The politics of urban renewal in Kampala

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Main taxi park, Kampala.  (All photos in this post by me)

Tom Goodfellow recently shared a link to one of the best pieces I’ve seen in a long time about the politics of urban change in Africa.   It appears that the entire article might not be available to readers who aren’t on Twitter, so I’ve excerpted some key parts here.  Do read the whole thing if you can.

The article begins with a deep dive into the workings of the Kampala Capital City Authority (KCCA), a recently created governing body which has raised tax revenues by 89% over five years and begun cleaning up the city — but at the cost of increased tax burdens for small businesses and ordinary citizens.

“It’s a significant achievement,” says Roland White, global lead for city management, governance and financing at the World Bank. “I’m just not aware of any other big African city which has done what Kampala has done in proportional terms.”

… Last year Global Credit Ratings, a South African agency, gave Kampala an “A” rating for its long-term debt, which could pave the way for a municipal bond issue. There is some way to go yet, but if a bond materializes it would be a first for Uganda, and a rare sight in Africa more generally: a symbol that Kampala has got its finances in order and is open for investment.

But for all the plaudits, much of that extra revenue has been squeezed from … taxi drivers and small businesses, who are struggling to get by. Many Kampalans feel disempowered by reform. The KCCA’s powerful executive director is appointed directly by the president, and overseen by a Minister for Kampala in cabinet. While the authority’s technocratic vim excites international experts, it alienates the locals. “The KCCA doesn’t listen,” says Naswif Kiggundu, a trader. “They do each and every thing from the top.”

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Old meets new at Tropical Bank on Kampala Road

The local politics of tax reform are connected to national debates as well.  The current mayor has become known not just for his opposition to KCCA’s new taxes but for his broader stance against Yoweri Museveni’s 30-year rule as well.

The avatar of this bubbling discontent is Erias Lukwago, a populist lawyer who was elected as Lord Mayor in 2011. He demanded a tax refund for traders, refused to approve the taxi fee and was arrested while protesting the eviction of vendors from one of the taxi parks. His posturing predictably irked the KCCA’s executive director, Jennifer Musisi, a hard-nosed technocrat dubbed the “iron lady’” by local press. …

“He’s our mayor, not their mayor,” says one driver, who didn’t want to be named. In part, Lukwago owes his popularity to national politics: He has promised to “dismantle the dictatorship” of Uganda’s long-time president, Yoweri Museveni, who is widely loathed in Kampala. But he also articulates a radical notion of accountability, which directly challenges the KCCA’s appointed officials. …
Opposition protests are quenched with tear gas. Plans to redevelop markets, ban street vendors and register boda bodas (motorbike taxis) have all met resistance. When it comes to revenue collection, the KCCA’s approach to enforcement is seen as arbitrary and unforgiving — a “witch hunt,” in the words of Kennedy Okello, a newly elected councilor.

KCCA officials deny any unfairness. “I don’t see why someone who is upright fears the regulations,” says Sam Sserunkuuma, director of revenue collection. The traders and taxi drivers do not own the city, he adds, listing the services from street cleaning to hospitals that their fees help to fund.

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Downtown viewed from Kifumbira

A more straightforward revenue solution would be to tax property or land, but existing regulations and infrequent property valuations make this difficult.

For Kampala, an effective property tax is the Holy Grail. “It should be the main revenue source,” says Sam Sserunkuuma, KCCA director of revenue collection: He reckons the city could triple the amount it currently collects.

But tax officials are groping in the dark. The last property valuation was done in 2005, and revised in 2009. Though rental values have tripled in a decade, none of the gains have reached city coffers. New buildings like Acacia Mall do not officially exist.

World Bank support is helping the KCCA to compile a database of buildings, using geographic information system (GIS) technology. When the mapping is complete, tax officials plan to apply a rough valuation of each property based on its location — a cheaper alternative to individual assessments.

There is one snag. Owner-occupied houses are exempt from property tax, following a cynical promise by the President during the 2006 elections. They make up 53 percent of all eligible properties, so the resulting losses are huge. Sserunkuuma describes the law as a “headache”: His officials have to traipse around town, verifying how buildings are being used. It also creates loopholes for tax evaders to exploit.

But only central government has the power to scrap the exemption. The KCCA’s best efforts have so far failed to coax a law change from Uganda’s self-interested politicians, who recently passed a bill to exempt themselves from income tax.

kampala hillsPosh green yards sit next to informal housing near Kololo

The steps that Kampala has taken towards urban renewal are part of a broader trend across the continent.  But across the board, political challenges remain.

All over Africa, cities puzzle over the same conundrums. Rwanda has a new electronic land register, which could help with taxation. Several Tanzanian cities have plumped up their revenues through canny administrative reforms. Lagos, in Nigeria, has patiently cultivated a tax-paying culture, with impressive results.

The lingering question, in Kampala and elsewhere, is who will bear the biggest burden. So far, at least, the wealthy properties on the city’s breezy hilltops have been relatively untouched by reform. “It’s much easier to go after the small guy,” says Nansozi Muwanga of Makerere University. “It’s much easier to after the taxi driver, the lady who brings her green peppers on the sidewalk, the person who’s selling Chinese clogs.”

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