Converting Old Possessions into Lease System in Ethiopia: Decades

of Unsuccessful Endeavors
Taye Minale Belachew & Habtamu Sitotaw Semahagne
Abstract
Dual urban land tenure arrangements have continued to exist in urban centers of
the Ethiopia since the beginning of 1990‟s. However, despite the fact that the lease
system began to be implemented for more than a decade ago, we are still
witnessing the existence of urban land lease holdings and old possessions side by
side. The attempt to have a unified tenure arrangement began with the current
government following the enactment of the first urban land lease proclamation in
1993. However, this attempt has turned out to be unsuccessful so far, due to
various reasons. Similarly, an unsuccessful effort was witnessed during the
implementation period of the 2002 subsequent urban land lease proclamation.
However, like its preceding urban land lease laws, even if the law aims to achieve
otherwise, no feasible change has been observed in unifying the urban land tenure
system after the coming into force of the existing Urban Lands Lease law in 2011.
Using a doctrinal approach, this article aims to examine why the government is
unable to start the process of implementing the law in unifying the urban land
tenure system. More specifically, the major possible challenges the government
may encounter in converting old possessions into lease holdings and the
corresponding benefits that can be accrued to the lease holders, as well as the
government, will also be addressed. Moreover, in order to substantiate the
argument forwarded in this article, interviews were also conducted with relevant
experts in the field from the two concerned authorities of Amhara region. Based on
the primary data and analysis of various legal documents, the authors argue that if
there is a need to have a unified tenure arrangement in urban areas of the country
through converting old possession into lease holdings and if there is a need to
rectify previous failures, especially after the enactment of an unambiguous and
unequivocal regulation by the Council of Ministers, then a different approaches
and strategies must be adopted.
Key Words: Old Possession, Lease System, Urban Land, Conversion


LL.B (Bahir Dar University), MSc in Land Management, specialized in Environmental Built
(Royal Institute of Technology, KTH Sweden), Lecturer at Bahir Dar University, Institute of
Land Administration. The author can be contacted via t_minale@yahoo.com

LLB (Wollo University), MSc Land Administration and Management specialized in Real
Property Law (Bahir Dar University), Lecturer at Bahir Dar University, Institute of Land
Administration. The author can be reached at habtamusit@gmail.com
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 122

1. Introduction
As is the case for many developing countries, land has a special place in the
socio-economic and political life of Ethiopians. If we take the economic
facet only, land has been a source of wealth, economic growth, employment
and a source of basic survival for an overwhelming majority of the
population of the country and it will remain so, at least, for foreseeable
future.1 In relation to urban land, the country is witnessing rapid level of
urbanization which is drastically changing the physical, social, economic,
political and administrative structures of the cities.2 After assuming power,
in transforming the tenure arrangement, the Transitional Government of
Ethiopia enacted a new urban land governing law in 19933, where the first
urban lands lease holding law was promulgated. Unlike the permit system
that was operational during the Derg regime, this new urban land law has
introduced a lease system and dating this moment, many towns in Ethiopia
are now governed through this lease system.4
This first proclamation, however, was replaced by Proc. No. 272/2002.5
Since land and interests in it are dynamic in nature, the above proclamation
could not govern some issues that occurred after its promulgation. Hence, at
the end of 2011, the federal parliament (the HPR) enacted the current urban
land lease proclamation.6 Apart from bringing all forms of land tenure
systems outside of the lease system to an end, the legislation requires the
conversion of all previous holdings in the form of permit system to

1
Bacry Yusuf et al, Land Lease Policy in Addis Ababa, 2009, p. 14, in Yared Berhe, Conversion of
Old Possessions to Leasehold and Its Implication on Tenure Security of Holders of Old
Possessions, Mekelle University Law Journal, Vol.3 No. 1, 2015, p. 91
2
Ibid
3
Proclamation No 80/1993, a proclamation to provide for the lease holding of urban lands, 1993
(hereinafter cited as Proc No 80/1993)
4
Daniel W/G, Ethiopian land law text book, Bahir Dar University, Institute of Land
Administration, 2013, p. 77
5
A proclamation to provide for the re-enactment of lease holding of urban lands, Proclamation No.
272/2002, Federal Negarit Gazeta of the Federal Democratic Republic of Ethiopia, 8 th year No.
19, Addis Ababa, 14th may, (hereinafter cited as Proc. No. 272/2002)
6
Federal Democratic Republic of Ethiopia, Proclamation No. 721/2011, a proclamation to provide
for lease holding urban lands, Federal Negarit Gazeta (hereinafter cited as FDRE Lease Proc No
721/2011)
Converting Old Possessions into Lease System in Ethiopia 123

leasehold.7 Though these proclamations (Proc. No.80/1993 and Proc.

No.721/2011) opt for the conversion of old possessions to the lease system,
thereby, urban centers will be governed through uniform systems, this has
been a difficult task since the laws are designed with vague expressions with
reference to old possessions and there is always difficulty of
implementation. Converting old possessions to the lease system was not an
easy task in the first two land lease proclamations and is same is true in the
present proclamation also. The conversion has been considered one of the
measures that the new proclamation has introduced towards the
uniformalization process in the current lease proclamation and a challenging
task with possible discontentment from the general public.8
Recently, due to little action taken by the government, the overall issue of
old possessions has become a source of worries for urban landholders and a
point of discussion for scholars from different disciplines. However, so far,
there are few studies done by scholars concerning the basic issues associated
with old possessions in the prevailing lease system in Ethiopia. The works
have incorporated issues on conversion of old possessions into lease system
though they far from comprehensively discuss the possible issues during
conversion of old possessions to the lease system. In order to present the
main ideas of this article and its approach to the issue, let us first overview
some of the previous works on the issue. In this regard, Fikerabinet Fikadu‟s
work titled, “Ethiopian Urban Land Policy and Laws; Constitutionality of
Access and Land Rights”, addressed issues related to the size of old
possessions; expansion of old possessions; limitations and restrictions on
transactions and mortgaging properties attached with old possessions and
the manner of conversion of old possessions to the lease system. However,
the discussions in his work did not extensively address the challenges of
conversion of old possessions to the lease system; nor did it address how the
conversion is treated under subsidiary legislation nor the possible benefits
that may result from conversion and strategies to be adopted during
conversion of old possessions to the lease system.

