**2. Property system in Ethiopia: overview of features and its deficits**

As it is clearly defined in the federal constitution of Ethiopia, land is the property of state the peoples of Ethiopia and accordingly sale and as a means of exchange is prohibited [13]. Under the umbrella of exclusive state ownership of all land, the property system is bifurcated into rural and urban landholding systems due to the bifurcation of legal and institutional frameworks for rural and urban land (see **Figure 1**). Land located in the rural territory is governed by a rural land holding system by which rural landholders are allowed to exercise usufruct right only without the right to permanent transfer through sale or without the right to convert it into non-agricultural use by themselves [14]. On the other hand, land in the urban jurisdiction is governed by a leasehold system by which allocation of urban land is carried out through auction and government allotment on the basis of annual rent for a specified lease period and allows development rights according to a land use plan [15].

**19**

nor urban jurisdictions.

*Urban Built-Up Property Formation Process in the Peri-Urban Areas of Ethiopia*

*The bifurcated property rights system in Ethiopia. Source: author produced.*

State as sole supplier and owner of land is responsible to allocate all types of land use rights to the citizens. In the process of land allocation different requirements and procedures are being employed to allocate rural and urban land use rights. According to both federal and regional legislations, rural land can be granted to the people with usufruct right free of charge without time limit for those citizens who want to engage in agricultural activities for their livelihood [13, 14]. These two legal frameworks allow every citizen from 18 years of age whose main residence is in rural areas and who wants to make a living from agriculture to be accorded free access to rural land and permitted to exercise usufruct/holding rights for an indefinite period (FDRE, Proc. No. 456/2005, Art.5). Rural land in Ethiopia can be acquired by reallocation of communal or other unoccupied lands [16]. The landholders of rural land in Ethiopia have the authority to use and harvest on it, to rent it, to donate it, to bequeath and sharecropping except selling and mortgaging it. On the other hand, the land within the administrative boundary of urban areas

in Ethiopia is governed by the urban lease holding system. The lease system is proclaimed as a sole means of accessing urban land in the country since the 1990s. The system allows that all land in urban areas to be transferred in to lease system and calls for conversion of old possessions to leasehold [15]. The current lease law recognizes tender (auction) and allotment as the basic means of lease transfer from government to citizens. As a matter of principle, land needed for residential, commercial (urban agriculture, industry, or service), and other uses are transferred by competitive tender. As an exception, city municipality may give land by allotment to selected areas of paramount importance to government institutions, religious institutions, public residential housing programs, diplomatic mission, displaced persons for urban renewal. The lease system serves as a hot political and legal agenda and has been criticized for a number of reasons including rent seeking, corruption, inefficiency, price hike, etc. that made the system unable to satisfy the

Land governance and institutional setup is derived from the constitutional provision and are a reflection of the property system of the country. The responsible authorities managing land are divided into municipal and rural land administration for urban and rural land respectively both at federal government and regional government level. The division of land governance institutions into urban and rural has been creating confusion in the transitional peri-urban areas where the land is highly demanded for urbanization and being converted into urban built-up property rapidly. The authority and the land tenure system in the transitional peri-urban areas lack clarity. Sometimes this transitional area may also fall under neither rural

growing demand of the urban poor and investors [17].

*DOI: http://dx.doi.org/10.5772/intechopen.86708*

**Figure 1.**

*Urban Built-Up Property Formation Process in the Peri-Urban Areas of Ethiopia DOI: http://dx.doi.org/10.5772/intechopen.86708*

**Figure 1.**

*Land Use Change and Sustainability*

form of land/property rights [10].

systems [5].

conflicting interests.

conclusion of the study.

urbanization in sub-Saharan Africa is often accompanied by the termination of existing local land rights in the peri-urban areas and the birth of new and urbanized

In the transitional peri-urban areas, competition for land between local rural settlers engaged in agricultural practices and urban actors interested in this land for residential purposes is fierce. The competitions for land during transition could instigate institutional changes need to regulate the emerging land rights. It is obvious that peri-urban areas are largely characterized by a wide range coexistence of formal and informal land transaction practices. Consequently, they serve as a breeding ground for new types of land tenure systems (which can be either semi-legal such as occupation of state land or non-legitimated totally) and land transaction processes which exist side by side with formal and customary

Peri-urban land from the Ethiopian context involves an agricultural rural land adjacent to municipal boundaries, often held by local peri-urban farming communities. It is also a land under constant threat of expropriation of by the government agents and with a very high possibility of being converted into urban built-up property [11]. Peri-urban areas in Ethiopia can also be described as mushrooming place for new unauthorized/informal settlement without basic utilities. Therefore, peri-urban land in Ethiopia is a fascinating arena displaying complementary and

