INSTITUTE OF TECHNOLOGY

DEPARTMENT OF URBAN PLANNING AND CITY DEVELOPMENT

A THESIS SUBMITTED TO WOLLEGA UNIVERSITY IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE BSC IN URBAN PLANNING AND REGIONAL
PLANNING.

CRITICS OF URBAN LAND LEASE POLICY AND ITS DEVELOPMENT: IN CASE OF

NEKEMTE TOWN

BY:

TEWODEROS ALEMU ADVISOR: GEBEYEHU TADESE (MSc.)

WOLLEGA UNIVERSITY

JUNE, 2017

NEKEMTE, OROMIA, ETHIOPIA

 Declaration

I tewoderos alemu (Eng R 12/130) hereby declare that this thesis is my original work that has
been carried out under the Supervision of Instructor gebeyehu tadese (MSc.) lecturer,
Department of Urban Planning and regunal planning, Wollega University during the year 2022
as part of the Bachelor of Degree of Urban and Regional Planning in accordance with the rule
and regulation of the University.

Name of participant:-tewodewros alemu tegaw Signature__________date________

This thesis has been submitted for examination with my approval as Wollega University,
College of Engineering and technology, Urban and Regional planning supervisor.

Name of Advisors: Mr. gebeyehu tadese (MSc) Signature________Date__________

i
 Approval

The undersigned certify that they have read and hereby recommend to the Wollega
University, Institute of technology, program of Urban and Regional planning to accept the
thesis submitted by tewoderos alemu tegaw and entitled “Urban Land Lease Policy and
developement in case of Nekemte Town” in partial fulfillment of the requirements for the award
of a Bachelor Degree in Urban and Regional Planning.

Name of Advisor: _________________________Signature__________ Date_______________

Name of Examiner: ________________________Signature __________Date ______________

ii
 Acknowledgment

First of all, I would like to thanks, my Almighty GOD for all his support in my life. I wish Glory
to my Lord Almighty, for His care and smoothening challenges in doing and all my steps from
the Start to end of this research.

I kindly thank my advisor Mr. gebeyehu tadese (MSc.) for his contribution, guidance and
constructive comments during this research. I would also like to express my great appreciation
to my staff members for all their suggestions and encouragement.

Deep appreciation and thanks goes to Nekemte municipal and land management agency and
some respondents for their assistance in providing necessary documents and sharing ideas for
this research.

At last but not least I would like to say a special thank you to all my families for their support
and encouragement all along my study of five years.

iii
 Abstract

This research is aimed at assessing land policy development and management practices and
challenges in Nekemte town administration. The study assessed the problem by applying good
governance principles under the management dimensions. In order to achieve the above
mentioned objectives, literature review was undertaken that includes previous studies, various
land management books and manuals. Thus with this literature review a conceptual framework
was developed and a feasible methodology has evolved. Questionnaires, interview and document
review checklists were used as research tools to collect data. The qualitative data was analyzed
using narrative explanation. The findings of the study revealed that land development and
management processes are not transparent to the service users. Weak citizen participation in the
land development and management and unequal treatment of clients in the service provision
were observed as key problems. The study also revealed that service users were dissatisfied on
the performance of land policy development and management officials in their service delivery
for different needs. Finally, based on the findings of the study, recommendations were
forwarded.

Key words:

“Lease; Ownership, Transfer, Urban plan, allotment, land reform, Tender, Grace period,
Old possession, compensation, , land registration, article, proclamation, policy and
certification,

iv
 Acronyms

FUPI…………………………..Federal Urban Planning Institute

GPS……………………………Global Positioning System

IDP…………………………….Integrated Development Plan

SNNPR………………………..Southern Nation Nationalities and Peoples Region

UN…………………………….United Nations

UN HABITAT………………..United Nations Human Settlements Program

v
 List of Tables

Table 1: Community Response......................................................................................................38

Table 2: Descriptive statistics on Equity.......................................................................................39
Table 3: Descriptive statistics on transparency............................................................................40
Table 4: proposed and Existed Man Power..................................................................................42
Table 5: Questionnaires Filled By Residents................................................................................56

List of Figures

vi
Figure 1: Nekemte Town Spatial Location......................................................................................4
Figure 2: Thesis Organization Diagram.........................................................................................5
Figure 3: Example of land rights...................................................................................................16
Figure 4: Transitions in Lifecycle of Land Markets......................................................................17
Figure 5: New tenements being built (Kibera, Nairobi)................................................................33
Figure 6: Responses on Affordability of Land Price Compensation.............................................38

Table Content

Declaration....................................................................................................................................................i

vii
Approval......................................................................................................................................................ii
Acknowledgment........................................................................................................................................iii
Abstract.......................................................................................................................................................iv
Acronyms.....................................................................................................................................................v
List of Tables..............................................................................................................................................vi
List of Figures............................................................................................................................................vii
Table Content...........................................................................................................................................viii
CHAPTER ONE..........................................................................................................................................1
1. Introduction.......................................................................................................................................1
1.1 Background............................................................................................................................1
1.2 Problem Statement.................................................................................................................2
1.3 Objectives..............................................................................................................................2
1.4 Research Questions................................................................................................................3
1.5 Significance............................................................................................................................3
1.6 Scope......................................................................................................................................4
1.7 Limitation...............................................................................................................................4
1.8 Thesis Organization...............................................................................................................5
CHAPTER TWO.........................................................................................................................................6
2. Literature Review..............................................................................................................................6
2.1 Basic Concepts and Definitions........................................................................................................6
2.2 Socio-economic Significance of Land in Ethiopia...........................................................................8
2.3 Land lease policy in Addis Ababa....................................................................................................8
2.4 The lease policy and its characteristics in Ethiopia..........................................................................9
2.5 Transfer of Land use rights.............................................................................................................11
2.5.1 Lease...........................................................................................................................................11
2.5.2 Permit.........................................................................................................................................12
2.6 Appellate Tribunal..........................................................................................................................12
2.7 Takeover of Land............................................................................................................................13
2.8 Transitory Provisions......................................................................................................................13
2.9 Land market....................................................................................................................................13
2.9.1 What is the land market?......................................................................................................15
viii
 2.9.2 Sales markets and rental markets.........................................................................................17
2.10Advantages of a lease system.........................................................................................................18
2.11Conversion of Old Possessions to Lease Holding..........................................................................19
2.12Leasehold Permit of Urban Land....................................................................................................19
2.12.1 Urban Lands Prepared for Tender........................................................................................20
CHAPTER THREE...................................................................................................................................22
3. Methodology...................................................................................................................................22
3.1 Study Approach..............................................................................................................................22
3.2 Methods of Data Presentation and Analysis........................................................................23
3.3 Data Type.............................................................................................................................23
3.4 Data Source..........................................................................................................................23
3.5 Data Collection Techniques.................................................................................................24
3.6 Sample Size Determination..................................................................................................24
3.7 Data Analysis Techniques....................................................................................................25
3.8 Methods of Data Presentation and Analysis........................................................................25
CHAPTER FOUR.....................................................................................................................................26
4. Local Case Study, Hawassa (SNNPRS).........................................................................................26
4.1 Introduction..........................................................................................................................26
4.2 Review of the Current Hawassa, Land Lease Policy...........................................................26
4.3 Findings................................................................................................................................29
4.4 Land market: in case of Kenya (Nairobi).......................................................................................31
4.5 Formal access to land...........................................................................................................31
4.6 Lack of adequate land regulation.........................................................................................32
4.7 Land markets in Kenya........................................................................................................32
4.8 How well are urban land markets working for poor people?...............................................33
4.9 What could be done to make urban land markets work better for the poor?.......................34
4.10 Dual legal systems of land ownership:................................................................................34
4.11 Selected recommendations...................................................................................................34
4.11.1 Planning......................................................................................................................................34
4.11.2 Land administration....................................................................................................................35
4.11.3 Land policy and tenure systems..................................................................................................35
ix
 4.12Experiences of South Africa...........................................................................................................35
4.12.1 Land ownership and Administration...........................................................................................35
4.12.2 Land pricing and decision making...............................................................................................36
4.12.3 Lease term and lease period renewal.........................................................................................36
4.12.4 Laws for development of land and related properties................................................................36
CHAPTER FIVE.......................................................................................................................................37
5. Data Analysis, Result and Description...........................................................................................37
4.1 Challenges in the Implementation of Lease Proclamation in Nekemte town......................37
5.1.1 Unreachability of Information about the Application of Lease Proclamation.............................37
5.1.2 Unaffordable land price to the citizens.......................................................................................37
5.1.3 Equity of land distribution...........................................................................................................39
5.1.4 Proliferation of Squatter Settlements.........................................................................................41
5.1.5 Institutional Capacity..................................................................................................................41
5.1.6 Organizational Capacity..............................................................................................................41
5.1.7 Technological Aspects.................................................................................................................43
4.2 Discussion of fundamental laws of lease.............................................................................43
4.2.1 Land acquisition for urban expansion and redevelopment..................................................44
4.2.2 Informal land acquisition and development.........................................................................44
4.2.3 Discussion............................................................................................................................45
CHAPTER SIX..........................................................................................................................................48
6. Recommendation and Conclusion..................................................................................................48
6.1 Conclusion...........................................................................................................................48
6.1.1 Regarding Compensation.....................................................................................................49
6.2 Recommendation.................................................................................................................49
BIBLIOGRAPHY......................................................................................................................................53
APPENDIX 1.............................................................................................................................................54

x
 CHAPTER ONE

1. Introduction

1.1 Background
Urban centers across Africa are growing rapidly, both demographically and spatially on their
proposed policy frameworks and rules of urban development in each country. Population
projections show that by 2030, about 50 per cent of Africa’s population will inhabit urban
centers (UN-HABITAT, 2010). The rapidly growing urban areas are affecting land relations and
exerting pressure on urban land policy and management system located immediately beyond
urban boundaries. The transition of many former socialist countries from a command to a market
oriented economy has brought radical changes in previous policies. One of the sectors, which
have undergone a radical transformation, is the issue of urban land. Land is a key natural
resource that requires proper consideration in urban development. The misuse of land does not
only waste a scarce resource but also affects other sectors of development. The proper utilization
of land requires the recording of rights over land and conditions of use and facilitating the
smooth transfer, on a market principle or otherwise, to other users. (Belachew Yirsaw, 2004)

The issue of land everywhere in the world is economically, politically and socially the most
sensitive and significant aspect of human beings. Since long, land has been the major source of
controversies, disputes or conflicts among individuals, groups, societies, and countries. This
implies that land ownership is extremely a basic state of affairs for individuals, societies and
governments. Almost every development is based on secured ownership of land. Those countries
that have well registered and secured land title observed, other things being equal, a good level
of economic development. Hence many former socialist countries would have been taking
radical policy changes to use land and land related resources for enhancing economic
development. As studies show several city administrators would have been using incomes being
collected from land and land related developments for covering expenses being used for
infrastructure and other urban development activities. (Belachew Yirsaw, 2004)

1
Ethiopia one of the former socialist countries in the horn of east Africa had taken so many policy
measures following the fall of the socialist government. One of the policy measures that would
have been taken by the present government of Ethiopia is urban land lease holding system, which
is one form of land tenure that enables the government to transfer land use rights and benefits
from the state to private individuals.

