Ethiopia - Land Governance Country Profile

3. Land Tenure System

The Constitution of the Federal Democratic Republic of Ethiopia unequivocally states that land shall not be individual‟s property. It asserts state ownership of land and thus no private property rights in land. Article 40(3) of the constitution proclaims that “the right to ownership of rural and urban land, as well as of all natural resources, is exclusively vested in the State and in the peoples of Ethiopia. Land is a common property of the Nations, Nationalities and Peoples of Ethiopia and shall not be subject to sale or to other means of exchange. Government has the duty to hold, on behalf of the People, land and other natural resources and to deploy them for their common benefit and development. This implies that the right to ownership of rural land and urban land, as well as of all natural resources is exclusively vested in the state and the peoples of Ethiopia. Land is a common property of the nations, nationalities and peoples of

Ethiopia and shall not be subject to sale or to other means of exchange.”

In Ethiopia, there is rural land tenure and urban land tenure.

3.1 Rural Land Tenure

The rural land tenure system is among the most complicated of the world. Rural Land is managed under the Rural land administration Proclamation number 89/1997. The basis of this proclamation is sustainable rural land use planning; identifying the size and use rights of “the different types of landholdings” in the country; directing mechanisms to resolve problems between farmers and agricultural investors, and between pastoralists and agricultural investors who encourage individual farmers; and establishing a conducive system of rural land administration.Other than this, it encourages private investors in pastoralist areas, and seeks to implement Article 52 (2) (d) of the Constitution relating to the powers and functions of regional states.

The Proclamation provides special rights over rural land. Under Section 2(5) of the Rural Land Administration and Use Proclamation 2005, the following land rights are conferred:

• Peasant farmers/pastoralists engaged in agriculture for a living shall be given rural land free of charge;

• any citizen of the country who is 18 years of age or above and wants to engage in agriculture for a living shall have the right to use rural land;

• children who lost their mothers and fathers due to death or other situation shall have the right to use rural land through legal guardians until they attain 18 years of age;

• Women who want to engage in agriculture shall have the right to get and use rural land.)

The Proclamation gives any person who is member of a peasant farmer, semi pastoralist and pastoralist family having the right to use rural land may get rural land from his family by donation, inheritance or from the competent authority. Further, Government being the owner of rural land, communal rural land holdings can be changed to private holdings as may be necessary.

Private investors that engage in agricultural development activities are given the right to use rural land in accordance with the investment policies and laws at federal and regional levels and governmental and non-governmental organizations and social and economic institutions shall have the right to use rural land in line with their development objectives.

The Proclamation makes provisions for measuring and registering rural land and providing a holding certificate. Under section 2(6) the sizes of rural lands under the holdings of private persons, communities, governmental and nongovernmental organizations shall be measured as appropriate using cultural and modern measurement equipment. Their land use and level of fertility shall be registered as well in the data base centre by the competent authorities established at all levels.

Any holder of rural land shall be given holding certificate to be prepared by the competent authority and that indicates size of the land, land use type and cover, level of fertility and borders, as well as the obligation and right of the holder.

Where land is jointly held by husband and wife or by other persons, the holding certificate shall be prepared in the name of all the joint holders. The information that describes the holder of rural land, the holders of the bordering lands, the types of use, and the rights and obligation of the holder thereof shall be registered in the database and kept by the competent authority. Any rural land that is held through lease or rental shall be registered by the competent authority.

Section 2(7) (2) of the proclamation provides the duration of rural land use right. Under the section, the rural land use right of peasant farmers, semi pastoralists and pastoralists shall have no time limit and the duration of the rural land use right of other holders shall be determined by the rural land administration laws of regions.

Section 2(7) (3) of the states that a holder of rural land who is evicted for the purpose of public use shall be given compensation proportional to the development he has made on the land and the property acquired, or shall be given substitute land and where the rural landholder is evicted by the federal government, the rate of compensation would be determined based on the federal land administration law. Where the rural landholder is evicted by regional governments, compensation would be determined based on the rural land administration laws of regions.

