Economics Today 18th Edition by Roger LeRoy Miller

Exercise 2

Seeking to Unlock Kenya's Growth Potential via Ownership Rights
In recent years, foreign investment has increased considerably in the nations of Sub-Saharan Africa. One country among these is Kenya, in which most cities contain sprawling shantytowns populated with residences and thousands of tiny businesses. Also commonplace, particularly in shantytowns, are unsightly piles of rubble strewn along unpaved, rutted paths and criminals who lie in wait to prey on residents. Nevertheless, many homes and firms situated within the borders of these shantytowns have significant value to their residents. The values of these structures undoubtedly would increase as investment funds flow into Kenya--if only private ownership rights to shantytown structures existed.
Evans Omondi Jack, a 60-year-old Nairobi man who over the years has been forcibly evicted four times from the shantytown in which he was born, has launched a court case to establish who has titles of ownership in shantytowns. Omondi's attorneys argue that under Kenyan law, most parcels of shantytown lands, which largely are government-owned, should have been sold at public auction years ago. They are hopeful that Omondi and the other two-thirds of Kenyan citizens who reside within the 2 percent of Kenyan lands containing the shantytowns will be granted or offered a chance to buy formal titles of ownership to existing buildings. If so, the structures may be transformed from dead capital to tradable capital goods that people can further develop as foreign investment in Kenya increases.
How might granting titles of ownership lead to improved shantytown conditions? Sources are listed at the end of this chapter.