Despite the policy measure did not enabled the people to have secured land access, the
government of Ethiopia had been taking urban land lease system as one of the policy measures
aiming to enhance the transfer of land use rights, value the urban land and to encourage
investment and the provision of social services to the residents. Hence, this paper tried to
evaluate how the Oromia, (Nekemte) urban land lease policy functions and works in line with
efficiency and equitable distribution of land in particular and the economic development in
general. Furthermore, the paper tried to see the experience of other countries so as to get
important lessons for the present urban land lease policy of Nekemte town. (Mathewos, 1998)

1.2 Problem Statement

Certain basic problems have been observed regarding the application of land lease policy, which
would discourage investments on land and housing development it could be described as follows.

The land administration agency could not realize the tasks due to weak coordination with
sectorial authorities, high demand for cost of development and insignificant role of the private
sector involvement on land development. The reasons for the escalation of land price would be
the growth of land speculation. The price of land has grown unexpectedly high and underutilized
land has been spread all over the city. The occupiers have claimed that the increase of the cost of
building materials, inaccessibility of getting bank loan due to bureaucratic procedures, and the
policy itself have contributed for the halt of their investment. Some of the reasons seem right but
it may be possible to conclude that they may speculate or in other word they might wait for the
increase of land value.

2
 1.3 Objectives
General

 To evaluate the urban land lease policy in line with its effect on urban dwellers and
financial contribution for infrastructure development and on investment expansion.

Specific

1. To find out the merits of the land lease policy and identify victims of the policy
implementation.
2. To evaluate the practice of the policy and bottlenecks of implementation of the policy,
and
3. To forward recommendations that would be useful for concerned parties.

1.4 Research Questions

Why the land lease policy does not work and identify victims of the policy implementation?

What are the main bottlenecks that restrict the implementation of the policy?

How the proposal can be made and to recommend the proposal that make it works?

1.5 Significance
The land lease policy should be helpful to improve housing and land supply to be more
responsive to demand. The existing urban land development and management practices need to
be improved to use land as a resource for social and economic development programs. The
intention of the research is to link the policy with the provision of serviced land for housing and
to make suggestions how to reduce the trends of speculation through property taxation. Providing
different options based on other countries experience would be the aim of this research.

The finding from this research would provoke further studies in the area of land policy especially
identifying the obstacles that have occurred during the implementation process. So it is essential
to critically and comprehensively review the existing pitfalls of the policy and directing towards
the requirements of the free market economy within the framework of the constitution of the
public ownership of urban land. In general the research has intended to review where the real

3
problem for improving the delivery of serviced urban land has encountered and set out clear
recommendations on how the priority objective of the policy will be achieved. The result and
findings will be helpful for the responsible bodies of the city to apply the urban land lease policy
properly.

1.6 Scope
The Ethiopian urban land lease policy which would be represented by the leased towns of the
Oromia national regional state, the First largest region of the country (mainly of Nekemte) would
have been covered by this study. Hence, the policy's contribution on land policy analysis,
infrastructure development and investment expansion in particular and the economic
development in general, the practice and the bottle necks that affect the implementation of the
policy would have been covered by this paper.

Figure 1: Nekemte Town Spatial Location

Source: Nekemte Structural Plan

The astronomical location of Nekemte Master Plan Revision study region lies in between 8°27’
(in Nunu Kuban Woreda) to 10°13’ (in Ibantu Woreda) North Latitude and 36°08’ (in Diga
Woreda) to 37°09’ (in Boneya Woreda) East Longitude. (Source: Nekemte revised master plan
2009-2018) This research will be finalized in the next three months.

4
 1.7 Limitation
Lack of sufficient financial resources and time to use large samples, lack of properly quantified
statically data or information, unwillingness of some respondents to give valid data, fear of
respondents to provide genuine and accurate information and failure of some of the respondents
to back questionnaires was some of the limitations of the study. In addition, the researcher faced
great difficulty in the data collection process and some employees were afraid to fill out the
questionnaires. The other limitation is that the number of samples that would be taken is small as
compared to the size of the country and number of the population.

1.8 Thesis Organization

This study is organized in six chapters as shown on the diagram below.

CHAPTER
ONE CHAPTER FIVE
 Bac  Analysis
CHAPTER FOUR
kgr  Discussion
oun  Case studies from:  Finding
d of  Local and  Result
the  international
stud

CHAPTER
CHAPTER THREE
TWO CHAPTER SIX
Methodology
 Lite  Conclusion
ratu  Study approach
 Recommendation
re  Research design

Figure 2: Thesis Organization Diagram

Source: Author

5
 CHAPTER TWO

2. Literature Review
2.1 Basic Concepts and Definitions
Governments around the world pursue urban land policy objectives and they rely on a vast range
of policy tools and institutions to achieve them. Many cities use master plans, zoning,
subdivision regulations, building codes, and other public policies to shape development. These
regulations are normally adopted to help protect the urban and natural environment, gear
infrastructure investments with development, and maintain and enhance property values. Other
objectives are more difficult to achieve: providing the poor with access to land, controlling land
speculation, and land inflation. In the minds of many policy makers achieving these goals
requires stronger medicine: nationalization of land, public land development, and highly
centralized property registration systems to control and monitor land ownership. (Diamond,
2005)

Since many government interventions are inefficient and lead to sub-optimal distributions of land
resources, some policy experts argue that the best way to “manage” land use and development
patterns are to rely on market forces. On the other hand, without planning and regulations, land
markets are likely to generate enormous external costs and fail to produce public spaces. In fact,
without government intervention critical public facilities such as parks, open spaces, and major
infrastructure and urban services, which the private sector cannot profitably produce and sell,
will not be provided. Thus the solution to ineffective and counterproductive urban land policies
is not to do away with governments’ interventions and policy initiatives, but to find the proper
balance between the public and private sector regarding urban land development and
management. (Achamyeleh Gashu Adam, 2014).
6
In countries of free market economics, private property is recognized and protected by the state
as a natural means of accomplishing individual, familial and societal aims. However, the role of
the state in providing essential services for society and the growing environmental and other
social concerns, have influenced the concept of private urban land ownership by subordinating
all or some land to the needs of the Nation and of the common welfare. Even in countries where
private land ownership constitutes a basic element of the society’s values, such as the USA and
Switzerland; a more focus towards the communal aspect of land ownership has been recently
observed. On the other land, in countries where the private ownership of land was restricted and
the communal concept was the only criterion in the use and allocation of land (countries of the
command economy), a transition is being made towards privatization where individual
ownership of land through lease hold or free hold is allowed. (Bacry, Sileshi and Admit,., 2009,
p, 15)

Other non-socialist developing countries such as Nigeria, India, etc., which nationalized urban
land for the benefit of the community in the belief that public control and allocation of land will
be both more efficient and more equitable than leaving it to market forces or to traditional
authorities, have proved the failure of the public sector to accomplish this task efficiently and
equitably. (Bacry, Sileshi and Admit,., 2009, p, 15)

A national approach to land allocation was and is still seen as an important aspect of nation
building. This is not the view everywhere, however; extreme inefficiencies (as in India),
corruption and partially (as in Nigeria), over centralization (as in Ghana) have affected the
management of public lands by land administration agencies so that the wheel has in effect come
full circle, and the argument now is that land is more efficiently and equitably allocated by the
market. The above argument shows that in the case of private ownership of land, the private
market has proved to be adequate for the effective demand but inadequate for the need of the
society at large. On the other hand, the public ownership has also been unable to satisfy the
communal and individual demand. What we can learn from all this is that concerning land
ownership and allocation, the most efficient system may be neither the government monopoly,
which foster corruption, bureaucracy, lack of transparency and probity, etc., nor the market,
which brings negative externalities and inequity. Thus, the solution to ineffective and

7
counterproductive urban land is not to do away government interventions and policy initiatives
but to find the proper balance, or division of labor, between the public and the private sector
regarding urban land development. (Melkamu and Shewakena,, 2010, p, 3)

The major aim of this paper is not to deal extensively with the issues of most efficient system of
land ownership but to deal with the performance of the present urban land policy of Ethiopia.
The Federal government of Ethiopia enacted laws and regulations on issues of urban land tenure.
Article 8 of the Economic policy of the Transitional period of Ethiopia is devoted to urban land
and house construction policy .Sub-article 1 to 4 of the same article define the role of the
government with respect to urban land and houses. (Berhanu and Feyera, ., 2005, p,20)

Urban land remains under the control of the government and shall be distributed for those who
want to construct houses. As resources permit government agencies are to construct low cost
houses for rent or sale to consumers. The government was given the role of issuing directives
governing the relationship between owners and renters to direct and control the benefit of both
parties. Governmental construction institutions are to be restructured with a view to ensure their
profitability and operation in a free market economy competing with private construction
enterprises. (John Medendorp Ph.D, Sep. 2015)

2.2 Socio-economic Significance of Land in Ethiopia

Land has enormous socio-economic significance as a key productive asset and source of income.
In Ethiopia, as elsewhere in the world, this enormous socio-economic significance stems from
the fact that land is a source of wealth, economic growth, employment and a source of basic
survival of the majority of the population. In respect of urban land, this is further accentuated by
the rapid urban development that leads to swift and drastic changes in the physical, economic,
social, political and administrative structures of the cities. (John Medendorp Ph.D, Sep. 2015)

2.3 Land lease policy in Addis Ababa

Governments in all countries and at all times have felt bound to guide and control the important
structural changes taking place in the urban land market citing the following main justifications:
By redistributing society’s scarce resources to benefit the disadvantaged groups; eliminating
market imperfections/failures to increase operating efficiencies; and removing externalities so

8
that the social costs for land market outcomes correspond more closely to private costs. The
justifications given are both political and economic. A wide variety of tools are available for
governments to implement the objectives of regulating land use, however much limited these
may be in practice. Those mechanisms include planning tools, zoning ordinances, building
regulations and by-laws, permits, inspections and penalties. (Belachew Yirsaw, 2010)

The Urban Land and Extra Housing Reform of 1975 was a measure that fundamentally changed
both the ownership of urban land and housing and the way these are administered by abolishing
private ownership of urban land and extra houses without any compensation to previous owners,
ending a feudal order and the corresponding land tenure system that had existed for years.
Following the ouster of the military government in the early 1900s, however, urban land lease
holding system was introduced to the country the system in rural parts of the nation remaining
more or less the same as that of the past regime. (Belachew Yirsaw, 2010)

2.4 The lease policy and its characteristics in Ethiopia

In spite of the fact that there are an infinite number of tenure arrangements in every country,
however, when dealing with the legal policy issue (whether land is considered to be a public and
or private property), the two most common ways of owning and using urban land are “lease
hold” and “free hold.” Oxford student’s dictionary (1988), defines lease as a written agreement
by which the owner of land or a building (the lessor) agrees to let to another (the lessee) to have
the use of it for a fixed rent payment and period of time. Simpson (1978) on the other hand
defines lease as follows: (John Medendorp Ph.D, Sep. 2015)

A lease may be defined as a contract granting the exclusive right to possession of land for a fixed
or determinable period\ shorter in duration than the interest of the person making the grant. The
interest created by the grant is formally called a term of years “but is more usually referred to as
a” lease” or a “lease hold interest.” The granter is called the “lessor” or “land lord” and the
grantee the “lessee” or “tenant”. All leases are necessarily derived directly or indirectly from the
free hold. (John Medendorp Ph.D, Sep. 2015)

Leasehold tenure, in contrast, involves a landlord and in most cases the tenure is of fixed
duration. The main difference between the two is that the leaseholder is governed by the laws of

9
the land and the terms of the lease lay down by the landlord while the freeholder is only bound to
the laws of the land and nothing else. Leasehold made of land tenure is not new to Ethiopia;
however, it was part of a variety of land holding types prior to 1974. It became part the over-
riding urban land holding system through proc.No.80/1993.The National lease hold policy of
urban land was enacted to address the inequalities brought about the nationalization of urban
land and extra houses (pro. No47/1975) brought land under public ownership; however, the real
benefit occurred only to those who had access to it. This law did increase the accessibility of land
to low income people, but its inability to express land value in monetary terms decreased the
distribution of benefits to those who cannot get access to land for different reasons. Therefore,
the main objective of the urban land lease holding policy (proclamation No.80/1993) was to
provide monetary value for the utilization of urban land. In this respect the leasehold policy of
land is one step ahead of the previous policies on land. (Rahmato ; Holden and Johannes, , 1984,
2002)

Proclamation No 80/1993 enabled the government to transfer urban land administration from
permit system to leasehold system. According to this proclamation;

Ownership: All urban land is public property and transfer will only be carried out through the
lease system;

New land allocation: All new land allocation to Ethiopians or foreigner, as of the date the
proclamation entered into force (1993) is to be made under the lease system with a minimum
duration of 50 years (for commercial activities) and a maximum of 99 years (for residential
purposes). (Melkamu and Shewakena,, 2010, p, 3)

Previous possession: All urban land held before the proclamation is divided into two.

