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Mapping out path for compulsory acquisition of land for public projects

By Beatrice Nyabira and Judy Muigai

With the excitement surrounding the new JKIA – Westlands Expressway project and the prospect of other mass transport projects being developed, this is an opportune time for reflect on how land is compulsorily acquired for infrastructure projects in Kenya.

Firstly, Kenya passed the Prevention, Protection and Assistance to Internally Displaced Persons and Affected Communities Act in 2012 and by so doing, committed to preventing the displacement/ relocation of persons due to development projects unless there are compelling and overriding public interests and no feasible alternative exists.  The threshold for what is in the public interest has to be very high to avoid controversial situations which have arisen in other jurisdictions where attempts were made to compulsorily acquire property for large scale commercial agriculture or sprawling urban developments replete with casinos, golf clubs and theme parks on the basis that they are in the public interest.  In the same Act, Kenya also covenants to abide by the 1998 United Nations Guiding Principles on Internal Displacement and the 2006 Great Lakes Protocol on the same subject both of which contain stringent criteria to protect displaced persons from being dispossessed without consultation, compensation or a fair, transparent and appropriate relocation plan and process.

The legal meat and bones of compulsory acquisition in Kenya are found in the Land Act, 2012 which prescribes the process to be followed by the public authority which intends to acquire the land for a project.  The authority is required to map out the target land and maintain a register of persons occupying the land, the legal rights they have over that land and their period of uninterrupted occupation.  As we have seen in the past, one thorny issue is around eligibility for compensation – how to distinguish between genuine claimants and opportunistic phonies.  Well, the National Land Commission (NLC) is required to notify all those who are potentially affected by the land acquisition in addition to placing notices in the Kenya Gazette and the relevant County Gazette.  The notified persons are required to attend an inquiry convened by the NLC which is tasked with receiving and interrogating compensation claims.

For persons who have title deeds, substantiating their claims is relatively straightforward.  However, for those occupants who do not hold title documents, they are only entitled to compensation where they are ‘good faith’ occupants who have occupied the land for an uninterrupted period of 6 years prior to the publication of the notice to acquire the land.  The compensation payable to such occupants may take the form of the value represented by the structures they have erected on the land or a reimbursement of reasonable relocation expenses.  This all sounds rosy, but what happens if someone receives compensation in error?  The Land Act provides that in such cases, the NLC shall serve a notice to the recipient of the compensation requiring them to refund the payment, which shall be treated as a debt due to the NLC with the attendant enforcement related implications.

Moving along then to another contentious issue – quantifying the compensation.  The project-affected land is intended to be valued on the basis of the land value index being developed by the Cabinet Secretary with responsibility for the Lands docket and approved by both houses of Parliament.  Understandably, certain measures have also been introduced to ensure that the price of the property is not artificially inflated by avaricious landowners.  The Land Act requires, for example, that specific factors be disregarded in the valuation process including the increase in the value of the land due to its anticipated use in the post-acquisition phase, the urgency of the acquisition due to project timelines or the disinclination of the landowner to part with the land.  Essentially therefore, the authorities are prohibited from sweetening the deal for landowners by awarding greater compensation.

It is fortunate that the Land Act envisages that compensation is also required where economic harm is done by reason of severing the land being acquired from other land or where a person’s actual earnings are affected by the land acquisition or where there is diminution in profits of the land from date of the notice of intention to acquire the land to the date the NLC takes possession. 

In the minds of most, compensation connotes a bigger bank balance. However, in the case of compulsorily acquired land, compensation could take various forms.  One common alternative to monetary reparation is the provision of alternative land of equivalent value and comparable geographical features and usage.  Other forms of compensation include government bonds and equity shares in a state-owned entity. One bit of good news for the impacted landowners is that 15% of the value of the compensation is added as an allowance for disturbance. 

In appreciation of the time-value of money and our inflationary economic environment, provision has been made for landowners to be paid interest on any portion of the compensation which is delayed.  The interest is calculated using the base lending rate set by the Central Bank.  A point to note however is that where there is a significant time lapse between the date the landowners are dispossessed and the date when they receive all their compensation, the additional interest may not satisfy the demands of restitution since such interest may not fill the gap created by the increase in land prices in the interim.

The law provides for the affected persons to choose the mode of compensation which they prefer.  While we sympathise with the sentiment behind this approach, we are cognisant of the human tendency to prefer cash compensation rather than less liquid assets such as land, shares or bonds.  The problem with cash compensation is that it is liable to be misspent.  Studies have shown that where large lump sums are paid to persons who are unused to dealing with substantial amounts of cash, they often waste it on highly speculative ventures or shopping sprees.  For people whose livelihood is land-based, the loss of their compensation money as well as their land sentences them to destitution.  Where the risk of such an outcome is identified in advance, the preferred mode of compensation should be resettlement to a comparable parcel of land.

Development projects are notorious for encountering significant delays particularly in connection with the acquisition of land and other rights.  The Land Act has therefore proposed certain timelines in order to cushion the affected landowners such as providing for a 24-month timeline for the completion of the entire acquisition process.  In addition, where monetary compensation has been awarded, it can be paid in instalments which can only be spread out for a maximum of 1 year.

In terms of redress, persons who are aggrieved by a decision of the NLC in connection with the land acquisition process may appeal to the Land Acquisition Tribunal.  The Government may also wish to consider supporting project affected persons by allowing for the creation of a ‘helpdesk’ office at the grassroots level where affected persons can obtain information and be assisted with their compensation claims, especially for vulnerable persons such as the elderly or illiterate.

The article was featured in the Business Daily on 9 February 2021 and can be accessed here