Access to Urban Land and its Role in

Enhancing Business Environment:

Multi-track versus Mono-route Land-use Markets
Elias N. Stebek 
Abstract
Access to urban land for business activities relates to access to working space,
or using and/or controlling a unit of land based on open access, land ownership,
land lease, business lease or premise rentals. Diversified and broad-based
access to urban land with due regulatory control against speculation and
holdouts enhances the dynamism and competitiveness of business activities,
while on the contrary, mono-route land use markets such as municipal control
of urban land provision suppresses the supply and transferability of land use
rights thereby creating land use market imperfections. This article discusses the
role of access to urban land and its transferability in enhancing the business
environment, inter alia, as one of the major inputs in the production of goods
and services. Rising urban population and correspondingly increasing business
activities lead to urban intensification and urban frontier expansion to adjacent
rural areas which should be addressed with prudence and caution in the context
of accurate land information, efficient utilization of urban land, effective and
transparent land governance and due attention to good practices in comparative
legal regimes.
Key terms
Access to urban land, business environment, urban land law, urban
intensification, urban extensions, informal settlements, Ethiopia.
DOI [Link]
______________
Introduction
Every person occupies a space during each second of his/her lifetime. While
most of the space we occupy at any given moment is public space (such as a
street or an open space), there are units of land over which individuals, groups
of persons, communities or juridical persons claim a spectrum of exclusive
rights of use and control. Access to land does not thus mean dominion over


Elias N. Stebek (LL.B, LL.M, PhD), Associate Professor, St. Mary’s University, School of
Graduate Studies. An earlier version of this article was part of an unpublished research
paper titled “Access to Urban Land for Private Sector Development in Ethiopia” (dated
June 9, 2015) which was submitted to Private Sector Development Hub, Ethiopian
Chamber of Commerce and Sectoral Associations.
1
2 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

commoditized land as its ‘master’, per se, but access to be at a certain space, or
use (and control) a certain plot of land (in common with others, as a member of
a certain group or exclusively as an individual). It also involves the security,
tenure and transferability of the access which is obtained.
In the context of business undertakings, the claim over well-defined and
secure rights to use (and control) a certain space on land takes the forms of
working space or business premises through open access, shared access, rental
tenancy, leasehold, ownership and other forms. While most business activities
merely use premises or floor spaces, others invest on the land. “Access to land
with sufficient security to encourage investment for its efficient use and
development is a vital component in development strategies for individuals,
groups, cities and nations”.1 This is more evident “in urban areas where demand,
and therefore prices, of land for all uses are highest”.2
Land constitutes one of the factors of production, and access to land
facilitates access to a key resource in value adding economic activities. On the
contrary, inadequate access to land and restrictions thereof constitute entry and
transferability barriers to enhanced economic activities thereby adversely
affecting business environment and economic development. As Okoth-Ogendo
duly observes, land “is an economic resource and an important factor in the
formation of individual and collective identity, and in the day-to-day
organization of social, cultural and religious life”.3 Moreover, land is “an
enormous political resource that defines power relations between and among
individuals, families and communities under established systems of
governance”.4
The triadic functions of land as one of the foundations of our lives include (a)
its role as the source and foundation for our natural resources which constitute
inputs in the production of goods and services that relate to our basic needs; (b)
its services as sink in the course of waste disposal and recycling; and (c) its
function related to our aesthetic needs, amenities and reverence to nature. In its
first function, land is the foundation of business undertakings in relation to the
space, inputs and raw materials that are indispensible in all economic activities,

1
Geoffrey Payne (1996), Urban Land Tenure and Property Rights in Developing Countries,
A Review of the Literature, August 1996, Prepared for the Overseas Development
Administration, p. 13.
2
Ibid.
3
Okoth- Ogendo. Keynote Address at a Workshop on Land Tenure Security for Poverty
Reduction in Eastern and Southern Africa. Organized by IFAD/ United Nations Office for
Project Services/Ministry of Lands, Housing and Urban Development, Government of
Uganda. Kampala, 27-29 June 2006 [in Improving access to land and tenure security,
Policy, IFAD, December 2008, page 5].
4
Ibid.
Access to Urban Land and its Role in Enhancing Business Environment 3

particularly where the economy is factor-driven, a phase which countries

undergo before their eventual transition to technology-driven and innovation-
driven phases of production of goods and services.5 As noted by Kunte et al,
land represents 30 to 50% of the national wealth in developing economies.6 This
article deals with the significance of access to land, business premises and
working space and the need for ease in their transferability to the most efficient
user in the pursuit of enhancing conducive business environment. As the themes
are general and comparative, this article does not relate most issues with the
Ethiopian context. Other articles (such as the one which is concurrently
published with this article) can address specific themes regarding access to
urban land in Ethiopia.
The first section introduces the key issues that can be regarded as the
constituent elements in access to land. Section 2 deals with the influence of
access to urban land in improving ease in doing business and it also highlights
land market imperfections. The third and fourth sections of the article deal with
the challenges that are inherent in the course of enhanced urbanization through
urban intensification and urban land expansion. The fifth section highlights the
significance of land information and land governance in access to urban land.
Sections 6 and 7 deal with tenure under public ownership of land, the
misconceptions thereof, and a brief discussion on China’s pursuits in urban land
law reform with regard to tenure and transferability despite public ownership of
land. The eighth section highlights some comparative experience regarding the
scheme of incremental tenure titles for informal settlements.

1. Key Issues in Access to Land

Based on a ‘systematic exploration of the land issues from the perspectives of
private sector development,’ Muir & Shen suggest a taxonomy which captures
‘the multilayered and interrelated obstacles facing private investors seeking
access to land’.7 They indicate the following four key issues investors can face
in relation to access to land:
- “Access: Is the land I need available? If so, from whom, at what price, and
on what terms? How long will it take?

5
See the elements in factor driven, technology driven and innovation driven economies, in
World Economic Forum (2012), The World Competitiveness Report 2011-2012, Geneva.
6
Arundhati Kunte, Kirk Hamilton, John Dixon, and Michael Clemens (1998), Estimating
National Wealth: Methodology and Results, Departmental Working paper (World Bank,
Washington, DC).
7
Russell Muir and Xiaofang Shen (2005), “Land Markets: Improving Access to Land and
Buildings by Investors”, FIAS World Bank Group, October 2005.
4 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

- Security. If I can get access to suitable land, what will be my rights over the
land? Will my property rights be secure? Will I be able to use them as
security for bank loans?
- Use. Once I have acquired land, how may I use and develop it? How long
will it take to obtain all the permits for construction and related activities—
and how much will it cost?
- Consistency of treatment. Are my competitors being treated in the same
way?”
Each key issue in this model has sub-themes and conditions that determine the
impact of access to land on good business and investment environment. For
example, the issue of Security involves “titling system, registration process,
collateral rules, and transfer of property rights”, while Use, embraces location
permits, construction/building permits, environmental impact assessment and
utility connections. We can use these key issues in conjunction with various
indicators of business environment. For example, elements of business
environment (used in World Bank Business Environment Snapshots) in
accessing land include the strength of land lease rights, strength of business
premise ownership rights, access to land information, time (number of days) to
lease land from private land use right holders, and number of days to lease land
from public entities. Ease in Doing Business indicators developed by the World
Bank are also related with these key issues because five of the eleven indicators
(as shown in Section 2) directly or indirectly relate to access to land.
Access to land in the context of conducive business environment further
renders the issues of sustainability and other factors relevant. ‘Future resilience’
and sustainability of cities requires the anticipation and adaptation to
prospective challenges of resource scarcity, population growth and climate
change while at the same proactively working toward enabling cities to “support
existing business and attract new ones”.8 Various key drivers are noted to have
impact on the decision of potential economic actors to “locate in a particular
business environment”, which include proximity to market, communication
links (such as transportation and information technology), access to resources in
terms of proximity and steady supply, availability and affordability of land and
premises, skilled workforce, attractive living environment and government
incentives.9 Thus access to urban land involves not only access to working space
or the physical availability of land or business premises per se, but it further
relates to various interrelated factors that deserve attention.

8
Forum for the Future, Sustainable urban enterprise: creating the right business
environment in cities (commissioned by Opportunity Peterborough), available at
<[Link]
[Link]>, Accessed: 30 December 2014.
9
Ibid.
Access to Urban Land and its Role in Enhancing Business Environment 5

2. Access to Urban Land, its Influence in Doing Business,

and Overview of Market Imperfections
Various internal and external factors determine business environment. Laws
such as the legal regime on access to land are among the external factors which
determine the setting in which business operates.
Doing Business sheds light on how easy or difficult it is for a local
entrepreneur to open and run a small to medium-size business when
complying with relevant regulations. It measures and tracks changes in
regulations affecting 11 areas in the life cycle of a business: starting a
business, dealing with construction permits, getting electricity, registering
property, getting credit, protecting minority investors, paying taxes, trading
across borders, enforcing contracts, resolving insolvency and labor market
regulation.10
These eleven indicators are compared annually among countries, and this
enables comparison not only among countries but also among economies in a
given region or sub-region. Six of the eleven indicators are directly of indirectly
related with access to land: (a) Starting business envisages access to working
space or business premise through owned premises, rentals or business lease.
(b) Utilities including electricity are factors that render a working space or
business premise usable. (c) Registration relates to various key elements of
access to land such as adequate and reliable land registries, and the ease or
difficulty in selling or mortgaging property. (d) Getting credit is, inter alia,
enhanced or diminished by the scope of using landholdings as collateral for
bank financing. (e) Trading across borders is related with access to land because
this indicator refers to the convenience of a given location for trans-boarder
trade which is one of the determinants in time and cost for sea transport (in
relation to exports and imports). This indicator also includes the trade logistics
regarding the time and cost of inland transport to the largest business city/cities
of a county.
Access to land in the context of manufacturing, for example, usually
envisages (a) acquiring land to construct business premises, or (b) buying
business premises (or working space) as owner occupant, (c) premises rented for
business, or (d) business lease. These options involve certain levels of certainty
in duration. Manufactures, for example, have vested interest in the scope and
security of lease and ownership rights. This evokes two core concerns related

