No Ready-Made Solutions: How African Cities Are Adapting Land Value Capture to Local Realities
As African cities grow, public investments are rapidly increasing land values. But who benefits from this uplift? From Kigali to Stellenbosch, cities are adapting land value capture to local realities – showing that successful urban finance tools are built through context, experimentation and political commitment, not copied from elsewhere.
Land value capture is often presented as a promising urban finance tool, as some kind of “silver bullet”. But it is difficult to apply in practice: some critics argue that it only works under very specific institutional conditions. Others point to successful examples that show its potential when it is adapted to local realities. In cities like São Paulo and Bogotá, land value capture instruments have funded billions of dollars in public infrastructure and affordable housing. These experiences suggest that success depends less on applying a universal model than on political commitment, institutional capacity and careful adaptation to context. This has important implications for African cities.
The core idea is simple. When public investment – such as a new road, a metro line, or a water connection – raises the value of surrounding land, that increase is not created by the landowner alone. Rather, it is socially created value because it is the product of collective decisions and public expenditure. Land value capture is the set of tools that allows governments to recoup some of that uplift as revenue and reinvest it for the public benefit. It is about ensuring that what the public creates, the public also benefits from.
The Stakes for Africa’s Fastest Growing Cities
Africa’s cities are urbanising faster than almost anywhere else in the world, and with that growth comes rapid, often significant increases in land values. In parts of Addis Ababa, around the central marketplace, for instance, land values are reportedly beginning to rival those in Geneva. When infrastructure investment follows urban growth, as it increasingly does, land values rise further still. However, without instruments in place to capture any of that uplift, the gains flow almost entirely to private landowners who own land in areas that benefit from public investment. They are not benefiting primarily from their own labour or investment. The windfall is largely unearned and created by collective decisions and public expenditure.
This is precisely what Henry George argued in his landmark 1879 work Progress and Poverty, which was one of the deepest structural sources of inequality. The observation remains relevant today. In a context of scarce public resources and rapidly growing cities, allowing unearned land gains to accumulate privately, while governments simultaneously pay for both the infrastructure and the compensation claims that follow, is a costly failure of fiscal design.
Nowhere is this more visible than in cities where land tenure itself is contested. Kampala is a useful illustration as the city operates under four legally recognised tenure systems simultaneously, with no comprehensive, widely accepted land information system to underpin them. When the government invests in public infrastructure and land values rise, the Constitution requires that landowners be compensated. Speculation combines with the absence of a reliable land database to produce a situation in which the government not only fails to capture the uplift it created but ends up paying twice: once for the investment and once for the compensation.
Why Context Matters
The most instructive thing about the best-known land value capture success stories is not that they had perfect conditions. It is that cities developed instruments suited to their own conditions rather than waiting for ideal ones. São Paulo and Bogotá are cases in point as both developed instruments rooted in their own legal, political, historical and fiscal contexts, and neither model has been replicated elsewhere in exactly the same form. São Paulo, for instance, has sold air rights through innovative instruments called CEPACs, which are auctioned on the stock exchange. The proceeds are ring-fenced and reinvested in affordable housing and public services, not citywide, but in precisely the areas where the revenue was raised. The result is that some of the city’s poorest residents live alongside its wealthiest, served by the same public infrastructure.
The successful African examples are instructive for the same reason. South Africa’s National Treasury, for example, has a dedicated Land Value Capture programme to support municipalities in developing their own instruments. Stellenbosch shows what municipal-level action can look like when that support is in place. As a city working to overcome a strong legacy of apartheid spatial segregation, it has recently passed an inclusionary zoning policy requiring developers in some of the most sought-after areas to include at least 30% affordable units as a condition of receiving a building permit. It is a practical, locally rooted instrument that reflects the specific housing pressures and historical legacy of that city.
