Evaluating the feasibility of land value capture as a land-based financing technique for infrastructural development in urban areas: case study [of] Kagugube, Kampala

Abstract

With Uganda’s urban population growth rate at 5.2%, the need for infrastructure development heightens but the resources to support this necessity, do not (The Uganda National Urban Policy, 2017). Many financing techniques have been used by the government to grapple with this gap but the tax base remains narrow, public debt only digs the hole deeper, and PPPs (Public Private Partnerships) are still at an all-time low. Nevertheless, the owners/users of the properties adjacent to where this infrastructure has been successfully installed enjoy the benefits of increased land value solely. This research intended to assess the viability of ‘Special Assessment Districts’(SADs), a land-value capture (LVC) tool as a land-based financing technique for infrastructure development at a local government level in urban areas. It was conducted using a KAP (Knowledge, Attitude and Practices) survey of 300 commercial property owners/users in Kagugube, Kampala within a 1km radius of Makerere Hill Road to examine their readiness to pay additional tax in special assessment districts. The analysis showed a strikingly high readiness (78.3%) of these respondents to pay an additional fee with the aim of reaping benefits provided by the infrastructure. The gap analysis of the current financing options, sufficiently ascertained the available gap for implementation of the LVC scheme. A stakeholder analysis was done and its outcomes were used to generate a possible working Process Model of SADs as a land-based financing technique for infrastructural development. This model was differentiated from the current Property Tax Process in Kampala. All these, allowed the researcher to conclude that SADs is truly a feasible land-based financing technique for infrastructural development in urban areas. Potentially providing a foundation upon which other land value capture tools could be tested to solve the financing gap that causes infrastructural inadequacy in Uganda.