10
World Bank (2014), Doing Business 2015, Going Beyond Efficiency: Economy Profile
2015, Ethiopia (2014, The International Bank for Reconstruction and Development / The
World Bank), p. 4.
6 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

with access to land, i.e. availability of land in an efficient market, and secondly
affordability of the price.
In a market economy, the forum for access to urban land is the land market.
As Evans notes, “[t]he conditions necessary for a perfectly competitive market
would be that, with respect to the sale of any property, there were many buyers,
many sellers, full information, and similar properties also on the market”.11 The
fourth element of ‘similar properties’, in ‘perfect markets’ traces its origin from
the sale of homogeneous goods “usually thought of as some agricultural product
like wheat of a specific grade, and the participants in the market [were assumed
to] have full information as to the prices of alternative products, etc”.12 This
assumption of homogeneity is not, however, fully applicable to land markets,
inter alia, because land is “fixed in location” and “what is apparently being
traded” is specific area of land, while “what is actually being traded is some
characteristic of that piece of land.13
The first and second elements in the definition of the ‘perfect market’, i.e. the
need for ‘many buyers’ and ‘many sellers’, are also complex in the context of
real estate and land markets. Various categories of sellers of land (or land use
rights in the Ethiopian context) have different motives. For example, an owner
occupant tends to charge relatively more than what a classical absentee landlord
would have sought. For the owner-occupant, the land and the house represent
‘home’ with various memories and attachments, in addition to the level of
indispensability he/she might feel towards continued occupation. Likewise, the
developer (as a seller) enters into the market with a different mindset of
investment and profit, which varies from that of the classical landlord (who
acquires land through inheritance, political pressure or nominal purchase). The
developer (as a seller) is also different from a speculator who enters into the real
estate market to re-sell at high price in contrast to responsible developers who
have a different motive of reasonable profit mark-ups usually commensurate
with their value creation. This is because such developers usually have their
long-term goodwill and sustainable economic benefits in view.
All these factors can affect land (land use) markets, and in effect render them
relatively imperfect. This relative imperfection can, inter alia, be manifested in
land price hikes and steady rise in business premise rent which have adverse
impact on social wellbeing and the business environment. It is in the context of
such imperfections that house markets go through series of house price booms
and significant price declines in various cities.

11
Alans W. Evans (2003), Economics, Real Estate and Supply of Land (Blackwell
Publishing), p. 7.
12
Id., pp. 48, 49.
13
Id., p. 49.
Access to Urban Land and its Role in Enhancing Business Environment 7

While Ricardo focused on factors such as the fertility and inelasticity of rural
land in relation to other factors of production, Von Thunen and Alonso’s
contributions relate to the impact of location and distance (from the market
centre) in land markets. Various neoclassical economists have promoted the
intervention of planning in the supply side of land to lower land value and
enhance access to land. This has led to settings such as intensification of urban
land use14 (such as higher density construction)15 and the extension of urban
frontiers to surrounding rural land.
The particular features of real estate property and the imperfection and the
relative inefficiency of its pricing have thus brought about different responses.
On the one hand, the intervention of the planning option and state intervention is
suggested. This emanates from public interest in land and its inherent features
which do not warrant the perception of land as a commodity. On the other hand,
there is the libertarian view which mainly traces its roots to US thinkers. It is
influenced by the setting whereby US homestead farmers mostly owned their
own land. Unlike various countries such as Britain, the US homestead farming
(and farm owner-occupant) tradition had no symbolic attachment to the
ownership of land by the ‘Crown’. Nor does the US farmer-occupant homestead
farming legacy reflect collectivist influences which prevailed in various
traditional societies in Africa and various parts of the world.16 This setting has
prompted the libertarian view on land markets which, as Evans observes,
assumes “that the views of the owners of land coincide with the wants of society
so that if agreements are not thought to be necessary by the owners of the land
then they are not necessary for the protection of the rest of society”.17
Even if this libertarian view has its apparent downsides, the other extreme of
paternalistic intervention was a failure as was, for example, proven in China’s
land laws during the 1950s and 1960s which had bestowed land rights on
communes.18 This extreme had also prevailed in the land laws of the Soviet

14
Id., p. 31.
15
Id., p. 38.
16
For example, of the 5,739,657 farms in the United States in 1990, 54.9% of the farms
were owned entirely by the occupants, 7.9% were “owned in part by the occupants and in
part by some other person or persons from whom they are rented by the occupants”.
Another major category of tenure involved tenants on shares (22.2%) and tenants for cash
(13.1%). See, Henry Gannett (1909), “Farm Tenure in the United States”, The Annals of
the American Academy of Political and Social Science, Vol. 33, No. 3, Conservation of
Natural Resources (May, 1909), p. 164.
17
Evans, supra note 11, p. 123.
18
See for example, Yang Yao (2007), “The Chinese Land Tenure System: Practice and
Perspectives”, [in Ashok Gulati & Shenggen Fan, Editors (2007), The Dragon & the
Elephant: Agricultural and Rural Reforms in China and India (Johns Hopkins University
Press), pp. 49-70].
8 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

Union and Eastern European former socialist economies. This was mainly
attributable to a conception of property rights over land, which goes to the other
extreme of undermining and neglecting the market value of land altogether. As
briefly indicated in Section 7 below, the economic performance of China, since
the mid-1980s shows that a legal regime that classifies land as a domain of
public ownership can recognize the ownership rights of landholders over their
land use rights (while the state owns the land) and enhance land use markets by
allowing urban landholders to participate as sellers (in the form of direct sale or
contribution as capital share) in addition to the role of the state as seller of land
user rights in the market.
Needless-to-say, land is not the product of human labour with few exceptions
which involve human labour inputs (in reclaimed land from coastal waters,
marshy land, land fill, etc). Yet, land has attained exchange value owing to its
scarcity as population increased and owing to saleable extractions or products
from land thereby eventually eroding traditional systems of communal land use
and bringing about the gradual emergence and coalescence of individual
appropriation. This objective reality renders the subjective denial of market
value to land (or land use rights) untenable.
It is to be noted that the imperfection of land markets does not justify the
monopoly of land rent through the concentration of land under the control of a
few owners. If for example, “a single land owner or landlord owns the whole
area, the uses to which the land is put can be restricted, either directly … or
indirectly … through constraints in the contracts with tenants. If then the amount
of land used … is restricted … [there will be] higher income or rent from the
land”.19 This evokes a query whether the imperfection of land markets can be
rectified if the state regulates the transactions through means such as planning
constraints, to which Evans responds: the “observable relationship between the
number of properties for sale and … house prices helps to explain the effects of
planning constraints on the amount of land available for development. … If the
amount of land is limited by a constraint imposed by government the
implication is that prices will rise. ...”20
In other words, such constraints can worsen land market imperfections if
they do not significantly increase the amount of land and real estate sellers on
the market. In settings which enhance the supply of land to the market through
multimodal sources such as the transfer of land rights by private landholders and
the enhanced availability of publicly held land through land banks, state
intervention to enhance land supply can have positive effects in land markets.
Yet, if the land supply mainly comes from the public domain, the state

19
Evans, supra note 11, p. 129.
20
Id., p. 168.
Access to Urban Land and its Role in Enhancing Business Environment 9

intervention (through auction) may not lead to low land lease rates as long as
many buyers of land use rights chase land rights from a significantly
monopolized land bank.
Even if land is an economic asset subject to market transactions, “social,
ecological and aesthetic concerns mean that purely market-driven land use will
be suboptimal”.21 These “externality concerns are sufficient in many
circumstances to necessitate state ownership of … environmentally sensitive
areas, national parks, roadways, and other public spaces”.22 It is thus in light of
these features of land as an economic asset and other externality concerns that
states intervene in and outside the land market by avoiding the two extremes of
laissez faire (in the name of free market) and monopolistic or paternalistic land
market dominance.
Sustained population growth and urbanization enhance demand and make it
difficult to strike a balance between efficiency (productivity) and equity through
efficient land markets if land supply is dominated by a single source.
… Unlike other resources or commodities, land is unique in three key
respects: (1) It cannot be moved; (2) it cannot, at least in law, be destroyed,
(since it is held to be the surface area of a quantity which goes downwards
to the Earth`s core and upwards into space …) and; (3) its supply cannot be
increased, (in law, land is finite, though in practice usable land can be
increased by reclamation programmes). In developing countries, markets in
many sectors are often dominated by external factors, making it difficult for
them to be self regulating and achieve either productivity or equity
objectives. Several factors distort urban land markets and prevent them
from being self regulating. Rapid and sustained urban growth has ensured a
permanently high level of demand which provides disproportionate benefits
to land-owners, or those controlling land allocation.23
As Payne observes, stable and steadily rising “level of demand provides
guaranteed levels of return on investment” in real property, and as a result
“other, more productive sectors of the economy may be unable to match and this
serves to attract even higher levels of investment [in real property], which
further fuels land price inflation”.24 This further exacerbates the traditional
function of land as “a means of transferring funds generated in the informal, or
‘black’ economy into the formal sector with minimum risk”.25 Payne duly notes

21
Tony Burns and Kate Dalrymple, (2012), in Janelle Plummer, Editor (2012), Diagnosing
Corruption in Ethiopia: Perceptions, Realities and the Way Forward for World Bank
Group Key Sectors (The World Bank, Washington D.C.), p. 296.
22
Ibid.
23
Payne (1996), supra note 1, p. 16.
24
Ibid.
25
Ibid.
10 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

that “these factors tend to intensify the levels of speculative investment in land
and inhibit the efficiency and equity which markets provide in theory”; this is
further aggravated by “the considerable distortion which also exists in urban
income distribution” thereby making it “difficult to achieve equity in access to
land” at affordable prices.26