7
Yared Berhe, Conversion of Old Possessions to Leasehold and Its Implication on Tenure Security
of Holders of Old Possessions, Mekelle University Law Journal, Vol.3 No. 1, 2015, p. 89
8
Belachew Mekuria, Overview of the Core Changes in the New Ethiopian Urban Land Leasehold
Legislation, Mizan Law Review, Vol. 5 No. 2, Dec. 2011.
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 124

In Addition, Daniel W/Gabriel in his PhD Thesis, titled “Land Rights and
Expropriation in Ethiopia”, discussed the fate of old possessions in a lease
system, already adopted in Ethiopia, within a single page. The paper defined
“old possession and the manner of transfer of old possessions to the lease
system in pursuant to the new urban lands lease holding proclamation. Since
the paper‟s central theme was not to deal with the issue of old possessions, it
left many issues untouched concerning old possessions.
Therefore, this article deals with the various benefits that the government,
individual landholders and the entire community might acquire following the
conversion of old possessions into the lease system; the possible challenges
that may actively work against successful conversion of old possessions to the
lease system (taking into account the experiences of the previous lease
proclamation); the strategies that shall be adopted before the government
enters into total conversion of old possessions to lease system if the Council
of Ministers enacted the expected regulation to this effect; the position of
subsidiary legislations in relation to providing rules modalities for conversion
of old possessions to lease system and others.
Hence, this article examines the challenges and prospects in converting old
possessions into the lease system primarily in the current Urban Lands Lease
Holding Proclamation. Though the sources of data used in this article are both
primary and secondary, it is generally a doctrinal legal analysis. Scrutiny of
urban land governing laws of the past and the present with specific attention
to old possessions; moreover, relevant information was also collected from
various websites and different published and unpublished materials, journals,
magazines and newspapers. Also, the authors interviewed pertinent experts on
the field from Bahir Dar City Administration and the Amhara National
Regional State Bureau of Urban Development. Finally, a descriptive method
is employed in order to analyze the data obtained from the above sources.
To that end, this article is organized into four parts. Part one is the
introduction; the second part is devoted to describe the manner in which the
three urban land leasehold laws have managed the issues of old possessions.
The third part is discusses issues relating to conversion of old possessions into
lease system and, in this part, a particular emphasis is allotted to the currently
governing urban land leasehold laws of the country. Furthermore, the
Converting Old Possessions into Lease System in Ethiopia 125

implications of conversion of old possessions and, in some cases, the reasons

behind the hesitation of the government to have immediate action to handle
the conversion including the possible challenges that can be encountered in
the process and the possible benefits are considered. Lastly, concluding
remarks and recommendations are provided.
2. Old Possessions in the Three Urban Land Lease Holding
Proclamations
The urban land tenure arrangement of the country has gone through different
changes during different regimes. The changes have been necessitated due to
the prevailing socio-economic conditions of the country but it also swing
along with the political ideology of the ruling government. For instance,
Emperor Menelik II promulgated the 1907 decree, which had duly recognized
private ownership of land that allowed wider rights in the use, inheritance and
sale of urban lands. The edict was mainly declared by the emperor to give
security of land rights and to authorize and enable those countrymen and
foreigners to buy land in the town of Addis Ababa according to the law.9
Apart from private ownership of land during this era, there were also other
systems of urban land ownership arrangements.10 The era of Emperor Haile
Sellasie I also recognized private ownership of land. Article 24 of the 1931‟s
Constitution guaranteed private land ownership rights of individuals and
protected landholders from begin deprived by anyone of their movable or land
property unless for public purposes.11 Private ownership of urban land was
also recognized under Article 44 of the 1955 Revised Constitution and it was
also expressly recognized under the 1960 Ethiopian Civil Code.12
Nonetheless, following the overthrow of the imperial regime in 1974 with the
so called slogan “land to the tiller”, the Derg Regime held the throne and took

9
Brightman Gebremichael, Heartrending or Uplifting: The Ethiopian Urban Land Tenure System
Reform of post-1991 and Its Reflection on Tenure Security of Permit Holders, paper submitted
to review , 2015, p. 3
10
These tenure arrangements may include government land, church land, communal land, rist and
gult lands.
11
See Article 27 of the constitution of the Empire of Ethiopia, Negarit Gazetta, 16 July 1931
12
The Civil Code of the Empire of Ethiopia, Proclamation No.165/1960 Neg. Gaz. Extraordinary,
year 19 No. 2 (hereinafter Ethiopian Civil Code), Art. 1126 & ff deal with the issues on private
ownership of movable and immovable properties
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 126

different actions that radically altered the social, political and economic
structure of the country. One such reform was with regard to the urban land
tenure system. The slogan, though primarily seeking a change in the rural land
tenure, the military government‟s action extended to reform the urban land
tenure to which formally changed the nature of urban land rights.13
The proclamation was a new introduction in the urban centers; its central
theme being nationalization of all urban lands without payment of
compensation and promulgating public ownership of urban land. 14 During this
regime, the permit system was the prominent means to access urban land by
the citizens who wished to build a dwelling. The lands distributed by the
military government to individuals , in addition to the holdings acquired
during the imperial regime, have been a continued base for the subsequent
development of old possessions in the different urban land lease holding
proclamations of both the transitional and the current governments.
2.1 Old Possession under Proclamation No. 80/1993
According to the preamble of this proclamation, the need for the coming into
force of the law includes, the high rate increment of urban dwellers which
resulted in unplanned expansion of urban centers which further complicated
problems associated with the allocation of urban land; shortage of existing
houses for residence purposes and the need to build houses expeditiously, and
so forth. Concerning its scope of application, the proclamation rules that it
shall not apply to urban lands previously utilized for building dwelling
houses.15 Immediate application of the lease proclamation on possessions held
in permit was not envisaged and in strengthening this fact, the Proclamation
proclaimed the following:
“…the regulations of urban land holding for private dwelling houses
which were in force prior to the enactment of the present

13
Brightman Gebremichael, 2015), supra notes 9.
14
Proclamation No. 47/1975, the "Government Ownership of Urban Lands and Extra Houses
Proclamation, July 26, 1975, Arts. 3(1), 3(2) and 13(1) reveal that public ownership of urban land
had been recognized and nationalization of all urban lands (without compensation) and extra-
houses was made possible and if necessary another single business house. Due to the approaches
adopted under the proclamation, an individual or family can no longer own more than a single
dwelling house as all "extra" houses were taken by the government.
15
Proc. No. 80/1993, supra notes 3, Art. 3(1)
Converting Old Possessions into Lease System in Ethiopia 127

proclamation shall continue to be in force, provided, however, that

where a dwelling house is transferred to another person in any
manner other than inheritance, the person to whom the said house is
transferred shall hold the land in accordance with the lease holding
system provided for in this proclamation”.16
According to the above provision, transfer of old possessions, in any
modality, to third party (save inheritance) will result to an immediate
conversion of the entire possession into the lease system. Still, however, no
clear information about what might happen when some part of the possessions
is transferred to third parties, while the remaining parcel is held by its holder.
It usually happens that landholders prefer to transfer part of their holdings to
others; thereby generating money in return. In such a case, there were no clear
rules to govern the status of the remaining/non-transferred land or the entire
land at hand.
Concerning buildings that were built for a purpose other than dwelling houses,
the proclamation further rules that ”any person who, prior to the coming into
force of the proclamation lawfully holds an urban land other than that which
is designated for the construction of dwelling houses, shall apply to the
appropriate town administration within the time specified by the said
administration in order to get for the urban land he holds a lease holding title
document in accordance with Article 6 of the new proclamation.”17
Hence, unlike lands used for dwellings, lands used for other purposes will be
automatically changed to the lease system upon application of the landholder
in accordance with Article 6 of the proclamation. Even if lease was the prime
mode of acquisition of land after the coming into force of the proclamation,
exceptionally, land may be given without lease arrangements if it is to be
utilized for investment that the government encourages or for social services
establishments or for other purposes which directly benefit the public.18 But
the reading of various provisions in the proclamation does not clearly show
whether these lands should be treated by the prevailing lease system or the
permit system. Also, there was no clear indication regarding the manner of the

