Title:- URBAN LAND ACQUISITION AND TRANSFER

MECHANISM FOR RESIDENTIAL HOUSING ASSOCIATIONS

UNDER ETHIOPIAN LAW: THE LAW AND PRACTICE IN
CHOLE WOREDA
By Adisu Negash Worku, Email. Adisuneg2@gmail.com, phone No.
0920048410

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Table of Contents
DECLARATION......................................................................................................................................iii
CERTIFICATE........................................................................................................................................iv
APPROVAL OF BOARD OF EXAMINERS..........................................................................................v
ACKNOWLEDGEMENTS........................................................................................................................vi
ABSTRACT..............................................................................................................................................xi
ABBREVIATIONS AND ACRONYMS..................................................................................................xii
1. INTRODUCTION...............................................................................................................................1
1.1. Background to the Study..............................................................................................................1
1.2. Statement of Problem...................................................................................................................4
1.3. Objective of the Study......................................................................................................................8
1.3.1. General Objective......................................................................................................................8
1.4. Research Question.......................................................................................................................8
1.5. Significance of the Study.............................................................................................................9
1.7. Scope of the study........................................................................................................................9
1.8. Research Design...............................................................................................................................9
1.9. Sample Design................................................................................................................................10
1.9.1. Sampling Techniques...............................................................................................................10
1.9.2. Target Population.....................................................................................................................10
1.9.3. Sampling Size Determination..................................................................................................11
1.10. Sources of Data and Data Collection method................................................................................12
1.10.1. Sources of Data......................................................................................................................12
1.11. Data Collection Method................................................................................................................13
1.11.1. Questionnaire.........................................................................................................................14
1.11.2. Interview................................................................................................................................14
1.12. Data Analyzing Process and interpretation...................................................................................14
1.13. Ethical Considerations..................................................................................................................15
1.14. Limitation of the Study..........................................................................................................15
1.15. Operational definitions...........................................................................................................16
1.16. Organization of the Paper......................................................................................................17
CHAPTER TWO: THEORETICAL FOUNDATIONS OF RESIDENTIAL HOUSING COOPERATIVE
ASSOCIATION AS STRATEGY OF LAND TRANSFER......................................................................18
2. Introduction.......................................................................................................................................18

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 2.1. A Review on Urban Land Lease Policy..........................................................................................18
2.4. Urban Land Policy practices...........................................................................................................21
2.5. Proclamation No 721/2011.............................................................................................................25
2.6. Regulation No. 181/2016................................................................................................................26
2.7. Challenges of Co-operative Housing Infrastructure Provision........................................................27
2.7. Residential House Construction Association..................................................................................28
CHAPTER 3: ANALYSIS OF LAW, POLICY, PRACTICE AND INSTITUTIONS ON RESIDENTIAL
HOUSING COOPERATIVES ASSOCIATION UNDER ETHIOPIAN LAW” THE CASE OF ARSI
ZONE-CHOLE WOREDA.......................................................................................................................32
3. Introduction.....................................................................................................................................32
4.1. Demographic profile of respondents...............................................................................................32
3.1.1. Sex and age of respondents:.....................................................................................................32
3.1.2. Marital status of respondents:..................................................................................................33
3.1.3. Educational level of respondents in the study area...................................................................34
3.2. Urban land acquisition and transfer mechanism policy.......................................................................35
3.2.1. Procedures for Residential House Construction Association...................................................35
3.2.2. Preparation and Identification of Land lease for Residential Housing Association................38
3.2.3. Socio economic condition of the housing cooperatives......................................................40
3.3.1. Tenure security............................................................................................................................41
3.3.2. Budget Deficient......................................................................................................................42
3.3.3. Infrastructural problem............................................................................................................44
3.3.4. Laws and public awareness to concerned issues......................................................................45
3.3.5. Competing Interests on Peri Urban Areas in study area...........................................................48
CHAPTER 4..............................................................................................................................................50
CONCLUSION AND RECOMMENDATION.........................................................................................50
4.1. CONCLUSION.............................................................................................................................50
4.2. RECOMMENDATION.................................................................................................................52
References.................................................................................................................................................54
Appendix...................................................................................................................................................58

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List of tables
Table 4.1 Sex and age composition of respondents 26
Table 4.2 Marital status of respondents 26

Table 4.3 Level of satisfaction of being members of satisfaction 30

Table 4.4 Perceptions of Respondent’s on Residential House Construction Association 31

Table 4.5 Rank of Infrastructural problem 32
Table 4.6 Awareness of the respondents on land lease proclamation 721/2011 32

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List of figure
Fig 4.1. Educational level of respondents in the study area 27

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ABSTRACT

This study was conducted in Chole Woreda in Arsi zone with in Oromia regional state. The
objective of this study was to critically assessing the law and practice of urban land acquisition
and transfer mechanisms for residential house construction associations under Ethiopian Law.
To realize the objective data were collected from municipality chairperson, land administration
and use office head, court president, prosecutor office head, and 228 residential construction
associations’ were used as target population. The study used descriptive research method as well
as both primary and secondary sources in order to touch its objectives. Questionnaires,
interview and different documents reviews were used as research tools to collect data. The
findings of data analysis indicated that lack of inappropriate approaches Land Expropriation for
residential Housing associations’ mismatch of proclamation and directives concerning
residential housing construction associations, tenure insecurity, Budget Deficient for
expropriation and members of associations, Infrastructural problem, lack of Laws and public
awareness to concerned issues, and Competing Interests on Peri Urban Areas in study area.
The other findings of the study that identified were collective ownership, collective action, core
house provision and participation of low income members are the potentials which create
economic and social benefit for the beneficiaries. Additionally, the findings reveal that self-help
residential house associations have a potential that could be used as an alternative way of
mitigating the housing problem of low income households in the city. Based on the findings and
discussions in the research the study recommends that applying the laws in a fair and equitable
manner are essential to enhance tenure security residential house constriction associations and
market value of land.
Keywords: Urban Land, Lease, Land acquisitions and transfer, Associations, Tenure, Land use,

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ABBREVIATIONS AND ACRONYMS
Art. Article
AARH Agency for the Administration of Rental Housing
BMP Benchmark Land Price
ANRS Amhara National Regional State
CBD Central Business District
CSA Central Statistics Agency
EDRI Ethiopian Research Development Institute
Etc.: Extra
FAO Food and Agricultural Organization
GDP Gross Domestic Product
GTP Growth and Transformation Plan
FDRE Federal Democratic Republic of Ethiopia
MOA Ministry of Agriculture
MWUD Ministry of Works and Urban Development
NGOs Non-Governmental Organization
ONRS Oromia National Regional State
Proc. no Proclamation Number
Reg. no Regulation number
SNNP Southern Nations Nationalities People

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 CHAPTER ONE

1. INTRODUCTION

1.1. Background to the Study

Urbanization recognized as one of the most powerful and irreversible forces in the world,
especially in developing countries like Ethiopia .The process of urban expansion shifts the
agricultural land to an urbanized land use, which is bringing a large concentration of people into
towns and cities1. Therefore, the process of urban expansion may involve both horizontals and
vertical expansion of the physical structure of urban centers, especially in peripheral areas.
Additionally, it can result in loss of agricultural land, natural beauties, rangelands, parks, and
scenery2.
Land occupies high place in the Ethiopian society. As such, land has been a source of wealth and
security, economic growth, employment and a source of basic survival for an overwhelming
majority of the country's population. Rapid urban development also increased the instrumentality
of urban land.
The central concerns raised related to the law’s effect expropriating property rights without
compensation; issues of constitutionality; and an alarm that lease may be unbearable to many
sects of urban society including to holders of old possessions in terms of higher lease price and
limited duration of construction period that it imposes. On the side of the government, the single
most line of argument has been that the law was enacted mainly to fully implement the
Constitution3, which vests ownership of all urban and rural land on the state and the nations,
nationalities and people of Ethiopia.

1
World Bank (2005): The Dynamics of Global Urban Expansion, Transport and Urban Development Department,
Washington D.C.,World Bank.
2
Minwuyelet Melesse, (2004): City Expansion, Squatter Settlements and Policy Implications in Addis Ababa: The
Case of Kolfe Keranio Sub-city, Master‟s Thesis; Addis Ababa University.

3
The Constitution of the Federal Democratic Republic of Ethiopia, Proc. No.1/1995, Negarit Gazeta, 1st year, No.1,
21st August, 1995.

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Much of the debate on land in Ethiopia lies on the issue of ownership of rural land. This
excessive emphasis on the controversies in ownership of rural land has neglected urban land
tenure policy and laws. As a result, when in 2011 the Ethiopian Parliament adopted 4 the Urban
Land Lease Holding proclamation a wide-range of debate and controversies ensued, arguably
attracting public debate next in magnitude to the nationalization of all land and urban houses
during the formative years of the Derg.
The law explained, apart from bringing all forms of land use other than the lease system to an
end, requires the conversion of all previous forms of old holdings to a lease system a move that
drew serious controversy among the public and other stakeholders including political parties and
some members of the international communities.
Ethiopian urban areas have grown very fast similarly with other developing countries which have
led ever-increasing demand of land from peri-urban areas for housing and other non-agricultural
activities5. In the process of market oriented land development mainly two different approaches
are being followed. The first one, which is used in Russia, Poland, and some other countries
allow private ownership of urban and rural land. While the second one, which is mainly used by
China, is the one that gives the "use and benefit rights" to the user but the government retains
ownership6.
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.
New Urban Land Lease Holding Proclamation abolished all forms of land acquisition modalities
other than lease.
Some of the reasons the government gave as justifications for opting a public lease system
include the argument that the system:

4
FDRE Urban Lands Lease Holding Proclamation, Proclamation No.721/2011.Negarit Gazette Year 18,
No. 4.
5
Adam (2009): Urbanization and the Struggle for Land in the Peri-Urban Areas of Ethiopia, Bahir Dar
University, Ethiopia.
6
BelachewYirsaw (2010): Urban Land Lease Policy of Ethiopia: Case Study on Addis Ababa and Lease
Towns of Amhara National Regional State

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  Serves as a means to transfer land use rights from government ownership to individual
citizens holding without contravention to the public ownership of land policy.
 Is an important instrument to collect adequate amount of revenue for the government in
the form of ground rent, mainly to finance urban infrastructure.
 Turns public land from a timeless and costless resource into formally exchangeable
commodity with both cost and time limit, thereby increasing land use efficiency and
investment; and
 That it gives an opportunity to attach a market value to land.
New Urban land lease proclamation7 and Oromia urban land lease regulation 8 stated that 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.

The Criteria that helps to transfer urban land lease for investment activities is states that subject
to giving 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. Private investors that engage in development activities shall have the
right to use urban land in accordance with investment policies and laws at federal and Regional
levels9. On the other side urban land lease proclamation and Oromia urban land lease regulation
states that the aim of the proclamation and regulation as to satisfy the growing urban land
demand resulted due to fast economic growth of the country.

Additionally, urban land lease proclamation stated that Leasehold certificate shall be issued to a
person to whom an urban land lease holding is permitted. The leasehold certificate shall include
full name of the lessee including grand father’s name; size and location of the plot; the type of

7
Supra Note 4, Art.4 (1-4).
8
Oromia National Regional State, Urban Land Lease Holding Regulation, Megeleta Oromia, Reg. no.
182/2016, 24th May, 2016.
9
Supra Note 4, Art.4 (4).

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service, land grade and plot number; the total lease amount and down payment; the amount of
the annual lease payment and the time of the final lease payment to be effected; the lease
period10.

In study area City Administration has taken measures to alleviate housing problems of the city
dwellers in general and the urban poor in particular. The City Administration has tried to solve
the problem through housing cooperative associations. But it is clear that neither the public nor
the private sector alone can address the growing challenges of providing adequate and affordable
housing and services to predominantly poor urban populations UN-Habitat, 2001 11. This calls for
integrated systems of supply of housing for different income groups.