The first one which includes all plots occupied by private and publicly owned dwelling houses is
to be governed under an improved land rent law. The second group, which includes all other
previous land users in the city, should be ruled by the new lease policy. Nevertheless, when lands
previously held for residential purposes are transferred to other people other than through
inheritance, they will be under the lease policy. (Guidelines for support to land policy design and
land policy reform, 2004)
10
Urban land lease holding is to be granted if the request is in conformity with the land use pattern
of the urban center and after carrying out a competitive public tendering. Land lease is given for
a fixed term and the duration of the lease varies depending up on the purpose for which the land
is requested and the level of urban centers. (Federal Negarit Gazeta, 2011)

The policy gives the right to determine the rate of rent of the lease to the national/ regional self –
governments. Factors such as the level of urban centers, zoning of the urban centers and the
purpose for which the land is requested considered in the determination of the lease rate. The rate
is to be low for land used for social services and low cost houses. Provision is made to grant
urban land free of lease payment and without public tendering for investment that the
government encourages and social services, which directly benefit the public. The main features
of the leasehold policy (proclamation No. 80, 1993) as it relates to urban development include its
scope of application, property rights related to transfer, mortgaging, compensation, and
associated duties, ways of acquiring new development land, manner of fixing rates and
modalities of lease fee payment, and duration of lease period. (Federal Negarit Gazeta, 2011)

2.5 Transfer of Land use rights

Any person who acquires the right to hold urban land on lease may transfer or recruit such right
or contribute it in the form of a share to the extent of the rent paid. As pro, No 80/ 1993, where
the right to hold land on lease is mortgaged the building on the land and its auxiliary facilitates
shall, unless otherwise decided, also be mortgaged; likewise, where the building and its auxiliary
facilitates are mortgaged, the right to hold the land on lease shall also be mortgaged (pro. No 80/
1993). According to this proclamation, the lessee may not, on transfer of his right of lease,
collect income, which is higher than the rent of land he paid; nor may he mortgage such right at a
value, which is higher than the rent. Since this hinders private investment expansion, it was
improved in the amended lease policy proc. No 272/2002. According to the amended
proclamation, the lessee can transfer his lease right for the period the lease is valid and he can
collect income from transfer of lease right without maximum limit. In Ethiopia, there are two
types of methods for transferring of land use rights. These are. ((Professor Pete, 2004)

11
 2.5.1 Lease
Based on the urban land lease holding proclamation No 80/1993, article 1, 3 and 12, lease sale
and lease grant are the two methods of lease transfer. All urban lands except those previously
used for the construction of residential houses are governed by these lease transfer methods.

Lease Sale: Lease sale is one of the two urban land transferring methods that are used to transfer
urban land within a certain determined period of time from the lessor (Government) to the lessee.
It is the system that enabled the lessee who has acquired the right to hold urban land on lease of
use the developments and profits from investment on land, sublease or full transfer to third party.
(Achamyeleh Gashu Adam, 2014)

Lease grant: the government may grant freely or without public tendering urban land which is
to be utilized for investment that the government encourages or social services establishments or
for other purposes which directly benefit the public. Hence, provision is made to grant urban
land free of lease payment and without public tendering which directly benefit the public. (land
law and registration, 1976)

2.5.2 Permit
It is the method that is used to administer and transfer land use rights which is applicable to all
urban land held before the issuance of the new urban land lease policy. Urban lands held before
the issuance of the new urban land lease proclamation No 80/1993 and utilized for private
dwellings, private dwellings transferred through inheritance and private dwellings rented to
others because of leaving the city due to various reasons such as work, education, medication etc.
are not administered under the lease hold system. According to proclamation No 80/1993, each
and every possessor, who possessed urban land law fully prior to the coming in to force of this
proclamation is forced to pay annual ground rent depending up on the level of urban centers,
zoning of the urban center, level of area and type of services. The buildings constructed on the
land and facilities accessory there to the land, the right stipulated in the lease contract can be
transferred. But the land cannot be sold and pledged as the collateral. However, when the
possessor transfers the building and facilities accessory to it, it is the right of the possessor to
determine the type of possession either lease or rent. (Federal Negarit Gazeta, 2011)

12
If the possessor wants to develop adjust land together with its possession with in one possession
map, the whole possession will be administered under the lease system. Since there is no time
limit in permanent possession, when it is decided that all permanent possession with adjust land
is leased, there is no clear indication when the lease period starts. (Federal Negarit Gazeta, 2011)

2.6 Appellate Tribunal

Urban land clearing and compensation cases appellate tribunals shall be established by regions
and city administrations. A Tribunal established pursuant to sub-article (1) of this Article shall
have the power, upon examining appeals submitted to it, to confirm, vary or reverse a decision
rendered in accordance with sub-article (3) of Article 28 of this Proclamation and to enforce its
decision. The Tribunal shall be accountable to the council of the region or the city
administration, as the case may be. The Tribunal shall consist of not less than five members
drawn from different relevant bodies. (George E. Peterson, Nov. 2006)

The Tribunal may order and use police force where it finds it necessary to execute its decisions
and orders. The Tribunal shall be free of any influence except the law. The Tribunal may not be
governed by the provisions of the ordinary Civil Procedure Code while conducting its functions.
It shall, however, be governed by expedient procedures to be issued by the region or city
administration. (Federal Negarit Gazeta, 2011)

2.7 Takeover of Land

Without prejudice to the provisions of sub-article (2) of this Article, the appropriate body shall
take over urban land from any person who has been served with a clearing order within 90 days
from the date of payment of compensation, or if the person refuses to take the payment, from the
date of depositing the compensation in a blocked bank account in the name of the appropriate
body; provided, however, that the appropriate body shall pay the deposited amount whenever the
entitled person intends to take the payment. The appropriate body may order police force when
it finds it necessary to use force to take over the land. . The appropriate body may not be held
responsible for any property situated on illegally held plot of urban land in the course of clearing
the land. ((Professor Pete, 2004)

13
 2.8 Transitory Provisions
Regions and city administrations shall render decisions, within three months after the coming
into force of this Proclamation, on pending land holding requests in accordance with the former
laws.

2.9 Land market

Land markets exist when and wherever it is possible to exchange rights in land for agreed
amounts of money or services rendered. Without an integrated and formalized real property
system, a modern economy is not viable since the ability to create national wealth is severely
restricted. An efficient land market underpins the capacity of banks and other financial
organizations to lend money and for landowners to invest. The fragmented nature of some
property systems severely inhibits the creation of an effective land market, which in turn hinders
the emergence and development of an overall equitable distribution of wealth. Less economically
developed societies have, for various political and cultural reasons, failed to create an efficient
land market, allowing the rich to exploit the poor. As a result, such societies tend to be under-
capitalized. ‘What creates capital in the West is an implicit process buried in the intricacies of its
formal property systems.’ (Hernando De Soto, 2000)

The development and maintenance of land markets involves the interaction of complex political,
economic, social and cultural issues, legal frameworks, fiscal policies and environmental
controls. Their impact on society and the local economy varies from nation to nation and
depends much upon what is happening in other parts of the national and global economies. The
diversity of individual economies and associated legal practices alone makes the concept of a
common land market model unrealistic. (Professor Peter Dale)

In order to benefit from the land market there must be clear policies and enforceable laws. The
institutional framework should provide for consistent, responsible and accountable decision-
making within the overall national land policy. There must be a land registration system that is
affordable so that all citizens, rich and poor, can have access to it. Such a system must provide
value for money for the users, encourage its use, guarantee title, and be open to public scrutiny..
Public/private sector partnerships can work successfully although the ultimate control must lie
with the state. (George E. Peterson, Nov. 2006)
14
Land markets should be open to all nationals especially women and minority groups and
consideration should be given to the ownership of land by foreign individuals and legal entities
to encourage inward investment. A growth in the globalization of land markets is to be expected,
especially as information technology allows greater access to national land information services.
In this context, countries need to consider introducing legislation and policies to provide web-
based access to all land information. In many countries the immediate pressure is to address the
issues surrounding real property rights for those living in informal settlements. It is also
necessary to improve transparency and accessibility to good quality land information, and to
reduce the cost of gathering and communicating such information and registering land and
property transactions. Open access to good quality information reduces the incidence of corrupt
dealings. (Robin McLaren)

Land markets are not a solution, but they do have a significant role to play in support of
economic development, quality of life and the sustainability of one of our most fundamental
resources land.

2.9.1 What is the land market?

Land is unlike other commodities that can be bought and sold in that it is immoveable. Buildings
upon it can be dismantled and moved elsewhere and even the soil can be removed but the land
remains where it is. From a legal perspective, only the rights can be bought and sold. From it we
get everything that we use or value, whether food, clothing, fuel, shelter, metal, or precious
stones. We live on the land and from the land, and to the land our bodies or our ashes are
committed when we die. The availability of land is the key to human existence, and its
distribution and use are of vital importance’. (George E. Peterson, Nov. 2006)

Whilst it can be argued that Land is not the source of all material wealth, it is a significant
component. Land is part of the culture and essence of a nation. Both at a national and an
individual level people are prepared to fight to defend it. Throughout history, this territorial
imperative has made land issues sensitive and politically controversial. Lawyers have sought to
bring order into the management of land by viewing it not as a physical entity, but rather as an
abstract set of property rights that govern the use of the land and the ability of the owner to
acquire or dispose of these rights. In classical times, these rights were considered to extend ‘from
15
the center of the Earth to the infinite in the sky’ and to include all things in permanent contact
with the soil such as buildings, minerals and vegetation. In practice there is a limit as to how far
below and above the surface one may lay claim to the ownership of the land but especially in
cities with high-rise structures, there is increasing concern to see land from a three- dimensional
perspective. In some societies, however, land is deemed to exclude buildings and other man-
made features and is treated essentially as the surface of the Earth on which these stand. (S.
Rowton Simpson, 1976)

‘Land’ will be taken to include all things attached permanently to it, in effect occupying a small
volume of space just below and just above the surface. The terms ‘real estate’ and ‘property’ will
also be used. With a few exceptions (such as Antarctica) the ultimate owner of the land is the
state, which retains the right to acquire private property for public purposes and to control the
manner in which the land is used, for instance through planning legislation. The state may also
retain the rights to minerals and hydrocarbons. Subject to this, many societies permit private land
ownership with rights held either in freehold, which represents the maximum degree of freedom
for the landowner, or leasehold in which there are greater limitations on how and when the land
may be used. (George E. Peterson, Nov. 2006)

