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disincentives for registering land or re-registering transfers of leasehold property. The use of leasehold
rents to pay for general rural development expenditures imposes on leaseholders a disproportionate
share of the cost burden. There is further risk of double taxation resulting from ground rents and
property taxes being levied on the same piece of property (chapter 4). The MOL may be correct in
arguing that it now has a record-keeping system that makes a land-based tax feasible, and at a lower
administrative cost than alternative forms of taxation. However, these claims should be discounted and
a push made for a more careful and general review of the tax system (of which the land tax would be
a part), for an evaluation of alternative approaches for financing rural development, and for a general
institutional review of agencies (including the rural councils) and their appropriate roles in tax
collection and expenditures. In the end, the MOL may play a greater role in tax collection, but every
attempt should be made to divorce the land rent for purposes of enhancing property rights from
general taxation of land value.
The MOL's plan to pay up front the costs of developing new lands then recouping the costs
through annual leases is problematic on another front. The leaseholder would bear none of the
development costs, or at least would be required to put little personal capital into the holding. Once
the title is in hand, the leaseholder is eligible for short- to medium-term credit. Should the banks
foreclose, the government or the bank is left bearing all the costs of land development, while the
leaseholder gains tremendous financial leverage from investing little or no personal capital in the land.
Rather than amortizing the development costs into the lease rent, a strong argument can be made for
auctioning properties to recoup part of the development expense from the land purchaser up front.
Such a policy would limit land demand, but would help minimize risks of land speculation solely for
the purpose of increasing credit access.
VIII. Proposed actions
A. Land tenure reforms
There is wide consensus within government of the need for land tenure reform to increase
private sector development, private and foreign investment, and capitalization of the farm and
non-farm sectors. The existing land legislation needs to be comprehensively reviewed with the overall
aim of simplifying the legislation, achieving a more unified body of legislation, and identifying
fundamental changes necessary to facilitate the development of the land market. Indicative changes,
that are by no means exhaustive, are outlined below:
Zambia (State Land and Reserves) Orders, 1928 to 1964. This act as currently written
suffers from at least three major deficiencies. First, while it addresses the role of district councils and
the conversion of land into leasehold property, it administratively ignores the land rights of natives
and nonnatives to customary lands outside of leased land. Second, the term "native" is ambiguous and
difficult to argue in a court of law. Third, restrictions limiting leasehold property of charitable
organizations to 33 years and nonnatives to 5 years of occupancy does not provide sufficient duration
for long-term investments or planning. In addition, the Commercial Farmers Bureau raises concerns
about the commissioner's powers to set legal area maximums on leasehold property. The ceiling of
250 hectares, according to the Bureau, is too small for large-scale commercial farming, particularly
for beef cattle or game ranching. The central issue that government must address is whether it wishes
to control the size of farms, particularly if the demand for land by foreigners increases in response
to current Zambian policies aimed at attracting foreign investment.