16
Ibid, Art. 3(2)
17
Ibid, Art. 15(1)
18
Ibid, Art.13
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 128

possible use of a land in an old possession as collateral; the proclamation did

better in determining the use of a lease holding land as collateral. 19 The
proclamation was not able to attain wholesome conversion of old possessions
into the lease system which was aggravated due to the absence of a regulation
relevant to implement the proclamation.
2.2. Old Possessions under Proclamation No. 272/2002
Since Proc. No. 80/1993 failed to achieve objectives such as enhancing urban
land revenue, ensuring transparency in land transfer, promoting economic
development of urban centers through involvement of investors, and the need
to widen the scope of the lease system to cover permit holdings (the
conversion of old possession into the lease system), it was replaced with Proc
No. 272/2002. As stipulated in its preamble, the objective to introduce this
later proclamation was to provide market driven exchange value. It was also
assumed to encourage investment, provide housing and infrastructure, control
undesired expansion of cities, and combat speculation and non-transparent
system of plot allocation. The prevalence of good governance is assumed to
be a fundamental requisite for the development of an efficient, effective,
equitable and well functioning market. With this system, the government was
expected to collect enough money to run urban infrastructure and transfer all
urban landholdings into the lease system.20
Unlike its predecessor, this proclamation has a clear provision which declares
that it will be enforced on old possessions as well. On this basis, the
proclamation shall be applicable to an urban land held by the permit system,
or by other means prior thereto, as well as to an urban land permitted
thereto.21 Pursuant to this provision, the scope of application of the
proclamation shall include urban lands held by the permit system. The essence
here is different treatment of old possessions in isolation with leased lands
was not envisaged and it opted to govern all the land in urban centers by the
lease system.

19
Ibid, Art. 10
20
Sileshi Tefera et al, Land Lease Policy in Addis Ababa, Produced and distributed by the Addis
Ababa Chamber of Commerce and Sectoral Associations with financial support from the Swedish
Agency for International Development Cooperation, Sida, 2009, p. 4
21
Proc No 272/2002, Supra notes 5, Art. 3(2)
Converting Old Possessions into Lease System in Ethiopia 129

The exception, however, is any urban land which has not been under a lease
holds system, as per the time and conditions to be set by the concerned region
or city government.22 That means based on the time and conditions to be
determined by concerned regions or city governments, there will be some
urban lands that will not be governed by the lease system. Also, the
application of the proclamation for any town, which has not been under a
lease hold system, would be as per the time and conditions to be set by the
concerned region or city government.23
Unless for either of the above scenarios (which are dependent or conditional
upon the possible decisions of the city or regional governments), the
proclamation will be applicable for urban lands held in permit too; this could
be considered a deviation from its predecessor. Since, at least, permit holders
shall effect payments for the lease price and enter into lease contracts with the
government, this law seems to follow unfair treatment of possessions taken in
permit as it allows them to be governed by the lease system. In fact, even
during the periods where the previous legislation was in force, it was not an
easy job to convert old possessions into the lease system. Taking the above
stipulations into account, it could be argued that the following questions were
not properly addressed in this proclamation.
 Does it mean the operation of the proclamation for old
possessions is in reality automatic save the exceptional
circumstances above given the fact that it was not possible to
administer the entire land by lease system in the periods where
proclamation No. 80/1993 was in force?
 Is it practically possible to employ similar principles for leased
lands and permit possessions given these two holdings are
different in various respects. Or do the provisions of the
proclamation equally apply to old possessions and other lands
alike (will similar principles shall apply for the two
simultaneously)?
 Can we imagine the proclamation can properly administer the
entire urban land without prior conduct of successful conversion

22
Ibid, Art. 3(2)(a)
23
Ibid, Art. 3(2)(b)
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 130

of urban lands into the lease system? Or how can the

proclamation be enforced on permit holdings without prior
conversion of the holding into the lease system?
2.3. Old Possessions under the Current Urban Land Laws
In the present land tenure arrangement of the country, for urban lands, a
leasehold system is introduced and for rural lands, a holding type of land use
right for an unlimited time is applied. This shows that the rural and urban
lands are independently administered and governed by different institutions.
Concerning the status of old possessions, controversies exist when one looks
at the currently governing proclamation which is enacted with various lease
principles in a motive to ensure a unified land tenure arrangement in urban
centers of the country.24
2.3.1 What is an Old Possession?
Old possession is defined under the current proclamation as “a plot of land
legally acquired before the urban center entered into the lease hold system or
a land provided as compensation in kind to persons evicted from old
possession.”25 According to this definition, there are two types of holdings
which are treated as old possessions. The first is related to those lands that
were acquired before a certain urban center entered into a lease system; and
the second is related to lands that an old possession holder acquired in the
form of compensation for the lands taken away by the government through
expropriation.
Thus, all land acquired and held during the imperial era, the Derg era, and
after that, outside the lease system, is considered as old possession. Besides,
replacement land given to owners whose land was expropriated may also be
considered as old possession since the land was given without lease contract.

24
FDRE Lease Proc No 721/2011, Supra note 6, Art 4 listed the principles of lease in Ethiopia.
accordingly, 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.
25
Ibid, Art. 2(18)
Converting Old Possessions into Lease System in Ethiopia 131

Although it is difficult to put the exact figure, the number of old possessions
in Addis Ababa, for example, may constitute half of the total properties in the
city.26
But nothing is implicated in the proclamation concerning the status of those
urban lands that were acquired outside the lease principles before the coming
into force of this system in the country but allowed to continue in that state by
an appropriate organ.
In the same fashion, the Amhara Regional State Urban Lease Implementation
Directive defined old possession as:
“ነባር ይዞታ” ማሇት የከተማ ቦታ በሉዝ ስርዓት መተዲዯር ከመጀመሩ በፊት
በሕጋዊ መንገዴ የተያዘ እና ሉዝ ተግባራዊ ከሆነ በኃሊ ሇነባር ይዞታ ተነሺ
በምትክ የተሰጠ ቦታ ወይም ሉዝ ከመተግበሩ በፊት የተያዘ ሆኖ አግባብ ባሇዉ
27
አካሌ ከሉዝ ስሪት ዉጭ እንዱቀጥሌ በህግ እዉቅና የተሠጠዉ ቦታ ነዉ፡፡”