Hence, this paper tried to evaluate how the Ethiopian urban land acquisition and transfer
mechanism functions and works Under Ethiopian law in general and Oromia National Regional
State residential housing associations law in particular. Furthermore, the paper tried to see the
practice of Arsi Zone CholeWoreda towns so as to get important lessons for the present urban
land acquisition and transfer mechanism for residential Housing associations under Ethiopian
law.

1.2. Statement of Problem

Urban land acquisition and transfer mechanism for housing cooperative is a controversial issue. .
Urban centers across Ethiopia are becoming the future habitat for the majority of Ethiopians.
Currently, urban land is acquired by the government under the lease system Proclamation. This
proclamation permits acquisition if the land is to be used for a 'public purpose' project. Public
purpose currently includes village sites, town and rural planning, residential projects for the poor
or those displaced by natural calamities, planned development (education, housing, health, slum
clearance) and projects of a state corporation. Private land may also be acquired for the use of a
company for a 'public purpose' project or for any work that is 'likely to prove useful to the
public'. Urban land is to be held based on a lease agreement to be concluded between individuals,
private and public institutions, diplomatic establishments or others on the one hand and the
appropriate government organ on the other. Uniformalizing the urban land holdings under the
10
Id , Art.17 (1-2) (a-f)
11
UN-Habitat. (2001). Cities in Urbanizing World Global report of human settlement, Nairobi, Kenya.

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unified leasehold system remained a long over-due project of the current government.
Accordingly, General principles of urban land lease proclamation stated that 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 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 development12.

The significant change that newly adopted regulation of Oromia Regional Government
Residential House Construction Associations introduced were Workers of an office who know
each other and have similar housing interest having equivalent capacity may come together and
be organized before the organizing body by presenting a letter from their office, and workers of
different offices may be organized together13.
Setting aside the vagueness of all these modalities, particularly negotiation has given rise to high
level of abuse and corruption. This is now omitted under the new proclamation and accordingly,
auction and allotment are the only methods by which a lease right on any urban land may be
acquired14.
The particulars on the tender process are fairly detailed in the new legislation that provides for
the preconditions that an urban land must fulfill to be ready for tender, the requirements of
publicity and the detailed guides on handling the bid process15.
Considering the huge corruption and mishandlings that the law enforcement organs have
uncovered in the last couple of years, this form of rule-based clarity will partly address those
urban land lease-related glitches.
Allotment is the second method of acquisition of leasehold which is meant to apply only for
specific urban land users. The latter are exhaustively listed by the legislature and such allotment
requires the ‘decisions of the cabinet of the concerned region or the city administration.
Due to the unbalanced urban growth, unskilled man power, lack of private sector involvement
and financial constraints, it would be very difficult to tackle the urban problems such as
inadequate of housing, poor infrastructure, unemployment growth, low investment, etc both in

12
Supra Note 4, Art.4 (1and 4).
13
Oromia Regional State, Housing Cooperative Association Regulation, Megeleta Oromia, Regulation No.
181/2016, May 6, 2016, Art. 9
14
Supra Note 4, Art.6 (2).
15
Id, Arts.7-10

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Self-governing city administration and the lease towns of the Woreda. However, it is necessary
to come across on each problem and conducting researches to assist the implementers to look at
different options based on other towns’ experience. Certain basic problems have been observed
regarding the application of urban land acquisition and transfer mechanism for housing
cooperative under Ethiopian law, which would discourage investments on land and housing
development. It could be described as follows.
One of the tasks of the land administration and Use of Woreda towns’ administration is
providing serviced land in efficient way for housing development. The office could not realize
the tasks due to weak coordination with sectoral authorities, high demand for cost of
development and insignificant role of the private sector involvement on land development. For
these reasons satisfying the demand for serviced land would be impossible. What has been
observed in un-serviced land was either the homes builders have no interest to go to new the sites
or even if they wish to build their houses, the houses might be vacant for long time.

Ethiopia is one of the poorly developed country which characterized by housing shortage and
poor housing infrastructure, especially for those living in urban areas. These problems are caused
by low per capita income, low investment in housing, rapid growth of population, massive
urbanization, rising cost of building materials, low income of urban dwellers to afford descent
and standard housing, low investment or scarcity of financial resources to increase housing
development & low supply of serviced residential plot.

In Ethiopia housing problem is seriously felt in many urban centers of the country both
quantitatively and qualitatively. As a result, attempts have been made to enable interested and
capable individuals to construct their own dwelling units through the provision of free plots of
land, credit facilities and technical services, opening the way for the real estate development etc.
Another recently emerging strategy is provision of readymade collective dwelling units (or
condominium housing units) which aimed of to be affordable for low and middle income groups.
However, to what extent the affordability of the housing units to the urban poor is still
questionable.

The major objective of housing project is minimizing disparities by viewing governments

concern and commitment to improve the main slum settlement, ensuring access to decent and

6
affordable housing for the poor urban dwellers, which are homeless or inadequately sheltered
and bringing fair distribution of wealth. Others argued that, the projects are designed irrespective
of financial capacity of the poor to afford. As a result, aggravating impoverishment level of the
poor; and others view the project as against the people's culture, values and norms.

Ethiopian urban lease proclamations have shown that there are provisions that limit or restrict
free transferability of lease rights. Any person who acquires the right to hold urban land on lease
may transfer such right to contribute in the form of a share to the extent of the rent paid. In
implementation, a lessee may not transfer his right of lease but may collect income which is
higher than the rent of land he paid. When the lessee collects an income higher than the rent he
paid, he has the duty to pay the difference to the city administration or municipally.
Analysis of the trend indicated that although the federal and regional lease laws limit the
transferability of lease right, there were no any specific bodies that have been responsible to
follow up and ensure that the seller hands over the difference of rent to town administrations.
Instead, city administration has adopted directives here and there which may prohibit the transfer
of bare land or foundation to discourage land speculation. Well-focused efforts directed at
evolving, explicit and comprehensive financial market development policies have not been made
so far. And those directed at evaluating the impacts of the various policies and strategies of urban
land lease development are reckoned to be inadequate. This has given Banks an opportunity to
estimate the amount of mortgage loan based on their own market analysis. Land use rights have
been used as a commodity to be bought and sold and used as collateral, and restrictions on the
leaseholder have not been considered by lenders. In other words, restriction on transferability of
lease right is only found in the laws. The critical question here is the question of landholder when
they are the members of New Associations and they need to mortgage to bank for loans or to
transfer title as they have no title deed until ten (10) years they didn’t mortgage to bank and
transfer to third parties16.
Due to the lack of research in this area, very little is known about the land acquisition and
transfer mechanism for residential housing associations and the property rights system in the
urban areas of Chole Woreda. Thus, as a response to the existing knowledge gap, this research
project has attempted to investigate the nature of urban land acquisition and transfer mechanism
16
Oromia National Regional State, residential Housing Construction Associations, Directive No.17/2016,
The Directive to modify Directive No. 15 /2016 on Date 24/02/2017, Art.5(c).

7
for residential housing associations under Ethiopian law in the urban areas of Woreda. Chole
town is selected as a case study area for the purpose of collecting secondary empirical data.
Therefore, it is imperative to critically examine the laws and practices in Chole Woreda with
specific reference to urban land acquisition and transfer mechanism for residential housing
associations under Ethiopian law.
1.3. Objective of the Study
1.3.1. General Objective
Assessing the law and practice of urban land acquisition and transfer mechanisms for residential
housing associations as tools of urban land acquisition and transfer under Ethiopian Law.
1.3.2. Specific Objectives
 To assess the urban land acquisition and transfer mechanism for residential House
construction Association.
 To evaluate whether the practice regarding residential House construction Association
is going in line with the law; and
 Assessing Challenges related with Residential House Construction Association.

1.4. Research Question

In the federal government of Ethiopia in general and Oromia region in particular, both urban and
rural land was nationally owned and housing decisions were made without land market. As the
result, large tracts of urban land were allocated for free to individuals, private and public sector
enterprises.
 To what extent urban land acquisition and transfer mechanism for residential House
construction Association practicing?
 Is the practice regarding residential House construction Association going in line with the
law?
 What are the major challenges of residential House construction Association in study
area?

1.5. Significance of the Study

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

8
be improved to use land as a resource for social and economic development programs. 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 urban 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 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
acquisition and transfer mechanisms based on lease policy properly. Moreover, it will also be a
base for potential researchers to conduct further studies on the issue.

1.7. Scope of the study

Geographically, the paper focuses on Lease town of Chole Woreda, Chole town that have new
city associations. The Ethiopian urban land acquisition and transfer mechanisms through
residential housing associations which would be represented by the leased towns of the Arsi
Zone chole woreda town would have been covered by this study. Undertaking the study was not
an easy task; particularly, obtaining information for the purpose of the study has been a
demanding and burdensome task owing to the tedious bureaucracy in the government
organizations concerned with the land acquisition and transfer mechanisms for cooperative
associations.
Hence, the study was limited to the extent that can clarify and consolidate the urban land
acquisition and transfer mechanisms for residential housing associations in its normative
frameworks under Ethiopian law in Arsi Zone Chole Woreda.

1.8. Research Design

Descriptive research methodology studies are those, which concerned with describing the
characteristics of a particular individual, or a group, specific predictions, with narration of facts
and characteristics concerning individual, group or situation(Saunders et al. 2009). The nature
and purpose of this paper is urban land acquisition and transfer mechanism for residential
housing associations under Ethiopian law. Therefore, descriptive design appropriate to explain

9
the problems and to formulate rational and sound recommendation on urban land acquisition and
transfer mechanism for residential housing associations under Ethiopian law.

1.9. Sample Design

1.9.1. Sampling Techniques

This study paper is used Qualitative and Quantitative research design. For this Qualitative
research design, the study was used purposive sampling techniques as the idea behind this
sampling technique is to concentrate on respondent with particular qualities who will better be
able to assist with the relevant research question and Quantitative research design in case of
random sampling technique as this method is used for which each element of the population has
an equal and independent chance of being included in the sample i.e. a sample selected by
randomization by using a Lottery method, it is free from subjectivity and free from personal
error. It provides appropriate data for the study purpose. The observations of the sample can be
used for inferential purpose. It requires a minimum knowledge of population.

1.9.2. Target Population

Target population is the specific population about which information is desired. According to
Muganda (2008), a population is a well-defined or set of people, services, elements, and events,
group of things or households that are being investigated. It’s a complete group that fits the
study’s specification from which the study wants to generate the result of the study.

The target populations for this study were town administration officials, public servants in the
town and housing cooperatives representatives. Accordingly municipality chairperson, land
administration and use office head, court president, prosecutor office, experts head and
cooperative associations samples were used as target population of study area.

For the purpose of questionnaire, respondents were selected using multi-stage sampling method.
The total members of residential house construction associations are 528 which is the sampling
frame from which sample size was determined. Accordingly, for the purpose of questionnaire
respondents were selected using Cochran (1977) formula17:

17
Cochran W. (1977). Sampling techniques, 3rd ed. John Wiley and sons. USA.

10
 N
n=
1+ N ¿ ¿
Where: n=designated the sample size the researcher was used

N= the total number of residential housing associations members in the study area
e=designate maximum variability or marginal error (5%) =0.05
1=designate the probability of an event occurring
N 528 528 528 528
n= n= n= n= n= n=228
1+ N (e) 2 1+ 528(0.05)2 1+ 528(0.0025) 1+ 1.32 2.32

Based on the above formula the sample size of the study was calculated and it was found to
be 228.
Table 3.1. Respondents by category

Name of kebele Targeted population

municipality chairperson and experts 4

land administration and use office head and

4
experts

court president and judges 4

prosecutor office head and public prosecutor 4

Residential Housing associations members 228

Total 244

Source: Chole town municipality (2021)

1.9.3. Sampling Size Determination

Determining the appropriate sample starts with identifying the population. Due to the nature of
population the study used census and non-probability techniques in respondent’s selection.
Sampled respondents from administration, public servants and housing cooperatives
representatives were selected purposively based on certain criteria.