3. The Paradox between Urban Intensification and

Affordability
Economic activities grow commensurate with the rise in urban population,
change in living standards and lifestyles. This brings about the intensification of
built up floor space and the frontier expansion of urban centres that are
inevitable as long as there is urban population growth. “Most urban economic
activities do not require land per se but only the floor space built upon it”; and
the “spatial concentration of floor space where economic activities are taking
place allows the increasing returns to scale characterizing cities’ economies”.27
In urban centres, the demand for land is thus “in reality a demand for floor
space”.28 However both reactions to urban population growth, i.e. intensification
and urban frontier expansion involve a paradox of bittersweet packages.
3.1 Intensification
In urban settings, intensification refers to the intensity in the usage of land for
built up area by enhancing floor space of buildings, improving infrastructure and
enhancing amenities (parks, open spaces, landscape views, etc) commensurate
with the intensification of the built up portion of a city. Bertaud notes that
“[t]he consumption of land per unit of floor space varies enormously from city
to city and within cities. This variation is due in part to consumer demand and in
part to government regulations and government landholdings”.29
Intensification does not mean haphazardly crowding urban land space with
match-box like buildings (irrespective of built up plots vis-à-vis roads cum open
space ratio) but rather refers to liveable cities that efficiently use land by
enhancing floor space per unit of land. This is the case even in the most densely
populated cities because intensification does not mean congestion without due
attention to wider streets, street alignments, adequate access to the interior of the
city, landscaping, transportation, utilities, noise pollution, glaze and amenities.

26
Ibid.
27
Alain Bertaud (2010), Land Markets, Government Interventions, and Housing
Affordability (Global Economy and Development at Brookings, Working Paper 10, May
2010), p. 6.
28
Ibid.
29
Id., p. 18.
Access to Urban Land and its Role in Enhancing Business Environment 11

A case in point is intensification by upgrading informal settlements and slum

areas by significantly enhancing floor space and at the same time equitably
accommodating original residents in newly upgraded floor spaces, and
concurrently availing significantly augmented floor space for new residential,
office space and business consumption. The following figure illustrates
intensification in the utility of urban land. It shows the comparative land use
between formal and informal settlements in Northern Mumbai, India:
Informal Formal
Average number of floors Units 1 7
Average floor area per dwelling m2 17.5 81.3
(including common corridors and
staircases)
Area of floor space per person m2 3.50 23.21
Area of land per person m2 4.04 6.16
Area of land per m2 of floor space m2 1.16 0.27
Area of land per dwelling m2 20.22 21.55
% of roads and open space % 13.5% 46%
Gross FAR (Floor Area Ratio) 0.87 3.77
Net residential density people per 2,473 1,624
hectare
Source: Alain Bertaud (2010)

3.2 Challenges in the affordability of the substitution of capital for land

Intensification of urban land-use involves the substitution of capital for land. As
land grows scarce, floor spaces in multi-storey buildings substitute the floor
space that could have been constructed on land for business and residential
purposes. As these floors involve capital, they become attractive to the extent
that upward construction becomes comparatively affordable than paying for
land space for the construction of a comparable floor space. As Bertaud states,
“when land prices are high, land consumption per person will adjust downward,
either by consuming less floor space or by substituting capital for land by
building multi-storey buildings”.30 Such substitution of capital for land may
also include demolition of old buildings to build new ones normally after “a
useful life of around 50 years or more” because “it makes economic sense to
demolish that building and build a new one with a rate of substitution closer to
the optimum”.31
There are two sine qua non conditions in the pursuit of consuming less land
and using capital to construct floor space upwards. The first relates to the need
to observe regulations because the construction should conform to the urban
planning requirements and standards thereof. Even if all constructions involve

30
Bertaud, supra note 27, p. 6, footnote omitted.
31
Id., p. 8.
12 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

the observance of these standards, the levels of complexity and rigor of the
requirements are directly related with the standard and type of the construction.
The second condition refers to “the minimum capital threshold required from
households and firms to accomplish this substitution”.32
In areas where land is expensive, developers substitute capital for land by
building additional floors on the same parcel of land. Assuming that
households and employees consume a constant amount of floor space per
person, increasing the number of floors would increase density (both job
density and population density), and therefore for a given population it
would decrease the demand for land for the entire city. Alternatively,
increasing the number of floors would allow increasing floor consumption
per person or per job without increasing the demand for land. The floor area
ratio (FAR) is the number of units of floor space that are built on a unit of
land [FN].33 It is therefore a measure of the rate of substitution of capital
(the cost of construction) for land.34
In other words, floor area ratio (FAR) is the total square meters of a building
divided by the total square meters of a given plot of land. The higher the FAR,
the more dense is the construction. For example, a ground plus one (i.e. two-
floor) building with an aggregate floor area of 4,000 square meters is said to
have FAR of 1 if it is built on a plot of 4000 square meters with built-up area of
2000 square meters. Each floor area will thus be 2,000 square meters and there
will be an open space of 2,000 square meters. If the floors are doubled, the four
floors will have an aggregate of (2,000 square meters x 4 =) 8,000 square meters
on the same plot of land (i.e. 4,000 square meters), and the FAR rises to 2. A
similar rise in the FAR occurs if the floors are doubled again to eight floors, in
which case the floor area becomes of (2,000 square meters x 8 =) 16,000, and
the FAR increases to (16,000 sqm ÷ 4,000 sqm =) 4.
In the course of intensification, FAR values are accompanied by building
footprint regulations so that the external wall to wall area occupied by multi-

32
Ibid.
33
Endnote 3 of Bertaud, p. 47 reads:
The FAR is the ratio between the total floor space area built on a lot and the area of the
lot. FAR values vary, typically from 0.2 in suburban areas to 15.0 in downtown areas.
… The FAR is not equivalent to the number of floors or to the height of buildings. A
building footprint rarely covers the entire lot because of the necessity of reserving
space for light and ventilation between adjacent lots. For instance, for a building
footprint covering 50 percent of a lot, an FAR of 2 would correspond to a four-story
building. If the building covers only 25 percent of the lot, the same FAR would allow
the construction of an eight-story building. The FAR is equivalent to the number of
floor only if the building footprint covers 100 percent of the lot.
34
Bertaud, supra note 27, p. 6.
Access to Urban Land and its Role in Enhancing Business Environment 13

storey buildings leaves a reasonably adequate open area for light and service
access. As Bertaud observes, even if the constant building footprint (in a certain
urban centre) may be using about 30 percent of the lot while in practice, “higher
FAR values usually require lower building footprints to allow more light and
services access on the ground. With a 25 percent footprint, the number of floors
corresponding to an FAR of 2.4 would be 9.6 stories average for the entire
city”.35
Such increase in the enhancement of floor space built on a unit of land
operates in the midst of regulatory thresholds and capital limitations. The FAR
regulatory thresholds vary between downtown and other parts of the city, and
they may not be relevant for suburbs, because the issue of substitution of capital
for land may not arise as long as residential and business premise constructions
observe urban planning and other modest standards toward construction permit.
The FAR regulations in core parts of the city are indeed rigorous thereby
constraining the substitution of capital for land as that level of capital cannot be
accessed by most entrepreneurs and landholders. Moreover, after a certain level
of floors, the capital substitution for land gets into a level of diminishing returns
because of the potentially lesser rental demand for higher floors and a possibly
enhanced cost of construction per extra floor. Such floor extension further
prolongs the timeline for bank loan paybacks due to relatively delayed timeline
of completion.
Such crossroads create a paradox between the benefits of intensification and
the challenges of affordability. As economic development should be inclusive,
this challenge has the potential of pushing many landholders off-track and
becomes unthinkable for citizens at middle income and low income levels.
“Low-income households do not have always the possibility of substituting
capital for land. The cost of constructing a structure that can support several
floors is often beyond the means of low-income urban households”.36 As a
result, their recourse is to “consume less land and less floor space”.37
Even if there are efforts on the part of low and medium-level income earners
to consume less land and less floor space, it is inevitable that urban
redevelopment at some point engulfs these urban areas as well. Intensification
can thus have adverse footprints in denying access to small and medium level
business activities which in the context of developing countries are very
significant in pursuits of inclusive private sector development.
In the course of intensification, land markets facilitate the transfer of land use
rights to new landholders. Or, depending on the legal and institutional

35
Bertaud, supra note 27, Endnote 8 p. 47.
36
Bertaud, supra note 27, p. 8.
37
Ibid, p. 9.
14 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

framework, it might facilitate win-win pursuits which can accommodate benefit

shares with former landholders in the form of allowing land use rights as capital
contribution and other equitable compensation modalities. Short of such
equitable legal regimes, intensification and the dislocation of small and medium
income-level citizens will have adverse side effects.
There is consensus that unmediated sales markets do not assist poor and
landless households to access land (CIDA, DFID, EU, GTZ, ILC, World
Bank). Poor households face numerous obstacles to participating in sales
markets, including access to information, and lack of market power and
access to credit. These reduce both the equity and efficiency of sales
markets. There may be potential for land speculation to develop where land
transactions are newly introduced (DGCID).38
The other question that arises is whether the small and medium-scale business
activities can have enhanced access to rental floor space in newly constructed
premises. The challenges in this regard can be volatility of rental rates which
can possibly increase at unpredictable pace. This calls for pragmatic and
planned intensification in which the state facilitates urban redevelopment
through (a) state-managed urban re-development projects, (b) state intervention
in the supply of land to the real estate market, and (c) putting in place regulatory
and institutional frameworks that enable land use right holders to freely transfer
their rights to more efficient users, access bank financing through mortgaging
these rights and also contribute same as capital contribution in real estate
redevelopment projects which aim at maximizing capital substitution to land.