A restriction on use is essentially a negative right or put another way the positive right is
retained by the community on the basis of decisions by the planning authority. A traditional view
of land rights is as a bundle of sticks (figure 1) with a label on each stick saying ‘the landowner
may do this or do that with the land’ (for instance sell the property or lease it to someone else).
The absence of a stick means the right to certain actions does not lie with the landowner. The
number of these sticks that are being retained by the community in the interest of environmental
sustainability is increasing. Freehold does not, therefore, mean freedom to do whatever the
landowner wishes, only freedom to do a certain number of things. (George E. Peterson, Nov.
2006)

16
 Figure 3: Example of land rights

Source: (George E. Peterson, Nov. 2006)

Where private rights in land are recognized, they may be transacted, that is they are exchanged
for a consideration, usually money. Sometimes they are passed to a developer in the form of an
obligation such as a requirement to build a certain number of houses suitable for poor people in
exchange for permission to build more expensive edifices. Some rights only apply for limited
periods of time, as in the time-share of apartments. Some rights stay with the land even though
they may appear anachronistic, which is why archiving of data is important. Not all rights are
administered by one body, which often means that in practice several different enquiries must be
made to ascertain all the rights associated with one piece of land. (George E. Peterson, Nov.
2006)

2.9.2 Sales markets and rental markets

Land market can be said to exist when the number of transactions passes a critical threshold
(figure 2). There are two types of market: a sales market in which the freehold or long-term
leases may be exchanged; and a rental market in which 'use rights' are transferred for a limited
period. In both cases, the market may be formal and structured, or informal and operating extra-
legally. In either case, the financial worth of a property will depend on a variety of factors:
location; size; condition and type of construction; the form and security of tenure; the permitted
land use; and the general state of the national and global economies. (George E. Peterson, Nov.
2006)

The sales market may also involve the transfer of certain rights for a limited period, such as
when a mortgage agreement is entered into, or may involve permanent changes in use agreed
under certain conditions, such as the right to build so that development may take place.

17
 Figure 4: Transitions in Lifecycle of Land Markets

Source: (George E. Peterson, Nov. 2006)

Land sales markets influence productivity and efficiency in agriculture and the level of
investment in industry, since commercial enterprises and individuals can borrow against their
real assets. Land rental markets can facilitate access to land so, for example, increasing the
potential income of rural households, while in urban areas they can create opportunities for
migration so that people can move to where work is available. Land markets in general affect
income distribution, which is why many members of rural communities, especially the young,
move into urban environments. These impacts upon social attitudes and practices, the need for
housing, land for development, potable water, transport facilities and the general condition of the
physical environment. In turn these issues affect the priorities in political decision-making, the
types of land tenure (especially where unofficial and uncontrolled settlements emerge), fiscal
policy and the focus of financial support services. (George E. Peterson, , Nov. 2006)

2.10 Advantages of a lease system

The present government of Ethiopia accepted urban land leaseholds in its new urban land policy
to exploit the following advantages of the lease system: To achieve efficient land use planning:
In order to plan and control land development, it is recommendable to do it from a position of
ultimate owner rather than from a position of statutory regulator. In countries where land is
privately owned, to get all the owners agreed to develop the land has proved to be time
consuming. Contracts of leaseholder ship enable a municipality to control land uses more
actively than is permitted by building and planning legislative measures. Problems involving
land assembly are more flexibly solved under leaseholds than free holds. It becomes easier to
carry out major readjustment when land is held under lease. The most frequent subject of
controversy, expectations of future values, is then largely eliminated. (Federal Negarit Gazeta,
2011)

Possibility of reclaiming: The other advantage of this system, which is constantly mentioned by
the municipality, is the possibility it gives to reclaim land from leaseholders when it is required
for other purposes. In the leasehold system, it is certainly less expensive and easier to take land

18
back than when it is in private ownership. Appropriation of future land price increases by the
public and distributing it to society: One of the advantages of retaining land in public ownership
is to have the increase in land values accrue to the community at large and make it easier to
allocate land to other uses at some time in the future. When a municipality grants the use of land
under a leasehold system, it reserves the right to claim substantial proportion of future
increments in the capital value of land at the end or in the middle of the contract. (Federal
Negarit Gazeta, 2011)

2.11 Conversion of Old Possessions to Lease Holding

The modality of converting old possessions into lease hold shall be determined by the Council of
Ministers on the basis of a detailed study to be submitted by the Ministry; provided however, that
the process of such study may not preclude a revision of the existing rental rate applicable to old
possessions. Where parceling of plots of urban land in accordance with the approved national
standard and the urban plan, in the course of converting old possessions into lease hold, results in
the reduction or increase of the size of a plot: a) Compensation shall be paid in accordance with
the appropriate law for any property to be removed from the land so reduced; or b) the payment
to be made for the additional land obtained shall be treated in conformity with the relevant lease
principles. (Federal Negarit Gazeta, 2011)

Where a property attached on an old possession is transferred to a third party through any
modality other than inheritance, the person to whom the property is transferred becomes the
possessor through lease holding. In order to regularize possessions held without the authorization
of the appropriate body, the possessions which have found to be acceptable in accordance with
urban plans and parceling standard following the regulations to be issued by regions and city
administrations shall be administered by lease holding. Where an application to merge an old
possession with a lease hold is permitted, the entire possession shall be administered as lease
hold tenure. The lease rates applicable to possessions converted into lease hold tenures pursuant
to the provisions of this Article shall be the lease bench mark price of the locality. (Federal
Negarit Gazeta, 2011)

19
 2.12 Leasehold Permit of Urban Land
An urban land shall be permitted to be held by leasehold: If its use is in conformity with the
urban plan guidelines or, if the urban center does not have such guidelines, as per the regulations
issued by the region or the city administration; and through the modality of tender or allotment.
(Federal Negarit Gazeta, 2011)

2.12.1 Urban Lands Prepared for Tender

The appropriate body shall determine that: prior to advertising urban lands prepared for tender,
the lands: Are free from legal claims of any party; are prepared in conformity with the urban
plan; have access to basic infrastructure; are parceled, delineated, and assigned with unique
parcel identification numbers; Has site plans and fulfills other necessary preconditions; and the
tender process is implemented in a manner that secures the appropriate price of the land
following the rules of transparency and accountability. The information relating to urban land
prepared for tender shall contain the land grade, the lease benchmark price and other detailed
relevant data. Where the urban land prepared for tender requires a special development program
and implementation action plan, such development program and action plan shall be included in
the information. (Berhanu and Feyera, ., 2005, p,20)

Land tenure should be defined broadly as the “system of access to and control over land and
related resources”. It defines the rules and rights which govern the appropriation, cultivation and
use of natural resources on a given space or piece of land. Strictly speaking, it is not land itself
that is owned, but rights and duties over it. Land rights are not limited to private ownership in the
strict sense, but can be a very diverse balance between individual rights and duties, and
collective regulations, at different levels (different levels of family organization, communities,
local governments or state), private or family ownership being one possible case. The rights and
duties that individuals or a family hold are themselves embedded in a set of rules and norms,
defined and enforced by authorities and institutions which may be those of rural communities
and/or of the state. No system of land tenure can work without a body with the power and
authority to define and enforce the rules, and provide arbitration in case of conflict. Thus, a land
tenure system is made up of rules, authorities, institutions and rights. Land administration itself

20
(maps, deeds, registers, and so on) is only one part of a land tenure system. ((Professor Pete,
2004)

A land policy aims to achieve certain objectives relating to the security and distribution of land
rights, land use and land management, and access to land, including the forms of tenure under
which it is held. It defines the principles and rules governing property rights over land and the
natural resources it bears as well as the legal methods of access and use, and validation and
transfer of these rights. It details the conditions under which land use and development can take
place, its administration, i.e. how the rules and procedures are defined and put into practice, the
means by which these rights are ratified and administered, and how information about land
holdings is managed. It also specifies the structures in charge of implementing legislation, land
management and arbitration of conflicts. (Guidelines for support to land policy design and land
policy reform, 2004)

Land policy is contained in texts issued by governments, and is further developed through
legislation, decrees, rules and regulations governing the operation of institutions established for
the purposes of land administration, the management of land rights, and land use planning. To be
effective, land policy must propose a practical and coherent set of rules, institutions, and tools,
which are considered both legitimate and legal, and are appropriate for different context and
interest groups. There are frequent contradictions between formal and informal tenure rules and
institutions, which lead to conflicts and inefficiencies. One aim of reformed land policies should
thus be to find ways of combining these different systems so as to ensure legitimacy, equity and
economic efficiency. (Guidelines for support to land policy design and land policy reform, 2004)

21
 CHAPTER THREE

3. Methodology
The research methodology shows the logical framework that discusses research design, target
population, sampling size and technique, methods of data collection and method of data analysis.
The research methodology explains the following questions; Why research study has been
undertaken, how the research problem has been defined, in what way the data have been
collected, what data have been collected and what particular techniques has been adopted, why
particular technique of analyzing data has been used and a host of similar other questions are
usually answered concerning a research problem or study (Kothari, 1990, p.25).

So having considering this the study has been presented under this; research design, sample size
and sampling techniques, data sources and data collecting tools, data analysis and interpretation.

3.1 Study Approach

The study was employed both qualitative and quantitative methods of data collection and
analysis. The qualitative method was used for conceptual development at the early stage and for
interpretation, clarification and illustration of the findings as well as the collection and analysis
of subjective opinions, attitudes and views of people during interview. The qualitative
information extracted from interview was grouped into thematic categories and has been
analyzed qualitatively. This could support quantitative data which has been collected using
questioner and analyzed using simple descriptive statistics. This together could support the line
of arguments and strength the data sets from various sources by cross checking evidence. The
reason for using this method is to maximize the strength of each method by enabling the
researcher to gather dependable information.

22
The study could mitigate the problems of credibility by using the qualitative data sets. In terms
of weighting, the study was focus on qualitative data and use quantitative data for few variables
of interest. This is because good governance principles are not quantifiable variables but
variables on management practice can be quantified. Nekemte town administration, land
development and management office was used as case and the employers and leaders has been
used as samples to administer the survey questionnaires.

In terms of sequence, qualitative data from secondary sources could be collected. Then survey
was administered by instruments developed from the understanding of the secondary evidence.
The survey response were then be analyzed to see outstanding data for detail qualitative research.

Hence, the study was employed both descriptive and explanatory research design; which was
used in combination to collect evidence by multiple methods, tools of data collection and
analysis. The analysis was also be phased in order to come up with issues of discussion,
conclusion and recommendation.

3.2 Methods of Data Presentation and Analysis

The collected data has been coded, tabulated, categorized and organized according to the nature
of the data. Then the data was converted to percentages, tables and charts. The information
obtained has been incorporated and presented through narrative descriptions. Both primary and
secondary data was analyzed and presented using statistical tools like tables, charts and figures to
facilitate the presentation of the result. In analyzing of the primary data, SPSS version 20 was
used for simple averages, percentages, tables and graphs and frequency. The qualitative
secondary data was analyzed using narration explanations.