One of the major issues in any discussion about sampling is the size of sample (Bryman, 2004).
A large sample size provides a greater accuracy in the findings (Burns 2000), a higher
significance level, and statistical power of the test (Forza, 2002). However, it is not applied to all

11
cases; there are suggestions (Burns, 2000, May, 2001, Bryman, 2004) that sample size is not
necessarily the major consideration in designing the research method, as long as it fulfilled the
basic requirements. According to Bryman (2004), the decision about sample size is not a
straightforward one as it depends on numbers of considerations: so there is no definitive answer.
After considering all those factors, the researcher determines a sample size of 228 respondents
for this study.

Purposive sampling method was used by considering that the selected groups of people have
sufficient information about land administration issues of the town. Sampling ensured that
conclusions from the study were generalized to the entire population.

1.10. Sources of Data and Data Collection method

1.10.1. Sources of Data

With regard to data sources, both primary and secondary sources would be considered for the

successful accomplishment of this study.

As far as the practical (primary) source is concerned, the study purposely selected the key

informants, judges and other experts in the field like legal advisors and public prosecutors for

interviews. As to the firsthand information, the necessary data has been gathered from key

informants, consultative meetings and observation and sample survey on selected city

associations by using structured and semi-structured questionnaires which contain queries

relevant to the research. In-depth interviews/ discussions have also been made in clarifying the

information or data collected during key informant interviews.

Regarding the secondary source, in order to achieve its objectives and to fully assess the

statement of the problem, this research mainly emphasis on an analysis of the relevant legal

documents and available legal literature on the subject.

Secondary data has been collected from published and unpublished materials, which are

available in the form of books, journal articles, proclamations, policy briefs, federal and regional

12
constitutions, laws, regulations, organizational structures, performance reports and pertinent

ONRS city administration documents. Particularly, data pertaining to fiscal and budget reports,

land lease towns of ONRS reports as well public service planning and implementation reports,

periodic and statistical reports which have been crucial for analyzing and presenting of the

findings has been collected from Chole town respective institutions.

1.11. Data Collection Method

The approach to be followed in this paper is qualitative research in which different data

collection methods would be used because qualitative research will help the study to interpret

and better analysis of the urban land acquisition and transfer mechanisms for residential housing

associations under Ethiopian law. Qualitative research method will be used to answer questions

about the nature of the land acquisition and transfer, often with the purpose of describing its

mechanisms from the legal points of view as well as quantitative research approach to be

followed because it requires a minimum knowledge of population in case of respondents selected

randomly from associations’ member.

Accordingly, the descriptive legal and theoretical analysis is the major data collection method

adopted in conducting this paper.

In order to achieve the study two instruments of data collection was used. This instrument of the

study was questionnaires’ (open and closed ended), and interview.

In order to achieve the study two instruments of data collection was used. This instrument of the
study was questionnaires’ (open and closed ended), and interview.

1.11.1. Questionnaire
According to Walonick, (1993), the closed ended questionnaire is one of the most popular
methods of collecting data conduction in scholarly research. Because it very convenient for the
respondent to answer the question and it save, time to complete the questionnaire. This closed

13
ended type of questionnaire also help full for the researcher for coding and analyzing it by the
given software packages.

1.11.2. Interview
Interview was carried out as instrument of data collection to gather data on the topic of the study.
Interview was used to elicit views and opinions from the participants in detail. For open
questions, the researcher was interviewed with 1 municipality chairperson, 1 land administration
and use office head, 1 court president, 1 prosecutor office head and 3 experts from each office
and court.

1.12. Data Analyzing Process and interpretation

In order to analyze and present the data, qualitative information was organized and constructed
coherently and analyzed. Following this, data analysis has been made using qualitative analytical
tools. Qualitative analysis using narrative description has been used for the data collected using
key informants and documentation. Qualitative research explores attitudes, behavior and
Experiences through such methods and attempts to get an in-depth opinion from participants. So,
to investigate issues in depth interview is most important.
The data analysis was applied for survey questionnaires, key informant interview. Then, all
primary and secondary data was analyzed and present by tables, charts, figures, and texts to
facilitate data interpretation. Moreover, case narration of the city association discussion was
included to find out their feeling, opinion, and real problems of the associations affected by
urban land acquisition and transfer mechanisms for housing cooperative association in the lease
town of Chole town selected. Before a questionnaire survey to collect data in the field, it was
tested a pre-analysis of data done in first. This involves systematic organization of the raw data
(from questionnaires and interview schedules) into a manner that facilitated easy analysis.

1.13. Ethical Considerations

The study has made an attempt to develop a sense of trust. Consent was gained genuinely. Above

all I have explained to the interviewees as to the confidential character of our relationship. The

researcher holds a neutral role as it has made it in this final text in order to avoid ethical issues

that may pose in report writing.

14
Unquestionably, the study remained neutral and avoided biases to the extent possible.

Particularly, as per the guarantee that I have made to my research participants; the research

problem has a rational for its importance, the utility to the area in particular and to the nation at

large. No person or group was offended despite the critics/comments/ on some selected acts of

the administration units, the committee and regular court judges. Moreover, the researcher did

not use any language of inclination favoring either of the respondents or audiences or any

interested group of the research.

The respondents would be informed clearly and in detail about the importance of the study and

about their right to participate or withdraw at any time or refuse to answer any question at any

time.

1.14. Limitation of the Study

Undertaking the study was not an easy task; particularly, obtaining information for the purpose
of the study has been a demanding and burdensome task owing to the tedious bureaucracy in the
government organizations concerned with the residential housing associations. For instance,
there is no organized data that show the criteria of being member associations’ and associations’
formations as well as the total size of land prepared for associations in Chole Woreda town.

1.15. Operational definitions

Unless otherwise the context changed, throughout this study the definition for these terms is as
follows.
Articles: Means the provisions of different legislations.
Allotment: means a modality applied for providing urban lands by lease to institutions that could
not be accommodated by way of tender;
City Associations: means associations established by the cities which have legal personality for
their mutual development benefits;

15
Land acquisition: refers to the modalities of land transfer from the government to individual
leaseholders;
Land transfer: indicates the modalities of land transfer from private leaseholders to other fellow
potential landholders;
Lease: means a system of land tenure by which the right of use of urban land is acquired under a
contract of a definite period;
Urban center: means any locality having a municipal administration or a population size of
2000 or more inhabitants of which at least 50% of its labor force is engaged in non-agricultural
activities;
Urban land: means land located within an administrative boundary of an urban center;
Woreda: administrative district;

1.16. Organization of the Paper

The research thesis is organized in four chapters including conclusion and recommendations.
The first chapter introduces the reader with the study. It highlights the reasons that necessitated
the research and the objectives that are intended to be achieved. It presents the statement of the
problem; research questions, general as well as specific objectives of the research, significance,
Scope of the study, research methodology and considering ethical considerations of the study,
and. It ends by operational definitions briefly.
The second chapter deals with issues related to urban land lease holding policies. A discussion
on land tenure systems highlights the laws, policies and practices from Imperial regime up to the

16
current government regime. The current land policy issues in Ethiopia in general and Oromia in
particular have been given concerns under this part. The effects of urban land certification and
transfer mechanisms on tenure security in the Oromia as well as limitations of the existing
pertinent law have been covered.
The third chapter deals with results, discussions and findings from the urban city association’s
survey by looking at pertinent variables related to urban land policy and the urban land
acquisition and transfer mechanisms for residential housing association in Ethiopia in general
and Oromia in particular have been critically analyzed. The laws and the practices regarding the
urban land acquisition and transfer rights over urban lands, including the FDRE constitution, the
implementing proclamations, regulations and directives which are adopted in relation to the issue
at hand both at federal and the Oromia as well as practices in Chole Woreda have been
examined.
In the last chapter, but not certainly the least, the study closes with conclusion, policy
implications and possible recommendations for the future.

CHAPTER TWO: THEORETICAL FOUNDATIONS OF

RESIDENTIAL HOUSING COOPERATIVE ASSOCIATION AS
STRATEGY OF URBAN LAND ACQUISITION AND TRANSFER

2. Introduction
The literature review addresses important issues that are related to urban land acquisition and
transfer mechanism, Land Expropriation for residential Housing associations, Competing

17
Interests on Peri-Urban Area and Socio economic condition of the residential housing
associations. Additionally, it provides information on issues that are related to bottlenecks that
affects the implementation of the law.

2.1. A Review on Urban Land Lease Policy

The rapid growth of investment has obvious implications for the land, infrastructure and service
needs of cities. The failure to expand land supply and basic services to match the growth of
investment has been a prime cause of misery in the cities of the developing world. A glance at
the literature supports the belief that in most cities of the developing countries the situation is
worsening. The location of land with no doubt has also an implication on business sector
development. A case in point, the bid rent theory is a geographical economic theory that refers to
how the price and demand for real estate change as the distance from the central business district
(CBD) increases. It states that different land users will compete with one another for land close
to the city center. This is based upon the idea that retail establishments wish to maximize their
profitability, so they are much more willing to pay more for land close to the CBD and less for
land further away from this area. This theory is based upon the reasoning that the more
accessible the area (this is to say that, the greater the concentration of customers), the more
profitable.
Adam Smith, on the other hand, has not assumed his production function to have diminishing
marginal productivity. However, his production function is subject to increasing returns to scale
(which means that, output increases more than proportionally to an equal percentage increase in
all inputs). In his view, with the passage of time, the size of the market will increase, which will
lead to both internal and external economies of scale, which will eventually lower down the cost
of production. Smith considers only three factors of production, namely Land, Labour and
Capital. According to him, the production cost would be lowered if improvement in the
production techniques and a greater degree of division of labour takes place. When one can
critically investigate his theoretical foundation it is found that without increasing the size of land
and labor it is possible to decrease production cost and increase profit via improvement made on
land and labor.
In traditional economic models, the focus is on the stability of a steady state, which is an
equilibrium characterized by constant structures. On the contrary, evolutionary economics looks

18
at structural change as a feature of an equilibrium path in which structural change may be
considered as an open process (Knottenbauer, 2001). In particular, the innovation process forces
some of the existing technologies (and the used means of production) to become obsolete and is
responsible for the evolution of the firms over time. In this competitive game, firms that are not
able to innovate lose their market share, see their economic results to decline and have to either
restructure or to exit the market. In this framework, because the capacity to innovate is strongly
related to the quality and quantity of human capital, investments in human capital can be a very
important way to enhance the ability to survive due to higher innovation capability. This is to say
that, the success of the firm may determine by other factors than availability or access to land
Land is a commodity that is bought, sold or leased like any other durable item. People desire to
own land for a variety of reasons - economic or emotional. Land can be put to a variety of uses.
The decision to allocate land among different uses is made through the market price by
demanding and supplying land. The market for land directly influences business expansion and
economic development. High cost of land deters business, as high land cost could add up to high
service or production cost, which in turn reduce the demand for the services or the product. As
(Muir &Shen, 2005) noted that, high land cost, by influencing cost of services/products, reduces
competitiveness both at domestic and international markets.
2.3. An Assessment of Land Lease Policy in Urban Ethiopia
Commonly lease is defined 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 (Bacryetal, 2009). According to Clarke,etal (1991) lease is termed as a contract
granting the exclusive right to possession of land for a fixed or determinable period of time.

