Land Reform in Nairobi

Meera Selva, writing for CSM, has a heartening piece about land reform in Nairobi. Nairobi’s slums, like those in many African cities, provide housing for large numbers of people who’ve immigrated to central cities in search of work. Built on public lands by squatters, the shantytowns are periodically bulldozed by the government, a “solution” that does nothing to address the key problems of unemployment and housing scarcity that cause shantytowns.

Importing a model pioneered in India, an association of people living in the Kambi Moto neighborhood approached the Nairobi City Council for title to the land they were squatting on. Armed with ownership of the land, they’ve invested in constructing small concrete-block houses replacing the cardboard and wood shacks they’d previously lived in. In the process, they’re creating a local employment boom as people set up businesses making concrete blocks and working as masons.

While the CSM article doesn’t reference Hernando de Soto, it certainly puts me in mind of the argument the Peruvian economist makes in The Mystery of Captial. de Soto argues that people in developing nations are less poor than commonly concieved, but that they have a very difficult time turning their assets – usually, their homes – into capital because of bad property rights regimes. In a developed nation, an entrepreneur might take out a loan with her house as collateral, and use the money to start a business. In Kenya, she can’t take out a loan on her house, because she doesn’t own the land it sits on. No house, no capital, no business…

The fact that extremely poor people are building concrete houses looks like an object lesson in the importance of property rights. Since the City Council isn’t funding house construction, this suggests that homeowners are finding money to build real houses, instead of shacks, once they’re confident that they own the land and that their investment won’t be destroyed. Here’s hoping that this experiment succeeds and that more governments figure out that land rights are a better solution to urban slums than bulldozers.

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