This paper examines a paradox noticed in the development of land tenure systems in eastern Africa
during the late- and post-colonial periods. The Kenyan state attempted to activate land markets in its
Central Province, yet land transactions therein remained constrained; the Rwandan state attempted to
restrict land markets, but land transactions multiplied. The paper explores this paradox through new
institutionalist theories of institutional change. It argues that newly introduced formal land laws failed to
achieve their land-market goals because they were less able to respond to the demands of economic
actors than were the existing informal rules. Conceptual work in the new institutional economics explains
why informal and formal land tenure institutions do not always cohere. From there, this paper moves to
explain the two cases’ informal land institutions by examining the demand-side factors of population
density and commercialisation of agriculture in each area. It suggests that land market activity in the two
cases was comparable due to similar demand-side pressures. As for the formal land laws, the paper,
recognising the political nature of the supply side, offers hypotheses as to why the two states imposed
the legal land tenure institutions that they did. It suggests that the holders of Kenyan political power had
more to gain from land-market activation than did their Rwandan corollaries.