Landowners in Tanzania will now pay up to five times more in rent after the government revised the rates in an effort to increase revenues.
Rent has gone up from Tsh200 ($0.15) per acre to Tsh1,000 ($0.62) for rural land and Tsh5,000 ($3.1) to Tsh10,000 ($6.3) for urban land.
The new rent, which the Ministry of Lands projects will increase revenue from Tsh19 billion ($10 million) to Tsh100 billion ($60 million), is likely to drive out land hoarders and free the resource for wealth creation.
According to the Minister of Lands, Housing and Human Settlements Development, Dr Anna Tibaijuka, the ministry has been slow to ensure land is used for wealth creation and poverty eradication owing to lack of funds.
During the 2012/2013 budget, the ministry planned to collect Tsh99.8 billion ($60 million) from various sources in the land sector but until April this year during the reading of the 2013/2014 budget, it had collected only Tsh19 billion.
“This shortfall was caused by various challenges, including the delay in implementing the new land rates,” she said.
According to Prof Tibaijuka, her ministry will send land rent bills through mobile phones, use private companies to collect rent as well as ensure stern action against defaulters.
The ministry has ordered all municipal councils to take stern measures, including prosecution of defaulters and revocation of ownership.
However, the increment in land rent has not gone down well with investors. Dan Mchemba, executive director of the Tanzania Chamber of Commerce, Agriculture and Industries, said the increment goes against government initiatives to encourage investments because it raises the cost of doing business.
Mr Machemba said it was wrong for the government to fight land hoarders by increasing rent. Instead, he suggests, the government should ensure anyone applying for land already has plans for its use.
The executive director of the Tanzania Private Sector Foundation, Godfrey Simbeye, said the increment would adversely affect large-scale farmers as some would have to pay as much as Tsh1 billion ($624,000) a year.
Mr Simbeye said farming in Tanzania is risky because it depends on rain and a farmer who is required to pay that amount of money per year may not be able to.
“This is not sustainable, and it encourages cheating. I’m expecting very high non-compliance,” he said.
He also dismissed the government’s argument that the increase would curb land speculation, arguing that land rent was charged only for registered land, whereas most of the hoarded land was unregistered.
According to Mr Simbeye, land rent has discouraged smallholder farmers, most of whose land is unregistered, from venturing into commercial activities, as this would force them to register their land.
To curb land speculators, the government said it will repossess all unregistered land from 50 acres and above.
While on a tour of the country last week, UK Secretary of State for Development Justine Greening suggested that Tanzania and her country could co-operate on the G8 land and tax initiative: “The G8 land partnership will put in place a Land Tenure Unit in the Ministry of Lands that will collect and publish data relating to current and future land deals, and develop a road map for land reform by June 2014,” she said.
Ms Greening said the partnership will lead to a more efficient, effective and fair Tanzania tax administration, and bring in experts from the UK’s HMRC to advise on Customs modernisation.
The G8-Tanzania Land Transparency Partnership was signed by President Jakaya Kikwete in June in London.
The partnership is designed to attract increased foreign and national private sector investment.
To implement the partnership agreements, the G8, led by Canada on Extractives Transparency and by the UK on Lands Transparency, will work closely with the Tanzanian government, other development partners, the private sector and civil society organisations.