4. Urban Land Expansion versus Agricultural Land

Conversion (ALC) cum Forest Loss Dilemma
Land transformation from rural agricultural land to urban land is among the
outcomes of urbanization. As observed in the Marakech Declaration39:
The industrial development and the rise of capital during the last century
have led to the development of large cities. In developing countries this
urban growth is even higher due to higher birth rates. The lack of basic
services in rural areas has drawn rural populations to cities, a migration that
has a negative effect upon rural and agricultural community, and at the

38
Improving access to land and tenure security, Policy, IFAD, Dec. 2008, p. 31.
39
“The 2nd FIG Regional Conference ‘Urban-Rural Interrelationship for Sustainable
Environment’, held in Marrakech, Morocco, 2–5 December 2003. The aim of the
conference was to shed some light on selected issues of urban-rural interrelations and to
raise awareness of this complex topic. It also tried to explain the close linkage of land
policy and land administration.” Marrakech Declaration (Marrakech, Morocco, 2–5
December 2003), Infra note 40, p. 3.
Access to Urban Land and its Role in Enhancing Business Environment 15

same time deteriorated the urban environment and reduced the quality of
life as the infrastructure is insufficient to support such large populations
(leading to what can be called “rurbanisation”).40
In the context of urban sprawl (i.e. haphazard urban extensions), the frontier
expansion of cities involves not only positive outcomes to stakeholders, but also
may cause social, economic and environmental tension and disharmony between
competing interests. Such urban extensions “absorb productive agricultural land,
exploit water resources, pollute the rural environment and [use rural land] as
sinks for urban waste”.41 This reflects the non-efficient expansion of cities and
“[t]here often remain extensive rural areas within cities and their metropolitan
boundaries, giving rise to the phenomenon of urban villages”.42 According to the
Marrakech Declaration, “a regional settlement structure has to be designed
which combines density, mixing of different land uses, polycentrality and
capacity of public mass transport systems and public facilities” in order to
achieve “the ecological, social and economic targets of sustainability”.43 This,
according to the Declaration calls for priority “to slow down the urban growth”
by, inter alia, strengthening “the living conditions and the economic basis in the
rural areas” and promoting “new forms of cooperation between cities themselves
and between the cities, towns and the villages at the regional level”.44
Azadi and Hasfiat compare less developed, developing and developed
countries in the conversion of agricultural land to urban land and they have
examined the drivers thereof.45 Their findings show that “[u]rban population was
identified as the main driver affecting ALC [Agricultural Land Conversion] in
all the countries. Furthermore, although urbanization process exists in all the
groups, the developed countries are more successful in managing urban
development and ALC”.46 They note that ALC is the “a logical result of
population growth and economic development and it has been neglected as an
unavoidable consequence in the development process.” However, they suggest
that “a stricter implementation of land use and spatial planning or even land
conversion laws are needed”; along with “other approaches (such as economic

40
Marrakech Declaration (Marrakech, Morocco, 2–5 December 2003), “Urban-Rural
Relationships for Sustainable Development”, FIG Publication No. 33, FIG- International
Federation of Surveyors, August 2004, p. 14.
41
Ibid.
42
Ibid.
43
Id., p. 15.
44
Id., p. 16.
45
H. Azadi & Hasfiat (2010), Agricultural Land Conversion Drivers: A Comparison
between Less Developed, Developing and Developed Countries, Land Degrad. Develop.
(2010), Wiley Online Library ([Link]) DOI: 10.1002/ldr.1037
46
Id., p. 1.
16 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

controls including tax incentives and agricultural subsidies) not only to

encourage farmers to remain, but also to improve their farming activities”.47
China has gone through the challenges inherent in agricultural land conversion
and has ultimately set constraints. For example, “the central government imposes
a land conversion quota on every major city to preserve agricultural land”.48
Agricultural land conversion is usually accompanied by the inclination of
landholders in the rural areas adjacent to urban centres to sell their agricultural
land to attractive offers from developers, speculators or urban dwellers. The
prevention of such conversion by direct agricultural zoning can be “a blunt
instrument”.49 On the other hand, removing the right to develop farmland
without compensating the owner is difficult to justify. This has fostered
‘voluntary' approaches, “including outright land purchase, purchase of
development rights (PDR), and transferable development rights (TDR)
programs”.50
The following observation is made regarding agricultural land conversion in
China and the pursuits of protection against the steady decline of farmland
through land-conversion quotas, market-driven allocation, innovative means of
efficient utilization of urban land, and other schemes:
The central government has stated a target of 120 million hectares of
farmland to be protected from conversion to ensure long term food security.
The concern over the loss of farmland has led to the institution of strict
land-conversion quotas, and the farmland protection policy has sought to
rein in uncontrolled land conversion, misallocation, and inefficient urban
expansion. Urbanization, however, is likely to continue to demand more
land into the future, and many localities have devised innovative
approaches to reclaim inefficiently used rural land and make it available for
urban development. The challenge that remains includes creating a better
balance of demand for agricultural land and urban development through
improved utilization, transparency, market-driven allocation, and control
mechanisms for the appropriate use of land.51

47
Id., p. 8.
48
Bertaud, supra note 27, p.11.
49
Ekaterina Gredenko and Dennis Heffley (2014), “Open Space Preservation: Direct
Controls and Fiscal Incentives” in the Oxford Handbook of Land Economics, Edited by
Joshua M. Duke and Junjie Wu (Oxford University Press), page 518.
50
Ibid.
51
World Bank Group (2014), Urban China: Toward Efficient, and Sustainable
Urbanization, Chapter 4, “China’s Urbanization and Land: A Framework for Reform”,
(World Bank, Development Research Center of the State Council, the People’s Republic
of China), p. 268.
Access to Urban Land and its Role in Enhancing Business Environment 17

Market-driven allocation, in China, does not mean commoditization of land, but

rather a balance between the policy framework which renders urban land public
property, and at the same time widening the scope of urban land use rights so
that owners of these rights can freely sell the use rights in real estate markets,
contribute them as shares in capital mobilization towards high rise building
construction, and making use of ownership of land use rights as collateral for
bank financing. Efficient utilization of urban land is thus one of the crucial
factors in the control against the side effects of haphazard agricultural land
conversion. This requires efficient and accurate land information and
presupposes effective and transparent land governance.
Urban land-use supply can indeed be significantly enhanced in Ethiopia if
land-use holders in urban centres are (pursuant to Article 519 of the Commercial
Code) allowed to contribute their landholdings as capital in kind toward the
construction of buildings. Such schemes enable developers to invest their capital
on construction than lease price loans and compound interest repayment
burdens. Even if Ethiopia’s land law does not prohibit such capital contributions
after the level of construction required by law is done, there is the need for
simulation by pretending as if a house (which is going to be demolished) or an
unfinished construction (and not land use right) is transferred.

5. The Need for Land Information and Effective Land

Governance
Access to land presupposes (a) a subject (the person or business) who needs and
affords to access land, (b) the object (i.e. the space) intended to be accessed, (c)
the modality intended to be pursued, i.e. purchase, rent, etc, and (d) the
regulatory and institutional setting which allow, delay or impede the access
sought by the subject towards the object in the modality of the subject’s needs.
The interface between these elements occurs in the context of land
administration which involves “the processes of determining, recording, and
disseminating information about the tenure, value, and use of land when
implementing land management policies”.52 These elements of land
administration facilitate land management, i.e. “activities associated with the
management of land as a resource from both environmental and economic
perspectives towards sustainable development”. 53

52
United Nations-Fédération Internationale de Géomètres (UN-FIG) [International
Federation of Surveyors], 1999. “The Bathurst Declaration on Land Administration for
Sustainable Development.” International Workshop on Cadastral Infrastructures for
Sustainable Development (Bathurst, New South Wales, Australia, October 18–22), FIG
21, Appendix IV, Glossary of Terms.
53
Ibid.
18 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

Effective and efficient land administration requires a land information system

which can be defined as ‘a system for acquiring, processing, storing and
distributing information about land”.54 This requires a formal registration system
which is accurate, current and accessible to the public (including online access).
The need for information services creates the scope for another public good
the state can provide: the maintenance of accurate records and information
about land rights and obligations. The transfer of land and its use as
collateral for credit requires that information concerning the assignment
and nature of land rights be available to all interested parties and the public
in general. Because functioning land markets are important to ensure
efficient allocation of resources, reducing associated transactional costs can
have important benefits. In addition, publicly available information can
help to better identify and inform decisions about externalities.55
Land information includes GIS (Geographic Information System), CIS
(Cadastral56 Information System), line maps, clearly defined land plot
registration, title deed registration which is transparent and readily accessible
and other elements of land information and governance. In the current
information age which enables the GPS (Global Positioning System) in our
mobile phones locate where we are at any given moment, it is indeed expected
of land administration institutions to be up to the requirements of our times. As
UN-Habitat (2012) notes “[e]nsuring sustainable urban development requires
targeted land information”.57
Land information refers not only to the collection and storage of data. It
envisages optimal utility by every user of the information in his/her pursuits to
access land or to access information regarding the rights of a landholder and
encumbrances thereof (i.e., claims against a property by another party as
creditor, due to injunction, claims of inheritance, etc). This presupposes
governance even though there is “a general tendency to focus too much on data
and too little on governance issues”58 which translate the information into
effective access to land. While the land information, inter alia, facilitates “use,
access, ownership, taxation, value, transfer and development potential”59 etc.,

