Unresolved: An Assessment of the National Land Commission

Posted on May 31st, 2019

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The land “problem” in Kenya dates back to the colonial times, with the alienation of land to European settlers stoking the fires of the struggle for independence. Subsequent allocation of the same land after independence to well positioned individuals and companies, did not solve the problem. Since independence, the legal and institutional framework relating to land has been fraught with tension, strife and copious litigation.

The Constitution of Kenya, 2010 provides for the formation of the National Land Commission (NLC) under Article 67 (1). Article 67 (2) stipulates the functions of the NLC. Further, Article 68 provides that the Parliament should revise and rationalise existing land laws and enact new ones. Pursuant to these provisions, the Land Act, 2012 (the Land Act), Land Registration Act, 2012 (the Land Registration Act) and the National Land Commission Act, 2012 (the NLC Act), were enacted. The NLC Act makes further provisions on the functions and powers of the NLC, including qualifications and procedures for appointment to the NLC. It also gives effect to the objects and principles of devolved government in land management and administration, and for connected purposes.

The establishment of the NLC was touted as a catalyst to Kenya’s land reforms that would have a domino effect of spurring economic growth. The key functions of the NLC include managing public land on behalf of the national and county governments, recommending a national land policy to the national government, advising the national government on a comprehensive program or the registration of title in land throughout Kenya and conducting research related to land and the use of natural resources, and make recommendations to appropriate authorities. The NLC also has the mandate to initiate investigations, on its own initiative or on a complaint, into present or historical land injustices and recommend appropriate redress, encourage the application of traditional dispute resolution mechanisms in land conflicts, assess tax on land and premiums on immovable property in any area designated by law and monitor and have oversight responsibilities over land use planning throughout the country.

The coming to an end of the tenure of the first commissioners of the NLC on 19th February 2019, invites the opportunity to assess and appraise the work of the NLC and to consider whether the NLC achieved its mandate as stipulated in the Constitution and the NLC Act. The establishment of the NLC brought with it rays of hope that the recurrent land issues in the country would be addressed with finality.

The recognition of the NLC as a constitutional commission exuded a new dawn in the arena of land management and administration policy, having been anchored in the supreme the law of the land. However, the following issues bedeviled the NLC no sooner had it commenced its operations.

Conflict over Roles

The jurisdictional conflict between the Ministry of Lands and Physical Planning (the Ministry) and the NLC erupted right from inception of the NLC. There was a vicious “turf war” between the Ministry and the NLC as to whose responsibility it was to undertake critical functions such as the extension and renewal of leases. This led the NLC to seek an advisory opinion from the Supreme Court concerning its roles vis-à-vis those of the Ministry.

By its advisory opinion In the Matter of the National Land Commission (2015) eKLR, the Supreme Court underscored the interdependence of the two institutions, in the sense that none was intended to work independently from the other. Rather, both were meant to work in consultation, to ensure that a system of checks and balances was enforced.

In analysing the NLC’s role under the Land Act, including functions such as the extension and renewal of leases over private land, conversion of land from public to private or vice versa, compulsory acquisition of land for a public purpose or undertaking land settlement programmes, the Supreme Court observed that “the foregoing provisions entrust the NLC with the responsibility of protecting and overseeing the public’s rights and interest, under the Constitution. However, the NLC’s mandate in that regard is not held exclusively and is not unqualified – provision is made for approval from the National Assembly and the consent of the National Government or relevant County Government. This provides a check-and-balance system, to ensure that the NLC operates within the prescribed limits.”

The Supreme Court noted that the NLC’s mandate entailed the processes leading to the issuance of title, whilst the Ministry’s role was the actual issuance of titles. On this point, the Court observed that “…The NLC has a mandate in respect of various processes leading to the registration of land, but neither the Constitution nor statute law confers upon it the power to register titles in land. The task of registering land title lies with the National Government, and the Ministry has the authority to issue land title on behalf of the said Government.” Notwithstanding the distinction of roles, the Court nevertheless reiterated the aspect of interdependence as follows:
“The Constitution’s mandate falls to the three State organs, in an operational context of check-and-balances: and the various Commissions act as oversight and watchdog mechanisms. Hence, each of the functions of the NLC and the Ministry stands to be checked by the one or the other, in order to avoid abuse of power in matters relating to land. The unchanging theme throughout the Constitution, is that the relationship between these two bodies is inter-dependent and based upon co-operation; it is not an agency relationship. As the Ministry conducts its functions, the NLC acts as a watchdog, to ensure compliance with the Constitution, and with legislation. Likewise, the NLC as an oversight body, maintains its functional, financial and operational independence, while still being overseen and checked by the public, by other independent offices, and by the three arms of Government.”

Revocation of Titles

The NLC had been holding periodic sittings concerning the legality of titles at the end of which, it would revoke titles for properties considered to have been acquired illegally or irregularly. It would then proceed to publish lists of revoked titles in the Kenya Gazette and in newspapers of nationwide circulation. These revocations were challenged in the Environment and Land Court and several cases have thus addressed the point.

