PROPERTY GUIDE: Foreigners owning land in TZ: A blessing or a curse?

A day before yesterday at a restaurant near our Dar es salaam offices in Mbezi, two colleagues and I were engaged was engaged in a weird and heated debate who told me that the existing ban on foreigners from owning land is justified because of our dear beloved country’s territorial size, poor economic condition and so that chance is given to poor to own land. I will tell you what my stand was shortly but others would argue that Tanzanians should continue to prohibit foreigners from buying and owning real estate because of its small or limited land mass, and because real estate prices would increase if we allow foreigners to own land.

By law, foreigners are not allowed to acquire land in Tanzania since our land Act under section 20 is very clear and says “for avoidance of doubt, a non citizen shall not be allocated or granted land unless it is for investment purposes under the Tanzania Investment Act” .A foreigner can only acquire land if, (one) it’s for investment purposes and that investment must be under T.I.C (Tanzania Investment Centre) and (two ) they received it by way of inheritance(beneficiaries under a will) as per the famous landmark judgment delivered at the High Court of Tanzania, District Registry by Dr Fauz Twaib, J, on May 13th 2011 in the case of EMMANUEL MARANGAKIS as Attorney of ANASTASIOS ANAGNOSTOU VERSUS THE ADMINISTRATOR GENERAL, CIVIL CASE NO. 1 OF 2011. (The full judgement is on our website www.abcattorneys.co.tz.)

This politico-economic policy of the Tanzania Government relating to land goes back to our “Mwalimu Nyerere’s “ philosophy which embraced his heart’s desire to promote the people’s living by eradicating property, ignorance and diseases. He believed in this philosophy which went hand in hand with us owning our own resources and profiting from them. Mwalimu in 1958 published a pamphlet entitled Mali ya Taifa (National Property) aimed at opposing the colonial government proposal for a new legislation regarding land holding. In this pamphlet he discarded any idea which attempted to commodify or privatise land. The basis for his position is his belief that land, like water and air, is the gift of God to his living creation. Humans do not create or add to land, they are born to find it there and die to leave it there. Again in 1977 Nyerere underscores this point later on in his Ujamaa-The Basis of Socialism where he argues that “... we don’t need to take degrees in Economics to know that neither the worker nor the landlord produces land. Land is God’s gift to man-it is always there”. This in short means it was our God given right, for Tanzanians to hold and not a commodity to sell off to non Tanzania. This is however one way to look at it.

The other way is for you, who is reading this right now to think it is wrong to assume that allowing foreigners to own lands would automatically result in truck loads of wealthy foreigners and companies owning most of the country. If that’s was the case, then Michigan and Detroit should have attracted millions of property buyers from around the world because of their low home and property prices. In America, Canada, Australia and other rich economies allow foreigners to own land. Did that result in foreigners grabbing most of the countries’ land-holdings? No. It’s because of the following:

1. Nobody can compel a property owner to sell his property.

2. It is in the interest of the property owner to keep his property.

3. It is NOT in the interest of a foreigner or a foreign company to buy excessively vast areas of land due to property taxation and other allied taxes.

But here’s why one would be in favor of foreigners owning lands?

1. It can be a good mechanism to attract foreign investments.

2. Thus, it can increase the value of lands. Just imagine Apple or any tech giant buying parcels of land in Area D in Dodoma or Salasala in Dar es Salama. That would increase the value of adjacent lands overnight. Remember that it is against the law to coerce someone into selling his property. By the way I am against eminent domain.

3. It’d be an initial step for skilled, talented foreigners to seek citizenship and become part of our team. This is what Singapore did.

But then again it is a key point to note that a lot of wealthy foreigners buy lands abroad because of the country’s tourist destinations, beaches, stable peace and order situation. You don’t expect a British or Russian millionaire to buy lands in Somalia because of the country’s bad peace and order situation (assuming Somalia fully allows foreigners to own land).

What I’m trying to say is, you won’t expect foreigners to come here in “numbers” once we allow them to own lands, and buy properties. That’s not how property buyers behave in the real world. Property buyers and companies buy lands because of their existing business. There must be some motivating factors, like

• Ease of doing business (e.g., Singapore, US, etc.)

• A good investment place. Which means the country must have stable economy.

• Less crime rates.

In light of the above, once again, one would argue like my colleagues that allowing foreigners to purchase domestic assets ensures that foreign exporters will continue to provide domestic consumers with imports (natural resources, gasoline, product inputs, etc) vital to a robust economy.

Additionally, foreign investment benefits the economy. When foreigners buy TZ assets, they free domestic money to be invested in other projects that create growth. Though foreign investment may seem “bad,” it is beneficial to all involved (if it wasn’t, they would not voluntarily agree to buy / sell assets).