Alozius Gonza | Managing Director
November 21, 2014 09:09 AM

An edited version of this artical first appeared in the New Vision

I have followed with interest various articles and commentaries about compensations and particularly the one in Hoima intended to pave way for the construction of the refinery. Of particular interest is the article in the Daily Monitor of 10th October, 2013 which carried a story titled "Oil Refinery; Residents reject Government Pay”. In the story, it was stated that “more than 7,000 people displaced by the construction of the oil refinery in Kabale Parish in Buseruka Sub-county, Hoima District have rejected the government’s valuation price for their land. They say the government undervalued their land and the properties thereon and vowed not to leave unless they are paid the appropriate price for their property”.

Similar sentiments have been echoed in other compensation exercises with affected persons feeling grieved by the amount of compensation award paid out to them. In most cases, there has been a feeling that the money paid is less than what a neighbor in the same area (neither affected nor displaced by the project) would get if such a person decided to sell their land. In most of these commentaries, the picture painted has been one of an undervaluation by the Valuer and the project affected residents have felt let down by an exercise that appears to leave them worse off than before the project implementation.  

It is upon the above that as a Land Economist and Valuer, I find it necessary to give insight about the compensation exercise in Uganda and perhaps pose the above question to policy makers and legislators.

Compensation in Uganda

Compulsory acquisition (compensation) for property is provided for under article 26 of the constitution of the republic of Uganda. The same article 26 provides for purposes for which government can compulsorily acquire property and these purposes include; taking of possession or acquisition necessary for public use or in the interest of defense, public safety, public order, public morality or public health. It further states that the compensation must be fair and adequate and the payment of this compensation must be prompt and made prior to the taking of possession or acquisition of the property.

The question to ask at this level perhaps is what amount to fair and adequate compensation because this is not clearly defined in any legal instrument. It is the responsibility of the law makers to define clearly what amounts to fair and adequate compensation.

The rates that are used in the compensation exercise are actually developed by the district land boards (see Sec. 59(1)(e) of the land act) and the members of these land boards are in many cases selected from within the district. Seldom do we have a Valuer as part of the Land board to give technical advice when developing these rates and there is no provision of the law to that effect. The Consultant Valuers’ role while undertaking a compensation exercise is only to apply the rates as compiled by the Land Board and approved by the Chief Government Valuer.

It is also important to understand that these compensation rates are rarely updated. It is the responsibility of the district leaders to make the necessary updates to these rates possible so that their residents can not appear to be losing in land acquisitions/ compensations. I believe this is the essence of decentralisation. We can neither blame the central government nor the Valuer for such inefficiency but as the situation is right now, the losers are the peasants.

The other aspect that needs serious review is prompt payment prior to the taking of land. It is increasingly becoming impractical for payment to be done before the taking of the land and in most projects, the period between data collection and payment of compensation award has affected the money paid out. The land market on ground resulting from anticipations caused by the project implementation has in most cases driven the land values very high that by the time compensation payments are being done, the amount paid out appears to be very low compared to what similar plots are selling. A development order intended to freeze land transactions for the period of the project if well enforced can help to stop speculators from driving land values very high. At the same time, the development order should not be misused to arbitrarily lock away land from development. It is during this order that quick and accurate compensation awards can be determined and paid out to the affected persons.

The law should also allow for the selection of a multiplier to upgrade the compensation package to cater for time lag in line with economic circumstances in the country. An annual or monthly incremental rate based on the Central Bank Interest Rates (Not Commercial Bank Rates) or the annual inflation rates as the multiplier can be considered.

Our laws in the current form do not cater for the resettlement of project affected persons. There is urgent need to overhaul the Land Acquisition Act of 1965 to clearly provide for the basis of assessment as well as define what constitutes fair and adequate compensation. The Lands Ministry can engage the Surveyors Registration Board and the Institution of Surveyors of Uganda to develop the necessary reviews to the law.

It is important for all to understand that the general principle for compensation following a compulsory acquisition of land is based on the principle of equivalence. This means that the claimant/affected party should be no worse off in financial terms after the acquisition than they were before. Likewise they should not be any better off. The valuations are done on the basis of open market value as at the time of data collection and inspection of the affected persons without taking into account any increase or decrease of values attributable to the project implementation or speculations.

As the proceeds of the oil are largely focused on infrastructure development, I am sure many land acquisitions shall result from these developments and it is important that we understand our responsibilities in making future compensations exercises more acceptable to all.

As a Valuer and perhaps for all other Valuers, the best is being done within the current legal regime and in line with International best practices on compensation to ensure that affected persons are left neither better nor worse off than before the project undertaking. However, other stakeholders in this exercise ought to do their part as we pray for reviews in the current laws to address some of the issues highlighted.

Above all, anyone aggrieved by the compensation award has a right of appeal to our courts of law. After exhausting all avenues of dialogue between the project affected persons and the government on a “fair and adequate compensation”, I would encourage affected persons to appeal in the courts of law as the refinery project continues.

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