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Compulsory purchase in developing countries
Richard Grover
I compulsorily purchase your land; you exercise eminent domain; he expropriates.
English irregular verb
Introduction
This chapter examines compulsory purchase1 in developing, emerging, and transition countries. Their principal common characteristic is that their incomes per capita are lower than those of the countries that make up clubs like the Organisation for Economic Co-operation and Development (OECD). They are currently, or were in the recent past, entitled to receive World Bank loans or grants, or were on the OECD Development Assistance Committee’s list of countries receiving Overseas Development Aid.
Developing countries, like others, need from time to time to undertake the compulsory purchase of privately owned property rights: for instance, for the construction of infrastructure or site assembly for development projects. However, a characteristic of developing countries tends to be capacity limitations in areas relevant to compulsory purchase. These can include infrastructure, such as land and title registration systems, as well as human capacity, including lawyers, surveyors, and valuers. Land administrations may lack basic resources, like suitable offices and record storage facilities, and vehicles to enable staff to undertake site visits, or have inadequate or poorly maintained equipment or systems whose licenses have expired. At its most basic, compulsory purchase requires the identification of the parcels to be acquired, the persons (legal as well as physical) with property rights over the land, and the nature of those rights. For this to happen there needs to be a cadastre that identifies the parcels and their boundaries and a land or title registry that records rights. Many developing countries do not have well-developed or comprehensive cadastre and land registration systems. Mapping may rely on relatively old analogue surveys rather than being digital, cadastres may not record buildings or accurately reflect what is on the ground, and informal or non-statutory rights may not be recorded in land registries. If those whose property is taken are to receive compensation that ensures they do not end up being worse off as a result, then what is compulsorily acquired must be accurately valued. For this to happen, there must be qualified valuers capable of working to international valuation standards, and who follow internationally recognised codes of ethics and professional conduct.
There may be governance issues, including how well private property is protected and whether there is the ability to have infringements of human rights judged impartially by an independent tribunal. Those whose property is threatened with expropriation should have the ability to challenge the policy and the legality of the action as well as the valuation of their losses. Good governance means that government is well-managed, effective, inclusive, and results in desirable outcomes. In reality it may be discriminatory, inefficient, or ineffective. There may be corruption – land administration is one of the more corrupt areas of government (Transparency International/FAO, 2011). Government may not be open or transparent in decision-making, and policy-making may not be done in a legitimate, accountable, or participatory way. Decisions may not be consistent or predictable, and the government may not be subject to the rule of law.
The literature contains many individual case studies of compulsory purchase in developing countries, but in order to study these issues more closely and draw conclusions about how typical particular experiences are, one needs a relatively consistent set of data about how expropriation is carried out in a number of countries. The data need to be about actual outcomes and not just focus on laws or policies since there may be issues about the implementation of policy. This chapter draws on a particular source: namely the Land Governance Assessment Framework (LGAF) analyses carried out by the World Bank since 2011. These are demanding, in-depth analyses of major aspects of land governance, including compulsory acquisition. A sufficient number of these have now been undertaken to make some rudimentary statistical analysis possible, both of how compulsory acquisition is carried out and the factors that seem to be associated with particular outcomes. The analysis suggests policy approaches that development banks, international agencies, and bilateral donors might take to enhance the governance of compulsory acquisition and, in particular, to ensure that support for other development projects that involve the displacement of populations does not have unintended consequences.
Land Governance Assessment Framework
The LGAF developed by the World Bank is intended as a “diagnostic tool to help evaluate the legal framework, policies, and practices regarding land governance and to monitor improvement over time” (Deininger et al., 2012). LGAF was created because of the “need for well-designed land policies to ensure the security of long-held land rights, to facilitate land access, and to deal with externalities”, particularly at times of major change. Governance is defined by the World Bank as “the manner in which public officials and institutions acquire and exercise the authority to shape public policy and provide public goods and services”. One of the issues explored is the compulsory acquisition of land by the public sector.
LGAF is intended to be applied in a collaborative fashion to examine various aspects of land governance and to recommend policies for improvement. Data are collected by expert investigators and presented to panels of specialists. The indicators are scored on a scale of A (good practice) to D (weak practice). The process is an iterative one, with the results being subjected to technical validation, the aim being to reach consensus where possible. The key strength is that LGAF does not just examine whether a policy exists or whether there is legislation on an issue but reflects the judgements of those with experience of its effectiveness. LGAF, though, is not designed to compare the performance of one country with that of another, there being no mechanism to ensure that the assessments in one country are scored consistently with those of others. Nonetheless, with this caveat, LGAF can be argued to provide a systematic approach to reviewing how a range of countries approach compulsory acquisition.
LGAF first appeared in 2012, with a major revision in 2013 in response to the publication of the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests (VGGT) (Committee on World Food Security, 2012) and experience gained from operating the process. The number of indicators was increased from 80 to 116 (World Bank, 2012, 2013). The fundamental approach to collecting data and scoring indicators did not change significantly, and many of the indicators used in the assessments up to 2013 are similar to those used since then.
At the time of writing 39 countries2 had been through the process, though not every country has been scored on all the indicators. LGAF has been undertaken for twenty-four countries from Africa, six from Asia, five from Central and South America, and four from Europe. Figure 1.1 shows the variability of Gross Domestic Product per capita in terms of international dollars purchasing power parity. This shows that the countries provide a good cross section in terms of development. The countries include former colonies of Belgium, Britain, France, Germany, Portugal, and Spain, parts of the former USSR, and one country that has joined the European Union. They therefore have inherited a range of legal and institutional heritages.