This definition, similar to what is provided in the federal proclamation,

recognized lands gained in permit, and those lands given as a replacement to
the holders due to expropriation decisions, as possessions in permit. In
addition to the federal proclamation‟s definition, those urban lands, that were
acquired outside the lease system before the coming into force of the lease
system in the country, but allowed to continue in that state by an appropriate
organ, are properly addressed and they are simply old possessions that shall
continue in that state until conversion is made. Hence, in this legal instrument,
old possessions are defined to encompass more lands above and beyond the
federal proclamation‟s definition.
The Addis Ababa city land lease regulation has defined old possessions in a
similar fashion with the federal urban lease proclamation as follows:
“ነባር ይዞታ” ማሇት ከተማው በሉዝ ስርዓት መተዲዯር ከመጀመሩ በፊት
በሕጋዊ መንገዴ የተያዘ ወይም ሉዝ ተግባራዊ ከሆነ በኋሊ ሇነባር ይዞታ ተነሺ
28
በምትክ የተሰጠ ቦታ ነው፡፡

26
Daniel W/G, 2013, Supra notes 4, p. 77
27
See the Amhara Regional State Industry and Urban Development Bureau Urban Land Lease
Implementation Directive No. 1/2005, Art. 2(6)
28
Addis Ababa City Administration urban land lease regulation No.49/2004, Art. 2(8)
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 132

From all the above definitions given to old possessions, it can inferred that
there is a huge area of lands obtained during the permit system and which is
now falling to the fate of conversion to the lease system when the proposed
guideline is enacted by the Council of Ministers for mass conversion.
2.3.2 The Scope of Proclamation No. 721/2011 in Governing Old
Possessions
The proclamation has no immediate or automatic application to all urban
areas in the country. A grace period is provided to some towns and the task of
assigning these towns is left to regional cabinets. For this, the proclamation
specifies that:
“Regional cabinets may specify urban centers to which this
proclamation remains inapplicable for a certain period: provided,
however, that such transitional period within which the proclamation
remains inapplicable in any urban center may not be more than five
years starting from the date of the coming into force of this
proclamation.”29
Hence, to the maximum of five years dating the introduction of the
proclamation, there may be some urban centers where the proclamation will
not automatically apply for which they will be governed through the permit
system. In these towns, therefore, whatever kind of transfer is made on the
land, it will not result the conversion of the old possession into the lease
system. However, when the urban centers supply land in this transitional
period, the delivery shall be through tender and the benchmark shall be the
annual land use rent of the locality.30 In general, dating the coming into force
of this new proclamation, leasehold is the only means of land acquisition
mechanism in Ethiopia as it is clearly stated in the proclamation that “without
prejudice to the provisions of Article 6 of this Proclamation, no person may
acquire urban land other than the lease holding system provided under this
Proclamation”.31

29
FDRE Lease Proc. No. 721/2011, supra notes 6, Art. 5(4)
30
Ibid, Art. 5(5)
31
Ibid, Art. 5(6)
Converting Old Possessions into Lease System in Ethiopia 133

3. Conversion of Old Possession into the Lease System

3.1. Modalities of Conversion
In the current lease proclamation, it is said that the fate of converting old
possessions into the lease system will be decided by the Council of
Ministers upon a detailed study to be made in the future. 32 In other words,
all “old possessions” will not be converted in mass at once to leaseholds
before the detailed study is conducted in the future. The proclamation, in the
meantime, requires the conversion of old possessions into the lease system
in one of the following events whether there is total conversion or not.
 Where a property attached on an old possession is transferred to a
third party through any modality save inheritance (Article 6.3)
 Informal settlements that have been regularized pursuant to the
regulations of regions and urban administrations (Article 6.4)
 Where an application to merge an old possession with a lease hold is
permitted (Article 6.6)
The first modality for conversion of old possessions is when a property is
transferred to a third party and property transfer in this case includes sale,
exchange or donation, except for inheritance. It must be noted that since
land is not saleable, the subject matter of “transfer” is not the land itself but
the immovable on the land, i.e. building. From this perspective, whenever a
house resting on old possession is sold, exchanged, or donated, the new
owner shall possess the land on lease basis.33
On the other hand, when an informally held possession is regularized by an
appropriate organ, this possession will be converted to the lease system.
Land may be held and construction of houses may be carried out without the
permission of the urban land administration offices. Normally while houses
are found built without the permission, the usual measure taken in such
cases is demolition of the informal settlement. However, in some cases,
there might be measures to regularize and formally register these

32
Ibid, Art. 6(1)
33
Daniel W/G, 2013, supra notes 4, p. 78
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 134

settlements.34 Hence, the regularized possessions will be governed as per the

principles in the lease system. And the third possibility where an old
possession will be converted to the lease system is where an old possession
is to be merged or amalgamated with a piece of land already leased. Hence,
even if these two parcels have been governed through different systems (one
through the lease system and the other in permit), once they are merged or
amalgamated, the entire possession will be converted to the lease system.
3.2. Issues on Conversion of Old Possession to the Lease System
Article 6 of the new proclamation is meant to govern the conversion of old
possessions into the lease hold system. The rules for total conversion shall
be made by the Council of Ministers upon a detailed study submitted by the
Ministry of Urban Development and Construction.35 Unlike Article 5(4) of
the proclamation, which sets the maximum time limit of five years within
which the urban centers may suspend the enforcement of the proclamation,
Article 6(1) except providing the possibility that the Council of Ministers
may come up with the urban land conversion modalities into a lease system,
it does not set the time limit when the regulation would be issued. The
provision also states that the process of enacting the regulation should not
preclude the revision of the rental rate applicable to old possessions.
This particular provision may have multifaceted implications. To begin
with, since the time limit is not set yet and no visible action is begun by the
authorized organ, the process of enacting the regulation may take a very
long time. Due to this, the old possession tenure arrangement will continue
to exist along with the lease system for a period that cannot be easily
predicted. In addition, the inclusion of the last statement on the provision
regarding the possibility of making revision on the old possession rental
amount may also indicate that such regulation may not be soon reached
since there is a possibility to increase the rental amount to be paid on old
possessions leaving the possibility of providing conversion rules on timely
basis. Hence, there is a possibility of delay of enacting the much expected
regulation.

