recovery a priority in its titling operations, other ways of reducing the cost (such as dropping cadastral survey requirements) should be pursued.

Secondly, we have discovered that, without the help of an extensive land titling programme, the average citizen faces an inordinate number of hurdles to obtain a land title. A detailed analysis of the land titling process found that urban residents must go through eleven discrete steps, deal with two separate government institutions, and spend between $300-600 for the basic prerequisites alone.