There is a question about how representative the LGAF sample of countries is. There is likely to be an element of self-selection because of the demanding nature of the task and a degree of bias towards those countries in which the World Bank, FAO, or bilateral donors have been active in land projects, such as systematic first registration and the creation of cadastres. In addition the LGAF analyses were not all undertaken at a single point in time, so there is a danger that the strength of some possible associations could be undermined by policy changes that have taken place between the date when the LGAF was completed and that when the data from other sources used were compiled. Caution is therefore needed in interpreting the results.
Figure 1.1 Gross Domestic Product per capita in terms of International Dollar Purchasing Power Parity, 2016
Source: World Bank Development Indicators, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators#.
Alternative compulsory purchase models
Many of the LGAF countries were at one time colonies of European powers. The characteristic legacy from colonialism was a dualistic land law in which colonial written law was superimposed on customary law and practice. Tchawa et al. (2012), with specific reference to the former French colonies of Central Africa, state that “The inability of these [colonial] policies to take local realities into consideration has led to the emergence of multiple systems that duplicate or neutralise each other” (2012, p. 29). The colonial era policy instruments often survived but were applied in ways which were rigid, inapplicable, and ineffective, or the capacity to realise them was lacking. The result could be an amalgam of customary rules, with heavy statutory overlay and confrontation between customary and statutory tenure. Such a dual system was characteristic of Ghana, Nigeria, Tanzania, and Zambia (Bugri, 2012; Adeniyi, 2013; Tenga and Mramba, 2015; Mulolwa, 2016).
The newly independent countries were offered an alternative approach to land management, namely that offered by the Soviet Union. These ideas were spread, amongst other means, by the training of cadres in universities in the USSR and satellite countries like Bulgaria. Central to Communist philosophy was the concept of collective ownership of the means of production, which in practice meant the nationalisation of land. The Second All-Russian Congress of Soviets in 1917 issued a decree on land, which made all land in the Soviet Union the property of the state. The 1936 Federal Constitution placed an absolute prohibition on civil transactions relating to land. The 1936 Soviet Constitution was extended to Estonia, Latvia, Lithuania, Moldova, and Eastern Poland after their annexation in 1940 and became the inspiration for the constitutions and legal structures put in place by the Communist governments of Central and Eastern Europe after they came to power between 1946 and 1949. There were variations between Communist countries, but, in the Soviet system, the tenure rights that existed permitted the tillage of the land and the erection of buildings, with state bodies having rights of operational management.
Compulsory purchase as such could not take place as private property rights capable of being expropriated no longer existed. Rather, the state could withdraw, resume, or reallocate the occupancy or use rights that it had allocated. The withdrawal of land occupancy could result in losses for which compensation was payable, assessed by a commission. However, compensation was generally not paid by the state but by the body to whom the land was transferred (Vondracek, 1975). In other words, the beneficiary directly compensated the loser rather than the state compensating the loser on behalf of society. Losses that could be compensated included the value of expropriated buildings and crops, the costs of reinstatement at another location, the costs of tillage and improvements for which revenue had not been received, and damage to other buildings as a result of the expropriation.
In some newly independent countries, for instance, Burundi and Cameroon, the state was seen as the custodian of land, with the right to manage land resources in the interests of economic and social development. In others, for instance, the Democratic Republic of Congo, a 1972 law granted the state exclusive and inalienable ownership of the land (Tchawa et al., 2012). In Tanzania, after independence in 1961, freehold titles were converted into government leases in 1963 and into granted rights of occupancy in 1969, with all land becoming public land under the trusteeship of the President (Tengo and Mramba, 2015). In Nigeria the Land Use Act, incorporated into the constitution in 1979, vested the management of land with state governors, with ownership being replaced by rights of statutory and customary occupancy (Adeniyi, 2013). In Uganda the 1975 Land Reform Decree declared all land to be public land vested in the state and abolished freeholds and the private estates created for traditional rulers under colonialism, though the 1995 constitution restored land tenures to the position at the time of independence (Obaikol, 2014). Ethiopia’s Derg, which ruled between 1974 and 1987, nationalised rural and urban land in 1975 (Gebrewold, 2016).
In recent years expropriation policy has been influenced by two trends. First, the fall of the Berlin Wall in 1989, the collapse of the Eastern European Communist regimes, and the disintegration of the USSR removed exemplars of the Soviet model of expropriation and opened up their property markets to private ownership. This has not followed a universal pattern. Generally, apartments were transferred to their residents either without payment or at a nominal price. Restitution in a number of countries, but not Russia or Poland, has seen the restoration of property expropriated during the Communist period to its owners or their heirs. The land in state and collective farms in Moldova and Ukraine was distributed to their workers, and in Georgia leaseholders could buy the agricultural land they had been occupying from the state at a multiple of its land tax (Egiashvili, 2011; Muliar et al., 2014; World Bank, 2014). The 1987 and 1993 Land Laws in Vietnam reallocated co-operative land to farmer households for long-term use (Vo and Thang, 2013). For officials who grew up under the Soviet system, it ca...