Descriptive analysis: This descriptive analysis is used to look at the data collected and to
describe that information. It is used to describe the demographic factors for more clarification.
It is mainly important to make some general observations about the data gathered for general or
demographics questions

3.3 Data Type

Both primary and secondary data are used in order to get extreme information about the research.
The primary data are acquired by interviewing the town municipality, the mayor, and the towns
23
land administration and also by preparing questionnaires to those above mentioned offices and
the town planning institute. Secondary data collected from internet, published books, journals,
newspapers and different reports.

3.4 Data Source

Primary data:-sources are collected from, interview and journal, mass media, and

Secondary data: is basically get from various documents like, annual report, different website
and books and published document from Nekemte town Administration and Oromia Urban
Planning Institute (OUPI) western branch which is located in Nekemte town.

3.5 Data Collection Techniques

As the source were identified from primary and secondary source would collected systematically
to get frank information from the concerned body. In collecting primary data questionnaire and
structured interview will be issued. The questionnaire would have both open ended and close
ended type. The open ended question help respondents to express their own idea without any
restriction, close ended provide actualize questions to the respondents.

The research was based on both quantitative (numerical and statistical) and qualitative (that
expressed by theories) data, information that gathered from interview and questionnaires (open
and closed questions) from community specially lessee by using random sampling technique and
concerned governmental bodies. The qualitative method was used for conceptual development at
the early stage and for interpretation, clarification and illustration of the findings as well as the
collection and analysis of subjective opinions, attitudes and views of people during interview.
The qualitative information extracted from interview was grouped into thematic categories and
has been analyzed qualitatively. In this study respondents have been asked to rate each item on
three point scales by assigning a value:

1 =strongly disagree, 2 = agree, and 3 = disagree

3.6 Sample Size Determination

The study was undertaken on a probability sampling techniques of systematic approach for the
community contained in urban land lease policy implementation especially at the expansion area.

24
The number of respondents proportionally decided this is due to the nature of the service user
unavailability in fixed time and place. Thus, from a total of population those live lease
implementation areas for the purpose of these study 50 respondents have been conducted to fill
the questionnaire.

3.7 Data Analysis Techniques

In case data analyzed using statistics and by analyzing gathered data from the content. To
facilitate the statistical analysis the researcher used different analysis tools (materials and
software) and questionnaires.

3.8 Methods of Data Presentation and Analysis

The collected data has been coded, tabulated, categorized and organized according to the nature
of the data. Then the data was converted to percentages, tables and charts. The information
obtained has been incorporated and presented through narrative descriptions. Both primary and
secondary data was analyzed and presented using statistical tools like tables, charts and figures to
facilitate the presentation of the result.

Descriptive analysis: this descriptive analysis is used to look at the data collected and to
describe that information. It is used to describe the demographic factors for more clarification. It
is mainly important to make some general observations about the data gathered for general or
demographics questions.

25
 CHAPTER FOUR

4. Local Case Study, Hawassa (SNNPRS)

4.1 Introduction
Hawassa, the capital of the Southern Nations, Nationalities and Peoples’ Region (SNNPR), is
located on the eastern shores of Lake Hawassa. It lies on along the international high way via
Moyale at a distance of 273 km from Addis Ababa. Geographically, the city is located between
38°24’ - 38°33’East longitude and 06 °54’ - 07° 05’ North latitude occupying a relatively flat
plain in the rift valley at an average elevation of 1690 meters above sea level. It has an
administrative area of 157.2 km2 divided into eight sub-cities with a total population of 329,
7341. Hawassa was established in 1960 by imperial declaration. The declaration extended to the
provision of land for retired soldiers to build homes and, generally, to create a livable ambience
around the palace that was under development then.

The city is one of the few urban centers in Ethiopia established by formal planning concept with
a Master Plan designed between 1958 and 1959before settlement begun, and guided the
development of the Town until 1988the Federal Urban Planning Institute/FUPI (2006). The
second master plan was prepared by FUPI in 1994 to guide its development for 20 years (Ibid).
The third Integrated Development Plan (IDP) which currently functioning was prepared in 2006
by same to guide the development of city for 10 years. The total area of land designated for the
establishment of the town was 120 hectares of which only 50-60 hectares was distributed to
settlers to construct houses on 324m2 parcel of land per household free of charge. Based on the
2007 National Population and Housing Census the current projected population of Hawassa is
329,734 of which 210,676 live in the city and 119,058 in the fringe and surrounding areas.

26
Every country has its land policy influenced by the institutional and legal frameworks within
which it operates (Macedo, J., 2000); thus, it becomes fundamental to analyze policies according
to the particular context in which they were implemented.

4.2 Review of the Current Hawassa, Land Lease Policy

In Ethiopia, all land is currently nationalized and held under ownership and control of the central
government which further plays a key role in defining land use policy whilst practical
administration remains at the local level. Accordingly, regional and city administrations have for
a long time enjoyed the power to pass laws to regulate and administer land including allocation,
disposal, use, registration and adjudication; of course, all laws passed must derive from a
superior one concomitant with the subject-matter.

The following is a brief contextual discourse of relevant proclamations, regulations and decrees
issued and enacted by the Southern Nations Nationalities and Peoples Regional State [SNNPRS]:

 Urban Land rents and lease holding regulation No. 1/1995

 Urban Land Rents and Lease Holding Proclamation No. 79/2004
 Urban Land Lease Holding Regulation No. 103/2012

The Urban Land Rents and Lease-holding Regulations No. 1/1995, promulgated to follow the
Federal

Proclamation No. 80/1993 brings all urban lands under the direct administration of local
government. The lease period varies between 60 and 99 years depending on the use or purpose
for which the acquisition is sought and leases attract varying rents depending on location; for
Hawassa residential land rent ranges between 0.18 Birr to 0.32 Birr per square meter. Other uses
attract relatively higher rents ranging between 0.40-1.50 Birr per square meter. The
implementation of this regulation was further detailed in Decree No.1/1995 which contained
detail provisions and mechanisms for land allocation through the lease and permit system. The
main objectives of the lease policy is for the regions to generate revenue for urban development
by assigning monetary value to land under a free market principles in the management of
publicly owned land and to control undesired urban expansion by expediting efficient and
effective use of land. The basic problem with this law and regulation was the creation of what
27
has come to be known as ‘double track system’ whereby former holders of land prior to coming
into force of the legislations are exempt from payment of rent. This is considered as unfair by
those who are required to pay rent for the same national product.

Following the replacement of Proclamation No. 80/1993 by Proclamation No. 272/2002 the
SNNPRS issued Proclamation No. 79/2004 to revise lease administration. As is required, two
regulations Regulation No 26/2004 and Regulation No 27/2004 - and two decrees - Decree No.
1/2004 and Decree No. 2/2004 – were also promulgated to provide detailed guidance for land
administration. The major improvement made this time was the introduction of negotiation as an
essential function of the land acquisition procedure and this, without doubt, contributed to the
acceleration of economic development as is the case in Hawassa. Precisely, Regulation No
27/2004 and Decree No 2/2004 are for administering the allocation of land on leasehold basis
using any of the following prescribed transaction modes: auction, negotiation, lottery, direct
allocation, and as a prize. The decision as to which mode to apply depends on several factors
such as value, location, or housing use.

The other most important legislative improvement is the provision to utilize at least 90 percent of
lease revenue for the provision of infrastructure.

Although not exactly a lease, a land permit has important social and economic role to play and
does also benefit from meticulous legislation. Regulation No 26/2004 and Decree No 1/2004 are
applicable to plots to be allocated and administered through permit system. Of course, land
obtained through permit system cannot be used as collateral for loan except when occupied by a
building.

Several problems have attended implementation of these laws. For example, land administration
is clearly the task of the municipality but decisions on land allocation and lease pricing have
been made and/or influenced by other bodies. Also, applicants for land by negotiation do not
follow through with further payments after making the initial down payment expected to be ten
percent. A study conducted by GTZ/IS (2006) shows that in reality most allotees by negotiation
pay only three percent. .Another problem relates to the provision that allows the city
administration to grant land without auction to encourage desirable investment. This provision

28
contains a loophole for corruption since the criteria for determination were not specified. To
address these problems the Urban Land Lease Proclamation No.721 of 2011 was promulgated to
repeal Proclamation No. 272/2002. For implementation, the SNNPRS passed the Urban Land
Lease Holding Regulation No. 103/2012.

The new law recognizes leasing as the only way for land in urban areas to be acquired or
granted. The intension of government in these legal provisions is to improve urban land
management through land market mechanism rather than administrative interventions.

Unfortunately, the performance report is not good. The Hawassa City Administration’s poor and
inadequate professional and technical capacity to manage the land administration job efficiently
has become evidently clear. For example, the 2013 report indicates that only 151 plots (of which
123 plots is for residence and 28 plots for commerce) were released into the market creating a
backlog of more than 11,000 applications. As a result of this land prices have escalated and the
situation is responsible for growing illegal settlements and dwindling public revenue.

4.3 Findings
Findings from the study suggest that the new land lease proclamation has become a source of
worry to many citizens of the city. The paper found a high level of perception-to-reality situation
in the population and this has greatly ruined the confidence of players in the Hawassa land
market.

For instance, there is a popular belief that policies and laws have been deliberately put in place to
benefit the rich rather than the poor who, incidentally, cannot participate due to unaffordable
pricing. Again, a clear majority of respondents in the study felt that the lease system is not
capable of enabling them own their own homes. The untenable situation has, quite expectedly,
driven a large proportion of the potential market to seek lands in unplanned and unauthorized
locations popularly referred to as ‘informal land markets’. The informal market has become a
veritable competitor to the formal channel and appears to be doing much better in delivering land
resources for development in Hawassa.

The paper found that the City Administration lacked the capacity to properly interpret and
implement rules and regulations contained in relevant policies and laws passed. The table below
29
shows that more than two thirds of the study’s respondents perceived the implementation process
as bogus and inefficient. Interestingly, the strengths of opinion of both formal and informal
respondents are almost the same across the response categories. This has been also further
witnessed by Mann Whitney U test and p-value (U= 12731.5, 0.211>0.05) that there is no
statistically significant difference between formal and informal settlers on implementation of
Policy and Law. This implies that both formal and informal settlers do not differ in their views
on the implementation of policy and legal frameworks relating to land management.

The difficulties encountered in the administration process may be traced to the lack of
community consultation/participation in the formulation of policies and laws as well as in
subsequent implementation phases Indeed, about 79 percent of respondents in study indicated
that they were not aware of any sort of consultation either prior or post formulation of policy and
laws.

Planning is a useful tool for implementation of urban land lease policy and in Hawassa this has
been the main guidance for urban growth since the city’s foundation. Plans, basically, set out in
great detail the different land uses to be allowed for now and for future expansion. The rigidity in
these plans and the inability of local authorities to modify them make it difficult for practical and
flexible application. To make things worse, the Federal Planning and Compensation Laws are yet
to be adapted by the Regional Government to enable implementation of its provisions at the local
level, including Hawassa.

Discussions with municipal officials charged with the responsibility of implementing plans
revealed that there were no strategic land management practices to predict composite future
demand for land and to prioritize land supply according to the needs of the market. Discussions
with citizen’s focus groups also divulged that the plans are unrealistic and ignore local
conditions.

Most of the city’s land resource has been haphazardly released and allocated in an uncontrolled
manner without resort to proper land use and development control measures/mechanisms
resulting in an overly consequence of all this is that in Hawassa today the formal channels to
informal market is hyperactive. The figure below shows the over majority of respondents have

30
little or no regard for the municipal authority’s role in the city’s land administration particularly
in terms of controlling land use and development.