54
Ibid.
55
Burns and Dalrymple, supra note 21, p. 296.
56
Cadastral map is “a map showing the boundaries of land parcels, often buildings on land,
the parcel identifier, sometimes references to boundary corner monumentation. Cadastral
maps may also show limited topographic features”, Ibid.
57
UN-Habitat (2012), Sustaining Urban Land Information: A framework based on
experiences in post-conflict and developing countries, United Nations Human Settlements
Programme, Page iv.
58
Ibid.
59
Ibid.
Access to Urban Land and its Role in Enhancing Business Environment 19

the sustainable and effective use of the information toward effective land
management needs good governance. These aspects of land information and
land governance apply to “land administration (security of tenure and property
administration), spatial planning (including regional and urban planning,
settlement upgrading and regularization) and environmental management and
planning”.60
Land governance ‘refers to the processes by which decisions regarding
access to, and use of, land are made, the manner in which those decisions
are implemented, and the way conflicting interests in land are resolved or
reconciled. Land governance is thus a techno-legal, procedural and political
exercise’ (UNECA, 2009:40). Good governance means ‘that government is
well managed, inclusive and results in desirable outcomes. The principles
of good governance can be made operational through equity, efficiency,
transparency and accountability, sustainability, subsidiarity, civic
engagement and security (FAO, 2007:6).61
While incompetent and ineffective institutions lead to poor land governance,
such settings can be “very convenient for the rich and powerful who benefit
from the lack of transparency in urban land management”.62 Weak or ineffective
land governance “include corruption, weak institutions, lack of horizontal and
vertical coordination and integration among governmental agencies, limitations
on the credit market, and low efficiency of land administration systems”.63 Such
weaknesses in land governance are attributable to a weak ‘foundation’ for good
land governance which “consists of a policy framework, a legal framework,
institutional capacity, primary geodetic network, education and training, funding
and finance and stakeholder engagement”.64

6. Tenure in the Context of Public Ownership of Land

Article 1205 of Ethiopia’s Civil Code has adopted the three elements of
ownership (usus, fructus, abusus) embodied in the various civil codes of
countries in continental Europe. While a tenant (ተከራይ) of a shop has the right to
use the premise (usus), one may also agree to transfer both usus (use rights) and
fructus (transfer of the rights to enjoy the fruits from a certain property) as in the
case of usufruct. The right of abusus (to dipose off) land through sale,
inheritance, etc was also embodied in the Civil Code. Even such conceptions of

60
Ibid.
61
Id., p. 18.
62
Ibid.
63
Ibid.
64
Ibid, citing (Burns, 2007).
20 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

private property over land, however, envisage the public domain and land
owned by communities.
On the other hand, various legal regimes do not recognize private ownership
of land. For example, all land in English law, in principle, belongs to the Crown
while land is privately owned in the US. The security of the landholder in both
contexts is not attributable to the tenure, as such, but to the tenure security, i.e.
the extent to which the specific tenure (be it in the US or in the English model)
is not susceptible to infringement.
In English society … the reasons go back to the feudal relationships of the
Middle Ages. The relationship between the owner and his tenants involved
a set of duties on either side, amongst which were the duty of providing
armed men, by the tenants, and the duty of defending the tenants, by the
lord. In turn, of course, the lords owed similar duties to their feudal lord,
the king. Over the years the mediaeval, feudal, relationships were modified,
although relics remain. One such is the legal fiction in English law that the
monarch is theoretically the owner, in the final analysis, of all land, the
actual freeholders holding their land from her (or him).65
The same holds true with legal regimes such as Singapore where land is, in
principle, publicly owned. However the form of the tenure in Singapore merely
determines the scope of the right among tenure categories (leasehold for a
maximum period of 99 years and freehold). This classification, however, does
not render the landholder with the narrower tenure insecure with regard to the
guarantee that s/he enjoys within the bounds of the bundle of rights included in
the tenure.
Property rights in relation to land have been subject of academic and policy
discourse for centuries. Locke’s ‘labour theory of value’ relates value with the
labour inputs that a person has in a particular object.66 The theory of John Locke
(1632-1704) was a departure from the notion of ‘sovereign will’ forwarded by
Thomas Hobbes (1588-1679) in which the sovereign “determines the rules that
tell every man what goods he may enjoy”.
In its Marxist version the labour theory of value is further extended to the
notion that ‘capital’ constitutes the material expression of congealed labour-time
which is exploited from the surplus value created by labourers. For Marx, The
polarities extend from property rights (including land rights) emanating from the
‘sovereign’ to the other extreme of abolishing property rights so that every
person can, according to Karl Marx (1818-1883) work ‘according to his
abilities’ and enable products of labour to be distributed to ‘each according to

65
Evans, supra note 11, p. 116.
66
See Elias N. Stebek (2011), “Conceptual Foundations of Property Rights”, Mizan Law
Review, Vol. 5 No. 1, pp, 10-12.
Access to Urban Land and its Role in Enhancing Business Environment 21

his needs’. While the Hobbesian conception is statist (i.e. empowering the
government to play a paternalistic absolute power in the allocation and
withdrawal of land rights), the Marxist conception targets at the abolition of
private property in the long run through the short-term phase of socialism.
The FDRE Constitution seems to have been partly influenced by Locke’s
labour theory of value (Article 40/2), with some Marxist tone manifested in
Article 40(3), in spite of its significant departure from the classical Marxist
version of landholding which, has been proved to be economically inefficient in
USSR’s Kolkhozes of the 1930s and Chinese communes of the 1950s.
According to Article 40(2) of the FDRE Constitution:
‘Private property’, for the purpose of this Article, shall mean any tangible
or intangible product which has value and is produced by the labour,
creativity, enterprise or capital of an individual citizen, associations which
enjoy juridical personality under the law, or in appropriate circumstances,
by communities specifically empowered by law to own property in
common.
This provision (a) states the categories of private property as tangible (which
may be moveable or immovable), or intangible such as intellectual property
rights, (b) it recognizes the value (i.e. exchange value) of private property, and
(c) it articulates its source, i.e., product of labour, creativity, enterprise or
capital. Locke’s labour theory of value is a general framework rather than a rigid
concept, because in the real sense of the term labour usually produces a tangible
(corporeal) object by using inputs which the labourer has neither produced nor
claimed as an object of his ownership. Nor can a person claim a thing of value
merely because he has some inputs in it.
Even if the word ‘value’ usually refers to the labour inputs in a marketable
commodity, there are challenges in the quantification of labour inputs to
determine the ‘natural’ monetary value of exchange of a given product. While
the attempts of Ricardo and Marx to address these issues paid attention to the
quantification of labour inputs, Adam Smith and other utility theorists rather
focused on valuation in terms of ‘value in trade’ and ‘value in use’ which are
subject to demand and supply during the time of exchange.
The real price of every thing, what every thing really costs to the man who
wants to acquire it, is the toil and trouble of acquiring it. What every thing
is really worth to the man who has acquired it, and who wants to dispose of
it or exchange it for something else, is the toil and trouble which it can save
to himself, and which it can impose upon other people.67

67
Adam Smith, An Inquiry into the Nature and Causes of Wealth of Nations (First published
in 1776), Book I, Chapter v.
22 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

Apparently, a person is not expected to ‘produce’ land to own it (but owns the
products from land by planting crops and trees68). In the context of land, its
ownership by an individual, a group, community, the state, etc. is not thus
attributable to the owner’s act of producing it, as such, but is related with factors
such as ‘use’ and ‘possession’ (usucaption) for a certain period of time69 (in the
case of original acquisition, other than cases of transfer through sale,
inheritance, etc.). Even in legal regimes (such as Ethiopia’s Constitution) that do
not recognize private property rights on land, the immovable property which is
privately owned constitutes an intrinsic element of the land on which it is built.70
According to Article 40(2) of the Constitution, a person is owner of the
house which is the product of his labour, creativity, enterprise or capital. And
pursuant to Articles 1130 to 1132 of the Civil Code, buildings and lands are
intrinsic elements. As buildings are materially united with the land on which
they are built, the ownership over the building logically extends over ownership
over the use right of the land for the period of lease (in leaseholds) and
indefinitely for the perpetual permit (grant) system (which in the Ethiopian
context refers old possession - ነባር ይዞታ).
Even if Article 40(3) of the Constitution provides that ‘land shall not be
subject to sale or to other means of exchange’, a person who sells a house for an
investor who intends to construct a building, is technically not selling land, but
the house that will be demolished by the new buyer. Actually, the ‘value in
trade’ and ‘value in use’ is the land use right, but the parties in the transaction,
and regulatory offices are becoming ‘procedurally right’ although the core
motive of the transaction is the sale of land use right.
Article 40(6) of the Constitution which recognizes the land use rights of
investors, and Art 40(7) which guarantees property rights on immovables give
due recognition to the ‘value in exchange’ and ‘value in use’ of land use rights.
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 tenure and security that the owner of the immovable is entitled to extends to
the market value of the immovable which clearly includes the land use value,
and the latter terminates only upon the end of the lease term, because at that
point the right of the owner, in principle, diminishes to the value of the property

68
See for example, Article 1133 of the 1960 Civil Code of Ethiopia.
69
See for example, Id., Art 1168.
70
See, Id., Art 1132.
Access to Urban Land and its Role in Enhancing Business Environment 23

built on the land. However, even at that stage, equity and efficiency do not
warrant the demolition of the property. Thus, the expiry of a land lease period is
expected to lead to automatic renewal upon application for renewal, approval by
the relevant organ and payment of prevailing benchmark lease price for the land,
because the fixed property on the land belongs to the leaseholder.
In spite of these wider interpretations in favour of economic value to land use
rights, particular laws (proclamations, regulations and directives) that have been
enacted to “determine the particulars” of tenure and security related with land
use right have steadily narrowed down the scope of tenure and security of
landholders.71 With regard to tenure, the misconception that public ownership
of land under the Ethiopian Constitution does not cohabit with of the
landholder’s ownership over land use rights is manifest in the various
proclamations, regulations and directives. On the contrary, China, for example
(which pursues socialism with some elements of market economy) recognizes
private ownership over urban land use rights as highlighted in Section 7. In the
realm of security, there is extremely wide definition of ‘public interest’
embodied in various proclamations, regulations and directive72 accompanied by
extensive administrative powers in the determination and implementation of
expropriation upon meagre level of compensation.73 These are manifestations of
the denial of economic value to land use rights, and they adversely affect tenure
security.

