Dual-Track Land Registries Anchor Real Estate Taxes Even Where Informal Tenure Dominates

Municipal governments across the developing world face a structural fiscal trap when attempting to fund urban infrastructure. They must provide water, sanitation, and roads for rapidly expanding populations, but cannot legally tax the majority of their residents. Traditional property tax systems require formal land titles, which up to 70 percent of urban residents in these regions lack.

To bridge this revenue gap, city authorities are increasingly adopting dual-track land registries to capture value from informal settlements. These parallel systems record physical occupancy and structural dimensions rather than legal ownership. By decoupling revenue collection from the slow process of formal land titling, local governments can immediately expand their municipal tax base.[2]

The core mechanism of a dual-track registry is the separation of fiscal identity from legal land tenure. In a standard cadastral system, a property must be legally surveyed, zoned, and titled before the state can assess its value. In cities where informal settlements dominate, waiting for formalization means forfeiting decades of potential municipal revenue.

A dual-track system bypasses the national legal cadastre entirely to focus on local service delivery. Surveyors map the physical boundaries of a dwelling, record the identity of the current occupant, and assign a unique geographic identifier. This creates a functional fiscal record that exists independently of the national land registry.

Decoupling taxation from legal title

The municipality then levies a service fee based on the structure's estimated value or size. Because the tax is tied to local services rather than underlying land value, it avoids the legal complexities of contested ownership. This allows cities to generate revenue even on land technically owned by the state.

Implementing a dual-track system relies heavily on geographic information systems and community validation. Municipal teams use high-resolution satellite imagery to delineate property boundaries in dense, unplanned neighborhoods. These areas typically lack formal street addresses, making digital mapping the only viable method for establishing a spatial baseline.[1]

Ground teams then visit each identified structure to verify the occupant's identity and assess the building's physical characteristics. They record data on construction materials, the number of floors, and the property's primary use. This information feeds into an integrated financial management system that calculates the annual tax liability and generates an invoice.[1]

In Afghanistan, the UN-Habitat "City for All" programme utilized this approach to overhaul municipal finance between 2016 and 2020. The initiative helped local authorities survey properties and issue "Safayi" certificates to residents in informal urban areas. These certificates function simultaneously as a municipal tax bill and a receipt for urban services.[1]

By late 2017, the programme had distributed 47,000 Safayi invoices across participating Afghan municipalities. This initial rollout collected 48 million Afghan afghanis, equivalent to $690,000, in previously untapped local revenues. The system demonstrated that residents of informal settlements are willing to pay municipal taxes when the process is transparent and linked to service delivery.[1]

The mechanics of occupancy registration

A similar dynamic transformed municipal finance in Maputo, Mozambique, following the end of the country's civil war in 1992. By 2005, the city's infrastructure was severely degraded, and only 1.5 percent of the municipal staff held university degrees. The city council operated on a budget of just $6 per capita, reflecting a system where only 5 percent of properties paid taxes.

The World Bank-financed ProMaputo development program introduced a comprehensive restructuring of the city's revenue collection apparatus. The project bypassed the stalled national land registry by deploying private firms to distribute property tax bills directly to informal occupants. This decentralized approach involved district administrations in revenue collection and consolidated a new database for tracking payments.

For residents of informal settlements, participating in a dual-track tax system offers a profound, if unofficial, benefit. Paying a municipal invoice provides the occupant with a government-issued document linking their name to a specific physical address. While this document explicitly does not confer legal ownership, it establishes a verifiable record of continuous occupation.

In practice, this paper trail acts as a powerful shield against arbitrary eviction or sudden displacement. Courts and local authorities frequently recognize these consecutive tax receipts as de facto evidence of tenure security. When a municipality acknowledges a resident's financial contribution to the city, the political cost of bulldozing their home rises significantly.

Over time, this documented history of tax compliance serves as foundational evidence for future legal integration. When a municipality eventually transitions an informal settlement into the formal legal cadastre, the dual-track registry provides the baseline data. Residents can present years of Safayi certificates or occupancy invoices to prove their long-term claim to the land.[2]

The de facto tenure dividend

"The Safayi certificate is a community-based record of ownership and property tax document," notes a 2016 UN-Habitat policy framework on Afghan municipal finance. "In the absence of a land cadastre, the Safayi system is dependent on onsite surveys to enable municipalities to maximize tax collection."