As one can clearly observes that leasehold right provides all the rights and privileges that private
land can do. The only difference is the degree of security and restriction. This is meant to say
that, the crux of the legal difference between freehold and leasehold is that the freeholder
(private owner) is bound by the laws of the land and nothing else. Whereas the leaseholder is
bound, in addition, by the terms of the lease laid down by the landlord. The leaseholder is then
less free and unrestricted in his or her use of land than is the freeholder.
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 since 1991. Before the popular

19
revolution in the country in 1974 (i.e. before the Derg régime), urban land was held in Ethiopia
under private ownership. When the Derg came to power in 1974, it passed a proclamation 18 that
transferred all urban land and extra houses to government ownership. One of the policy measures
that were 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. Since the 1990s, a legal basis for the formation of urban
lease holding system and the operation of holders has been established. In 1993, the government
enacted the first19 and new land leasehold proclamation that has been amended in 2002 20 and then
in 201121.
According to the Federal Government's urban land lease holding proclamation No. 80/1993, all
urban land is a public property and transfer will only be carried out through the lease system. 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.
New urban land lease proclamation is given to Regions and City administrations the power of
implementation through subsidiary legislation. According to article 33 of the proclamation,
Regions and City administrations shall have the powers and duties to issue regulations and
directives necessary for the implementation of the Proclamation.
Property transfers that are going to fall in the new land lease proclamation are also included in
the statements of the law. Article 5 of the Proclamation states that “No person may acquire urban
land other than through the lease holding system” Article 6, sub-article 1, which declares about
conversion of old possessions to lease holding, states that “the modality of converting old
possession 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 a
study may not preclude a revision of the existing rental rate applicable to old possessions.”. The
law plainly recounts that no person except through inheritance, can own a plot without lease.

18
A proclamation to provide for Government Ownership of Urban Land and Extra Houses, 1975, proc. No.
47, Neg. Gaz., year 34, no. 41
19
Negarit Gazeta of the Transitional Government of Ethiopia (1993) urban land lease holding Proclamation
No. 80/1993, Berhanena Selam printing press, Addis Ababa
20
Re-Enactment of Urban Lands Lease Holding Proclamation, (2002) FDRE, Proclamation No.
272/2002.NegaritGazeta. Year 8 No. 19
21
Supra Note 4,

20
The three proclamations enacted in the Country at different times have actually similarities and
peculiar differences. For instance, the 1993 proclamation declares that land should be allocated
through public tender only whereas the 2002’s relaxed the previous law and states that land
could be availed through a mix of public tender, negotiation and for housing to be regulated by
city or regional governments. Nonetheless, according to the 2011 urban land lease policy, urban
land shall be allowed on lease basis only through tender or allotment.
Regarding lease period, the 1993 law fixed period for each level of urban center from 50-99
years whereas the 2002 stated that the period of lease shall vary depending on the level of urban
development and sector of development activity or the type of service which shall have the
ceiling of up to 99 years for housing and different social and philanthropist uses. In Addis
Ababa, the lease period varies between 50 and 99 years in the 2002’s case, and between 60 and
99 in the 2011’s law depending on the land grade and sector of development activity.

2.4. Urban Land Policy practices

As highlighted earlier, the incumbent Ethiopian government has passed three distinct urban land
lease laws since it came to power. In this section, therefore, an assessment has been made using
some selected regional cities experiences. Accordingly, experiences of three regional states,
namely, SNNP, Amhara and Oromia regional states has been assessed and presented.
Countries around the world (including Ethiopia) do have their own unique land policies and law.
In case of Ethiopia, under FDRE constitution declared that “the right to ownership of rural and
urban land, as well as of all natural resources, is exclusively vested in the State and the peoples
of Ethiopia. Land is a common property of the Nations, Nationalities and Peoples of Ethiopia
and shall not be subject to sale or to other means of exchange 22.” Pursuant to the national law on
lease holding of urban land, the Amhara regional state has enacted its leasehold regulation
(Regulation No. 2/199523 and its amendment Regulation No. 6/2002)24.The applicability of this
regulation is however limited till now to the largest three urban centers in the region (Bahir Dar,
Dessie and Gondar). All other urban centers are still under the rent system as per the
proclamation no. 47/1975.
Taking Bahir Dar (region capital city) for the ANRS case, one can find two types of land
administration systems in the City, namely land rent (the old system) and lease system (the
22
FDRE Constitution, Supra Note 3, Art.40 (3)
23

24

21
recent one). In Bahir Dar, land for housing development through leasehold tenure system has
been provided through auction and decisions of the city administration. Regarding urban land
lease practice, Eskidar (2012)25 via quoting the City manager stated that: “the current allocation
of urban land through auction only benefit the higher income group and marginalizes the urban
poor”. He also underlines from a policy implementation perspective and emphasized that most of
the lessees take the land through paying higher prices not to undertake development activities but
to sale with profit for other land demanders. This makes the land price over and above the market
value. Therefore, the lease system could not accommodate the middle income group, which has
the capacity to build their own houses. A large tract of urban land allocated through tender has
also been underdeveloped.
In the case of Oromia the leasehold policy applies to only eleven urban centers. Even within
these urban centers the proportion of property under the leasehold system of land is very low.
Land rent is administratively fixed by considering market value. The market value of land was
considerably higher than the previous land rent hence the minimum rate was fixed at about four
times with the minimum rate pointed in proclamation No. 161/197926. The Oromia Regional
State has also enacted regulation No.1/1995 based on the national urban land lease law. The
provisions of interest for this review include accessibility of land, lease period, launching and
completion time of development, size of holding and transfer of rights.
Coming to the implementation status of the current land lease law in Oromia, Only 44 of the 560
towns in the region were found to be practicing the law at the moment. According to Addis
Fortune (2016)27, there were different lease prices in the region, even under the same purpose for
land, in the same city in the region, before. Under the Oromia regulation land given out through
auction and allotment and avoid inheritance and succession, which had been part of the practice
in the region. The same source also indicated that the new regulation has increased the floor
prices for all types of land to be leased in the region. The lease of a square meter of first grade
land for trade starts at 1,011.50 Br (birr); second and third grade land start with 892.50 Br and
664.83 Br respectively Three and four star hotels will get first grade land for 896.00 Br and 640
Br, respectively. The rate for five star hotels is left to be determined by the state government
25
Eskedar Birhan Endashaw ( 2012). Urban land policy and housing for poor and women in Amhara Region: the
case of Bahir Dar city FIG Working Week 2012 Knowing to manage the territory, protect the environment, evaluate
the cultural heritage Rome, Italy, 6-10 May 2012
26

27
Addis Fortune news paper ( 2016). Weakley English news paper. Addis Abba Ethiopia.

22
SNNP region has endorsed and practiced urban land lease system in its towns since the 1993
urban land lease proclamation of the country. A case in point, Hawassa, a city on the shores of
Lake Hawassa in the Great Rift Valley in Ethiopia, has witnessed a phenomenal growth and
under this condition of rapid urbanization competition for land has increased greatly resulting in
high land prices, uncontrollable sprawl and the escalation of informality in the land use pattern.
According to, Asfaw (2014)28, the land lease policy has failed to achieve its goals in Hawassa.
First, he noted that, the policy comes without substantial legal backing and no enforcement
provisions which have resulted in the proliferation of informal settlements. Second, the
institutions mandated to manage land in the city do not have the requisite capacity to implement
the policy. These challenges have given rise to avoidable bureaucratic hurdles in land
transaction, wrongful misinterpretation of policy provisions, noncompliance, and violation of
normal governance principles.
Land issues are of crucial importance to economic and social development, growth, poverty
reduction and governance. Access to land is the basis of economic and social life in both rural
and urban areas. Land policies, as such, express, implicitly or explicitly, the political choices
made concerning the distribution of power between the state, citizens and local systems of
authority. The multiple dimensions to land issues require a careful and well implemented
approach which places current land issues within the broader historical, political, economic, and
social context. It is the responsibility of national governments, working together with the civil
society, to make land policy choices and craft feasible and effective solutions.
With no doubt and as mentioned above, the lease towns of Ethiopia suffer from land market
distortions caused by poor land development and management policies including poor planning,
slow provision of infrastructure and services, poor land information systems and slow land
transaction procedures like most cities in developing countries (Bacry etal, 2009)29. Distortions
in the land market often lead to land speculation. If the land registration system develops in such
a way that it clarifies lease rights, it minimizes disputes and enables the government to use the
land in its maximum economic use.
The leasehold policy of the Amhara regional state has provisions that try to regulate basic
aspects of urban land holding and development. However, the implementation of the policy is

28
NechaSungena, T, Serbeh-Yiadom, KC, Asfaw, M (2014) .Towards an Efficient Implementation of the Land Lease
Policy of Ethiopia: A case-study of Hawassa. 2014/ /Developing Country Studies
29

23
reported to be far from being realistic in all three lease cities. The main reasons cited for this are
the implementation regulations being not attractive to the private sector, the low technical
capacity of urban centers to prepare land for lease and the limited financial capacity of the cities
coupled with their inability to involve the private sector in financing land development (Asfaw
(2014). One of the major problems faced by municipal officers of most urban centers is the
difficulty to clear land and deliver it to investors. Former holders whether legal or illegal (for
instance, Kebele house residents and farmers) resist eviction using various mechanisms that
range from legal to traditional means.
Comparison made among Addis Ababa, ARNS and Oromia National Regional State reveals that
in Addis Ababa case, the minimum lease rate would be fixed by the City Administration and the
prevailing lease rate is set through public tender. In Oromia, the minimum rate is defined based
on land rent and house tax and cost of infrastructure, and through public tender for the city entre.
In the ARNS case the minimum Lease rate to be set by former land rent. In regards to land
transfer, In Addis Ababa case, land is allocated through allotment or auction. Whereas in
Oromia up to 200 m2 through rent system, and above 200 m2 leasehold applicable and in ANRS,
Auction and Negotiation applicable.
Ethiopia as the nine regional states and two city administrations, becomes the second most
populous country in Africa with a population estimated at 99.39 million out of which over 19.4%
live in urban areas (Projected, 2017). Its economy still depends on agriculture, which accounts
for more than 42% of the GDP, 90% of the exports, and 85% of total employment (CSA, 2016)30.

In agrarian country like Ethiopia, land is not only the main means for generating a livelihood but
often also used to accumulate wealth and transfer it among generations. In urban areas also, most
of human activities are meaningfully linked to land. It is the starting point for all urban
development activities that provides the physical location for shelter, commercial, industrial and
other public services. Therefore, land lies at the heart of social, political and economic life of the
nation at large (Daniel T., 2006).

In Ethiopia, the right to ownership of urban and rural land to be vested in the State and people,
and is not subject to sale (FDRE Constitution, art. 40(3)). Hence, rural farmers and pastoralists
may acquire a plot of land free of charge with usufracturay right (rights to use, enjoy, rent,

24
donate and inherit the land) while urban residents through ground lease arrangements with fixed
period and specified payment (Daniel W/G, 2009).

Housing is a basic human need next to food and clothing. It is the foundation of all urban
development that occupies the largest portion of land, the greatest levels of government
investment in infrastructure, the priority concern of all citizens, and typically a family's single
largest investment (Giovana, 2013). Access to adequate and affordable housing/land is a critical
and growing problem in Ethiopia at large and in all towns of Amhara region in particular. To
solve this problem, different housing programs and real estate’s has been developing by public
and private sectors respectively. Cooperative housing program also implemented to solve
affordability problem in the country.

2.5. Proclamation No 721/2011

The current land tenure systems has also constitutional basis and the right to ownership of rural

and urban land, as well as of all natural resources, is exclusively vested in the State and in the

peoples of Ethiopia. Land is a common property of the Nations, Nationalities and Peoples of

Ethiopia and shall not be subject to sale or to other means of exchange. More under this

constitution (FDRE constitution No.1/1995) land tenure securities are provided under article

40(7) and (8) by stating that, Every Ethiopian shall have the full right to the immovable property

he builds and to the permanent improvements he brings about on the land by his labour or

capital. This right shall include the right to alienate, to bequeath, and, where the right of use

expires, to remove his property, transfer his title, or claim compensation for it. Particulars shall

be determined by law. The right to the land is also secured in that the state has the duty to pay in

advance of compensation commensurate to the value of the property during expropriation. From

this article what we may understand is that the right which was given for the urban possessors

are rights less than ownership since the full ownerships of land is given for the peoples of

Ethiopia.

