1. Urban Land Transfer and State Monopoly in Value Capture in Ethiopia Daniel W. Ambaye Bahir Dar University, Ethiopia

2. Introduction Expansion of cities require extensive annexation of rural farm land at the verge of cities and towns This land is annexed by cities through expropriation measures State transfers land for urban housing and investment mainly through lease auction which fetches large profit On the other, state pays inadequate compensation to those who lost land which creates unfair environment This paper suggests for the state to reconsider the revision of the amount and thereby shares the profit it solely captures

3. Methodology Desk review of secondary sources Personal observation Media Lease auction results published on line The data is focused on the lease auction prices from the expansion zone part of the Addis Ababa city

4. Land Rights in Ethiopia Ownership of land vests in the state and people of Ethiopia which shows – Joint ownership of land by the people and state Peasants and pastoralists are entitled to obtain land free of charge This right gives life time prerogatives of use, bequeath and lease of the land to the holder No sale of land allowed Protection against arbitrary state eviction Compensation in the event of expropriation Yet, constitution’s position acquisition of urban land for different purposes is hazy

5. Lease proclamation Urban land can be acquired either through allotment or auction Few organs can get land by allotment (without tendering) eg. public offices, religious institutions, manufacturing, publicly approved self help housing programs…. As a principle, every one has to bid/auction to get land for residence or business Restrictions on urban land transfer

6. Selling unfinished properties is restricted – No benefit if there is sale – municipal supervision during sale – Limited credit access for unfinished properties – Rational: to discourage rent seeking and to encourage completion of housing and thereby boosting housing stock

7. Urban Land Grade in Addis Ababa Zone Range of Initial Lease Price USD GradesPrice USD Central Market Zone44-841 84 2 76 3 66 4 54 5 44 Transitional Zone27-511 51 2 46 3 40 4 34 5 27 Expansion Zone9-171 17 2 14 3 10 4 9

8. The Addis Ababa city floats land for residence and business at least every two months 100-300 people bid for a plot of land at a time The highest price witnessed so far is 17,775 USD per m2 in the city center (Merkato)

9. Expropriation is a compulsory taking of land for public purpose activities Compensation is paid only for immovables (plants and building) established on the land and improvements made to the land Loss of land is not as such compensable But displacement compensation is paid as ten times of annual produce (if the land is to be taken without replacement)-------by taking average of 5 years income The Addis Ababa city calculates the compensation of loss of land as 20 birr (1USD) per square meter Expropriation is a compulsory taking of land for public purpose activities Compensation is paid only for immovables (plants and building) established on the land and improvements made to the land Loss of land is not as such compensable But displacement compensation is paid as ten times of annual produce (if the land is to be taken without replacement)-------by taking average of 5 years income The Addis Ababa city calculates the compensation of loss of land as 20 birr (1USD) per square meter Land expropriation

10. Compensation…. Compensation is criticized as inadequate mainly because it: – leaves out the location (site value) of land during valuation – It basis its calculation by taking previous 5 years produce Many farmers who lost their land to urban centers do complain on the insufficiency As joint owners they are not provided with enough compensation that recompense the loss of land

11. State monopoly in value capture By taking land at cheaper price from farmers state transfers it to urban residents and investors at high price: State justifies this – on the belief that only all land belonged to state – on the basis of state provision of infrastructure at no cost to society – Infrastructure is what increases 70% land value But it even does not give the rest of the 30%

12. ZoneLocation Initial price per m2 in USD Auction Date Auction Winning price range per m2 in USD Compensat ion paid to farmers per m2 in USD Winner Min Winner Max ExpansionAkaki kaliti 10 17 th Oct 2015 209805 1 ExpansionYeka 10 17 th Oct 2015 2001100 1 ExpansionNifas Silk 10 17 th Oct 2015 4511685 1 ExpansionAkaki kaliti 11 16 th Sep 2015 127750 1 ExpansionAkaki kaliti 11 15 th June 2015 328714 1 Transition Addis Ketema 66 15 th June 2015 6251140 1 ExpansionKolfe 14 15 th June 2015 6002446 1 ExpansionBole 9 15 th June 2015 3341438 1 ExpansionAkaki 11 14 th May 2014 286605 1

13. ExpansionAkaki 11 14 th May 2014 286605 1 ExpansionBole 10 14 th May 2014 3331142 1 ExpansionNefas Silk 15 14 th May 2014 8551827 1 ExpansionGulele 11 14 th May 2014 309650 1 ExpansionKolfe 15 14 th May 2014 3331505 1 S.NS.N ZoneLocationInitial price per m2 in birr Auction Round Auction Winning price range per m2 in birr Compensation paid to farmers per m2

14. Rethink on: Equity of land holding (Pple of equity requires us to create more access to land) Constitutionality of the lease proclamation on property right Constitutional principle of equal ownership by the state and the people Share of profit

15. Recommendations Through legislative amendment: Ease property right transfer in urban areas Share profit with land holders by paying adequate compensation Create opportunity to accessing land to urban middle and lower income group