Land Acquisition in Tanzania: Foreign Investor’s Guide!

INTRODUCTION

Land is a primary asset for any investment and business activities. Whether you are investing in agriculture, industrial production, hospitality, import and export or sale of commodities, you need to acquire a piece of land either through purchase or lease. It is, therefore, important for an investor to be aware of the procedure and formalities through which land can be acquired.

This brief intends to enlighten foreign investors about the modality and procedures of acquiring land in Tanzania (mainland).

LAND OWNERSHIP IN TANZANIA

Land in Tanzania is not the private property of a person. All land is public property entrusted to the President on behalf of the citizens of Tanzania (Sect.4(1) of the Land Act Cap.113 R.E 2019). Therefore, land ownership by any person in Tanzania is by way of a leasehold system. Under this modality, any person whether citizen or foreigner may own/possess the land and be granted the right to use the same for such period of time say 33 years, 66 years or 99 years of lease renewable. However, the procedure of land acquisition by foreign persons is a bit different from those applied to citizens as elaborated herein below.

CATEGORIES OF LAND

Before going into the details of land acquisition by foreign investors, it is important to understand the categories of land as per the laws of Tanzania. The land is classified into three categories namely:

• General Land;
• Village Land; and
• Reserved Land

GENERAL LAND

General Land is all public land which is not declared to be reserved land or village land (Section 2 of the Land Act). It includes unoccupied or unused village land. This land is under the management of the Commissioner for Land. The Right of Occupancy may be granted to any citizen (individual or corporate) upon application for any designated use. A foreign investor may be granted the derivative right of occupancy for investment activities through the Tanzania Investment Center (TIC).   General land is considered to be 2% of the land mainly under urban use and supporting around 20% of the population.

VILLAGE LAND

Village land is the land which has been declared to be village land under the Village Land Act Cap.114 R.E 2019. It consists of the land within the boundaries of a village registered under the Local Government (District Authorities) Act, the land designated as village land under the Land Tenure (Village Settlement) Act 1965, the land other than reserved land which the villagers have, during the twelve years prior to the year 1999, have been regularly occupying and using as village land. The administration and management of village land are vested in local government organs namely the Village Council, the Village Assembly, and Land Adjudication Committee.  Customary Right of Occupancy is granted to occupiers.

Village land is considered to be 70% of the land supporting 80% of the population.

A foreign investor may acquire village land for investment by buying a piece of land from the villagers or the Village Council. Where the land is bought by a foreign investor, such land should be changed from being village land to general land.  Thereafter, the process of registration is done through TIC and TIC will issue a derivative title to the investor.

RESERVED LAND

Reserved land is that land reserved, designated, or set aside for conservation, national parks, marine parks, urban planning, road reserve, public recreation grounds, hazardous land and land reserved for public utilities.  28% of the reserved land is made up of forests, national parks and game reserves. These lands are governed by a number of laws but the Commissioner for Land has ultimate powers of allocation of reserved land.

It is important to note that the President can transfer land between all three categories depending on government policies, general planning or upon application by interested persons including investors.

LAND ACQUISITION BY FOREIGN INVESTORS

Tanzania’s government has been actively seeking investors in various sectors of industries, including commercial, housing, hotel, mining, and agriculture.  Land acquisition and registration can be done in either of the following ways:-

• Granted Right of Occupancy: This is issued under the Land Act and Land Registration Act.  It means the Title Deed with respect to a specified land is issued by the Commissioner for Land to a person to occupy and use the land for a term of 33, 66 or 99 years.  The lease period is renewable.  This is with respect to general land. The Granted Right of Occupancy is issued to citizens and local companies.  Foreign investors may be issued with the Granted Right of Occupancy provided that they are a company with local shareholders retaining 51% of the shares. A body corporate registered in Tanzania whose majority shareholder or owners are non-citizens is considered to be a foreign company  (Sect.20(4) of the Land Act)

•  Customary Right of Occupancy: This is issued under the Village Land Act by the Village Land Council. The land under the customary right of occupancy is not subject to allocation by the Village Council since it has already been occupied. Foreign Investors may acquire any part of village land by buying it from the owners or by buying vacant land from the Village Council.  After the investor has purchased the land from the village, the process of conversion of land to general land should be done whereby the land will be registered under TIC and a derivative right of use will be issued to the investor. 

• Derivative Right: means the right to occupy and use the land created out of a Granted Right of Occupancy and includes a lease, a sub-lease, a license, a usufructuary right and any interest analogous to those interests. Section 20(1) of the Land Act provides that a non-citizen of Tanzania shall not be allocated or granted land unless it is for investment purposes under the Tanzania Investment Act, 1997. It was intended that the land for investment purposes be identified, gazetted, and allocated to TIC by way of the right of occupancy. TIC in turn grants a derivative right of occupancy to the investor.  The derivative right may be granted for a period of 10 days less than the period for which the granted right of occupancy has been granted. Therefore, if TIC has a Granted Right Occupancy of 99 years, the investor will be given a derivative right of occupancy of 99 years less 10 days.

PROCEDURES FOR ACQUISITION OF DERIVATIVE RIGHT OF OCCUPANCY

Registration of the Investment Project with the Tanzania Investment Center

It is important to know that, before TIC can proceed to issue a Derivative Right of Occupancy, the foreign investor must have already registered his investment project in accordance with the Tanzania Investment Act, 1997 and a Certificate of Incentives issued.  It is advised that once the investor has located the land and after having been assured of its acquisition,  he must proceed to register with the TIC and get a Certificate of Incentive. The certificate of incentives is given to the investor who has a capital investment of not less than United States Dollars Five Hundred (USD 500,000). The application for a Certificate of Incentive is done in terms of Section 17 of the TIC Act.

Land Acquisition Process

The land acquisition involves a number of steps especially when the intended land is village land. Investors are advised to seek the service of an attorney to guide them through the process. If the investor has not spotted any piece of land, is advised, through his attorney, to make an inquiry, to TIC specifying his area of interest and his desire to acquire land in a certain locality. TIC normally provides a list of available land whether government (TIC) owned or privately owned and advises accordingly.

If the land required is village land, application for acquisition is done through the local government in which the intended land is located. The Local Government will identify the land and provide the intended buyer with the requirements, contracts will be signed,  and payments made under the supervision or through the Local Government Authority.   

After the purchase process is done, the process of conversion of village land into general land is to be done in association with the local government, the investor and TIC (the facilitator). Upon conversion, the land will be registered under TIC for 33, 66 or 99 years and TIC will grant the derivative right to the investor for the same period less 10 days.

It is important to note that the process of change of land use from village land to general land takes a long time say a year or so. However, during this period, the investor is allowed to occupy and use the land. The process of granting the derivative right to investors in respect of land which is already registered under TIC takes a short period say 3 to 4 months only.

Other forms of land acquisition

Foreign investors have other options through which they can acquire land for their investment purposes. These options include a long lease arrangement whereby a foreign investor signs a lease agreement with local landowners for the most part of the term of the right of occupancy. The second option is to register the company jointly with Tanzanian(s) and allow them to retain 51% of the shares to allow the company to be a local company.

Ardean Law Chambers may advise further on both options should either of them be under consideration.

We hope that you find this brief informative. Should you need any further information relating to land acquisition for investment do not hesitate to contact us.

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Gratian B. Mali (Advocate)

Ardean Law Chambers

gm@ardeanlawchambers.co.tz

Cell/WhatsApp: +255 688361260