34
Id
35
See FDRE Lease Proc. No. 721/201, supra note 6, Arts. 6(1) and 2(22)
Converting Old Possessions into Lease System in Ethiopia 135

Moreover, when the provision indicates that “the modality of converting old
possession into leasehold shall be determined by the Council of Ministers
…” it is confusing in terms of the type and nature of these modalities
whether the Council of Ministers will adopt different modalities than those
stated under sub Article 3 of the same provision. This is because sub Article
3 states that “where a property attached on an old possession is transferred
to a third party through any modality other than inheritance, the person to
whom the property is transferred becomes the possessor through lease
holding” (emphasis added). By looking at the way the provision is framed,
it appears restrictive. Thus it is not clear what can be introduced and
determined by the Council of Ministers other than those modalities dealt
with indirectly under the proclamation and explicitly under the Civil Code
of Ethiopia.36
If the Council of Ministers is endowed with a delegated authority of putting
the details of those modalities already recognized under the various
governing laws of the country, there may not be any confusion. Thus, rather
than framing the provision as if the council will come up with new
modalities, it may have been better if it were about setting the circumstances
to be adhered during the conversion of old possession into the lease system
through those modalities already identified by the proclamation itself.
In the meantime, taking into account the manner through which the lands in
old possession were acquired, the proclamation requires a minimum lease
price to be paid by the landholder whenever his/her land is converted into a
lease system.37 If the lease rent is much greater than the rent paid for the old
possession, the payment can be perceived as a burden by the landholders.
The Amhara National Regional State Urban Land Lease Holding Regulation
has also confirmed the approach adopted under the federal proclamation in
stating “without prejudice to the provisions indicated under Article 6 (3), (4)
and 6 of the proclamation [referring to the federal proclamation], old
possessions shall continue as they are until it is determined through public

36
Ethiopian civil code, it has expressly dealt with how individuals may acquire various kinds of right
over a certain property and at the same time it has also dealt with the modalities through which a
person can transfer his ownership rights, usufractuary right through sale, donation/gift, rent. The
property owner may also lose his ownership right through foreclosure etc.
37
FDRE Lease Proc. No. 721/2011, Supra notes 6, Art. 6(7)
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 136

discussions and undertaking detailed study pursuant to Article 6 (1) of the

proclamation”.38
At this level, the Proclamation anticipates the entry point for conversion to
be the incidents of transfer of property on old possession of land to a third
party through any modality other than inheritance. In these transfer cases,
the old possession shall be subjected to conversion to the leasehold system.
Apart from transfers, the case of consolidating a leasehold land with a
previously permit-based holding would also result in uniformalising the
entire possession into leasehold.39
The Amhara Regional State urban lease law provides a series of rules that
shall be considered when a land held through permit system is converted
into the lease system. Accordingly, service of the holding/land for a person
to whom the holding is transferred shall be determined as per basic plan of
the urban or development plan of the locality and its period of contract shall
be on the basis of period of lease fixed for the service in the proclamation;40
a contract shall be concluded on the basis of land use as indicated on basic
plan of the locality;41 when it is to be transferred to a third party, it shall be
made to a lease hold in accordance with size of the plot specified on the
document submitted thereof .42 The law also stipulates different rules
concerning what shall be done when the size of the land is increased or
decreased. Accordingly, if the size of the plot obtained through site
measurement is less than that of the size obtained in the document, it shall
be determined upon the size of the plot obtained through field measurement,
provided, however, that if the size of the plot obtained through site
measurement is greater than that of the size obtained in the document, it
shall be determined by directives.43

38
Regulation No.103/2012, The Revised Amhara National Regional State Urban Land Lease
Holding Regulation, Council of the Regional Government Regulation Zikre-hig of the council of
the Amhara National Regional State in the federal democratic republic of Ethiopia, Bahir Dar
11th, September 2012 (here after Reg. No 103/2012), Art. 6.
39
Belachew Mekuria, 2011, Supra notes 8
40
Reg. No.103/2012, supra notes 38, Art. 7(1)(a)
41
Ibid, Art.7(1)(b)
42
Ibid, Art.7(1)(c)
43
Ibid, Art.7(1)(d)
Converting Old Possessions into Lease System in Ethiopia 137

The authors hold that the conversion of old possession into a lease system
will not be an easy task and, in some cases, it may also come up with
unintended consequences mainly for the following reasons:
 Even though Article 6 of the proclamation empowers the Council of
Ministers to determine the modality of converting old possessions
into leasehold on the basis of detailed study to be submitted by the
ministry, there is no action, as far as the best knowledge of these
authors, taken by any of the concerned bodies. Due to this reason,
the old possessions will remain as they are for unforeseeable period
of time. And this is in compromising every objectives of the lease
system and in creating uncertainty on the part of the old possessors.
 Under Article 3(1) of Proc. No. 80/1993 it has been stated that the
proclamation will be applicable on all urban centers except those
holdings used for residential purposes. And under sub-art.2 of the
same provision, transfer of any dwelling houses to a third party
through any modality than inheritance will shift the old possession
tenure into a lease system. Moreover, pursuant to Article 15 of same
proclamation, holders of an urban land for any other purpose than
construction of residential dwelling were expected to apply for the
concerned organ within the time limit to be determined by the town
administration for conversion of their holding from old possession
into a lease system. Even though this approach could be considered
as one lesson even for the upcoming regulation, it would have been
more clear and practicable if the provision has also addressed as to
what will happen if the landholder become unwilling to apply.
 Under Article 3(1) of Proc. No. 272/2002 as well it was stated that
the proclamation shall be enforced on urban lands held through
permit system, leasehold or by any other means. Moreover, Article 3
(2, (a)) also provides the authority to determine the timeframe when
a certain old possession should be converted into a lease system and
when a certain town to shift its urban land tenure arrangement into a
lease. Nonetheless, currently with regard to the issues stated herein
above, Article 3 proclaimed that, save those exceptional
circumstances, the lease law shall be enforced on all urban centers in
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 138

Ethiopia without making any difference on the land use type.

Therefore, except setting a certain time limit for adopting a lease
system in a certain urban centers upon the decision of the regional
cabinets under Article 5(4) and the four year period in order to
regularize the possessions held without the authorization of the
appropriate body as per Article 6(4) and (5), most of the provisions
which deals with old possession are a redundancy of what has been
said for more than a decade. Therefore, unless the council of
ministers become pragmatic and committed in taking measures in
adopting feasible and appropriate strategies and finally enacting the
regulation, it will be once again rhetoric and is very difficult to see
uniform urban land tenure system in the country in the near future.
 There is no specific time limit set for all urban centers within which
they should convert permit holdings into lease holdings. In order to
avoid the same mistake that has been made while enacting the
proclamation i.e. the failure to set the time limit for the Council of
Ministers to enact the regulation, while such regulation is finally
formulated and approved, a specific time limit should have set for all
urban centers with in which they should convert their old holdings
into a lease system. Otherwise, the process of having a similar tenure
throughout our urban centers will be remote.
 It is clear from the acontrario reading of Article 6(6) that when two
adjacent old possessions of a person are merged, the newly created
plot shall also continue in that state. Since the law requires that the
holding shall be in a lease system if either of the plots to be merged
is under the lease system or if both of them are under lease, for a
stronger reason, when two old possessions are merged, they shall
continue with same status. However, one of the reasons for the
existing lack of success for conversion of old possession into lease
during merger is related with the size of the lease holding to be
merged and the ultimate consequences of the payment. This is to say
that given the ultimate consequence of payment of lease rent for the
Converting Old Possessions into Lease System in Ethiopia 139

