Salient Features of the New Ethiopian Urban Land Lease Holding Proclamation No.721/2011 and its Implications on the Ethiopian Economy

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Addis Ababa University


This paper attempts to analyze the salient features of the new Ethiopian urban land lease holding Proclamation No.721/2011 and its implications on the Ethiopian economy. Today the new lease holding proclamation has become a burning agendum of discussion throughout the country. This proclamation prohibits the allocation of urban land other than through lease holding and designs a general direction through which all urban land holdings will in the future be converted to the lease system. Moreover, it highly restricts transfer of use right on urban land, provides unreasonably short time for commencement and completion of constructions, stipulates strict measures for failing to commence and complete construction within the time and restricts the right to appeal of aggrieved parties. In order to identify the implications of the proclamation on the Ethiopian Economy, the writer has consulted various literatures and collected information through interviews and focus group discussions with different concerned bodies. Based on this it has been founded that the changes and restrictions introduced by the proclamation have a negative bearing on the transaction of immovables i.e., land and buildings, security of tenure of urban residents, the construction industry, banking services, urban housing service, the market and investment. This in turn affects money circulation, job opportunity and the income of both individuals and the government which has a negative influence on the country’s economy. The paper also attempts to show that there is no provision under the FDRE constitution which provides that all urban residents will be allocated urban land through the lease system. It is also indicated that the lease system designed by the proclamation which in principle allows land allocation based on tender does not take in to account the capacity of most urban residents and thus such residents as they are also joint owners of the land should be allowed a plot of land based on the permit system at least for residential purposes. Moreover, it is stated that the government should not impose any restriction on transfer of properties attached with the land as long as individuals pay the required transfer tax and related charges. It is argued that the period of payment of lease, commencement and completion of construction should take in to consideration the prevailing realities on the ground. It is also recommended that the government should pay compensation at market price for the properties attached with the land and the permanent improvements on the land to the lessee when the contract of lease can’t be renewed because of the fact that the appropriate body refused to renew the lease contract when the land is needed for public interest. It is also stated that aggrieved parties should be entitled to take their appeal on all issues to the regular courts regarding urban land clearance. It has also been indicated that rather than trying to amend the proclamation through a regulation the government should amend the proclamation itself as a regulation which is enacted to implement the proclamation cannot legally amend the same.



Salient Features of the New Ethiopian Urban