4.4 Land market: in case of Kenya (Nairobi)

Urbanization in Kenya has resulted in Nairobi attracting 37.7% of the country’s urban
population. Nairobi requires 150 000 housing units annually but only 30 000 get formally built.
As a result of inadequate formal sector housing provision, informal settlements have developed
within the city’s boundaries as well as in per urban areas. More than half of Nairobi’s residents
are crowded into unplanned or inadequately serviced settlements, living and working in
unhealthy environmental conditions. Informal settlements accommodate 38.5% of the city’s
population. (Chreod 2005)

The irregular and illegal allocation of land in Kenya’s urban areas has led to many areas of
public utility land, including public parking, public toilets, public playgrounds and road reserves,
being lost to private landowners. It has also contributed to the spread of informal settlements, as
suitable land for low-income housing development becomes scarce. Informal land markets
operate in Nairobi in a similar way to those in Dar es Salaam and Kampala. (Chreod 2005)

4.5 Formal access to land

Conflicts of interests and abuse of power have created a formal land market that is based on
buying land from private individuals, rather than government allocation, and is expensive and
bureaucratic.

From the colonial days through to the 1980s the usual way to access public land in Kenya was
for the government to advertise the plots and invite applications made to the Commissioner of
Lands. The plots were allocated on lease terms that were very favorable to the developer, with
the land rent calculated on the basis of actual cost to the government rather than market value of
the land. The prospect of obtaining cheap land from the government resulted in competition for
the plots and irregularities that have since led to the ‘land grabbing’ phenomenon.

Access to land in the formal sector is associated with access to power. Those who are allocated
land by the state have, or are perceived to have, gained it through the influence of their socio-
economic and political networks. Such a system excludes the majority of Kenyans from
31
accessing land. In addition, many of those who are allocated land go on to sell their lease titles to
buyers at the prevailing market price. This also excludes poorer people.

4.6 Lack of adequate land regulation

In the colonial period the allocation of government land to individuals or corporations for
development was regulated. Gradually, after independence in 1963, the substantive and
procedural safeguards in the allocation of land were disregarded. For example, regulations
limiting the amount of land one individual could acquire were disregarded, and land was
allocated by people without the authority to do so, such as provincial administrators and
politicians.

Land was no longer viewed as belonging to Kenyan people, but as vacant space to be dished out
to politically ‘correct’ people for personal enrichment. This has created not only inequalities in
land ownership, but has also interfered with protected lands that have ecological integrity,
cultural relevance or strategic location. Such lands include forests, wetlands, riparian reserves,
historical sites and monuments.

In the 1990s speculation became rife and all manner of scandal in the allocation of public land
became the norm rather than the exception. Due to this reality, there is hardly any vacant public
land left in most urban areas in Kenya.

4.7 Land markets in Kenya

The land markets that operate in Kenya cities share some similar features which include:

Two systems of land tenure: statutory and customary. As illustrated by the mailo system in
Kenya, customary systems can help to protect the rights of people to land and prevent unfair
evictions. However, they can also inhibit the supply of land through complex selling processes.

Two types of land markets:

A formal system, administered by government departments, that is bureaucratic, cumbersome

and costly (e.g. in Kampala and Dares Salaam), but it gives security of tenure through ownership
of a registered title an informal system that is a simpler, cheaper process, and is socially
regulated; however, it provides weak security of tenure, particularly for the poor. It is the most
32
dominant land market, used by both rich and poor (e.g. in Nairobi). Some overlap between the
two types of markets. For example, in the informal system in Kampala surveyors may be used to
identify plot boundaries.

4.8 How well are urban land markets working for poor people?

Figure 5: New tenements being built (Kibera, Nairobi)

Source: (Kibera, Nairobi)

Urban land markets may be considered to work well if, for example, people are able to access
adequate shelter with basic services, in suitable locations with reasonable security of tenure. The
examples in the case study show that urban land markets pose challenges to people seeking to
meet such needs, for example:

Governments seem unable to deliver affordable land to poor people through the formal system.
Informal systems allow the poor to access affordable land near the city. However, this land is
often unplanned and unregulated, without adequate services (e.g. mailo land in Kampala).
Informal systems are open to abuse by the wealthy or more politically connected, which put poor
people at risk of exploitation (e.g. Nairobi and Addis Ababa).

Formal legal systems are difficult to understand and follow (e.g. Dar es Salaam). An outdated
legal system may be inappropriate for a fast-growing city with a large population of low-income
households.

33
 4.9 What could be done to make urban land markets work better for the poor?
For example: Acknowledge that informal systems have a role to play (especially given the
capacity constraints of local government) and learn how some elements could be enhanced.

Improve those aspects of the formal/informal systems that are needed for effective planning and
delivery of infrastructure services and adequate housing for low-income groups. An example is
administration – record keeping and gathering information relating to plots of land to facilitate
planning and infrastructure provision; encouraging registration of titles in informal systems by
subsidizing the costs; and generating revenue to invest in infrastructure or public goods. Increase
the security of those that hold land in the informal sector. Recognize local systems of
registration. Develop the capacity of local government and reduce inefficiency and corruption.

4.10 Dual legal systems of land ownership:

Common law system (Anglophone countries) or Civil Code system a colonial legacy of land
legislation under which a person can own land by buying a freehold or leasehold. The land is
alienable, which means that the owner can transact, sell or transfer the land to others.

Customary law: under which land is owned collectively by a community, clan or family. It is
not alienable and cannot be sold or transacted in an open market. Traditional practices or
principles regulate access and rights to use land held under customary tenure. These are
understood by members of the local community but they may not conform to a country’s legal
procedures

4.11 Selected recommendations

4.11.1 Planning
Plan with a vision: to create better living environments for all citizens with efficient and
affordable basic services and more compact city structures to reduce residents’ travel times and
costs and to reduce urban areas encroaching on peri-urban land with high agricultural potential
that could be better used to grow food for city dwellers Address the needs of the poor,
particularly regarding infrastructure, shelter and service delivery. Identify ways to integrate
newcomers to the city into the formal land delivery system, for example make it easier and less

34
expensive for land to be sub-divided into smaller plots, particularly in rapidly growing peri-urban
areas.

4.11.2 Land administration

Develop the capacity of public authorities to plan, allocate, administer and manage land
efficiently and effectively. Develop land information systems to inform land-use planning and
urban land markets and guard against well-connected individuals abusing the system to the
disadvantage of the urban majority.

4.11.3 Land policy and tenure systems

Recognize that customary or informal systems are not merely ‘survival’ tenure systems. Both
systems have their advantages and shortcomings.

Take account of the local or national context when considering whether it is desirable or feasible
to phase out a customary system over time. Where both systems are maintained, clarify the
interface between them and make it workable. Nurture and accommodate innovative land
allocation approaches to enhance land accessibility for all urban citizens.

4.12 Experiences of South Africa

4.12.1 Land ownership and Administration

Though, in South Africa, land is owned both by the government and private sector, the lion share
goes to the private sector. Due to this fact, land is transferred to different users either by
perpetual sale or lease sale. In general, as the country follows market oriented economy, more of
the land marketing is undertaken by private sector.

Land marketing: In South Africa, land marketing is taking place based on the current demand
situation; however, transfer of land use rights is accomplished through freehold sales and
leasehold sales. In freehold sales, land marketing is taking place between buyers and sellers on
the basis of demand and supply principles of the market. Moreover, landownership rights are
transferred to the buyers perpetually with no time limit. Leasehold sale is also another method of
transferring land to users within a limited time period whereby transfer of land use rights is
accomplished on the basis of market principles.

35
 4.12.2 Land pricing and decision making
In South Africa, both pricing and decision making is accomplished in accordance with market
forces-demand and supply. For marketing of leasehold sales and similar properties, however,
four types of price rating are used. These are market approach, capitalized income approach,
residual value method and summation method. Of these four price rating methods, residual and
marketing methods are wisely applied.

Locality and location, land use function, material and size of property and topography are the
factors considered as an input for land price rating. Finally, price rating is decided by the
government, financial institutions and professional experts.

4.12.3 Lease term and lease period renewal

Nowadays, the average lease period is ranged from 20 to 30 years. As a result, there is a
limitation in issuing title deed. Hence, the title deed is given to those lease contracts having a
contract period of 10 years and above only. Moreover, the lease can be renewed if the land is not
needed by the lessor. If the city administration needs the land for public purpose such as sport
Centre, expansion of the town, etc. it has a right to take the land through the compensation of the
land and related developments

4.12.4 Laws for development of land and related properties

South Africa has no much more experience in implementing lease system and hence there are no
specific laws on lease contracts and lease hold rights as well. However, lease contracts are
legally accepted in the country and hence, the country has developed practical experiences in
determining lease period and lease payment. In South Africa, lease sales are governed by laws of
contracts and standardized documents which have a legal basis

36
 CHAPTER FIVE

5. Data Analysis, Result and Description

4.1 Challenges in the Implementation of Lease Proclamation in Nekemte town

In this case, Challenges are the constraints that hindering the implementation of new land lease
proclamation in Nekemte town. These Challenges includes: unreachability of information,
unaffordable land price to the citizen and spread of squatter settlements were identified as main
bottlenecks addition to this institutional, organizational capacity limitations and lack of social
awareness about new lease proclamation are challenges in the study area.

5.4.1 Unreachability of Information about the Application of Lease Proclamation

Land lease seeks to enable all sections of society to obtain access to land in fair and transparent
way under conditions of increasing competition. However, most towns and cities in Ethiopia are
still, struggling with a number of challenges. Among these challenges, inaccessibility of
information is the major one.

5.4.2 Unaffordable land price to the citizens

To get the required plot of land/parcel there were two types of costs paid. The initial cost was the
cost that paid to fulfill the criteria of auction. All bid applicants paid this cost. Each applicant
pays 150 birr to register and participate on auction. This type of cost is known as service fee. The
second payment is the cost/price paid to own the parcel. Only those who are the highest bid offer
or the winner of the auction paid this cost. This was the price of parcel per m2

As it stated on this proclamation the initial price of land per m 2 was fixed with respect to the
level of the towns and the land grade of the land within the town. For example, the price of first-
grade land per m2 in second level town was 307.79 birr. Therefore, Nekemte town is the second
level among Oromia National Regional State towns. Also, the parcels that prepared for first
round bid were first grade land in the town. Land per m 2 was sold by lower price 522.54 birr and
1341.54 birr highest price.

In short, most of the respondents were responded as the land price was not affordable for
majority of the citizen.

37
 Table 1: Community Response

S no Questions for community Response Frequency Percentage

options
1 Is the price of land affordable for the Yes 6 12%
community? No 44 88%
2 Fair compensation paid for community Yes 11 22%
when land development needed? No 39 78%
Source: Author April 2017)

Land Price Response on Compensation

100% 100% 78%
88%
80% 80%
22% response on
60% PERCENTAGE 60% compensation
40% 40%
20% 12% 20%
0% 0%
yes No Yes No

Figure 6: Responses on Affordability of Land Price Compensation

Source: Author, (April 2017)

As the data projected on figure 1 above shows only 12% of the respondents were respond as the
price of land per m2 was affordable, whereas most of the respondents or 88% of the applicants
were respond as the land price was not affordable for the majority of the citizen.

Findings

Because, as the view of the respondents obtained from open-ended questionnaire most of the
dwellers of the town are low-income groups. Due to this reason they could not pay service fee
and price of land to own the required parcel of land.