25
Mainly we may infer the less than ownership right given to the urban lands are impliedly

understandable from the constitution of federal democratic republic of Ethiopia article 40(6,7)

and article 97 in which they implies the term uses which shows us the possessor has the usus

right. In current land tenure system besides the constitution, there are other legislations in

Ethiopia related to land tenure security matters among which the Urban Land Lease

proclamation (Proc. 721/2011) and the Expropriation Proclamation (Proc.455/2005) are the main

one in protecting the tenure security of urban land possessors.

The means of acquisitions of urban land under the current proclamations no.721/2011 is only

through lease holding system by using the modalities of tender and allotment, but for residential

house construction associations’ the lease modalities used is allotment. In this proclamation

transferring and mortgaging of lease hold rights are permitted. But at the time of transfer or

mortgage the lessee may transfer his leasehold right or use it as collateral or capital contribution

to the extent of the lease amount already paid. From this article what we may understand is

transfer is permitted before or after undertaking the construction as a principle. But the money

that you get at the time of transferring the lease holding rights are depends on the construction

you perform. Because there is intervening of government if zero construction or less than 50%

construction is undertaken. So this proclamation put conditions for transferring the lease holding

rights.

2.6. Regulation No. 181/2016

Regulation No 181/2016 of Oromia residential house construction associations’ under its

preamble states that the objective of the regulation are to solve the residential house problems

prevailed in the urban centers of Oromia Region by implementing the policy and strategy set

forth by the government to solve the residential house problem, and condition to enable citizens

26
construct residential house by being organized in association as per their will and be included

in residential house construction association program to strengthen one of the residential houses

program.

After they took the land landholders have a duty to protect and care for the land under his tenure.

Additionally, sanctions are stipulated for failing to undertake sound management. However, it is

not clear who makes the determination if a landholder has not fulfilled his duties no how or what

sanctions would be imposed. In any case this lack of clarity could be disincentives to investment.

Any public awareness campaign dealing with property rights should also be addressing the

obligations that a land holder has as well. Land ownership implies both sides of the coin: rights

and duties. At the same time the state has similar obligations to protect the property rights of the

landholder who is following the rules. The rule of law becomes paramount if there isa desire to

provide security of tenure rights.

2.7. Challenges of Co-operative Housing Infrastructure Provision

The challenges of infrastructure provision in Nigeria generally are enormous and can be seen in
the shortage of it as well as lack of adequate maintenance of existing ones. Different studies have
been carried out to x-ray the challenges facing infrastructure provision in Nigeria and by and
large, the cause of the problem centered on lack of adequate finance and poor governance.
Oyedele (2012) summarized the challenges thus; “the challenges of infrastructure development
in third world countries are many. The demand surpasses the supply and finance that will
stimulate rapid provision is not there. Due to wide gap between provision and needs, the
leadership classes are in arrears in all sectors. The political situation is not encouraging to foreign
investors. Governments do not set the priority right in infrastructure development. Projects are
supposed to meet objectives, but in most cases, projects embarked upon are white elephant
projects”. Tomori (2014) also averred that lack of funds alone is not a root cause of poor
infrastructure and services. It is a symptom of more fundamental problems and these include
instability, lack of confidence, distorted economic policies, and difficulties of governance. These

27
challenges have also resonated in the co-operative housing delivery system. Though self-help
approach, lack of finance and inability to access assistance had been a major challenge militating
against infrastructure provision in Nigeria. Another challenge is that many of these co-operative
societies are committed to financial needs of members which are for different purposes of which
housing is one. They only provides loan toward personal house building or engage in land
acquisition, process of documents, and purchase of materials in bulk. Land acquired in such
manner is provided with minimum level of infrastructure. Infrastructure provisions are grossly
inadequate in many of these housing estates while lack of maintenance capacity aggravates
deterioration.

2.7. Residential House Construction Association

Several studies have highlighted the problems of housing provision and lot of efforts poured into
discussion of the challenges confronting public and private sector housing provision. One area
that has equally attracted scholar’s attention is urban housing and infrastructure provision.
Tomori (2014) observed that the current finance for urban housing and infrastructure is
inadequate both in terms of capital resources, lending policies and conditions compared with the
types of income and borrowing capacity of majority of Africa’s urban populations. The author
further identified the myriads of problems confronting urban infrastructure provisions to include
policy and political instability, lack of confidence, distorted economic policies as well as
difficulties of governance. Infrastructure development is very vital to physical, social and
economic growth and sustainability. Infrastructure is a broad concept and in order to properly
situate urban housing infrastructure provision, it is imperative to look at the various definitions,
classifications and policy perspective of what constitutes infrastructure.

The word „infra‟ was derived from latin language and it means below‟ while structure according
to British English Dictionary could be interpreted to mean “the overall form or organization of
something” or “A cohesive whole built up of distinct parts” (Buhr, 2003). Infrastructure could
therefore be interpreted as “the foundation required for functional formation”. Better still, the
British English Dictionary defined “infrastructure” as “the basic facilities, services and
installations needed for the functioning of a community or society”. Traditionally,
"infrastructure” according to Drodowski, Scholze-Stubenrecht and Wermke (1997) has been
applied to permanent installations required for military purposes. The authors further stated that

28
modern general usage of the term concerns the necessary economic and organizational
foundation of a highly developed economy (e.g. transport network, labor force etc.). In the field
of economics, scholars have attempted to distinguish between infrastructure, superstructure and
supra-structure all in an attempt to contextually situate the concept of infrastructure. For
instance, Tinberge n (1962) introduced the distinction between infrastructure (for example, roads
and education) and superstructure (comprising manufacturing, agricultural and mining
activities). However, there was neither a precise definition nor any theoretic references of these
terms to back up the perspective. Moreover, Nijkamp (2000) described infrastructure as material
public capital (such as roads, railways, ports, pipelines etc.) and supra -structure as immaterial
public capital (such as knowledge networks, communication, education, culture etc.).

Oyedele (2012) described infrastructure as the set of interconnected structural elements that
provide framework supporting an entire structure of development. Fulmer (2009) described
infrastructure as the technical structures that support a society, such as roads, water supply,
sewers, electrical national grids, telecommunications, and so forth, and went further to defined it
as the physical components of interrelated systems providing commodities and services essential
to enable, sustain, or enhance societal living conditions. Kumar (2005) categorized
infrastructure into two: “hard and soft” infrastructure. While “hard” refers to the large physical
networks necessary for the functioning of a modern industrial nation, "soft" infrastructure refers
to all the institutions which are required to maintain the economic, health, and cultural and social
standards of a country, such as the financial system, the education system, the health system, the
governance system, and judiciary system, as well as security. According to Section 36 of the

Infrastructure Concession Regulatory Commission (Establishment) Act, (2005) of Nigeria,

infrastructure include development projects which, before the commencement of the Act, were
financed, constructed, operated or maintained by the government and which, after the
commencement of the Act may be wholly or partly implemented by the private sector under an
agreement pursuant to the Act including but not limited to power plants, highways, seaports,
airports, canals, dams, hydroelectric power projects, water supply, irrigation,
telecommunications, railways, interstate transport systems land reclamation projects,
environmental remediation and clean-up projects, industrial estates or township development,
housing government buildings, tourism development projects, trade fair complexes, warehouses,

29
solid wastes management, satellite and ground receiving stations, information technology
networks and database infrastructure, education and health facilities, sewerage, drainage,
dredging, and other infrastructure and development projects as may be approved, from to time,
by the Federal Executive Council.

Infrastructure is therefore very critical and simply constitutes one of the most important factors
for economic development of any nation. Infrastructure is the wheel that processes other
economic inputs thereby providing the enabling environment for sustained economic growth and
wealth creation (Ali, 2012). Every structure that aides and enhances human interaction with
immediate natural environment and makes it more conducive for habitation could be regarded as
infrastructure. Hence, as deduced from the “Establishment” Act, 2005, housing is classified as
infrastructure. Housing goes beyond shelter to encompass the immediate environment,
sanitation, drainage, recreation facilities and all other economic and social activities that make
life worthwhile, hence the concept of urban housing infrastructure. Urban housing infrastructure
is closely related to urban housing and infrastructure but could be distinguished by what each
entails. While urban housing and infrastructure entail urban housing and urban infrastructure
that make the entire urban system livable, urban housing infrastructure entails urban housing and
complementary off-site and on-site infrastructure that makes the housing community livable.

Despite the contributions these studies made to the understanding of the concept of residential
housing associations in Ethiopia in general and regional states in particular, certain questions still
remain unanswered. For instance, Daniel W/Gabriel (2017) conducted his research on the
Enigma of Informal Rural Land Deals in Ethiopia: Evidence from Peri-urban Areas of Hawassa
City. In Ethiopia, the right to ownership of urban and rural land to be vested in the State and
people, and is not subject to sale (FDRE Constitution, art. 40(3)). Hence, rural farmers and
pastoralists may acquire a plot of land free of charge with usufracturay right (rights to use, enjoy,
rent, donate and inherit the land) while urban residents through ground lease arrangements with
fixed period and specified payment. Hence, his findings cannot represent the reality of entire
country in general and the situation of Oromia regional state in particular. GirmaKassa
(2011)didn’t analyze the laws of the Oromia regional state in light of residential housing
associations since his focus was on the examining the laws applicable to compensation for rural
land expropriation in the Oromia regional state. Thus, the issue as to urban land acquisition and

30
transfer mechanism for residential housing associations in Oromia regional state Arsi Zone
Chole Woreda demands further research that will describe the practice and analyze the
provisions of laws related to the issue. Moreover, the studies conducted by Melaku Tanku and
Eyasu (2016) that also didn’t take into account the issue of housing as they focuses on impact of
lease law on business and investment expansion. Because they conducted these studies in 2011
and 2017 respectively; and their findings of the time cannot reflect the current situation in
Ethiopia in general and Oromia regional state in particular. Besides, the findings of the above
researches failed to address whether there are really public purposes and just causes behind
expropriation of the land.

Therefore, this research is believed to be sought to fill the gaps in the aforementioned and other
previous researches due to their inability to reflect the current reality and their weak focus to the
issue of examining the laws applicable to residential housing associations under Ethiopian law in
the Chole Woreda by backing the theoretical frameworks with application of laws in their actual
spirit. Moreover, it will be significant in bridging the gap existed in relation to the lack of
understanding on the effectiveness of laws adopted in relation to urban land acquisition and
transfer mechanisms for residential housing associations and their practical implementation in
Chole Woreda.

31
CHAPTER 3: ANALYSIS OF LAW, POLICY, PRACTICE AND
INSTITUTIONS ON RESIDENTIAL HOUSING
COOPERATIVES ASSOCIATION UNDER ETHIOPIAN LAW”
THE CASE OF ARSI ZONE-CHOLE WOREDA

3. Introduction
In this result and discussion part of the study quantitative and qualitative data collected through
questionnaire and in-depth interview with key informants are presented usingfrequency and
percentage, and the data was presented using tables and charts. The information gathered through
in-depth interview was narrated to embed under quantitative analysis in order to strengthen the
quantitative findings and it is presented in the table and charts. The demographic analysis is
presented below in the following sections:

4.1. Demographic profile of respondents

In this study sex, age, marital status and educational level of respondents of the members of
cooperatives housing in the study area were taken as indicators of the general profile of the
respondents for the field survey collected through questionnaires.

3.1.1. Sex and age of respondents:

Of the number of respondent (n= 228) 61.8% were male headed and 38.2% were female headed
and their age varies from 20 to above 51 (Table 4.1).

32
Table 4.1, revealed that among the total one 228 respondents majority 31-40 % of them were
reported their age as between 31-40, and 25.6% of the respondents were with age category of 41-
50 years old. Similarly, among the total respondents 23.1% of them replied as they are 20-30
years old.

