Compensation Theories and Expropriation of Customary Property Rights

Abstract

Market value is the most common compensation basis for expropriation of both private and customary property rights. Private property rights are generally exchangeable while customary property rights are conceptually not as exchangeable. It is hence critical to analyse the applicability of current compensation theories, which are founded on private property rights, to different property rights and in different social settings. By using existing literature and empirical evidence from Africa and other countries where customary property rights dominate, this paper undertakes a theoretical analysis of the applicability of existing compensation theories and the methodologies used to achieve the desired compensation goals. The analysis concludes that whilst current compensation theories are broadly applicable to customary property rights as they aim to protect property rights and prevent expropriatees from impoverishment, various ontological and methodological factors limit the realisation of these goals in settings dominated by customary properties. Such factors include ontology and dominance of customary property rights, use of market value as a compensation basis, and capacity of compensation assessors. Broadly, these factors lead to inadequate compensation and impoverishment of affected people.

Nuances of Compulsory Land Acquisition and Compensation in Botswana

“…Compensation for expropriation is based on two theories: the Equity and Equivalence Theory and the Takers' Gain Theory (Kabanga & Mooya, 2018). According to Mugisha (2015), the Equity and Equivalence Theory is also known as the Indemnity Theory or the Owner's Loss Theory.…”

“…In effect, the theory of Equity and Equivalence is aimed at providing dispossessed groups with adequate financial compensation (Mahalingam & Vyas, 2011). The aim of this theory is not only to compensate for tangible losses, but also to provide compensation for intangible losses which include disturbance, solatium, severance and injurious affection (Pai & Eves, 2016;Kabanga & Mooya, 2018;Pai, 2019). The guiding assumption is that the affected person is supposed to purchase a similar property on the market using the compensation he/she received for the expropriated property (Ambaye, 2013;Denyer-Green, 2013).…”

“…It is also important to note that contrary to the principle of Equity and Equivalence, the Taker's Gain principle can also form the foundation for compensation (Mugisha, 2015;Kabanga & Mooya, 2017;Kabanga & Mooya, 2018). The Taker's Gain Theory is based on the principle that the expropriating authority is supposed to pay for what it gained from the affected person.…”

“…Information is not easily available in communal land because property ownership and use rights are not formally documented (Kabanga & Mooya, 2018;Pai, 2019). The customary land tenure system, where land is not considered to be a commercial commodity, makes it incompatible with market value standards (Pai & Eves, 2016;Kabanga & Mooya, 2017, 2018Makathimo, 2019).…”

“…Information is not easily available in communal land because property ownership and use rights are not formally documented (Kabanga & Mooya, 2018;Pai, 2019). The customary land tenure system, where land is not considered to be a commercial commodity, makes it incompatible with market value standards (Pai & Eves, 2016;Kabanga & Mooya, 2017, 2018Makathimo, 2019). According to Pai (2019), the use of market value for customary properties results in undervaluation due to the fact that its unique cultural value does not conform to market value standards.…”