Despite their fiscal advantages, dual-track registries face significant operational and political constraints in developing megacities. The initial cost of surveying hundreds of thousands of informal structures requires substantial upfront investment. These mapping and registration drives are frequently funded by international development agencies rather than the resource-strapped municipalities themselves.

Maintaining the accuracy of the registry is equally challenging in highly transient informal neighborhoods. Properties in these areas change hands rapidly, and structures are continuously modified or expanded without official building permits. If the municipal database is not regularly updated, the tax rolls quickly become obsolete, and revenue collection rates plummet.

National governments sometimes resist the implementation of dual-track systems by local authorities. Federal ministries often fear that issuing official tax documents to informal settlers implicitly legalizes unauthorized land occupations. This tension is particularly acute when informal settlements occupy environmentally sensitive areas or land earmarked for national infrastructure projects.

Municipalities must carefully navigate these jurisdictional tensions to keep their revenue programs viable. They achieve this by ensuring that occupancy certificates carry explicit legal disclaimers stating they do not constitute formal land title. The administrative language strictly frames the payment as a fee for municipal services rather than a tax on land wealth.

Implementation hurdles and political limits

The Lincoln Institute of Land Policy highlights the complexity of assessing value in these environments. "Tenure rights in informal settlements are often obscure or even unknown," the Institute observed in a 2017 analysis. "Property value depends on vague or intangible factors such as the security provided by community organizations."

Furthermore, the administrative costs of tax collection are inherently higher in informal areas compared to formal districts. Assessed property values are generally much lower, meaning the municipality must process a vast number of small transactions to generate meaningful revenue. This requires a robust, corruption-resistant collection infrastructure that many developing cities struggle to maintain.

To mitigate collection costs, some municipalities experiment with linking tax compliance to the provision of specific utility services. However, this approach carries significant equity risks if it results in the poorest residents losing access to essential water or sanitation. Successful dual-track systems rely on building a culture of voluntary compliance through visible improvements in neighborhood infrastructure.

The data indicates that formalizing the fiscal relationship precedes formalizing the legal relationship. By treating informal residents as legitimate municipal taxpayers, cities integrate them into the civic fabric long before the national cadastre catches up. This pragmatic approach acknowledges the reality of rapid urbanization while securing the funds necessary to manage it.[2]

Dual-track land registries represent a structural compromise between the rigid requirements of property law and the urgent needs of municipal finance. They allow local governments to function in environments where the state's legal apparatus has failed to keep pace with demographic growth. As informal settlements continue to expand globally, these parallel fiscal systems will become increasingly central to urban governance.[2]

Technological foundations and sustainability

In Somaliland and Puntland, a similar UN-Habitat initiative funded by the Norwegian Agency for Development Cooperation targeted land-based financing in fragile states. The project, running from 2020 to 2022, focused on scaling up property taxation to fund local service delivery and reconstruction. By embedding technical staff directly within local government agencies, the programme built enduring institutional capacity for revenue collection.

The Somaliland intervention demonstrated that dual-track systems can function even in regions with highly contested or nascent state structures. Local governments in Borama and other municipalities utilized the parallel registry to collect taxes required for public order, water supply, and local economic development. The system provided a critical revenue stream independent of volatile central government transfers or international aid.

The technological foundation of these systems is increasingly shifting toward open-source spatial data platforms. Municipalities deploy tablet-based surveying applications that allow field workers to capture GPS coordinates, photographs, and occupant data offline. This digital-first approach drastically reduces the transcription errors and data loss associated with traditional paper-based municipal census drives.[1]

However, the transition from a donor-funded mapping project to a self-sustaining municipal department remains a critical vulnerability. When international funding cycles end, local governments must absorb the recurring costs of software licenses, server hosting, and surveyor salaries. If the newly generated tax revenue is not partially ring-fenced to maintain the registry, the system rapidly degrades.

The success of a dual-track registry hinges on the social contract between the municipality and the informal resident. If the collected revenues disappear into opaque general funds without resulting in visible neighborhood improvements, compliance rates collapse. Residents must see a direct correlation between their tax payments and the paving of local roads or the installation of streetlights.