Table 4.1 Sex and age composition of respondents

Categories Levels Frequency Percent

Male 141 61.8

Sex Female 87 38.2
Total 228 100
20-30
53 23.1
years
31-40
77 33.7
years
Age
41-50
58 25.6
years
51 and
40 17.6
above
Total 228 100
Source Filed survey (2021)

The other 17.6% of the participants were with age category of 51 and above years old. The
majority of the respondents were at the age category of 31-40. Those the respondents who have
experienced are expected to have more knowledge about Residential House Construction
Association practices (Table 4.1).

33
3.1.2. Marital status of respondents:
The marital status of the respondents gathered from the field is presented in Table 4.2.

Table 4.2 Marital status of respondents

Categories Frequency Percent

Married 184 80.9
Marital
Unmarried 33 14.57
status
Divorced 3 1.51
Widowed 7 3.02
Total 228 100
Source Filed survey (2021)

As indicated in Table 4.2 the majority 184 (80.9 %) of the total respondents surveyed were
married. Single heads of respondents, divorced and widowed constituted few numbers of
respondents. This implies that the natural increase of the population will be high and it will
impose heavy pressure on demand of Residential House Construction Association.

3.1.3. Educational level of respondents in the study area

Concerning to the educational status of study participants as accessible in Fig 4.1., below 34.7 %
of them were responded as they were above Bsc/BA

5.5%
10.1%

secondary
BSc/BA
MSc/MA

24.6%

Fig 4.1.Educational level of respondents in the study area

34
Source Filed survey (2021)

Whereas, 10.1 % of respondents said that were BSc/BA degrees. Hence, from this educational
analysis we can understand that the respondents were able to read and understand the
questionnaire

3.2. Urban land acquisition and transfer mechanism policy

3.2.1. Procedures for Residential House Construction Association

A Regulation to determine the Organization of Oromia Regional Government Residential House
Construction Association No.181/2016 art 14 (1-4) stated that Member of the association
residing in the country shall be organized by appearing in person whereas the Diaspora may be
organized and register by appearing in person or through representation before the organizing
body. The body organizing the association, after ascertaining the fulfillment of the requirements
shall cause block account to be opened in the name of the association at the Commercial Bank of
Ethiopia, Cooperative Bank of Oromia, or Oromia Credit and saving Association. Its particulars
shall be decided by the directive to be issued. The body authorized to organize association shall
give legal personality certificate for an association, which fulfilled the requirement and forward
to the Agency to enable them get the land.

Additionally, allotment of Urban land is stated under land lease proclamation 721/2011 art
12(1c) stated that Allotment of urban lands may, upon decisions of the cabinet of the concerned
region or the city administration, be permitted for public residential housing construction
programs and government approved self-help housing constructions. In addition, Registration
and Approval of Association is stated under Oromia Regional Government Residential House
Construction Association Regulation No. 181/2016 art. 20 (1-4) stated that a residential house
construction association shall prepare article of association and administrative regulation to
acquire legal personality. Its implementation shall be determined by a regulation to be issued.
Any residential house construction association shall be registered and approved at the authorized
body. Every association shall be registered and cause the registration of its members by
appearing before the registering body based on the registration program to be set. Every

35
residential house construction association shall cause its members give their finger print as per
the program set for such activity.

Interview made with Chole Municipality chairperson, Chole land administration and use office
head, and experts reveals that firstly the applicant associations applies their applications to Chole
municipal administration. Chole municipal after ascertaining the fulfillment of the requirements
shall cause block account to be opened in the name of the association at the Commercial Bank of
Ethiopia, Cooperative Bank of Oromia, or Oromia Credit and saving Association and direct the
application to Arsi Zone urban development and Housing office. Once the Arsi Zone Urban
development and housing decides on the application, give legal personality certificate for an
association which fulfilled the requirement, and forward to the zonal land administration and use
office. Zonal land administration and use office distribute the letters of application to Chole
town land administration and Use office. Chole town land administration and Use office receive
the letters of request land and look and identify land based on the master plan of the City;
identify and prepare the site plan and send back to Arsi Zone land administration and Use office
after approved by Zone land administration and use office the chole town land administration
and use office provide land to the cooperative associations. This is the process through which
Residential House Construction Association land is acquired. Chole town land administration
and use office officers deliver land for Residential House Construction Association based on the
direction given from Zone land administration and use office. They do not deliver land for
Residential House Construction Association by their own initiation. They are waiting for the
approval by Arsi Zone urban development and Housing office, and Arsi Zone land
administration and use office. Thus, from the above discussion one can understand that the
procedures are complex and not transparent for members of cooperatives to acquire land lease
which contribute to the live hoods of the members.

Criteria Required to be organized in a New Association is stated under Oromia Regional

Government Residential House Construction Association Regulation No. 181/2016 art.5 (2)
stated that Without prejudice to the provisions article 13 sub-articles 2-5 of the Proclamation 721
Who is residing in the urban center for 2 and above consecutive years; criteria shall be fulfilled
to be organized as a member of residential house construction association.

36
Chairperson and experts of municipality said that one of Criteria required to be organized in a
New Association is that who is residing in the urban center for 2 and above consecutive years the
reason is that a growing population resulted in continuous rising demand for land for house
contraction, but the supply of land for housing feel dramatically over the same period. This gap
between supply and demand has resulted in problems of housing affordability, with rising prices
creating particular pressure for first time buyers. However, civil servants transfer from one town
to another town due different reason. This implies that civil servant face problems to be
Residential House Construction Association members.

Table below shows level of satisfaction of being members of associations

Table 4.3.Level of satisfaction of being members of satisfaction

Are you satisfied

with tenure security Frequency percent
within cooperative?
Yes 119 52.2
No 109 47.8
Total 228 100
Sources field survey (2021)

Out of 228 interviewed 52.2% of the respondents were not happy with the tenure security in a
cooperative way (table 4.3). Significant number of the respondents about 52.2% of them
responded stated that they was not satisfied with being cooperatives members due to the tenure
became gradually changed from cooperative to individual tenure after 10 years for each housing
units as the loan repaid (table 4.3).

On the other hand, Interview made with Chole Municipality chairperson, Chole land
administration and use office head, experts and cooperatives members reveals that one of the
most tangible benefits of cooperative living is the sense of ownership that residents gain from
living in a housing cooperative. Through long term payment mortgage system all the cooperative
members became house owners. Housing has a character of non-mobile commodity due to
infrastructure and land. This makes us to raise the question of tenure. The main issue is getting
security of tenure with affordability. Cooperative housing with schemes of core housing makes
the beneficiary households to gain affordable housing with security of tenure. The same is found

37
in the study. All the beneficiary households owned their unit through long term repayment of the
loan.

3.2.2. Preparation and Identification of Land lease for Residential Housing Association
Under an Expropriation Proclamation 455/2005 it is defined: "Compensation" means, payment to
be made in cash or in kind or in both to a person for his property situated on his expropriated
landholding” It is logical and fair that expropriated properties are compensable. The FDRE
Constitution recognizes compensation by stating as follows: “Without prejudice to the right to
private property, the government may expropriate private property for public purposes subject to
payment in advance of compensation commensurate to the value of the property.

The same idea is stated under Expropriation Proclamation: A woreda or an urban administration
shall, upon payment in advance of compensation in accordance with this Proclamation, have the
power to expropriate rural or urban landholdings for public purpose where it believes that it
should be used for a better development project to be carried out by public entities, private
investors, cooperative societies or other organs, or where' such expropriation has been decided
by the appropriate higher regional or federal government organ for the same purpose.

Key informant stated that once the housing cooperatives fulfilled the required criteria of
cooperatives and land laws, the Government has to deliver land for those cooperatives through
expropriating and transforming the nearby agriculture land to urban uses. But, those evicted peri-
urban farmers have the right to get commensurate compensation for what they lost in advance.

From the above descriptions we can conclude that, the aim of Compensation during
expropriation is putting affected people into the position they had been before expropriation has
been undertaken. It is neither to enrich them through over compensation nor worsen them
through under compensation. However, the definition and descriptions given in the laws above
doesn’t necessary mean they are exactly similar in their content hence; there is a gap in the law.

38
Municipality chairperson, land administration and use office head, and experts stated that the
main problem on expropriating land in peri-urban areas was disagreed over the compensation
paid for their property of the landholders. Actually, the valuation does not follow the
constitutional guarantee and the land expropriation and compensation proclamation 455/2005.
Additionally, maltreatments over the compensation valuation were an important factor for
conflicting issues in peri urban areas. However, the land acquisitions and delivered for different
development projects in the study area was not supported by regional directives and regulation.
Municipality chairperson, land administration and use office head, and experts stated that the
absence of regional land expropriation and compensation Proclamation has resulted in the lack of
standardized valuation and compensation methods and procedures which are causing different
valuations, resulting in different compensation values for similar lands up on land lease
promotion and protection investment and welfare local community. Additionally, they stated that
the policies and laws are not timely supported by appropriate regulations and directives due to
lack of capacity, in terms of inefficient human resource, insufficient funding, institution which is
responsible frequently modify, urban land policy enacted by federal government but regulation
and directives enacted by regional state.

This implies that inadequate compensation, lack of adequate land use policy, and planning and
lack of regional regulations and directives to guide during the urban expansion and compensation
valuation is critical cause for land use conflicting in the area.

A Regulation to determine the Organization of Oromia Regional Government Residential House

Construction Association No.181/2016 art 9 stated that a person who is to be organized in a
newly established association shall have an interest and equivalent financial capacity and agreed
to work together.

General principles of urban land lease is stated under Urban land lease holding proclamation No.
721/2011 art 4 (1-4) stated that 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

39
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

Although the small numbers of the respondents were disagreed with ideas of importance of
cooperative housing, high numbers of teachers agreed with ideas of importance of cooperative
housing (table).

Table 4.4. Perceptions of Respondent’s on Residential House Construction Association

Frequency Percentage

Yes 165 72.4

No 63 27.6
Total 228 100
Sources field survey (2021)

Out of 228 interviewed 72.4% of the respondents were happy with being members of
cooperative housing associations (table 4.4). Insignificant number of the respondents about
27.6% of them responded that they were not satisfied with being cooperatives members.

3.2.3. Socio economic condition of the housing cooperatives

Majority of the respondents stated that Cooperatives are also expected to play an important role
in improving the income and lively hood of their members. Because Cooperatives has the
advantages of identifying economic opportunities for the members, participating them in
cooperatives and to defend their interests and providing security to the members by allowing
them to convert them individual risks into collective risks. Besides, a Cooperative association
offer not only economic benefits to members but also confers a number of benefits to the society.
This is so because the object of cooperation association is to transform the member’s condition
in such a way that it makes his social life richer and happier. The ultimate aim of cooperation
association is to develop men-men imbued with the spirit of self-help and mutual help in order
that individually they may rise to full personal life and collectively to full social life. The social
purpose of cooperation is more diverse than economic purpose.

40
Additionally, they said that the members of the cooperatives were living in private rental houses
and kebele houses before coming to the cooperative houses. At the initial stage of the project the
beneficiaries were all civil servants (teachers and soldiers). But now some of them working other
works and some of them are under retirement. Some female headed households are using other
means of livelihood. Others are working small scale works in the neighborhood. In addition to
the whole process of their housing consolidation, the households are tied by social organizations
like “iddir” and “equb “4. The iddir incorporates not only aided self-help housing cooperatives
but also other residents in the neighborhood. The iddir house is found in an open space to the
south of the aided self-help cooperatives.

From this we can conclude that Overall the collective action and participation of beneficiaries
had economic and social benefits for the households. The economic benefits were reducing cost
of the house through bulk purchase materials, managing the housing development through
selected committee, labor contribution and taking loan in a cooperative way. The social benefits
were the development of community spirit, job opportunity and skill and capacity development.

3.3. Challenges related with Residential House Construction Association

3.3.1. Tenure security

A Regulation to determine the Organization of Oromia Regional Government Residential House
Construction Association No.181/2016 art 9 stated that Workers of an office who know each
other and have similar housing interest having equivalent capacity may come together and be
organized before the organizing body by presenting a letter from their office, and workers of
different offices may be organized together.