Section 2(8) permits the transfer of rural land use right. Peasant farmers, semi-pastoralists and pastoralists who are given holding certificates can lease to other farmers or investors land from their holding of a size sufficient for the intended development in a manner that shall not displace them, for a period of time to be determined by rural land administration laws of regions based on particular local conditions. The rural land lease agreement to be concluded and shall secure the consent of all the members who have the right to use the land and be approved and registered by the competent authority. A land holder may, using his land use right, undertake development activity jointly with an investorin accordance with the contract he concludes. Such contract shall be approved and registered by the competentauthority. Any holder shall have the right to transfer his rural land use right through inheritance to members of his family.

The Act provides for investors rights. Section 2(8) (4) states that “an investor who has leased rural land may present his use right as collateral”

Section 2(10) provides the obligations of rural land users. These are as follows:

• A holder of rural land shall be obliged to use and protect his land. When the land gets damaged, the user of the land shall lose his use right. Particulars shall be given in the land administration laws of the regions;

• Where irrigation canals are constructed, the holder shall have the obligation to allow the construction of irrigation lines and other infrastructures if they cross his land holding;

• The holder of rural land shall have the obligation to cooperate when requested by the competent authority to measure and survey his land.

Any rural landholder shall have the obligation to notify the competent authority when he abandons at will his land use right.

3.2 Urban Land Tenure

The need for issuing this proclamation has three bases. The first is article 40 of the constitution, which reads that “land is the property of the state and the people of Ethiopia and that its use shall be subject to specific regulation by law.” The second basis is that, as the proclamation states, “the sustainable rapid economic growth registered across all economic sectors and regions in the country has necessitated continuously and increasingly the demand for urban land which requires such an appropriate administration that it is efficient and responsive to land resources demand and third basis is that the prevalence of good governance is a foundational institutional requisite for the development of an efficient, effective, equitable and well-functioning land and landed property market, the sustenance of a robust free market economy and for building a transparent and accountable land administration system that ensures the rights and obligations of the lessor and the lessee.

Under the Lease Holding of Urban Lands Proclamation the transfer of land holding into lease system means that all land in urban areas, after being identified and registered by the municipality, shall be registered as lease land and the holder shall enter with the government a lease contract that among others includes lease period and lease price to be paid (art. 15). The lessee will then be issued a “lease certificate” that shows name of lessee, land size, location, land use purpose, lease price, lease period and so on.

As a matter of principle, every land needed for residential, commercial (agriculture, industry, or service), and others will be transferred by tender. Bidders will use the minimum lease price as a base to offer their price. However, as exception, city municipalities may give land by allotment to selected areas of paramount importance to society such as government offices, religious institutions, public residential housing programs, diplomatic mission and so on (art.11). Besides, a person who is displaced from his or her house as a result of urban renewal (like in case of expropriation) shall get a land by allotment. All of them would pay lease price based on the bench mark set by the city.

The leasehold right is a right to use the land for fixed period of time against payment of agreed amount of money. The assumption is that any person who fulfills the requirements is entitled to get land by way of lease. Pursuant to article 4 of the urban landholding lease proclamation, an urban land shall be permitted to be held by lease in conformity with plan guidelines where such – a plan exists, or, where it does not exist, in conformity with the law which Region or City government makes as the case maybe or on auction or through negotiation or according to the decision of Region or City government.

Once a person gets land by one of the three mechanisms, he/she is entitled to get leasehold title deed. This is a certificate that proves the lessee‟s rights to the land. Once a person acquires the lease right s/he has the right to construct a building of different nature (residential, commercial, industrial) as per the agreement and the master plan. Hence the right of use and enjoyment is one right conferred on the lease right holder. Another right is that the lease right can be inherited, donated, or mortgaged provided that the beneficiary‟s rights are limited by the period of the lease term. Finally, the lease can be sold or exchanged to any person. Under Article 13 (1) of the provides that any lease holder may transfer, or undertake surety on (mortgage), his lease-hold and he or she may also use it as a capital contribution to the amount of the lease payment he has made.

It must be noted that this right shall be enjoyed so long as some form of construction/activity has been taken place; in other words bare land is not subject to all the above rights. Article 12 requires the leasehold possessor to “begin to use the land for the prescribed activity or service within the period of time set…” The time set for commencement of activities may vary from 18-30 months as the case may be as emphasized in different municipal regulations.

The Proclamation provides lease periods unlike rural land, urban land is granted to urban dwellers and investors on the bases of restriction. In the current property right situation, use rights are provided for a specific period (it could be for 15 or 99 years) obtained from the landowner who shall be the state through ground rent payment.