In Robert Mutiso Lelli and Cabin Crew Investments Limited v National Land Commission & 3 Others (2017) eKLR, whilst considering whether the NLC had jurisdiction to revoke titles to land even where it finds, after inquiry, that such title was irregularly acquired, the Court noted that there was no legal provision for the NLC to revoke titles even if upon inquiry it establishes that such titles were unlawfully or irregularly acquired. The power to revoke title was vested in the Registrar and not the NLC which could only recommend revocation.

Historical Land Injustices

Article 67 (2) (e) of the Constitution empowers the NLC to investigate historical land injustice and recommend the appropriate redress. The NLC Act replicates the same functions in section 5. Section 15 of the NLC Act defines historical land injustice as a grievance which meets the following criteria:

  • Was occasioned by a violation of right in land on the basis of any law, policy, declaration, administrative practice, treaty or agreement
  • Resulted in the displacement of persons from their habitual place of residence
  • Occurred between 15th June, 1895 when Kenya became a protectorate under the British East African Protectorate and 27th August, 2010 when the Constitution was promulgated
  • Has not been sufficiently resolved and subsists up to the period specified above
  • The act which the claim is based on should be verifiable as having resulted in the displacement of the claimant or another form of historical injustice
  • The claim cannot be addressed through the ordinary court system on the basis that it was illegal at the time the injustice occurred or is time barred
  • The claimant was either the proprietor or occupant of the land upon which the claim is based
  • The claimant did not at any time surrender or renounce his right to the land in question
  • The claim is brought within five (5) years from the commencement of the NLC Act i.e. 2nd May, 2012

Going by the last requirement, it is clear that the window period for lodging claims for historical injustices, expired on 1st May, 2017. This means that the NLC’s role as far as historical injustices are concerned has lapsed and it cannot receive new complaints after 1st May, 2017, but can only dispense with matters that were lodged before then. It is noteworthy that there was an opportune moment for extending the said deadline when the Land laws were revised in 2016. However, this provision was not addressed, meaning the deadline of 1st May, 2017 remains effective.

It is also interesting to note that The National Land Commission (Investigation of Historical Land Injustices) Regulations, which were meant to operationalise section 15 of the NLC Act, were gazetted on 6th October, 2017, some five (5) months after the deadline lapsed. Equally interesting is the fact that time is fast running out for the claims the NLC admitted before the deadline and is currently handling. Section 15 (11) of the NLC Act provides that the provisions of the entire section 15 will be repealed within ten (10) years. The NLC Act as previously noted, came into force on 2nd May, 2012. Therefore, the statutory timeframe on addressing historical land injustices will lapse on 1st May, 2022. This means that all the cases the NLC is handling should be concluded within the next three (3) or so years.

The Way Forward

The importance of the interdependent relationship between the NLC and the Ministry, as advised by the Supreme Court, cannot be overemphasised. If the spirit of the Constitution is to be upheld, the two (2) institutions should work in harmony and consult each other. As their roles and functions are interdependent, none can fully discharge its mandate in isolation of the other. Consultations will also be invaluable as a check and balance mechanism to ensure that the NLC does not exceed its mandate in future, as it did with the revocation of titles.

There is also need to revise the timelines on the investigation of land injustices, as the ten (10) year deadline may not be realistic, especially for sensitive matters that may have been protracted due to the plurality of claims. In the interest of substantive justice, there may be need to extend the NLC’s mandate in this regard, to ensure it has adequate time to determine such important matters. Perhaps it may also be necessary to extend the five (5) year window on the admission of claims, as there may be genuine cases where persons were prevented from lodging their claims before 1st May 2017.

Going Green: Introduction of Green Bonds as a Means of Sustainable Development

Posted on May 31st, 2019

By Patricia Mutiso

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Green bonds may be defined as regular bonds with a distinctively unique feature – the proceeds of the bonds are applied exclusively to projects with environmental benefits, for example, climate change mitigation, conservation of natural resources, promotion of biodiversity and reduction of air, water and soil pollution. In light of their specific utility function, there are several sectors on which the proceeds of green bonds can be utilised in, such as; energy, agriculture, waste management, water, transport and urban planning. Green bonds are therefore very useful in supporting the notion of sustainable development duly espoused as a national value in Article 10 (2) (d) of the Constitution of Kenya, 2010.

Green Bond Principles
The Green Bond Principles (GBP) were initially released in January 2014 and a revised version was published in June 2016. GBP provide guidelines for the issuance of green bonds, including providing guidance to issuers on the key components involved in launching a credible green bond and providing investors with available information that is necessary to evaluate the environmental impact of their green bond investments. GBP also assist underwriters by moving the market towards standard disclosures which facilitate transactions. GBP have four (4) main core components, namely, use of proceeds, process for project evaluation and selection, management of proceeds and reporting.