Rwanda: A Case Study in Contextualisation
Rwanda is one of the newest additions to the growing list of African countries looking to implement land value capture. Yet its challenge is distinctive because, unlike contexts where the primary obstacle is the absence of enabling legislation, Rwanda’s legal framework already contains many of the instruments needed. The gap is how to take what exists on paper and operationalise it in practice. Nowhere is that gap more pressing than in Kigali, the country’s largest and most rapidly urbanising city.
The pressure is most acutely felt in housing. The government has been looking for ways to increase the supply of serviced, well-located land and thereby expand access to low-cost housing units. One instrument Rwanda has been prioritising is land readjustment. Under this approach, landowners in a defined area pool their plots, which are then collectively planned and serviced before each owner receives back a smaller but now-serviced parcel of higher value. The land retained, called the contribution area, is transferred to the public authority, either to provide affordable units directly or to be sold to cross-subsidise infrastructure investment. Unlike compulsory acquisition, land readjustment keeps original owners in place and aligns their interests with the public good.
This instrument is not new, and Rwanda is not alone in Africa in adapting it. In Egypt’s Damietta and Qena Governorates, land readjustment has been applied in a very different context, with sites of over 200 landowners each reorganised through participatory design workshops that invited all claimant landowners into the planning process. Rwanda’s approach looks quite different, as the government first observed what was already happening on the ground before deciding how to operationalise the instrument.
Important Limitations
In particular, landowners in peri-urban Kigali were already informally engaging in land pooling arrangements because they needed to regularise their holdings in order to obtain construction permits and to accommodate public infrastructure. The government decided to formalise and test this existing practice in 2014 on a dedicated site in Nunga, a neighbourhood covering approximately 62 hectares with around 400 original landowners. The design of the pilot was deliberately community-led as authorities set a threshold of 90 per cent landowner consent before proceeding.
For a pilot in which no money changed hands, the outcomes were significant. Landowners collectively contributed 26 per cent of their land for road reserves, yielding 27 kilometres of six-metre-wide roads. At the prevailing land price of roughly 3 USD per square metre, the collective land contribution amounted to approximately 486,000 USD in value. The readjustment produced 1,170 serviced residential plots laid out on a formal street network, now so clearly defined it is visible in satellite imagery. Water and electricity connections have been extended to most plots, and 27 per cent of plots were dedicated to low-cost housing.
However, the pilot also surfaced important limitations, some of which are common to land value capture instruments more generally. Drainage infrastructure was insufficient, and green and blue infrastructure was limited. Plots designated for commercial and educational use largely reverted to residential use, undermining the neighbourhood’s mixed-use balance. Most significantly, once plots were regularised and serviced, they gained enough value to attract higher-income buyers, pushing lower-income original landowners out of the area. Regularisation, if not carefully managed, can accelerate displacement.
Learning From the Pilot’s Outcome
What makes the Rwandan case particularly valuable is that the Nunga findings did not simply remain confined to a project report. They fed directly into national policy. The National Land Readjustment Instructions, published in October 2025, draw explicitly on the pilot’s lessons. Article 43 stipulates that drainage must be prioritised in the servicing of readjusted plots. Article 28 requires that the remaining land be registered to the government and dedicated to public facilities. Articles 26 and 27 address land distribution and specify that landowners whose plots are too small to be regularised must receive monetary compensation.
This last provision is imperfect as monetary compensation does not account for landowners who wish to remain on their land for reasons beyond its market value, whether for livelihoods, family ties, or community belonging. However, it does at least attempt to ensure that low-income households are not displaced without recourse. It reflects an effort to learn from the pilot’s most concerning outcome and embed that learning in the regulatory framework.
The Broader Lesson
What Stellenbosch, Damietta, Quena, Kigali, and before them São Paulo and Bogotá have in common is not a shared instrument. They share an approach: they take the principle of land value capture seriously but then design instruments that work locally. Land value capture does not arrive ready-made. It has to be built, tested and iterated within the specific legal, political, and institutional landscape of each city. The land value being created by rapid urbanisation and public investment is real, and it is being created right now. The question is not whether it will be captured. The question is whether it will be captured for the public and reinvested to make cities work for everyone.