7. Adverse Effects of Misconceptions in Public Ownership

of Land and China’s Path toward Reform
Ethiopia’s current land law traces its roots to the ‘land to the tiller’ movements
of the 1960s and 1970s. The notion of public ownership of land was the motto
of the political movements that ultimately influenced the rural and urban land
proclamations enacted in 1975 which nationalized rural land, urban land and
urban extra houses. Many African countries had espoused similar aspirations
and resorted to nationalization of land in spite of variation in ideological
framework. Land was nationalized and private freehold ownership was
extinguished “in 20 out of 40 countries in sub-Saharan Africa just after they
became independent from the colonial powers”.74

71
See for example Muradu Abdo (2013), “Legislative Protection of Property Rights in
Ethiopia: An Overview”, Mizan Law Review 7(2), pp. 180-193.
72
Ibid.
73
Ibid.
74
UN-Habitat (2003), Handbook on best practices, security of tenure and access to land
(United Nations Human Settlement Programme), p. 14 [Citing Payne, G. (1997), Urban
Land Tenure and Property Rights in Developing Countries A Review, IT
Publications/ODA, p. 11].
24 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

Payne states the challenges encountered in “public land-ownership on a large

scale, where administrations are weak” and he notes that such nationalization “is
not able to guarantee either efficiency or effectiveness in the land market”.75,
Such land-ownership “is particularly susceptible to poor records” and “countries
that had extensive private land-ownership prior to nationalization by the former
Soviet era countries are better off in terms of records than those who had a small
history of private land-ownership”.76 Under settings of poor records, “occupants
must rely for their security of tenure largely on local social land tenure rules and
good neighbourliness and hope that their land will not be allocated by the state
to someone else.77
The nationalization of land in Ethiopia pursued the Soviet and East European
model under which urban land was allocated for owner occupants (mainly
through self-help residential housing cooperatives or on individual basis) under
the perpetual permit system. Post-1991 reforms in most former socialist legal
regimes have moved toward private freeholds while China is moving in the path
of reform with caution.
The ‘Land to the Tiller’ movement in Ethiopia culminated in a very radical
rural land reform and nationalization in 1975 which had prime focus on
‘distributive justice’, but which ultimately turned out to be inefficient. Any
observer who had the opportunity to periodically visit relatives in rural areas
since 1975 can note the demographic and land fragmentation impact of the
proclamation in spite its commendable significance in equity and fairness.
Higher number of children in a household meant wider land acquisition free of
charge upon a young person’s entry into hastened marriage thereby acquiring a
parcel of land from the plot that was collectively held by the village’s Peasant
Association. In rural communities where polygamy is allowed more wives
meant more landholding for the male dominated family. Subsequently, the
parcels from the cooperative farm held by peasant associations were distributed
(and at times re-distributed). In effect, the initial hectares per small-holder
farmer which had the maximum limit of ten hectares have in the course of
inheritance been fragmented to an average of about 0.5 hectares per household
in most parts of rural Ethiopia within a period of four decades.
In contrast, South Korea’s land reform was pragmatic due to its synthesis of
equity and efficiency.78 South Korea’s nationalization applied only to a small

75
Ibid, [Citing Payne, G. (1997), Urban Land Tenure and Property Rights in Developing
Countries A Review, IT Publications/ODA, p. 12].
76
Ibid, UN-Habitat (2003).
77
Ibid.
78
See Elias N. Stebek (2013), “Overview of Country Experience in Land Rights and
Development: South Korea, Taiwan, China and Singapore”, Mizan Law Review, Vol. 7,
No. 2, pp. 221-227.
Access to Urban Land and its Role in Enhancing Business Environment 25

portion of the landed gentry that was associated with the Japanese invasion, and
the land reform mainly implemented a legal regime of compulsory purchase of
land beyond certain thresholds upon upfront payment of modest compensation
to former landholders by the state, and resale of the land to landless peasants
based on nominal prices payable through farm production percentages in a
period of ten years. While the Ethiopian option was based on Marxist ‘theories’,
South Korea’s path was informed by pragmatic reason which on the one hand
addressed the concerns for distributive justice and at the same time considered
economic efficiency by enabling former landholders receive modest
compensation and thereupon establish non-farm economic activities in rural
areas thereby positively contributing to the vibrant economic activities that
prevailed in South Korea’s rural communities as well.
Ethiopia’s agriculture accounts for about 45% of the country’s GNP and for
about 90% of its exports. The challenges of steadily rising population relates not
only to rising urban population which is accompanied by urban frontier
expansions to agricultural land but it has also led to (a) rural land fragmentation
and the frontier extension of farmlands to the detriments of forests, parks and
fragile sloppy landscapes, and (b) agricultural intensification through fertilizers
and genetically modified seed varieties. The latter can eventually bring about the
pesticide treadmill, over-dependence of smallholder farmers on IP owner seed
providers and heavy debts payable to fertilizer and seed provision creditors.
The current Ethiopian legal regime has not made a significant departure
from the rural and urban land law regimes of 1975 in spite of the policy changes
since 1991. Land still belongs to the state, but unlike other legal regimes where
land is publicly owned, including China, rural and urban landholders do not
have the security and tenure to their holdings commensurate with the level
required for effective land management, collateral financing, and transferability
to efficient users.
China’s legal regime on urban land-use rights has shown significant reform
in the realm of tenure transferability despite the public ownership of land.
Lessons can be drawn in this regard, not because it represents best practice in
terms of tenure security and transferability, but because it indicates that a
socialist legal regime (with Chinese characteristics) embodies a wider scope of
tenure security and transferability as compared to the Ethiopian legal regime
although the two urban land lease regimes seem to be substantially similar. 79

79
In both urban land lease regimes landholders are entitled to leasehold for a certain period
of years. The scope of the use rights, rights of transfer, the right for automatic renewal of
lease period, etc. in China are, however, wider than the urban land lease regime in
Ethiopia. See for example the difference between the two regimes regarding automatic
renewal in Section 2.1, pp. 53-55 of the article by the same author published in this
journal.
26 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

Ethiopian urban land laws fall even far behind China’s land reforms, a legal
regime which still adheres to the Marxist version of socialism blended with
market economy. According to Article 3 of China’s 2007 property law80 “[t]he
State implements the socialist market economy, ensuring equal legal status and
right for development of all market players”. Yet, Article 143 of China’s 2007
property law provides: “[e]xcept as otherwise provided for by law, the owner of
the right to the use of land for construction use shall have the right to transfer,
exchange, make as capital contribution, donate or mortgage the right to the use
of land for construction use”.
Article 143 of China’s 2007 property law has two major differences from the
Ethiopian legal regime. First, the landholder under China’s 2007 property law is
“owner of the right to the use of land for construction use”. The designation of
the right holder as ‘owner’ of land use right is very significant because it clearly
shows a dual-track modality in the ownership of landed property. On the one
hand, urban land is owned by the state81, and meanwhile land use rights are
owned by persons who are lawful landholders. China’s property law duly uses
the term ‘assignment of the right to the use of land for construction use’,82 and
this clearly shows that the use right of the state over the land is assigned to the
landholder for the period of the contract thereby rendering the landholder owner
of the land use right during the period of contact. Moreover, China’s 2007
Property Law83 guarantees automatic renewal of lease upon expiry of the period
of lease in accordance with the law that embodies the procedures thereof.84
Most traditions and civilizations have reverence to land (and nature in
general) and refrain from considering it as a commodity. Various social and
political systems also have ‘legal fictions’ of land ownership by a sovereign, as
in English law. Ownership of land by the state does not mean that the state as
an incorporeal entity actually makes use of and directly controls every square
meter of rural and urban land. Public spaces (such as streets, green areas, open
spaces), parks, state-owned forests, etc. are directly administered by the state.
Such role clearly goes beyond bare ownership because it controls usus (use
rights) and fructus (products) so that the assets, resources and amenities can
either be accessed by all, or be exclusively used in the manner expressly stated
by the relevant laws. In the case of urban land lease, however, the state does not

80
The Property Rights Law of the People’s Republic of China, adopted at the 5th
Session of the 10th National People's Congress of the People’s Republic of China on
March 16, 2007, and effective on October 1, 2007.
81
Id., Art. 47.
82
See, for example, Id., Art. 138.
83
Id., Art. 149.
84
The difference between the two regimes regarding automatic renewal is briefly indicated
in Section 2.1, pp. 53-55 of the article by the same author published in this journal.
Access to Urban Land and its Role in Enhancing Business Environment 27

own the houses that belong to the landholder (to whom the land use right is
assigned) even if the land is under public ownership. This justifies the second
track of ownership recognized under Article 143 of China’s 2007 Property Law,
i.e. private ownership of land use rights during the period of lease.
Secondly, Article 143 entitles the urban landholder in China “to transfer,
exchange, make as capital contribution, donate or mortgage” his/her land use
rights. Even if urban land is state-owned, the landholder is entitled to any profit
accrued in the process of using the land. To this end, Article 135 of China’s
2007 Property Law provides that “[t]he owner of the right to the use of land for
construction use shall, according to law, be entitled to possess, utilize and obtain
profits from the State-owned land, and have the right, by utilizing such land, to
build buildings and their accessory facilities”.
Ethiopia (unlike China) does not pledge to pursue a socialist market
economy, and the comparison above is meant to merely compare the extent to
which China’s law provides a stronger tenure for urban leaseholders than
Ethiopia’s urban land law. Ethiopia rather aspires to pursue the economic
policies used (during the 1960s and 1970s) by successful East Asian economies,
namely developmental states, with some improvement toward (pursuing the
policies of a democratic developmental state). As stated in PSD Hub’s Study85
(December 2013), these states (Japan, Hong Kong, South Korea and Taiwan)
had, during their years of developmental statehood, stronger property rights than
other Asian states. The PSD Hub’s study also makes reference to Singapore
where land is publicly owned in spite of which the law guarantees broad tenure
and strong security.86
The experience of East Asian developmental states thus prove that the scope
of land tenure and its security are crucial in the economic performance of the
private sector which constituted the major basis for economic development in
these developmental states. Even if these developmental states (unlike the free
market minimalist state) actively intervened in the economy, their intervention,
as indicated in PSD Hub’s study87 was meant to empower the private sector by
at the same time disciplining its activities through a meritocratic bureaucracy by
striking a balance between embeddedness and due autonomy from opportunistic
benefits from economic actors. In the context of urban land tenure, the focus of
the policy and regulatory framework is thus expected to empower the private
sector analogous to the legal regimes of East Asia’s developmental states during

85
Elias N. Stebek, Muradu Abdo & Hailu Burayu (2013), “Property Rights Protection and
Private Sector Development”, PSD Hub Publication No. 23 (Property Rights
Development Hub, Ethiopian Chamber of Commerce and Sectoral Associations, Addis
Ababa), pp. 91-117.
86
Id., pp. 112-115.
87
Id., pp. 98-109.
28 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

the 1960s and early 1970s, after which these countries have moved onto mature
phases of a market economy.