5.4.3 Equity of land distribution

Table 2: Descriptive statistics on Equity
38
 S. no Variables Response action Frequency Percentage
1 Equal access to land information Agree 6 12%
without discrimination Disagree 25 50%
Strongly Disagree 19 38%
2 Employees deliver their service Agree 10 20%
Impartially Disagree 23 46%
Strongly Disagree 17 34%
3 Fair compensations paid to all Agree 4 8%
resident members who are losing Disagree 15 30%
their land holdings Strongly Disagree 31 62%
4 Providing reasonable cost for Agree 12 24%
services delivered Disagree 26 52%
Strongly Disagree 12 24%
Source: Author, (April 2017)

As indicated in table above, 50% and 38% of the respondents disagree and strongly disagree the
statement respectively that all community members in the town have no equal access to housing
land. On the other hand about 12% respondents agree the statement. This implies that the
majority of respondents argue that there is discrimination to access land information at the sub
city.

The second question regarding equity is about service impartiality. On the other hand, about 20%
and 46% of the respondents agree and strongly disagree to the statement respectively. In
addition, 34% of the respondents agree to the statement.

The last question regarding equity dimension was in relation to services cost. Accordingly, about
24% and 52% of respondents agree and disagree to the statement. Whereas 24% of respondents
are strongly disagree.

Table 3: Descriptive statistics on transparency

S. Variables Response action Frequency Percentage

39
no
1 Employees in the office deliver their Agree 9 18%
service transparently Disagree 23 46%
Strongly Disagree 18 36%
2 Clarity and accessibility of the laws and Agree 13 26%
rules are good in providing land service Disagree 21 42%
delivery Strongly Disagree 16 32%
3 Land related information services are Agree 5 10%
provided in a good manner Disagree 28 56%
Strongly Disagree 17 34%
4 Land market information are accessible Agree 3 6%
to all community members Disagree 39 78%
Strongly Disagree 8 16%
Source: Author, (April 2017)

Results

It is indicated in Table 5.3 that the levels of agreements to access good governance dimensions in
relation to transparency can be seen from four statements. The first question is concerning the
transparency of land service delivery process in the sub city.

Accordingly, the majority 46% of the respondents disagree to the statement. On the other hand,
the second largest respondents 36% strongly disagree to the statement. Whereas, 18% of the
respondents agree with the statement. Thus, from this discussion one can conclude that experts of
the sub city have positive perception regarding the transparency of land service delivery process
in the town.

The second question in the above table is with regard to the clarity and accessibility of the laws
and rules in providing land service delivery. In this regard, about 26% and 32% of the
respondents agree and strongly disagree to the statement respectively. On the hand 42%
respondents disagree to the statement.

40
This implies the transparency level of clarity and accessibility of the laws and rules in providing
land service delivery of the town is very low.

5.4.4 Proliferation of Squatter Settlements

An illegal settlement is one among the challenges of land development and management. The
existences of squatter settlements were other causes of low performances of land lease
proclamation.

On the other hand, the one of the objective of land lease was eradicating such activities. As the
information obtained from all interviewees, there were 821 illegal units of houses in Nekemte
town administration. These squatter settlements were prevailed at the town fringes and at the
back of kebele rental houses as the responses of the interviewees.

As the result of the study shows, in Nekemte town the existences of these illegal settlements
have multi direction challenges. On one hand providing land to lease by demolishing all the
illegal settlement is economically and socially disastrous. Therefore, the prevalence of squatter
settlements was causing land supply constraints in the town.

5.4.5 Institutional Capacity

The effectiveness of the organization measured by the extent to which a government can
accomplish its policy objectives by leasing public land. No public leasehold system could have
persisted without a judicial system to ease land-leasing conflicts. Land leasing requires a
considerable level of integrity and a high degree of coordination, in the procedural steps and
process to avoid cumbersome processes.

5.4.6 Organizational Capacity

Professionals

Workforce/ skilled labor forces are decisive to coordinate, plan, implement, organize and report
the performed actual. As the information obtained from interview and review of documented
materials out of 29 proposed official at office level and 12 officials at kebele level structure,
Nekemte town Land Development & Management Agency has10 employees at office level and 3
coordinators at kebele levels, totally the Agency has 24 employees out of 33 proposed
employees.

41
In terms of qualification and skill, most of the proposed man powers were first degree and
diploma and above at kebele level. Now the existed employees were 9 diploma and 13 first
degrees. The skill/ profession proposed were Urban Planning, Urban Economics, Land
Administration, Economist, Lawyer, and Architecture, Civil engineering, Surveyor, GIS
professional, Applied Geography and other related. However, among the present office and
kebele officials 6 diploma surveyors, 2 first degrees Applied Geography and 1 Economics
professional were assigned.

Table 4: proposed and Existed Man Power

No Qualification Proposed Actual
1 Diploma 10 9 Urban Planning, Urban Economics,
2 Degree 14 13 Land Administration, Economist,
3 MA/MSc 9 2 Lawyer, Architecture, Civil engineering,
Total 33 24 Surveyors, GIS professional,
Source: Nekemte town Land Development & Management Agency (May 2017).

As table 3 above shows there were only 72.73 % of the employees were in the office of the
Agency and serving the society. In terms of experience and commitment as information
obtained from the interview of the process owners and the Agency head office, most of the
employees came from the municipality who has the experience of transferring land through the
old system that was open for corruption and has complex bureaucracy. These officials push
themselves and the others to exercise through in the old system. Also, some of the employees
were not experienced with government office services. Few of the officials were not committed;
because they have the experiences of rent seeking in old system and the rest few were aware and
committed. These situations indicate as there is a manpower constraint to implement land lease
proclamation in Nekemte town.

Finding: - The actual number of professionals in the office does not much with the proposed
man power needed to effectively under take service provisions.

5.4.7 Technological Aspects

Technological aspects were another input to strengthen the institutional and organizational
capacity of any organization. Also one organization to perform its duties it requires equipment,
42
machinery, and there technologies. Therefore, the technological aspects of Nekemte town Land
Development and Management were assessed. As the responses of the interviewed officials,
process owners, and head office, the Agency has no the technologies like differential GPS, Total
Station, Theodolite, rather than meters and the other simple instruments.

Additionally as this Agency was a recent established organization out of the municipality. Due to
this, it requires support from municipality. But the municipality of the town is not supporting
technically and technologically as the responses of the interviewees. Therefore, the Agency was
encountered a lack of technological supports.

Financial Aspects

As the information obtained from all interviewees land development and allocation requires the
provision of infrastructure, high compensation, clearing the site and others. They responded that,
it requires 450-550 birr to prepare and allocate one parcel of land. Therefore, Provision of
infrastructure, compensation, clearing the site, also to fulfill the above-mentioned technological
deficiencies and other activities of the Agency it requires high financial support. Accordingly
Nekemte land management and administration do not pay appropriate compensation to the
owners existing on the area.

4.2 Discussion of fundamental laws of lease

The right to use of urban land by lease shall be permitted in order to realize the common interest
and development of the people. The offer of lease tender and land delivery system shall adhere to
the principles of transparency and accountability and thereby preventing corrupt practices and
abuses to ensure impartiality in the process. Tender shall reflect the prevailing transaction value
of land. The urban land delivery system shall give priority to the interests of the public and urban
centers to ensure rapid urban development and equitable benefits of citizens and thereby ensure
the sustainability of the country's development. Prohibition of Land Possession and Permission
other than Lease Holding

Without prejudice no person may acquire urban land other than the lease holding system
provided under this Proclamation. No person may enclose and use any plot of land adjacent to
his lawful possession without the permission of the appropriate body. No region or city
43
administration may permit or transfer urban land in a manner contrary to the provisions of this
Proclamation. Regional cabinets may specify urban centers to which this Proclamation remain
inapplicable for a certain period; provided, however, that such transitional period, with in which
the Proclamation remain inapplicable in any urban center, may not be more than five years
starting from the date of the coming into force of this Proclamation.. The bid bench mark shall be
the annual land use rent of the locality.

4.2.1 Land acquisition for urban expansion and redevelopment

The major problems reported by urban administrations with regard to land acquisition are related
to the absence of legal frameworks for expropriation and compensation to previous holders and
the lack of capacity to compensate current holders that are not willing to vacate the land required
for development. Rural urban conflicts exist due to lack of clear compensation regulation. Where
regulations exist, they are urban oriented peasants not given sufficient attention moreover; the
capacity of urban centers to mitigate problems of displacement is very low.

In addition to the lack of clear regulations for expropriation and compensation, municipalities
have financial limitations to acquire land. In lease administered cities of the region the lease fee
comes in installments where as compensation has to be made at the beginning of the eviction.
The lease policy stipulates that the urban administration will deal with previous land holders
prior to reallocation for investors. Such an arrangement is appropriate but still leaves open the
question of capacity to compensate for land and property.

4.2.2 Informal land acquisition and development

In addition to land proliferation Informal land acquisition and development another bottleneck
that can influence urban land policy implementation.

Informal developments that comprise construction without permit on legally occupied land and
informal land occupation is high in major cities. There is no organized land occupation and
informal accesses to land are through gift or market mechanisms. There is lack of public
awareness on land policy and negative consequences of informal developments. The magnitude
of informal urban land development has direct relationship with the dynamism of urban areas:
major urban centers and those that are fast growing experience concerted informal developments.

44
 4.2.3 Discussion
A number obstacle for policy implementation is analyzed from practitioners and respondents.

Those includes: Institutional constraints

The lack of qualified man power: Qualified manpower is very crucial to achieve the policy
objectives. As the information obtained from municipality of Nekemte town, out of the total
proposed employees it shows 23% scarce man power.

Absence of financial institutions’ participation in policy formulation; Financial institutions

like Agricultural and Industrial development bank, mortgage bank, construction and business
bank being the major financiers of business activities and housing (the part which takes the
biggest part of the land use) respectively ,these banks have a direct relation to land and the
structure on it. However, in the design of the lease policy, these institutions did not have any part
at all. On the one hand they were only ordered by the government to accept all land obtained
through lease as collateral between the bank and individual lessee and reject the rest (previously
hold land) and on the other hand they refused undeveloped land as collateral due to exaggerated
price and insecure owner ship of land

Conflict between urban and rural boundary: As is the case with urban land, rural land also
remains under the state ownership. While the urban government retains the right to lease urban
land by auction, the peasants however, are not allowed to sell or lease their land for urban uses.
When rural land is required for urban expansion, the peasants affected by the decision will be
relocated. This on the one hand deprives the poor farmer of his right to his land and on the other
hand, can result on illegal subdivision.

Unreliability of Governments: Ethiopian experience has shown that no government has ruled
the country for more than 40 years. Therefore, the fact that somebody has to sign an expensive
contract of long duration (a lease of 99 years and so on) in a situation where governments have
been unreliable and unstable has become by itself a big risk. If the change of government means
the change of all previous major policies as is happening now and in the past, this creates an
unsafe environment for investment.

45
Lack of technological advancement; latest instruments and software’s have not adapted.

Economic impact

 Monopoly ownership of urban land is major constraint to efficiency and competition;

 The “use right” given previous land holders affects transaction, efficient land use ;
Improvement of the physical structure, and economic development in the city;
 It discourages investment by all sectors (formal and informal) and expansion of
enterprises.
 It discourages competition;
 By depriving present land holders the right to develop their land according to the master
plan; it discourages private initiatives in land improvement.
 By not guaranteeing contract renewal and proper compensation, it discourages the use of
durable materials and buildings.