Therefore the landownership and use rights are separated and make the state out of full control over the land.

Article 6 of the proclamation provides different periods of years for different types ground leases. The period of lease shall vary depending on the level of urban development and sector of development activity or the type of service and shall have the ceiling o in any town:

• Up to 99 years for housing (personal and leasable), science, technology; research ,and study, government office, non-profit-, making philanthropist organization, religious institution;

• Up to 15 years for urban agriculture;

• As per government agreement for diplomatic missions and international organizations;

In Addis Ababa and in a town designated as of the grade of Addis Ababa:

• Up to 90 years for education, health, culture, sports;

• Up to 60 years for industry;

• Up to 50 years for commerce;

• Up to 50 years for others.

In other towns not designated as of the Grade of Addis Ababa;

• Up to 99 years for education, health, culture, sports;

• Up to 80 years for industry;

• Up to 70yem for commerce;

• Up to70 years for others.

Lease holding right may be terminated for good reasons; the state has no right to revoke this right whenever it wishes. Like any contractual agreement the expiry of the lease contract may be a reason for termination of the lease hold right. However, unlike lease of housing, the lessee has a better position. The municipality may not take back the land whether before or upon the expiry of the lease agreement unless the land is needed for public interest based works.

The lease hold possessor has the right to request for renewal of the period of lease agreement, 10 to 2 years before the final day of the agreement. Under Art.7 period of lease may, upon the termination thereof, be renewed for the lease-hold possessor as per the agreement to be reached, unless the urban land is wanted for public interest. Where the lease period is not renewed upon termination on account of the land being wanted for public interest however, compensation shall not be paid to the lease-hold possessor.

Art. 15 states that the lease-hold of urban land shall be terminated where the lease-hold possessor has failed to use the land or where it is decided to use the land for a public interest; or where the period of lease is not renewed. The lease proclamation provides three basic reasons for the termination of the contract. It seems the first and third reasons are happening on account of the failure of the lease-hold possessor himself or herself. Because, failure to commence the activity on the ground within the agreed time and in accordance with the plan and failure to request renewal of the lease agreement are impugned on the lease-holder himself. The second reason is however, accountable to the state, and as a result the lease-hold possessor shall be “paid commensurate compensation” for his loss of the property. In case of the first and third cases however there is no any compensation to be paid.

Article 40 (7) specifies the rights to the compensation payments for investment on land in case the “right to use expires. It states that “Every Ethiopian shall have the full right to the immovable property he builds and to the permanent improvements he brings about on the land by his labor or capital. This shall include the right to alienate, to bequeath, and where the right of use expires, to remove his property, transfer his title, or claim compensation for it”

Land may be, expropriated as one means of land acquisition for the state. This is a procedure whereby the state takes away private owned land property for public interest without the consent of the owner and against payment of fair amount of compensation. The subject of expropriation is not only privately owned land and building but also leased land. The lease proclamation provides instances of expropriation under articles 7(1), 15 (1) (b), and 16. Expropriation of leasehold land may be effected during the expiry of the lease agreement (7(1)), or before the expiry of the agreement as can be inferred from Article 15 (1) (b), and 16 (1). According to article 7, the state may refuse renewal and take back the land when the land is needed for public purpose. The law also emphases that in such case compensation is not to be paid.

Art 16 provides clearance of urban land. Under 16(1) the appropriate body may clear and take over an urban land which it decides it is necessary to commit for a public interest by issuing clearance order in writing to the concerned person. It shall also publicize the order through other alternative means. Where a leasehold right has been taken away by the state for good reasons/public interest (such as to build hospital, roads, schools, etc.), the state must compensate the leasehold possessor for the property on the land and the remaining lease rent. Regulation No.135/2007 that provides for “The Payment of Compensation for Property Situated on Landholdings Expropriated for Public Purposes,” under article 13 provides the formula. The compensation for buildings the amount of compensation should be calculated by taking the following into consideration of the cost of construction (current value) cost of permanent improvement on land and the amount refundable money for the remaining term lease contract. The leasehold possessor is refunded if he had made full or prior payments the rent.

Article 16 (2) provides that illegal settlers (squatters) may be evicted from the land they hold without any payment of compensation.