Types of Green Bonds
The following are the types of green bonds that are widely recognised:-

  • Use of proceeds bonds - where the proceeds from these bonds are earmarked for green projects but are backed by the issuer’s entire balance sheet. It entails a standard recourse- to- the- issuer debt obligation.
  • Use of proceeds revenue bonds - where the proceeds are assigned to eligible green projects, and bondholders have recourse to a specified revenue stream (which may be unrelated to the eligible green projects) but not to the issuer.
  • Project bonds - where the proceeds are invested in a specific green project and the investors have direct exposure to the green project itself. Debt recourse under a project bond is to the project’s assets and balance sheet.
  • Securitised bonds - where the relevant revenue stream is generated by a group of green projects or assets. Debt recourse
    under this type of bond is to a group of projects which have been grouped together (e.g. solar leases or green mortgages).

Supranational development banks have historically dominated the global green bond market, but now issuers are more diverse. Financial corporates led the market in 2018 and issuance by sovereign-related entities, like various water authorities, has also increased. The European Investment Bank issued its first green bond, named the Climate Awareness Bond, in 2017, with the proceeds of this bond dedicated to renewable energy and energy efficiency projects. In 2008, the World Bank issued its first green bond, a SEK 2.3 billion (USD 248 million) six (6) year issue that was sold to Scandinavian pension funds. The first corporate green
bonds were issued in 2012 and after that, the issuance of green bonds has been exponential. The green bond market grew from USD 10 billion in 2013 to over USD 40 billion in 2015 and Moody’s estimate that by 2019, the green bond market would have reached an annual value of over USD 200 billion.

In terms of “country appetite” for green bonds, China, France and the United States of America, lead the way accounting for fifty six per cent (56%) of global issuance in 2017, while Canada, Germany, Mexico, Netherlands Spain and Sweden fill out the remaining top ten (10) positions. Other countries participated minimally in the issuance of green bonds.

The exponential growth of the green bond market may be attributed mainly to two (2) factors. Firstly, governments globally are racing to mitigate the devastating effects of global warming in line with the Paris Agreement on Climate Change of December 2015. Secondly, in order to attract new investors, issuers of green bonds have developed innovative products such as green covered bonds and green residential mortgage backed securities amongst others, with the wider choice of investments products tending to attract a wider pool of investors.

The Kenyan Market

The Green Bonds Programme Kenya was launched in March 2017 with the aim of catalysing the market for green bonds. Subsequently, on 20th February 2019, the Capital Markets Authority (CMA) launched the green bonds market which was duly entrenched in law through the publication of a Policy Guidance Note on Issuance of Green Bonds and making amendments to the Nairobi Securities Exchange Listing Rules to allow for the listing of green bonds.

With CMA having approved the legal framework to issue both listed and unlisted green bonds, there is likely to be an increase in the issuance of green bonds and the funding for green projects in the country as well as the regional market.

Kenya is the third sub-Saharan African country to introduce a local green bond market after South Africa and Nigeria. In June 2017, the City of Cape Town issued a USD 74 million ten (10) year note maturing in 2027, with proceeds dedicated to projects that will mitigate and adapt to climate change, in particular, refinancing and financing water, sanitation and transportation projects. This was followed closely by Nigeria which, in December 2017, issued a USD 29.7 million green bond with proceeds reserved for renewable energy and afforestation projects.

Currently, Kenyan banks mainly rely on deposits with maturities of less than one (1) year and, to a lesser degree, development finance institutions for funding. Bond issuance by commercial banks is limited and the introduction of green bonds is expected to spur new environmentally friendly projects for banks to finance, creating opportunities for banks to grow and diversify their loan books. Banks will also be able to diversify their funding and investor profiles, increase available financing and raise funding with maturities beyond five (5) years to finance these projects.

Over the next few years and beyond, green instruments will play an important and niche role in driving the growth of Kenya’s capital markets, in line with the Marrakech Pledge for fostering green capital markets in Africa which calls for an increase in the volume, flow and access to finance for climate projects, alongside improved capacity and technology from developed to developing countries.

According to the Green Bonds Kenya Annual Report 2018, fifty percent (50%) of Kenya’s gross domestic product is attributable to sectors that are directly or indirectly reliant on natural resources. This dependence highly exposes Kenya to the risk of climate change, adverse weather conditions and related environmental risks and the country would thus do well in taking advantage of the opportunities for sustainable development that green bonds offer.

Research by Strategic Business Advisory in partnership with the Kenya Bankers Association, among others, shows that Kenya has a demand for climate-friendly bonds amounting to KES 91 billion (USD 910 million) in the next five (5) to ten (10) years. There are three critical sectors which the research selected as demanding green bond financing, namely, agriculture, transport and manufacturing. In addition, this report recommends that for green bonds to be competitive the pricing needs to competitive and simplified while incentives such as tax exemptions should be given.

Henceforward, sovereigns and sovereign-related issuers are likely to leverage investor interest to advance their environmental policies. According to Moody’s, multinational development banks will in the future support inter-regional issuance. It is worth noting that multinational development banks have moved away from being primarily green bond issuers in emerging markets to being facilitators of green bond issuance by providing technical assistance, credit enhancements and anchor investments in green bonds. Greener times, both financially and environmentally, lie ahead.

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