Financial impact

 For projects which require huge initial investment and to save money against inflation
and for emergency, the freeholder or long lease hold is a better option.
 The double track system and the subsequent ban on transaction affect the financial
position of the local government and the inhabitants.
 Inappropriate utilization of income for housing results in lack of finance for the provision
of services and infrastructures.
 Inappropriate lease payment affects the municipal finance in the short and long run.

Social impact

 It discourages new entrepreneurs and the informal sector.

 Treats the poor (urban and rural) inequitably concerning compensation, use, and transfer
of the land they presently holding and new land allocation.
 Subsidizes the wrong target group by neglecting the poor.

Institutional impact

46
Public monopoly ownership of land and centralization of power and its inherent characteristics:
bureaucracy, lack of transparency, corruption and inefficiency are the main bottlenecks to
efficient land allocation.

 Does not address speculation and corruption.

 Lack of cadastral map.
 The lack of qualified man power.
 Lack of participation by the population and financial institution.
 Conflict between urban and rural boundary.

47
 CHAPTER SIX

6. Recommendation and Conclusion

6.1 Conclusion
Ethiopia has faced a number of challenges in good land governance building process.
Observations in the Nekemte town show that large number of service seekers come to the offices
with diverse service problems. Customers refer to various problems in land development and
management such as lack of decision making, inconsistencies on interpreting land related
legislations, unpleasant and unwillingness service delivery from officials. In order to achieve the
above mentioned objectives, a systematic literature review was undertaken that includes previous
studies, various land management books and manuals. Thus with this literature review, a
conceptual framework was developed and a feasible methodology was evolved. The Nekemte
town land management and development office lacks the required good governance dimensions
of participation, transparency, accountability, equity, efficiency and effectiveness.

From the present study regarding service equitability issues, service users in accessing land
information was treated unequally and respondents feel that fair compensation was not paid to
resident members who were on losing their land holdings and there is also employee service
impartiality shown in the office while performing the service delivery process. There was also no
equal access to land to build houses.

The study revealed that there was no customer service delivery under one window and process
was lengthy and had many steps. So the procedure is very monotonous and this in turn has an
impact on quick service delivery and implementation of good governance in order to achieve
institutional objectives and goals. The study also identified lack of competent human resources to
improve efficiency and effectiveness in the land delivery process.

Concerning employee’s interest of responsiveness in solving problem, the study confirmed that
the majority of the respondents were not satisfied due to the employee’s lack of interest to solve
their problem. The sub city land offices were very weak or there is a lack of service user’s
consultation in the formulation of policies and programs and need their feedback to incorporate

48
in the resulting policy and programs. This indicated unsatisfactory evaluation and shows the
negative perceptions of service users on the good governance dimension of participation.

6.1.1 Regarding Compensation

Vulnerable groups: Particular attention should be paid to the needs of vulnerable groups among
those displaced, especially the landless, elderly, women, children, indigenous peoples and ethnic
minorities.

Indigenous peoples: Physical displacement of indigenous peoples may have significant adverse
impacts on their identity and cultural survival, so all viable alternatives to avoiding such
displacement should be explored. Where it is unavoidable, preference is given to land based
resettlement strategies compatible with cultural preferences and prepared in consultation with
such groups.

Timing: Possession of land and related assets may take place only after compensation has been
paid and, where applicable, resettlement sites and moving allowances have been provided.

6.2 Recommendation
Land Development and Management Agency, Municipality and the town administration had
better to give prime emphasis to maximize land supply and organizational capacity building and
thereby to block the problem of information inaccessibility and lack of clarity on requirements.

Also to provide affordable land price to all, it is good if lease benchmark price will be fixed at
town level by taking in account. Moreover, increasing the financial capacity of the Agency
through allowing all the revenue collected from land transaction for land preparation, the Agency
can provide enough parcels for auction and allotment.

Closing institutional capacity gaps or legal framework: The power and authority of fixing lease
benchmark price and the decisions of land transaction through allotment to allocate for the
dwellers have not residential house should be decentralized to town administrations.

49
The lease benchmark price was once announced as declaration and distributed to all towns
administered under lease system. The benchmark lease price shall be updated at least every two
years to reflect market condition.

Therefore, it should be determined based on the objective conditions of each urban center in
accordance with infrastructure provision, by considering the peculiar nature of land and the
socio-economic background of the society.

It is preferable be long term and short term training to build the capacity of the employees of the
Agency. Had better if an awareness creation program conducted:

 Provide proper legal frame works

 Provision of a grace period and the “benefit right” to previous land holders
 The adaptation of this step will have the following two advantages:
 Solve the problem of the double track system;
 Solve the differential treatment between people and increase the efficiency
 Land price increases and the question of appropriation of benefits

Social versus economic function of land

Payment of proper compensation to lease holders

 If the leased land is needed for public purposes or to be developed according to the
master plan, compensation at market price for the structure and the land should be given
if evicted.
 Compensation to purchase similar land elsewhere or to find new ways to earn a living,
 People whose families have been farmers, herders or gathers for generations may have
little ability to do otherwise. Resettlement may be the only way for them to maintain
their livelihoods
 When resettlement involves an entire community, social cohesion and networks can be
maintained.

50
  The offer of alternative land as compensation may avoid problems that can arise when
financial compensation is paid to people who are unused to handling large amounts of
money
 Without adequate training on how to manage a large lump sum payment, people may
spend the money quickly and unwisely, or may be fooled into investing in fraudulent
schemes. If compensation is paid to the male head of the household, the needs of women
and children may be ignored as the money vanishes, to the detriment of the family’s
health and welfare.

The end result may be people with no land to farm, no income stream to support themselves, and
no job skills to compete in a non-agricultural economy.

 Preferable to give priority to develop the present land holders.

 Discourage speculations
 Some land specialists believe that in a situation of high demand where the private market
tends to “hold out” urban land; land speculations are economically productive and an
efficient allocation mechanism in the long run.

Facilitate training to local staff

 Training of the local government staff, particularly those sections which have direct
relation to land management should be the first priority. Land leasing and upgrading of
rents needs updated information about the functioning of the current land market.
 Establish a national inventory of public land ensuring that national information is locally
verified;
 Consult local populations, traditional leaders, local government officials to clarify the
underlying land rights and livelihoods before deciding whether, and where, to locate a
camp, infrastructure and services.
 Provide mediation and dispute resolution support in cases of rising land-related or host
community tensions.
 Ensure that humanitarian programming does not undermine the land rights of another
community

51
 It is recommended that rules of ethics and professional integrity by the land management
officers should be put into operation and monitored. The system should consider
awarding highly efficient land officers and take corrective measures against officials
found to have been involved in malpractices.
 It is advisable to timely and transparently informing service users whenever changes are
made in services provisions. This enables service users to adjust themselves on time and
avoid confusions they face.
 Literally, the valuation profession is not yet created; the state has a great task to
strengthen the official centers to provide it with effective and efficient professionals.
 Strengthen mechanisms for local land administration and local community access to land
documentation, mapping, and dispute resolution processes in order to increase efficiency,
better rely on local knowledge of ownership and classification issues, and ensure public
awareness, transparency, and accountability.

52
 BIBLIOGRAPHY

(Professor Pete. (2004). Guidelines for support to land policy design and land policy reform.

Guidelines for support to land policy design and land policy reform. (2004).

Achamyeleh Gashu Adam. (2014). Peri-urban land rights in the era of urbanisation in
Ethiopia:.

Bacry, Sileshi and Admit,. (2009, p, 15). Land lease policy in Addis Ababa. Addis Ababa
chamber of commerce and sectorial associations, Addis Ababa, Ethiopia. .

Belachew Yirsaw. (2004). Urban Land Lease Policy of Ethiopia: Case Study on Addis Ababa
and Lease Towns of Amhara National.

Berhanu and Feyera, . (2005, p,20). Land registration in Amhara Region, Ethiopian. Russell
press, Nottingham, UK.

Diamond. (2005).

Federal Negarit Gazeta. (2011). Holding urban land by lease. Addis Ababa.

George E. Peterson. (Nov. 2006). Land Lease and Land Sale as Infrastructural Financing
Option.

Hernando De Soto. (2000). The Mystery of Capital.

John Medendorp Ph.D. (Sep. 2015). Ethiopian Land Administration.

Mathewos. (1998). Nekemte Revised MasterPlan.

Melkamu and Shewakena,. (2010, p, 3). Facing the challenges in building Sustainable Land
Administration Capacity in Ethiopia. .FIG Congress, Sydney, Australia.

Professor Peter Dale. (n.d.).

Rahmato ; Holden and Johannes, . (1984, 2002).

Robin McLaren. (n.d.).

S. Rowton Simpson. (1976). land law and registration.

53
 APPENDIX 1

Wollega University

Institute of technology

Department of urban and regunal planning and city development

Dear respondent:

The purpose of this questionnaire is to collect data regarding urban land lease policy
implementation in Nekemte town Land Management and administration for the partial
fulfillment of the requirements for Bachelor’s Degree in urban and regional planning in Wollega
University. Your genuine response for the following questions is extremely important for the
successful completion of this work. The information you provide is used only for academic
purpose and will be kept highly confidential.

I would like to thank you in advance for your cooperation and for scarifying your precious time.

I. To be filled by land management officials:

Please put a tick mark (√) and explanation for the answers you choose on the provided
space.

1. Is there an obstacle for land policy implementation? Yes____ No____

2. If yes what are they?
________________________________________________________________________
3. Have the policy implementation influential on dwellers? Yes_____ No ______
4. If yes who are the victims of this policy implementation?
________________________________________________________________________
5. Is there new land acquisition on the expansion area? Yes_____ no_____
6. If yes how?
________________________________________________________________________
7. How many meters square are allowed for one owner?
__________________________________________________________________
54
8. What are the types of existing ownership?
________________________________________________________________________
9. Is there compensation? yes_______________No________
10. If it is how many /m2?
_____________________________________________________________
11. What is the price of land prepared by municipality for tender / m2?
12. Is there land tender? Yes____ No______
13. What are the processes?
________________________________________________________________________
14. What are the instruments used during land preparation for tender?
________________________________________________________________________
15. What are the criteria to participate in the tender?
________________________________________________________________________
16. What is its bench mark?
________________________________________________________________________
17. Is it affordable for citizens? Yes______No________
18. If not what are the measures taken by Nekemte municipality to come up with affordable
land lease price?
________________________________________________________________________
19. Is there squatter settlement area in Nekemte town? Yes_____No______
20. How the municipalities control squatter settlement?
________________________________________________________________________
21. How many illegal units of houses are there?
________________________________________________________________________
22. Have the squatter settlement influence land policy implementation? Yes_____No_____
23. If what are the influences?
________________________________________________________________________
24. Is there sufficient man power in the institution?
25. Is there recent renewal of lease period? Yes________ No________

55
 26. If yes how for different land uses?
________________________________________________________________________

27. Financial aspect of the institute in relation to land allocation and development for public
service and utilities.
________________________________________________________________________

II. To be fulfilled by urban residents

Table 5: Questionnaires Filled By Residents

no Questions raised for residents Responsive actions

Agree Disagree Strongly disagree
1 Equal access to land information without discrimination

2 Employees deliver their service impartially

3 Fair compensations paid to all resident members who are
losing their land holdings
4 Providing reasonable cost for services delivered
5 Employees in the office deliver their service
transparently
6 Clarity and accessibility of the laws and rules are good in
providing land service delivery
7 Land related information services are provided in a good
manner
8 Land market information are accessible to all community
members
9 Is the price of land affordable for the community?
10 Fair compensation paid for community when land
development needed?

56