Moreover, land in the peri-urban areas in Ethiopia is in a rapid process of change from rural agricultural land to urban built up [11]. New urban built-up properties and associated rights are being evolved at the expense of rural agricultural land rights [12]. The process of new property and property right formation in Ethiopia is not well studied and explored. This book chapter primarily explores the process of new urban built-up property formation in the peri-urban areas of Ethiopia. Details on the peri-urbanization process are discussed in this chapter under six sections. The first section details with the conceptualization of periurban land. The second section discusses the property right system of Ethiopia focusing on the strength and limitations. The third section focuses on how the research was conducted. The fourth section covers about urban built-up property formation based on empirical analysis and debates. The reason for why the formal and informal channel of land development co-existence in the peri-urban areas is also explored in the fifth section of the book chapter. The final section covers the

**2. Property system in Ethiopia: overview of features and its deficits**

As it is clearly defined in the federal constitution of Ethiopia, land is the property of state the peoples of Ethiopia and accordingly sale and as a means of exchange is prohibited [13]. Under the umbrella of exclusive state ownership of all land, the property system is bifurcated into rural and urban landholding systems due to the bifurcation of legal and institutional frameworks for rural and urban land (see **Figure 1**). Land located in the rural territory is governed by a rural land holding system by which rural landholders are allowed to exercise usufruct right only without the right to permanent transfer through sale or without the right to convert it into non-agricultural use by themselves [14]. On the other hand, land in the urban jurisdiction is governed by a leasehold system by which allocation of urban land is carried out through auction and government allotment on the basis of annual rent for a specified lease period and allows development rights according to

**18**

a land use plan [15].

*The bifurcated property rights system in Ethiopia. Source: author produced.*

State as sole supplier and owner of land is responsible to allocate all types of land use rights to the citizens. In the process of land allocation different requirements and procedures are being employed to allocate rural and urban land use rights. According to both federal and regional legislations, rural land can be granted to the people with usufruct right free of charge without time limit for those citizens who want to engage in agricultural activities for their livelihood [13, 14]. These two legal frameworks allow every citizen from 18 years of age whose main residence is in rural areas and who wants to make a living from agriculture to be accorded free access to rural land and permitted to exercise usufruct/holding rights for an indefinite period (FDRE, Proc. No. 456/2005, Art.5). Rural land in Ethiopia can be acquired by reallocation of communal or other unoccupied lands [16]. The landholders of rural land in Ethiopia have the authority to use and harvest on it, to rent it, to donate it, to bequeath and sharecropping except selling and mortgaging it.

On the other hand, the land within the administrative boundary of urban areas in Ethiopia is governed by the urban lease holding system. The lease system is proclaimed as a sole means of accessing urban land in the country since the 1990s. The system allows that all land in urban areas to be transferred in to lease system and calls for conversion of old possessions to leasehold [15]. The current lease law recognizes tender (auction) and allotment as the basic means of lease transfer from government to citizens. As a matter of principle, land needed for residential, commercial (urban agriculture, industry, or service), and other uses are transferred by competitive tender. As an exception, city municipality may give land by allotment to selected areas of paramount importance to government institutions, religious institutions, public residential housing programs, diplomatic mission, displaced persons for urban renewal. The lease system serves as a hot political and legal agenda and has been criticized for a number of reasons including rent seeking, corruption, inefficiency, price hike, etc. that made the system unable to satisfy the growing demand of the urban poor and investors [17].

Land governance and institutional setup is derived from the constitutional provision and are a reflection of the property system of the country. The responsible authorities managing land are divided into municipal and rural land administration for urban and rural land respectively both at federal government and regional government level. The division of land governance institutions into urban and rural has been creating confusion in the transitional peri-urban areas where the land is highly demanded for urbanization and being converted into urban built-up property rapidly. The authority and the land tenure system in the transitional peri-urban areas lack clarity. Sometimes this transitional area may also fall under neither rural nor urban jurisdictions.

### *Land Use Change and Sustainability*

Moreover, the urban boundaries are always expanding into the surrounding peri-urban agricultural and rural areas and this in turn has been affecting the rural jurisdiction. As urban growth strategy, the government has been implementing expropriation of land from peri-urban areas as a response to the growing demand of land for rapid urbanization and the need for modernized infrastructures.