entire holding after conversion44 and due to lack of awareness of the

purpose and benefits of the lease system, the old possessors may not
incline to merge and convert their possession into a lease system.
3.3. Payment of “Lease Benchmark Price” and Plot Size Determination
upon Conversion
When an old possession is converted into the lease system, there is no
guarantee that the old possession will be maintained as it had been in the
past. This means the land use (residential, business, building height, etc),
land size and shape, land rent/tax, initial land payment, and so on shall be
determined based on the current or existing rules (such as structural and
local plans, land lease regulations etc).45 This, without doubt, will cause a
fluctuation in land size (large size of lands may be reduced and small plots
may be enlarged) and the lessee will be compensated for any fixture on the
land in case his land is reduced, and he is obliged to make lease payment for
the addition in case his possession is enlarged.46
In line with the proclamation, it is also possible to say that the effect of
transfer of land right or status of landholding in the event of the above three
situations is that people will pay lease benchmark price,47 which shall be set
by every urban center, multiplied by the area of the land size. The
calculation of this price takes into account the cost of infrastructural
development, demolition cost as well as compensation to be paid to
displaced persons in case of built up areas, and other relevant factors.
The concerns of the general public are whether or not landholders [old or
new] would pay for their holdings even though there is no transaction made
on the land. In other words, could they be surprised by a load of debt of

44
The payments for an old possession is very minimal and it is very tempting that the old possessors
wants stick with it because currently for a person who is holding 300 m2 of old possession, for
instance, pays less than hundred birr per year. But if it is through a lease system, obviously even
taking the minimum lease price the holder will pay much greater amount of money for the holding.
45
See Daniel W/Gebriel, 2013, Supra notes 4, p. 79
46
Id
47
FDRE Lease Proc. No. 721/2011, supra notes 6, Art. 2(11) has been defined this term as “the
threshold price determined by taking into account the cost of infrastructural development,
demolition cost as well as compensation to be paid to displaced persons in case of built up areas,
and other relevant factors”.
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 140

lease price without any activity of the above sort? The proclamation says
that it should be decided after thorough research is conducted by the
Council of Ministers. The years are now passing without concrete actions
taken by the government to relieve the fears of the general public as to
whether they have to pay for their holdings even in the absence of any
transaction done on the land.
The question at this juncture is: would the person be required to pay the
lease bench price (and generally comply with the mandatory lease
principles) for the possession he has before and the additions? If the
intention of the legislature favors for payment to the entire possession, that
appears unfair to the possessor now since he had been complying with
payment obligations during the permit system now and before (at least,
taxes for his possession).
As has been indicated under sub Article 2 (a) and (b) of Article 6 of the
proclamation, during conversion of old possession into a lease system, there
is a possibility by which the holding size of the old possessor could be
maintained as it is reduced or increased in line with guidelines to be
stipulated under the regulation to be issued by the Council or City
Administration. If the size is to be reduced, the holder will be entitled with
compensation for the loss of properties attached to the land.48 However, this
particular approach begs a few questions i.e. what will happen if the plot to
be reduced has no improvement? Should this particular plot be taken by the
government without compensation of any sort? Does it not open the
possibility of taking part of one‟s holding that would ultimately create
tenure insecurity? What will be the maximum plot size of urban centers?
What will be the base to determine such maximum holding size?
The issues of reducing the size of old possessors will create serious
resentment towards the government. Especially since the regulation and all
directives will be issued by the executive organ, unless various concerns are
considered, it may provide unnecessary discretions for this branch of the
government and it may also result in restricting individuals‟ constitutional
rights of property. With regard to the issue of compensation, in almost all of

48
Ibid, Art. 6(2)(a)
Converting Old Possessions into Lease System in Ethiopia 141

the existing rural land laws, any rural landholder who losses his holding for
the sake of public interest shall be given compensation. Therefore it could
be tenable to argue that this rule should also be equally enforced in the case
of reduction of urban land during the conversion of old possession into a
lease system.49
Most likely, the size of their land might be reduced due to scarcity of land in
most urban centers of the country. The land in the permit system could
reach up to 500 m2 but now in Addis Ababa city, for instance, the amount
of land allotted for residential purpose is 75 m2 and in Bahir Dar, it is 150
m2. The controversy here is that holders are compensated only for the
property removed from the land but not for the loss of the land itself.
Though the existing land policy (public ownership of land) might be a
defense on the side of the government, the writers argue in case of reduction
of urban land, there must be a ground to strike a balance between the
interests of the public and the landholders. In order to even strengthen our
argument, since the law under sub Article (2)(b) of article 6 rules that in
case there is any chance by which the holding of the old possessor increases,
the holder will be required to pay a lease rent for the additional holding.
Thus, if the law requires additional payment for the added holding, it will
also be fair to provide the possibility of payment of compensation when the
size of the holding is reduced during conversion.
Furthermore, in case there is increment, the holder will be treated in
accordance with lease principles and will be required to effect payment. The
payment to be made for the additional land obtained shall be treated in
conformity with the relevant lease principles.50 That means, the inherent
principles in the lease system that would apply on those urban lands
acquired afresh shall apply to holdings in permit whose size is increased as a
result too. The holder should conclude lease contracts with the government,

49
Pursuant to Art. 40/3 of the FDRE constitution, “The right to own rural and urban land, as well
as of all natural resources belongs only to the state and the people of Ethiopia. Land is an
inalienable common property of the nations, Nationalities and peoples of Ethiopia ….” If this is
the case, even if the reduction of the urban land during conversion is not strictly for „public
purpose‟, so long as their holding is reduced, compensation should have been given for the reduced
holding. Otherwise the urban landholder‟s right to land guaranteed under the constitution will be
at stake.
50
FDRE Lease Proc No 721/2011, Supra notes 6, Art. 6(2)(b)
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 142

which shall include restricted lease period based on the purpose of the land
and the urban center the land is located. And the holder shall conclude a
contract of lease with the appropriate body that shall include the
construction start-up time, completion time, payment schedule, grace
period, rights and obligations of the parties as well as other appropriate
details.51
In general, since there is population pressure in urban centers now, it is most
likely that the land size of old possessors will be decreased as a result of
conversion. In the major cities and other urban centers of the country the
size of land being delivered to urban dwellers is continuously declining. In
any case, a decision in favor of decreasing the size of land holding to a
lesser extent will go against the landholder‟s property rights that are
guaranteed under the constitution.
3.4. Conversion of Old Possessions under Subsidiary Legislations
According to Article 33 of the proclamation, regions and city
administrations shall have the powers and duties to issue regulations and
directives necessary for implementing the Proclamation. This being the
case, the Ministry of Urban Development, Housing and Construction (now
the name is changed to Ministry of urban Development and Housing) has
prepared a model land lease regulation two months after the issuance of the
proclamation. This document was submitted for discussion primarily in
Addis Ababa, Dire Dawa and some regions. Though this model land lease
regulation is not a binding document, it is expected that it will significantly
influence the subsequent regulations to be issued by regions and city
administrations.52
According to the current lease proclamation, as a matter of principle old
possessions, upon any dealings other than inheritance, should be converted
into the lease system. However, depending upon the intention of the
proclamation, pertinent provisions of the law are elaborated under various
subsidiary legislations. In this regard, Article 8 of the regulation (i.e. the

