BizCLIR

Real property law is crucial in a market economy; it provides the legal environment for a business to own, use, and sell land and buildings as well as to use them as collateral to obtain credit. Good property law is especially critical in transition-economy countries; a good law enables entrepreneurs to acquire land freely to produce goods and services in a secure ownership environment, which is a necessity in planning for the long term. A good property law must also be accompanied by an objective, standardized titling system.

Under Ethiopia’s Constitution all land is owned by the State, a circumstance which is hardly conducive to a free market in land transactions. Furthermore, Ethiopia has never had a widespread system of land survey and titling.

At the same time, however, the Constitution and other laws support extensive private use and quasi-ownership of land by Ethiopians and, in limited cases, by foreigners. This includes the right of private persons to own buildings and fixtures on the land, their right to lease land from the State on a long-term basis, farmers’ right to continue using rural land permanently for agriculture and in limited cases to lease it to investors or otherwise develop it commercially, and the State’s right—and frequent practice—to expropriate urban or rural private land use rights and sell those to private investors. Further, the city of Addis Ababa has a working cadastral titling system, and survey and titling projects have just begun with donor help that in several more years could cover much of the significant commercially desirable land in Ethiopia.

Through these limited rights, there is an active market in land transactions although that market is much more politically controlled and opaque, and the rights are less secure and predictable, than in market-economy countries or than should be the case for optimal economic development in Ethiopia.