Municipality chairperson, land administration and use office head, experts and associations
members stated that the members of cooperative were kebele dwellers, teachers and public
servants who were living with their family before they came to the cooperative houses. The
tenure type of the cooperative is critical for the proper functioning of the housing development.
Since the type of tenure will affect the housing condition and the way the households invest on
the extension. Therefore, it has to be decided before constructing the houses. The cooperative
tenure type arranged by Ministry of Urban Development and Housing was incremental. It was a
type of limited like mortgages. The cooperatives took the loan and each individual member of

41
the cooperatives repaid his own share for 10 years. As Oromia housing cooperatives
association’s directives 17/2017 under articles 5(c) tenure security of the cooperatives changed to
individuals after 10 years. The tenure became gradually changed from cooperative to individual
tenure for each housing units after 10 years. But in between if the member couldn’t own title
deed, He could not sell the house to another person with the agreement of the cooperative which
the challenges for members of cooperatives. Oromia land lease regulation 182/2016 objective
were to make urban land market oriented economy but cooperative obligated to sell their house
with low market price because of absences of title deed before 10 years. The new member had to
accept all the agreements and he will continue repaying the remaining loan. This indicated that
there is a gap between residential house construction associations’ regulation 181/2016 and
residential house construction associations’ directives 17/2017 under Art.5(c). As opposed to this
directive the provisions of regulation no.181/2016 was under Art.30 states that the power to
organize, register and give legal personality for residential house associations in the urban
centers of Oromia Region is provided to the Oromia Industry and Urban Development Bureau,
Offices and Urban Administrations. In the same provision under sub-Art.4 (f) states Where the
residential housing construction of the associations is approved by the construction office of the
Zone or the Urban center as it is constructed and completed in accordance with the permitted
plan, it shall prepare the ownership evidence in the name of each members and give to them the
evidence which has been in the name of the association; and in the same manner sub-Art 5(g)
states that the Zone and Urban Administration Construction Office Write a letter to the Oromia
Regional State Urban Land Development and Management agency to make the map and plan to
be prepared and provided individually for members of the association by approving the
completion of the construction of houses of the association as per the contractual agreement.
Thus, the directive is opposed to the regulation in case it has to put the particulars in regulation
in details. This supported by Hafte (2020) the study found both supply and demand-driven
factors associated with plot markup price. The findings revealed that plot size, payment period,
and monthly income, plots accessible to basic services, plot location, land use type, and land
lease auctioned period associated positively and significantly with the urban land lease markup
price. Auctioneers paid a premium for plots having a larger size, extended payment period,
access to basic services, and specified for residential housing. On the other hand, distance, and

42
plot inaccessible to basic services associated negatively and significantly with the urban land
lease markup price.

3.3.2. Budget Deficient

The existing relevant laws and practices show that displacement compensation may be given in
terms of money, full or partial, or in terms of land-to-land compensation. Article 2(1) of
Proclamation No.455/2005 defines “compensation” as payment to be made in cash or in kind or
in both to a person for his property situated on his expropriated landholding. Thus, in what
follows, the paper devotes to see the basis and amount of compensation payable in cash
(monetary) and/or in kind (land to land compensation).

Power to Expropriate Landholdings is stated under Expropriation of Landholdings for Public

Purposes and Payment of Compensation Proclamation No. 455/2005 art 3 (1 and2) which stated
that a woreda or an urban administration shall, upon payment in advance of compensation in
accordance with this Proclamation, have the power to expropriate rural or urban landholdings for
public purpose where it believes that it should be used for a better development project to be
carried out by public entities, private investors, cooperative societies or other organs, or where
such expropriation has been decided by the appropriate higher regional or federal government
organ for the same purpose. Notwithstanding the provisions of Sub-Article (1) of this Article, no
land lease holding may be expropriated unless the lessee has failed to honor the obligations he
assumed under the Lease Proclamation and Regulations or the land is required for development
works to be undertaken by government.

Chole town administration revealed that main source of municipal funds for compensation
purposes include the general municipal fund generated from municipal taxes, fees, members of
cooperatives associations and other revenue sources for those individuals that lose their land and
attached properties for public development projects. Of course, the amount appropriated may not
be sufficient in view of what is expropriated. The deficiency arises due to lack of budget or
problems related to the estimation of the budget, and the subjectivity that often occurs in
estimating variables such as productivity, price in rural areas and market price of construction
materials in urban areas.

43
This implies that the ineffective residential house associations and municipalities budget
deficiency to pay compensation for those evicted farming communities gives space to the
members of housing cooperatives to negotiate and pay the compensation to those farmers hand to
hand. This practice leads the farmers to face with unnecessary negotiation and to be paid
inadequate compensation. Additionally, they sated that financial constraints are the major
obstacles in the way of provision, operation, management and maintenance of urban
infrastructure and services in study area. This idea was supported by Oyedele (2012) who stated
that the challenges of infrastructure development in third world countries are many.

3.3.3. Infrastructural problem

General principles of urban land lease proclamation No. 721/2011 art 4(1 and 4) stated that 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 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. Additionally, Oromia
Regional Government Residential House Construction Association Regulation No. 181/2016 art
30(1e) Make follow up and support for the fulfillment of infrastructures and inputs for the
residential houses constructions by the cooperation and integration of various stakeholders;
facilitate favorable conditions.

The respondents stated in rural communities, the infrastructural facilities are also not in a well-
developed state. The aspects that are taken into consideration in infrastructural facilities are,
transportation, public services, technology and communications, power supplies, water supplies,
telecommunications, and roads. It is vital to bring about improvements in these areas in order to
promote better livelihoods opportunities. Apart from bringing about improvements in them, it is
vital to generate awareness among cooperatives members to make effective use of them,
particularly, technology and communications.

Table 4.5 Rank of Infrastructural problem

44
 Rank: 1st, 2nd,
S/N Reason Frequency Percent
3rd, etc

1 Water supplies 96 42.1 1st

2 power supplies 73 32.0 2nd

Roads and
3 59 25.9 3rd
transportation
Source: Field Survey, (2021)

It is indicated in Table 4.5 above that the rank of infrastructural problem in cooperatives
livelihoods. Water supplies, as first, power supplies as second, Roads and transportation as third,
power supplies as fourth. This due to Cooperative houses are primarily one- or two-story
structures (e.g. a series of neighboring row houses) that historically were built at the urban
periphery, where lower-quality and cheaper land was available for allocation by the government.
Additionally, land provided to housing cooperatives has not always been serviced with adequate
infrastructure, which has been detrimental to housing quality and has left space for informal
infrastructure provision that inhibits both optimal spatial planning and integration of housing
with an array of public services such as education and transport. This implies that in order for
cooperative housing to contribute to infill development in urban areas, it is important to review
the design criteria (e.g. multi-storey structure) as well as incentives (e.g. larger financial
incentives for high density development). This implies that in in study area, cooperatives
livelihoods practice was hampered by poor infrastructure. Road networks were underdeveloped
and the commodities exchanged were dominated by local products. This in line with Oyedele
(2012) summarized the challenges thus; “the challenges of infrastructure development in third
world countries are many

3.3.4. Laws and public awareness to concerned issues

The other aspect of the law that attracts constitutional issue is related to the problem of public
participation in the process of law making. Here, the main argument in support of the
unconstitutionality of the lease system relates to the lawmaking process of the Lease
Proclamation and lease regulation. The Constitution, under Art 40(3), vests the right of

45
ownership of both urban and rural lands to the state and people of Ethiopia that makes them
equal co-owners (parties) with respect to land. These joint ownership right calls for a special
arrangement and consent of the public with regard to the enactment of laws regarding to land,
including urban land beyond the general public participation clause of the Constitution provided
in Article 43 of the Constitution.

Moreover, the House of Peoples Representatives, though representative of the public, is deemed
to have exercised its power as part of the government. Hence, lack of meaningful participation of
the public on the jointly owned matter is the major setback that causes claims of violation of the
Constitution.

Another constitutionality issue is raised in respect to Article 23 of the Proclamation and Oromia
national regional state Urban land lease holding regulation no.182/2016 under Article 51, which
partly provides that “a lessee may transfer his leasehold right or use it as collateral or capital
contribution to the extent of the lease amount already paid.’ The issue is how to reconcile with
Art.40 (3) of the Constitution that prohibits the sale, exchange or mortgage of bare urban land.
The constitutional stipulation, according to the presenter, seems to only allow the transfer of
improvements/investments on the land.

The provision of the Proclamation and regulation, on the other hand, seems to allow transfer of
the land without any improvement as it allows transfer of a land prior to commencement of
construction. Hence, it allows transactions on bare land with no improvement though the
subsequent provisions clearly fix the amount of the financial benefit such a lessee could obtain
and the conditions under which such land can be transferred. It is fair to hold that this
contravenes the last limb of Art 40 (3) of the Constitution, which forbids the transfer of land by
sale or other means of exchange as long as there is a gain out of such transaction how nominal it
may be so.

Also, sub-art 2 of Art 23 allows the transfer of land through inheritance before commencement
of construction. It is not clear if this concept of inheritance is used in the sense of intestate
succession or it includes also testate (with a valid will) succession. If in the second sense, the
effect may be similar to that of transfer of bare land by sale as, however rare it may be, people
may opt for such an arrangement to make advantage of the loophole the effect of which is a

46
violation of Art 40 (3) of the Constitution. The law rigorously regulating some land transfer
matters leaving little and, in some circumstances, no space for private arrangements. An instance
in this case includes fixing the percentage of the total value of sale that one is entitled to receive
when s/he transfers one’s leasehold particularly when the construction is only half completed or
below as provided in Art 23(3).

Although this stipulation seems to be included to discourage the widespread urban land
speculations and non-value adding profits that used to be fetched by some speculators used to
happen prior to the enactment of the proclamation, it is criticized due to its negative implication
on narrowing the scope of private property rights and tenure security.

On the other hand, the provision treats a lessee with bare land in the same way as one who
commenced construction, but the construction is half-completed or under when it comes to
transfer of such land.

objectives of the proclamation No .721/2011 stated as providing with an appropriate urban land
administration which is efficient and responsive to the continuous and increasing urban land
resources demand created due to the sustainable rapid economic growth registered across all
economic sectors and regions in the country, and -Ensuring the prevalence of good governance
which is a foundational institutional requisite for the development of an efficient, effective,
equitable and well-functioning land and landed property market, the sustenance of a robust free
market economy and for building transparent and accountable land administration system that
ensures the rights and obligations of the lessor and the lessee. Unlike the preceding two urban
land lease holding system this proclamation incorporated /declare/the fundamental principle of
the lease proclamation. The general principles of lease such as why lease is made the cardinal
land holding system of the country, how the offer of lease tender and land delivery are
administered, what principles are followed during lease tender and land delivery and why such
principles are adhered to, Accordingly the No. 721/2011proclamation general principles are
declares under Article 4 (1-4) stated us 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

47
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.

Table 4.6 Awareness of the respondents on land lease proclamation 721/2011

Frequency Percentage
Yes 111 48.7
No 117 51.3
Total 228 100
Source: Field Survey, (2021)

As table 4.6 above shows, only 48.7% of the respondents were aware how new land lease
proclamation No. 721/2011 applied. Among these applicants, almost all of them were the
government employees who have the opportunity access to the information how lease
proclamation is applied. In addition, some of these applicants were expressed their point of view
as they aware how lease proclamation is applied during the bid was taken place. Whereas, 51.3
% of the respondents did not aware how to apply, new land leases proclamation. Urban land
lease proclamation 721/2011 distributed to regions to govern urban land through lease system.
However, as the responses of the officials, process owners, head office, Mayor and Kebele
leaders, most of them have no common awareness on this framework. In addition, the copy of
this proclamation was not available at kebele level structure. This implies that most of the
members of associations were participate in cooperative associations without the knowledge of
the proclamation. In short, these indicate the basic awareness and consensus is not yet created on
the benefits of leasehold system.