8. Comparative Experience on Incremental Tenure Titles

for Informal Settlements
The issue of informal settlements raises the concern for access to land in relation
to the urban (and peri-urban) poor. Meanwhile, there is the need to control land
invasions and squatting. Even though informal settlements are mostly
residential, they have relevance in the discourse related with the economic
activities of the private sector. The informal land market is one of the sources in
land supply, and informal landholdings have influence in the magnitude of
access to land to the private sector.
Informal (unauthorized) holdings are different from undocumented holdings
that are lawful but have not yet been formally titled (ሠነድ Aልባ). The latter can
occur due to regulatory or administrative constraints even if the holder is
entitled to the landholding. Where informal settlement occurs due to necessity
(rather undue land speculation), it usually takes the forms of dwelling shades of
the needy who have no other choice. Depending on the motive, duration and
settings of the settlements, various legal regimes pursue incremental legalization
schemes. This, however, presupposes preliminary steps of land information and
registration based on surveys of the plots in question according to urban plans.
The caveat, in this regard, is the need to observe urban plans and clearly
demarcate and protect publicly owned and community owned lands so that
legalization of informal settlements does not encourage further unauthorized
settlements under expectations of future regularization. As Edesio Fernandes
observes based on Brazil’s experience:
Policy makers should not forget that the role and obligation of the state, as
recognized in international documents and national laws, is to provide
adequate social housing. This is by no means the same as recognizing
ownership titles, let alone individual titles; in fact, especially as regards
settlements on public land, individual ownership [in informal settlements]
may not always be the best option. Moreover, given the scale of the
phenomenon of informal land development, there is no way it can be
tackled only through the attribution of individual ownership titles, and
collective legal solutions need to be considered.88
Payne calls for caution before individual ownership titles are regarded as
appropriate options in the context of informal settlements.

88
Available at <[Link]
[Link]/system/files/Urban+Land+Regularization+Prog+in+[Link]>,
Accessed, 25 January 2015.
Access to Urban Land and its Role in Enhancing Business Environment 29

Whilst the granting of full title may be of considerable benefit to local land-
owners, investors and settlers, it may also lead to dramatic increases in rent
levels which may force existing tenants out of the area. Secondly, sudden
increases in land or property values may encourage some settlers to realise
the enhanced value of their property and sell out to higher income groups,
thereby reducing the social coherence of settlements and making it more
difficult for other low income households to gain access. El-Batran (1994)
cites the case of Ismailia, where the introduction of full titles and
development standards led to an increase in rent levels for three room units
from £2 to £24-30, in addition to £1,000 key money in local currency.89
Payne notes the heavy indirect price that can ensue due to the provision of full
tenure to informal settlements because “benefits granted to existing
unauthorised settlements may well encourage the formation of others”.90 He
underlines the need for the provision of housing for the urban poor in informal
settlements, but suggests that incremental options such as rental tenures can be
relatively better options than individual freeholds, because the latter (in the
context of informal settlements) can bring about “adverse short and medium
term impacts on the efficiency and equity of urban land markets”. 91 According
to Payne, these adverse effects may include (a) “the ability to make substantial
profits merely from holding and transferring land, without investing in its
improvement or paying taxes on its increasing market value”, (b) the short-term
attraction of “even greater levels of investment”, and (c) ultimate adverse effect
because this “in turn reinforces land price inflation and diverts funds which
could be put to more productive economic use”. Payne thus argues that “[i]n this
sense, free, or unconstrained, urban land markets may serve to inhibit, as well as
facilitate, national economic development”.92
Thailand illustrates the merits of an evolutionary approach to its system of
tenure and property rights in accordance with changes in demand.
Botswana is another good example of an incremental approach to tenure
reform; the Presidential Commission on Land Tenure of 1983 concluded
that “in the final analysis… it became clear that the desires of people are
not for new and radical forms of land tenure but rather for easy access to
land”. It also recognised that “new needs exist, but old needs persist” and
concluded that “the land tenure policy which has been pursued by
Government may be described as one of careful change, responding to
particular needs with specific tenure innovations.93

89
Payne, supra note 1, p. 51.
90
Ibid.
91
Ibid.
92
Ibid.
93
Id., p. 52.
30 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

Tenure innovations in the context of informal settlements include “[i]ncremental

and pragmatic regularization schemes” such as “group tenure arrangements”
which can take the form of “housing associations involving large amounts of
land and housing stock under one agency” so that the “agency would take
responsibility for the land administration involved”.94
Given that there is a vast number of people living under group forms of
tenure, both family and wider group, and that the individualization of
titles/deeds often breaks down the social cohesion of the group, group forms
of tenure are taking on more importance in many parts of the world
(Payne:1997). UNHABITAT recommends that community, collective, or
cooperative land-ownership is adopted as it can provide a permanent or
intermediate form of secure tenure. “Within such community-controlled and
managed land, a range of tenure arrangements suitable to community needs
can be accommodated including rental, short and long-term tenure.”
(UNCHS:1996b:8).95
Tenures such as “local leases and group tenure approaches, as well as other
forms of recording these approaches” are believed to be pragmatic and relatively
favourable to the urban poor.96 This approach considers regularization as an
ongoing incremental process “as individual connections to services, housing
consolidation and the upgrading of tenure to individual rights take place”. The
process also involves “the gradual servicing of informal settlements in the city
and in expanding peri-urban areas. In addition, this form of regularization relies
on community involvement for the sake of sustainability during both the
development and the ongoing maintenance of services and land records” thereby
altering “conventional approaches to city governance”.97
Matthaei and Mandimika relate these views on incremental tenure systems
with developments in Namibia. They support the incremental “process of
moving along the continuum from complete illegality to formal tenure and full
property rights” thereby reducing “the potential risk of undesirable social
consequences” by gradually increasing the residents of informal settlement
“rather than moving directly from informal to private tenure rights”.98

94
UN-Habitat (2003), supra note 74, pp. 23-24.
95
Id., p. 24 [citing Payne, G. 1997 Urban Land Tenure and Property Rights in Developing
Countries A Review, IT Publications/ODA; and United Nations Centre for Human
Settlement (Habitat) (1996b) New Delhi Declaration, Global conference on access to land
and security of tenure as a condition for sustainable shelter and urban development. New
Delhi, 17th -19th January, 1996. Preparation document for Habitat II, Istanbul.]
96
Id., p. 28.
97
Id., p. 87.
98
Elke Matthaei & Prisca Mandimika (2014), The Flexible Land Tenure System in
Namibia: Integrating Urban Land Rights into the National Land Reform Programme
Access to Urban Land and its Role in Enhancing Business Environment 31

This is already done in some countries; whereby good examples are the
‘Certificates of Use’ in Botswana and Lesotho, condominium rights in
Brazil or extending existing customary arrangements in Egypt. In the case
of Egypt, informal settlers are charged a modest ground rent. This rent does
not grant a title and the land cannot be transferred, however should
households be displaced, they will receive compensation for the buildings
they have erected on their land parcels (ibid). This … enables the poor to
access land parcels which would normally have been beyond their financial
means. 99
Botswana’s innovative tenure option known as ‘Certificates of Rights (CORs)’
was introduced in the early 1970s in response to rapid urbanization and the
subsequent increase in informal settlements of the urban poor.100 They were
options which avoided the complex and costly procedures of registration and
formal titles aiming at facilitating self-help housing which could incrementally
be upgraded to formal title deeds.101 In spite of various challenges including the
transfer of plots to real estate developers and land speculators, the benefits
indeed outweigh the challenges encountered.
In Namibia, the Flexible Land Tenure Act, Act No. 4 of 2012 was enacted
“(a) to create alternative forms of land title that are simpler and cheaper to
administer than existing forms of land title; (b) to provide security of title for
persons who live in informal settlements or who are provided with low income
housing; [and] (c) to empower the persons concerned economically by means of
these rights”.102 This Act was a response to the challenges of “over 235 informal
settlements and 134,884 families” that were affected in Namibia”.103 The
Flexible Land Tenure System (FLTS) introduced tiers of titles that are
incremental and which may ultimately lead to freehold titles. The first phase is
known as the Starter Title which can incrementally lead to the second phase,
Land Hold title.