51
Ibid, Article 14 and 16
52
See Ethiopian land law, Ethiopian Legal Brief http://chilot.me/tag/ethiopian-land-law/
Converting Old Possessions into Lease System in Ethiopia 143

model lease regulation of the FDRE Ministry of Urban Development,

Housing and Construction) which is enacted to enforce the proclamation
provides the exceptional scenarios by which old possession shall not be
transferred into the lease system. While formulating these exceptional
modalities, it is perceived that the ministry has based itself on the scope and
intent of the proclamation which is enacted by HPR.
Though most of the modalities adopted under the regulation are consistent
with the terms of the proclamation, the legitimacy of some of these
exceptions must be questioned as it goes contrary to the hierarchy of law
in the legal jurisprudence. In the well accepted hierarchy of laws,
regulations are inferior laws that are to be promulgated with a purpose of
implementing a certain proclamation on the issues similar to it. When the
regulations attempt to govern issues that are contrary to the proclamations
or include further illustrations that are not foreseen by the proclamation, at
least to the extent of the provisions that go against the proclamation, it
shall be made void. While the proclamation restricted the mode of
conversion shall always be made upon any transfer save inheritance, the
regulation shall only have the discretion to maneuver within the ambit of
its superior law and it shall not contradict with the proclamation.
According to Article 7 of the regulation, the following exceptional
circumstances are set and the previous holder(s) of old possession shall
continue to be within the old possession tenure arrangement;
 When an old possession is divided among heirs/legates upon their
interest.
 When divorced couples who hold possession divide it in accordance
with relevant laws.
 When one of the divorced husband and wife or some of the
heirs/legates, up on payment of its value to the other/s agree to take over
the whole of the old possession. (emphasis added)
 A replacement land provided to holders of old possession whose land
was lost by expropriation.
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 144

 Holdings acquired before the coming into force of the lease system and
decided by the administration to continue as an old possession in
accordance with the law.
 Restituted holdings which were nationalized contrary to Proc. No.
47/2007.
 Holdings which were transferred to a third party due to different
circumstances before the coming into force of the proclamation but
whose title deed is in issued in the name of the transferee.
As it can be easily observed from the above stated exceptions, it is possible
to infer that most of the modalities are somehow consistent with the intent
of the proclamation. However, in some cases, the regulation has gone a little
further and has included some exception which might be perceived as a
bird‟s-eye view of the issues. Nonetheless, in other cases, the regulation has
also included few seemingly contrary exceptions. For instance, the third
exception can be questioned in line with the intent of the proclamation. This
is because if either of the heirs or divorcees have reimbursed the value53 of
the property, in effect such arrangement tantamount a transaction concluded
between the heirs or the divorcees. Thus, if this circumstances result in the
transfer of one‟s holding/property to another person especially based on
pecuniary dealings, it seems that the modality is apparently contrary with
the proclamation. Because the proclamation does not have the intent to
include those monetary based transactions as an exception like the case of
inheritance.
Most of the above stated exceptional scenarios are also adopted under The
Revised Amhara National Regional State Urban Land Lease Holding
Regulation No. 103/2002. However, the regulation has also provided further
additional scenarios that favor for non-conversion of old possession into the
lease system. Accordingly, among the various scenarios that will not result
the conversion of old possessions into the lease system, it is provided that
“non-documented holdings shall be caused to have a holding certificate in

53
It is also confusing whether such value refers to the value of the property attached to the land or
the land itself.
Converting Old Possessions into Lease System in Ethiopia 145

accordance with a directive to be issued by the Bureau.”54 So does this mean

that the regularizing of holdings held without authorization of the
appropriate body shall remain as old possessions? Unlike what is stated
under Article 6(2) of the Addis Ababa city administration urban land lease
regulation No.49/2004, if this is the intent of the regulation, it may
contradict with what has been stipulated under Article 6 (4) of the
proclamation. Generally, the overall issue here is in contrary to what proc.
No. 721/2011 stipulated, the above subsidiary laws, that repeatedly referred
the proclamation, go beyond establishing those scenarios that shall not result
conversion of old possessions into the lease system.
3.5. Benefits and Challenges of Conversion of Old Possessions into the
lease system
Conversion of old possessions to the lease system will benefit not only the
government, but also produce incentives to the individual landholders and
third parties too. However, the conversion does not only entail benefits;
rather, it has also its own challenges. The following sub-sections address
these issues. Accordingly, if old possessions are totally/wholly converted to
a lease system they may entail the following benefits:
A. Benefits
The benefits could be seen from the perspective of the government, the
landholders and third parties. On the side of the government, there will not
be two types of land tenure arrangements in towns (some part of the urban
land administered under the lease system while the remaining land by old
possessions). Uniform land tenure and simplified land administration will
prevail in urban areas. A better land information system that will help for
increased levy of tax since it will help to expand tax bases; and it will bring
about coordination among stakeholders. Also it will generate revenue for the
government so that the latter will invest much in infrastructure and other
services. The tax collected from old possessions is not yet satisfactory.
Accordingly, if one holds 300 m2 land, the annual rent will approximately
be 42 Birr. In case of a lease, however, the revenue to be collected would be

54
Reg. No.103/2012, supra notes 38, Art. 8(5)
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 146

incomparable. Furthermore, the government will easily control rent seeking

behaviors and the problems of partiality since the lease system urges the
need for proper information handling.
Also, from the landholders‟ perspective, conversion of old possessions to
lease hold will have a multi-faceted advantages including, the right to
mortgage lease rights since as it is provided in the proclamation, the lease
holder can mortgage his rights to the extent of payment he has already
made; the holder will get grace period concerning the lease price payment;
the holder can safely transfer his lease holding rights so long as he
completes half of the construction (in the old system, however, one need to
complete/finish the construction before transferring it; landholders will
benefit with better infrastructural services since supply of infrastructures
may take the first step before land is delivered through the lease system at
least legally speaking; better secured tenure wise, landholders will be
provided with certificates that ensure the holder‟s holding on the land and
protects from any form arbitrary eviction. Additionally, from the perspective
of third parties, the right to sub-lease is conferred.
B. Challenges during Conversion
From the interview results that the authors have conducted with some
experts on the field and from the general concerns of converting old
possessions into lease system that have been confronted by the different
lease proclamations so far, the following are considered as challenges
during conversion.
- Rent seeking behaviors of different stakeholders: It exists in each
stage of conversion scenarios and methods like during preparing
legal cadastre, in preparing legal maps (certificates) for
landholders, and transfer of holding rights. The problem could be
exacerbated since professionals may not act responsibly and the
checking mechanisms to curve from their misbehaviors are not
properly implemented to the degree required. Also while zoning
a certain land use, the prices there would be determined through
ranges (just like zone A may be from 500-1000 birr). Here,
professionals usually abuse the ranges to fix the amount either to
Converting Old Possessions into Lease System in Ethiopia 147

