Africa is rapidly urbanizing but central city development is not keeping pace.
At the center of a major African capital city like Kampala or Uganda— where you would find skyscrapers in New York City—it is not uncommon to find a farmer tending to his plot of maize. This land is potentially the most lucrative, so why is it being used for such low productivity purposes? Africa is urbanizing rapidly: Cities like Kampala are predicted to triple by the year 2050. According to estimates, two thirds of the urban topography that Africa will have in 2050 will be built during the next three decades, yet planning is lagging behind city growth.
An efficient city is dense at its core. This encourages connectivity between firms, work forces, the goods and services they need for production, and their market. It is also easier to implement a transit system, and more efficient for public service provision when people are physically closer together. It is this density that makes cities productive places, thus, land near the center of cities is usually among the most expensive.
To maximize use of this prime land, developers tend to exploit it to its fullest potential by cramming as much real estate on it as possible, leading to high-rises and increased density. Cities like New York or Hong Kong are clear examples of this, with more than 120,000 jobs per km2 and between 59,000 and 111,000 residents per km2 at their core [a km2 is about .39 of a square mile].
African cities do not have this type of density. They are exemplified by low-rise buildings and great urban sprawl. Vacant land at the center of the city is not being put to its most productive use. In Harare, Zimbabwe, or Maputo, Mozambique, for example, more than 30 percent of the land within three miles of the central business district remains unbuilt.
To understand why this could be happening, it helps to look at the historical development of other cities. For example, in the mid-1800s the price of land in Manhattan, then New York’s most populous borough, increased more than eight-fold as Manhattan’s population grew rapidly. Anticipating this, fur trader Jacob Astor began buying land at the turn of the century. Rather than developing much of the land however, he kept it vacant, while its price increased. By the time of Astor’s death in 1848, he owned a vast portion of New York City and was the wealthiest man in Manhattan.
Given that African cities are some of the fastest growing in the world, the practice of holding land for speculative purposes may be at play. But there are other factors particular to contemporary African cities that may result in prime land remaining vacant.
In African metropolises, unclear ownership of land can be a challenge. Even if the price of land increases and there is an investor who wishes to develop it, they may not actually be able to purchase the land due to murky title. Furthermore, owners may genuinely want to develop their land, but they may not be able to access enough financing to do so. For example, in Kampala, interest rates hover above 20 percent, making it too expensive for most people to take out a loan.
Overcoming the challenges of vacant urban land requires an understanding of exactly why this land remains vacant. For example, if the land is indeed being held for speculative purposes, then taxing this land at a higher rate may induce development.
A successful example of how this can be implemented is in Bogota, Colombia: their vacant land commands a tax that actually triples over a ten-year period. If there are still no developments after ten years, the city is legally allowed to reclaim the land. That could be a possibility for African metros but a vacant land tax would be difficult for cities that do not have physical development plans or zoning regulations in place yet, such as Kampala. To avoid paying the tax, landowners might just put up a small structure on the land that commands a notional value of property tax.
If the land is vacant due to lack of financing, a tax won’t make a difference. It will still be easier for owners of vacant land to pay the tax rather than develop the land. If financing is the problem, it will require overall changes to the financial system to alleviate this constraint.
For African cities to be able to adequately tackle the issue of vacant urban land, it is important to first understand the underlying causes of this vacancy. Addressing these causes will then require city-specific combinations of fiscal and planning instruments.
It is essential that the rapidly growing cities on the African continent develop well. Putting this prime land to its most efficient use is a precondition to ensuring that African urbanization provides a foundation for development and growth that can adequately sustain these growing populations.