3.3.5. Competing Interests on Peri Urban Areas in study area

Majority of the respondents said that Non-landholding residents are interested in acquiring land
mainly for residential purposes. The local landless young people are sons and daughters of the
peri-urban communities interested in land for farming and construction of houses. But the nature
of the land tenure system and the inefficiency of the formal and legal land acquisition and
delivery system make it difficult to obtain land. The process of bidding for a land lease is highly
competitive and unaffordable to this group of actors. The lease price is highly inflated and
unaffordable for them. Thus, local landless young people prefer to buy plots of land

48
informally/illegally at low prices from the local peri-urban communities, and then they erect
unauthorized houses to reside in.

Besides, they stated that they are migrants from rural areas who are attracted by better
employment opportunities and basic social services in chole town. As the rent for a house in the
inner city is not affordable to the majority of this group, they prefer to rent a house far away in
the periphery; some also prefer to purchase a plot of land informally from the local peri-urban
communities to build substandard residential houses. Therefore, some of these migrants live in
rented houses, but most live in self-built unauthorized and substandard houses built on
informally purchased parcels on former agricultural fields. This implies that every actor has its
own interests and motives to access and control the same peri-urban land. This means, competing
interests created on the peri-urban areas due to the farmers intend to sustain their life with
agriculture and the urban residents to fulfill their basic need (shelter). Practically, the
Government has been implementing this program to solve the housing problems of urban
residents through evicting those farming communities and giving compensation in advance.
Therefore, widely differing expectations about benefits from the same land and the prevalent
sense of insecurity, as a consequence of governmental expropriation, have been triggering
conflicts over land in the area.

49
CHAPTER 4
CONCLUSION AND RECOMMENDATION

4.1. CONCLUSION
This research was mainly aimed at assessing the law and practice of urban land acquisition and
transfer mechanisms for residential house associations under Ethiopian Law. Accordingly, data
were collected on the perception of the respondents and come with some findings. Hence,
according to the findings the following conclusions are drawn.

A Regulation to determine the Organization of Oromia Regional Government Residential House

Construction Association No.181/2016 art 14 (1-4) stated that Member of the association
residing in the country shall be organized by appearing in person whereas the Diaspora may be
organized and register by appearing in person or through representation before the organizing
body. The body organizing the association, after ascertaining the fulfillment of the requirements
shall cause block account to be opened in the name of the association at the Commercial Bank of
Ethiopia, Cooperative Bank of Oromia, or Oromia Credit and saving Association. Its particulars
shall be decided by the directive to be issued. The body authorized to organize association shall
give legal personality certificate for an association, which fulfilled the requirement and forward
to the Agency to enable them get the land. However, Interview made with Chole Municipality
chairperson, Chole land administration and use office head, and experts reveals that the
procedures is complex and not transparent for members of cooperatives to acquire land lease
which contribute to the live hoods of the members.

50
Out of 228 interviewed 52.2% of the respondents were not happy with the tenure security in a
cooperative way (table 4.3). Significant number of the respondents about 52.2% of them
responded stated that they was not satisfied with being cooperatives members due to the tenure
became gradually changed from cooperative to individual tenure after 10 years for each housing
units as the loan repaid.

Municipality chairperson, land administration and use office head, and experts stated that the
main problem on expropriating land in peri-urban areas was disagreed over the compensation
paid for their property of the landholders. Actually, the valuation does not follow the
constitutional guarantee and the land expropriation and compensation proclamation 455/2005.
Additionally, maltreatments over the compensation valuation were an important factor for
conflicting issues in peri urban areas. However, the land acquisitions and delivered for different
development projects in the study area was not supported by regional directives and regulation.
Municipality chairperson, land administration and use office head, and experts stated that the
absence of regional land expropriation and compensation Proclamation has resulted in the lack of
standardized valuation and compensation methods and procedures which are causing different
valuations, resulting in different compensation values for similar lands up on land lease
promotion and protection investment and welfare local community. Additionally, they stated that
the policies and laws are not timely supported by appropriate regulations and directives due to
lack of capacity, in terms of inefficient human resource, insufficient funding, institution which is
responsible frequently modify, urban land policy enacted by federal government but regulation
and directives enacted by regional state.

Out of 228 interviewed 72.4% of the respondents were happy with being members of
cooperative housing associations (table 4.3). Insignificant number of the respondents about
27.6% of them responded that they were not satisfied with being cooperatives members.

Majority of the respondents stated that Cooperatives are also expected to play an important role
in improving the income and lively hood of their members. Because Cooperatives has the
advantages of identifying economic opportunities for the members, participating them in
cooperatives and to defend their interests and providing security to the members by allowing
them to convert them individual risks into collective risks. Besides, a Cooperative association
offer not only economic benefits to members but also confers a number of benefits to the society.

51
This is so because the object of cooperation association is to transform the member’s condition
in such a way that it makes his social life richer and happier. The ultimate aim of cooperation
association is to develop men-men imbued with the spirit of self-help and mutual help in order
that individually they may rise to full personal life and collectively to full social life. The social
purpose of cooperation is more diverse than economic purpose.

The findings indicated that the majors challenges of Residential House Construction Association
in study area is individual short term Tenure insecurity, Budget Deficient for expropriation,
Infrastructural problem, lack of Laws and public awareness to concerned issues, and Competing
Interests on Peri Urban Areas in study area.

4.2. RECOMMENDATION
In doing so, the paper aims at identifying gaps, inconsistencies and ambiguities in the lease laws,
regulations and directives as well as the constraints and challenges that impede their effective
implementations for residential housing associations. On the basis of the outcome of the study,
important recommendations were drawn:

 Land Development and Management Agency, Municipality and the town administration
should give prime emphasis to maximize land supply and organizational capacity
building and thereby to tackle the problem of information inaccessibility and lack of
clarity on requirements.
 Promoting existing small scale enterprises and other associations to form saving for
Residential House Construction Association section to use their existing saving and
management potential.
 Existence of competing interests on peri urban areas in study area. Thus, the
establishment of strong and harmonized planning and land governance institutions.
Planning institutions are expected to act as mediators when there are conflicting interests
over peri-urban land; they should try to balance the competing interests of different
groups. The institutional arrangements for land governance and development should be
structured in a way that is sufficiently accommodating to all actors and institutions
interested in peri-urban land. In addition, understanding the interests of various actors
involved in peri-urban land is important not only for improving their interactions and

52
 peaceful coexistence, but also for setting up appropriate legal and institutional
frameworks for urban land development and management.

 Competing Interests on Peri Urban Areas in study area thus; enforcing the rights of
peripheral communities will require quick action to formalize these rights and to define
clear territorial boundaries. Effective management of public land is virtually impossible if
there is no inventory of such land or if its boundaries are ambiguously defined. The
absence of such an inventory provides opportunities for individuals to try and establish
land rights through informal occupation and squatting, often with negative environmental
impacts. So making an inventory by collaborating agents from both the town and the
surrounding rural kebeles upon whom residents and their house (or which parcel in
general), would found within the rural are jurisdiction as well as on Chole Town
jurisdiction one by one.
 The government has to enable Residential House Construction Association through
finance and technique. Since land acquisitions and transfer is for the poor the government
can’t be ignored totally. But it has to be enabler. This will further promote the
achievement of the intended development.

 Lastly, comprehensive study would be done on the pros and cons of unifying the various
urban land tenure systems under sole public leasehold tenure system. In addition, the
public should be consulted and given a chance to decide on the very issue of making
lease as a sole form of tenure. In particular, the implication of the lease on the urban poor
shall be carefully examined and reconsidered. Detailed and independent study shall be
made on study area with meaningful public participation and the study shall investigate
the pros and cons of treating small towns alike under the lease system.

53
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The Constitution of the Federal Democratic Republic of Ethiopia, Proc. No.1/1995, Negarit
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15 /2016 no effective Date.
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Directive to modify Directive No. 15 /2016 on Date 24/02/2017.
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57
Appendix
Appendix 1: Semi structured interview with members of Residential House Construction
Association

1. Sex: A. Male B. Female

2. Age: A. 20-30 B. 31-40 C. 41-50 D. Above 51
3. Marital status: A. Married B. unmarried C. divorced D. Widower
4. Educational level: A. Secondary B. BSc/BA C. MSc/MA
5. What is your understanding about Residential House Construction Association?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________
6. Do you know about the existing Residential House Construction Association laws,
regional and federal? _______________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
________________________________________

58
7. When you enter to the Residential House Construction Association? Date of entry
----------------------------------------------------------------
8. What was the criterion to join the Residential House Construction Association?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
__________________________________________________
9. What were your expectations when you joined the Residential House Construction
Association? ________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_________________________________________________
10. What are the procedures for land acquisition and transfer for Residential House
Construction Association? ___________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________
11. What constraints were faced by the residential House construction Association in
obtaining land? ____________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
______________________________________________
12. How long did it take to acquire land after the residential House construction
Association was established? --------------Years, ----------------months, ------------------
weeks.
13. Have you already know your lot? 1) Yes 2) no
14. What is the size of individual lots in square meters? ---------------
15. Do you think that the municipality is not effective in providing land for associations?
1) Yes 2) no 3) do not know

59
 16. If your answer for the above question is “yes”, how is it not effective?
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------
17. What are the major challenges in land acquisition and transfer for, and joining
residential House Construction Associations members? ______________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_________________________________________________

Appendix II
Questions to Concerned Government officials
Name ______________________________Government Organization
_____________________________Position________________________________
Address_____ __________________________________
Questions
1. What are the main reasons to be Residential House Construction Association members in
the Woreda? ____________________________________________________________
________________________________________________________________________
_______________________________________________________________
2. Do laws and policies adopted in relation to Residential House Construction Associations
in Ethiopia in general and Oromia regional state in particular, effectively provide
procedures for land acquisition and transfer for, and joining Residential House
Construction Associations? (Do concerned officials know about the existing Residential
House Construction Associations laws, regional and federal?) ______________________
________________________________________________________________________
________________________________________________________________________
_______________________________________________________

60
3. Is there a clear & uniform guideline of law on how to transfer land to Residential House
Construction Associations? _________________________________________________
________________________________________________________________________
________________________________________________________________________
___________________________________________________
4. What are the major challenges in land acquisition and transfer for residential House
Construction Associations members? ______________________________________
________________________________________________________________________
________________________________________________________________________
__________________________________________________
5. Is there strict follow up whether the transferred land is used for the intended purposes on
time? __________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_________________________________________________
6. Is there any support that your organization provides to enable residential House
Construction Associations successfully engage viable economic activities? Can you
mention it, if any?__________________________________________________
________________________________________________________________________
________________________________________________________________________
_______________________________________________
7. What are the main sources of land for Residential House Construction Association?
________________________________________________________________________
________________________________________________________________________
_________________________________________________
8. Has your organization expropriated rural land for Residential House Construction
Association? (What is your understanding of Residential House Construction
Association?)------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

61
9. Do laws and policies adopted in relation to compensation upon expropriation of rural
lands in Ethiopia in general and Oromia regional state in particular, effectively provide
procedures for expropriation and just compensation? (Do concerned officials know about
the existing expropriation laws, regional and federal?) __________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
10. Did the policy enhance the financial capacities of the cities for the provision of services
and infrastructures of the cities? ________________________________________
________________________________________________________________________
________________________________________________________________________

11. Did the policy in its past practice contribute in efficient land use and investment
expansion and economic development? ________________________________________
________________________________________________________________________
________________________________________________________________________
___________________________________________________________________
12. What has the policy lacked and should be improved as compared to some experienced
regions? _______________________________________________________________
________________________________________________________________________
________________________________________________________________________
_______________________________________________________.

62
Appendix III. Format to show how Residential Housing Construction
Association members sale land before having tittle deed to someone

63
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