the maximum or minimum range level based on their personal

interests.
- The lease proclamation was not able to get the general public
trust during its draft stage and even after it was officially
promulgated. There was frustration on the side of the people;
they were not aware of the possible advantage they will get if
they opt for lease.
- Conversion usually entails payment burden on leaseholders
basically when there is a quest for expansion of holdings as one
means of converting old possessions into lease system. The
payment for the new added parcel will be summed up/added with
the old one.
- There are problems of coordination between and among
stakeholders especially to properly administer lease payments.
- Since converting old possessions to the lease system is a vast
task, it needs various preconditions and efforts. Just like a well
organized land bank, land preparation for the organ that will
deliver land through lease principles and the like. However, in
reality these channels are not properly organized.
- Surveying instruments are not found in sufficient manner. It is
not a doubt that the role of survey instruments will play in proper
administration of land. Even if there are some important
instruments, our professionals lacked the skills to use them to the
required level possible. After people acquire land, there are cases
where the size of the land will vary (increase or decrease).
- Possible oppositions from old possessors: It should be noted that
the essence of old possession as it is incorporated in the current
lease holding proclamation might be opposed by old possessors
in various occasions due to either of the following grounds: 55 on
one hand, due to the restriction imposed by the law old

55
Araya Asgedom, Salient Features of the new Ethiopian Urban Lands Lease Holding Proclamation
No.721/2011 and its Implications on the Ethiopian Economy , LLM thesis, Addis Ababa
University, January 2013, p. 129
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 148

possessors cannot sell their possessions for a good price, because

buyers are subjected to two payments when buying old
possessions. On this basis, absence of the freedom to sell their
holding at better prices might hinder the possessors from solving
their economic problems. On the other hand, old possessors
cannot currently obtain a good amount of loan by mortgaging
their old possession because location value will not be taken into
consideration and banks are not sure how much lease will a
buyer pay in case the debtor defaults. Also, as stated in the
proclamation, after conducting a study, the Council of Ministers
may approve the study and decide for mass conversion of old
possessions to lease holdings. In consequence, such possessors
might be subjected to payment of lease price which might be
beyond their capacity. Also, if the Council decides for old
possessions to remain as they are, as the increase in the existing
rental rate is one possible alternative put under the proclamation,
if the rental rate increases without taking the capacity to pay for
an average old possessor, old possessors will be subjected to
either the sale of their possession at a discount price or they will
be entering into a huge debt.
3.6. What shall be done before Towns Convert Old Possessions into the
Lease System?
As indicated above, the process of conversion of an old possession into the
lease system is not an easy task. It may require multifaceted activities and
involvements of various stakeholders. The process of converting old
possession must also been made very cautiously because it may be wrongly
perceived by the urban landholders and escalate the contentions that we
have observed following the enactment of Proclamation No.721/2011. The
proclamation and the model lease regulation are silent with regard to the
kinds of preparatory tasks that should be carried out prior to the conversion
of old possession into a lease system. However, the Amhara Regional State
Lease Implementation Directive No.1/2005 provides the following as a
prerequisite to be fulfilled before the commencement of the conversion.
Accordingly, towns which are shifting their tenure arrangement completely
into a lease system shall carry out the following tasks. They are required to
Converting Old Possessions into Lease System in Ethiopia 149

complete the allocation of their human resources, preparation of structural

plan of the institution, prepare the land grade and make it approved and
determine the initial lease price.
Generally the following strategies can be adopted in successfully converting
old possession into lease holding:56
- Awareness creation on the old possession holders about the benefits
of converting their holdings into a lease system.
- Registration of entire holdings in the urban centers in order to
identify the tenure arrangements of each plots, their size and rightful
holder.
- Increasing the rent price of old possessions in comparison with the
lease price or to narrow the gap between these two payments, to ease
the existing resistant to pay the lease rent.
- To train involved governmental agencies to tackle existed corruption
and rent seeking behaviors and in order to make accurate
measurements of parcels.
- The entire land administration system must be built on the principles
of accountability and transparency.
4. Conclusion and Recommendations
As this article has demonstrated, the overall issue in the lack for mass
conversion of permit holdings to the lease system in Ethiopia today is due to
the absence of clear legislations and elite political and legal administration
in the area of land to successfully manage these possessions. The attempt to
convert old possession into the lease system has also been intended
previously but failed. The current governing urban land lease proclamation,
unlike its predecessors, authorized the Council of Ministers to enact detailed
regulation with the aim of converting old possessions into the lease system.
But so far there is no regulation enacted by this organ and this is creating
paramount challenges in total conversion of old possessions and having a
unified tenure arrangement in urban centers of the country.

56
Interviews with Mr. Swahle Abu, Amhara National Regional State bureau of urban development,
land and land related property registration core process head, held at his office on 18/01/2008.
Bahir Dar University Journal of Law Vol. 6, No. 1 (2015) 150

One of the challenges in converting old possession is lack of awareness on

the part of the landholder about the benefits of the lease system. Moreover,
lack of trust on the very purposes of the proclamation; payment burden on
the landholders who intend to convert their holding into a lease holding;
questionable readiness of the municipalities to convert old possessions into
a lease system and their minimal role in creating the required awareness and
failure of the council of Ministers to begin a thorough study and discussion
on the expected regulation are among the identified challenges for
converting old possession into the lease system.
In the process of conversion, various strategies shall be adopted by different
stakeholders. Among others, awareness must be created to the society about
the benefits of converting their holdings into a lease system; registration and
adjudication of entire holdings must be carried out in all urban centers in
order to identify the tenure arrangements of each plots, their size and
rightful holders; increasing the rent price of old possessions in comparison
with the lease price or to narrow the gap between these two payments, so as
to ease the existing resistant to pay the lease rent and training involved
governmental agencies so as to tackle existed corruption and rent seeking
behaviors and in order to make accurate measurements of parcels.
Therefore, based on the above discussions the following recommendations
are forwarded:
 The Council of Ministers shall come up with the detailed rules for
converting old possessions into the lease system. Especially in
tackling previously existed gaps in various urban land law with
regard to conversion of old possession, this regulation should be
framed in containing required specifics and it has to be also feasible
and set the time frame for the conversion of old possessions into a
lease system.
 The urban land lease model regulation has greater clarity on which
possessions could not be converted into the lease system compared
with the proclamation. However, legally speaking, in some cases it
deviates from what the proclamation rules, therefore, the deviations
must be rectified.
Converting Old Possessions into Lease System in Ethiopia 151

The issue of plot size determination and payment of lease price upon
increase in size for the land one holds in permit shall be fair for the
landholders. Whereas, during decrement of holding size, the landholder
should be compensated for not only the loss of improvements but also for
the land reduced, maybe by taking into account our approach of paying
compensation for the loss of agricultural land.