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Scholars have argued that economic efficiency requires a clear definition of the rights of ownership, contract and transfer of land. Ambiguity in the definition or enforcement of any of these rights leads to an increase in transaction costs in the exchange and transfer of land as well as a “residual uncertainty” after any land contract. The disjuncture between public and customary law regulating property rights is a problem for capital formation across Africa. In Kenya government efforts at establishing clearly defined property rights and adjudication mechanisms have been plagued by the existence of alternative processes for the adjudication of disputes. This paper will compare the costs and processes of the formal and informal methods of property rights adjudication and address which groups of people use which system. The research results suggest that legal attempts at property rights reform, now common across Africa and many other parts of the world, face difficulty in enforcement and often only affect the property rights of a privileged elite. People who are not members of the elite are constrained by customary systems which govern the allocation of land. Contrary to previous assumptions, field research has demonstrated that the adjudication of disputes regarding land within customary systems in Kisii involves such great expense that even the traditional systems of conflict resolution are beyond the means of many citizens. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]

In Kibera, Nairobi Kenya's largest slum, getting property rights enforced is no simple matter. Structures are owned by one person and rented by another, neither of whom have rights to the land on which the structure stands. Rental contracts are the subject of frequent dispute for residents and government conflict resolution mechanisms are inaccessible. Using structured interviews and working with local community based organizations we were able to identify three different mechanisms for contract enforcement that developed apart from the formal government channel: 1) bureaucratic entrepreneurs willing to act outside of their area of authority; 2) community based organizations; and 3) ethnic gangs. All of these mechanisms assist people in getting their property rights contracts enforced. In this paper we establish a rubric for the assessment of welfare maximization based on extant literature in new institutional economics. We discuss each of these contract enforcement institutions and evaluate them against the rubric. We find that these organically developed solutions to the inaccessibility of government mechanisms for contact enforcement are not obviously superior to the formal institutions. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]