(Paper prepared for presentation at the “2014 World Bank Conference on Land and
Poverty”, The World Bank - Washington DC, March 24-27, 2014), p. 12 [citing Payne, G.
2001. Urban Land Tenure Policy Options: Titles or Rights? Habitat International
(25):427].
99
Id., pp. 12, 13.
100
See, Boipuso Nkwae & Dixon Dumba “From Certificate of Rights to Long-Term
Leaseholds in Botswana”, University of Botswana, Gaborone, Botswana.
<[Link]
term_leaseholds_in_Botswana>
101
Ibid.
102
Flexible Land Tenure Act No. 4 of 2012, Government Gazette of the Republic of
Namibia, No. 4963, Windhoek, 13 June 2012, Section 2.
103
Matthaei & Mandimika, supra note 98, p. 20.
32 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

These two titles are individual types of tenure, however they are group
based. The rationale being that the outside boundary of a block of land that
is earmarked for titling under the FLTS is professionally surveyed and
registered under the freehold tenure system in the Deeds Registry in
Windhoek, while individual rights or plots within the block are registered
locally in the established Land Rights Offices (LRO). The ownership of the
block piece of land (Erf) can be with the Municipality, private developer or
a Community Based Organisation (CBO). The maximum number of
households per starter title or land hold title is not limited to 100; however
there have been suggestions to limit a block to 100 households to avoid
overcrowding (Hackenbroch & Konzonguizi, 2005).104
The holder of a starter title has the following rights:
a) to erect a dwelling on the blockerf105 at the specified location of the
specified size and nature;
b) to occupy the dwelling referred to in paragraph (a) in perpetuity;
c) on his or her death to bequeath the dwelling to his or her heirs and to
lease to another person;
d) subject to subsection (3), to utilise such services as may be provided to
the scheme as a whole by a local authority or any other person;
e) to transfer his or her rights to any other person, (whether that person is
the heir of the holder of that rights or whether the transfer is another
transaction recognised by law);
f) to be a member of the association of the scheme concerned.106
Starter title can be “transferred by agreement followed by occupation of the
dwelling concerned by the person to whom the right has been transferred or any
person assigned by him or her to occupy that dwelling”.107 However, it must be
noted that “[n]o natural person may hold more than one starter title right and no
person may acquire a starter title right if he or she is the owner of any
immovable property or a land hold title right in Namibia”. 108 This restriction is
attributable to the transitional nature of the tenure which is meant to address the
shelter needs of the urban poor who live in informal settlements and eventually
be upgraded to stronger tenure schemes.

104
Id., p. 21.
105
“blockerf” means a piece of land on which a starter title scheme or a land hold title
scheme is established” (Section 1, Flexible Land Tenure Act No. 4 of 2012, supra note
96).
106
Section 9(1), Flexible Land Tenure Act No. 4 of 2012, supra note 102.
107
Id., Section 9(4).
108
Id., Section 9(10).
Access to Urban Land and its Role in Enhancing Business Environment 33

The land hold title “is a statutory form of tenure with all of the most
important aspects of freehold ownership, however without the complications of
full ownership”.109 It provides the owner with rights that are “[s]imilar to
freehold in a designated plot [t]o occupy a defined site in perpetuity”; the land
hold title can “be transferred, is devisable [i..e, transferable by will] and can be
used as collateral”.110
These rights are recorded in the land hold title register established by the
Registrar of Deeds and located at a LRO by a land rights registrar. The site
of a land hold title is demarcated on a cadastral map which is held in the
LRO. In this instance, the holder can enter into a limited range of
commercial activities. Once tenure security is obtained, the holders of these
titles can build their own houses and the local authority will be expected to
provide other services. Land under land hold title may be sold, donated,
inherited and mortgaged, and as such be sold in execution.111
The starter title can be upgraded “to the land hold title or directly to freehold
title” but “upgrading of starter title rights is only possible if the whole group, or
at least 75% of the group occupying a block of land, decides to upgrade”.112
Registration is then made after layout planning is “finalised and approved so
that individual plots can be defined and allocated”.113 However, “the land hold
title can be upgraded to freehold title either individually or as a block of
plots”.114 And finally, the free hold title constitutes “the final step towards full
cadastral title, and includes procedures of surveying and results in the
proclamation of the whole block development as a new extension of the
town”.115
Addressing the problems of informal settlements require caution against two
extremes. On the one hand, even if informal settlements are unlawful, rigid legal
procedures of eviction and other measures are usually imprudent and unjust. On
the other hand, blanket regularization and the automatic issuance of
individualized title deeds are susceptible to the risk of encouraging future
informal settlements on public land, and some may even sell their holdings to
land speculators and move to other informal settlements. The good practices of
various countries can thus inform the need for incremental means of legalizing
landholding in informal settlements through flexible schemes which in the short-
term do not immediately lead to individualized title deeds to the landholding.

109
Matthaei & Mandimika, supra note 98, p. 22.
110
Ibid.
111
Ibid.
112
Ibid.
113
Ibid.
114
Ibid.
115
Id., p. 23.
34 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

Conclusion: The Way Forward Beyond ‘Isomorphic Mimicry’

Production and exchange have always been private engagements. As economic
activities became so complex and multifaceted, state intervention was necessary
to regulate and institutionalize the basic rules and processes of these activities.
The conventional minimal (thin) state confined its role to its police, defence,
taxation and adjudication functions until post-industrial economic activities
required enhanced regulatory schemes. During the last two centuries,
intervention in the provision of public goods has become inevitable. However,
extremist forms of command economy that substituted the private sector, or that
substantially sidelined the private sector toward peripheral roles in economic
activities have invariably failed in post-1949 China until the early 1980s, in the
former Soviet Union and East European countries. This proves that it takes
millions of hands, minds and hearts of a country’s adult population to produce
the goods and services that are needed for the livelihood, social wellbeing and
progress of the entire population.
The value chain of every product thus renders empowerment at all levels
crucial because productivity, competitiveness and economic development are
unimaginable without access to land at all tiers of the chain. It is to be noted
that access to land in its broader meaning is different from access to the highest
bidder. It rather means the accessibility of land based on effective and efficient
regulatory and institutional frameworks which balance equity and productivity.
This envisages broad-based access to land and empowerment which motivate
productivity beyond consumption thereby serving as a springboard toward
saving, the mobilization of resources, enhanced investment and sustainable
development. Grassroots empowerment thus requires land tenure and security
that constitute indispensable inputs in the economic pursuits of citizens.
Business activities operate with ease in settings which, inter alia, have access
to land with a significant level of tenure security accompanied by the
availability of urban land at affordable prices. This envisages multi-track land-
related markets that are not overwhelmed by imperfections. Market distortions
can bring about land-use price hikes thereby diverting capital to land speculation
and real estate bubbles to the detriment of other economic activities such as
modern agriculture and manufacturing which are the foundations for value-
adding economic pursuits.
This brings about knock-on effects of rental hikes (unmatched by a
proportionally increasing real income) which eat away the major part of salaries
and wages of the urban population thereby adversely affecting motivation,
productivity and social wellbeing. In the case of the self-employed, such rental
hike and shortages of residential and business rental premises render
productivity and saving difficult. This inevitably brings about focus on settling
daily household bills rather than saving, entrepreneurship, innovation and
Access to Urban Land and its Role in Enhancing Business Environment 35

investment. Nor can price caps on house rent solve the problem because such
measures would aggravate market imperfections by encouraging underground
rental deals, and can also push rental contracts toward the incorporation of
invisible elements such as ties and relationships. The way forward thus requires
enhancing access to land (with tenure security) through non-monopolized multi-
track land-use markets that positively contribute toward ease in doing business.
Ethiopia’s urban land law (which pledges to pursue robust free market
economy as stated in the Lease Proclamation) in fact embodies land use rights
that are narrower and weaker than the tenure security in China’s property law,
which pursues socialist market economy. Nor are the restrictions justified under
the land property regimes of East Asian countries that (during the 1960s and
early 1970s) pursued state interventionist policies of developmental statehood. It
is to be noted that these developmental states had in fact empowered, and not
substituted private economic actors. The way forward thus calls for drawing
lessons from the legal regimes of developmental states with regard to access to
land and tenure security. Another major good practice that can inform the way
forward in the path of incremental tenure schemes is Namibia’s legal regime on
the incremental regularization of informal settlements.
The way forward in Ethiopia thus envisages the significant enhancement of
the supply side of urban land-use rights through diversified tracks of real
property supply, inter alia, by setting aside the current restrictions in the
transferability of land use rights. Such setting calls for (a) the enhancement of
the transferability of real property for the more efficient user at market value
with due regulatory interventions against land speculation and holdouts (i.e.
landholder’s undue demand for exaggerated prices beyond market value during
urban redevelopment) and (b) share transfers by way of enabling land-use right
owners to contribute the market value of their land-use rights as stock (share)
contribution in investment projects including construction of buildings.
Piece-meal reactive measures in the form of over-regulation merely delay
solutions thereby causing opportunity loss and the entrenchment of the problems
and challenges. As Pritchett and de Weijer duly observed, there is the need to
avoid ‘isomorphic mimicry’ because it is real (de facto) performance rather than
mimicry of structures and directives 116 that can holistically resolve challenges
and problems. They further call for the need to distinguish between “optimism,
which can be a powerful positive force, and wishful thinking, which is not”.117
Moreover, they underline the need to avoid “pre-mature load bearing” by

116
Lant Pritchett & Frauke de Weijer (2010), Fragile States: Stuck in a Capability Trap
(World Development Report, Background Paper), Harvard Kennedy School October 29,
2010, p. 2.
117
Ibid.
36 MIZAN LAW REVIEW, Vol. 9, No.1 September 2015

“asking too much of too little too soon too often”.118 Entrusting municipal and
land management offices to address every problem and challenge that emerges
in the realm of land supply and transferability can thus lead to ‘isomorphic
mimicry’ rather than healthy land markets and effective land governance. Even
worse, such state-centric monopoly toward mono-route land-use markets diverts
municipal offices from their mainstream function, thereby creating gaps in the
municipal provision of utilities, waste management, transport management,
urban plan management, land governance and other municipal services.
As the property regime is one of the key elements among formal and
informal institutions, it involves sets of restraints and claims in economic, social
and political interactions. These elements of institutions involve “the
understanding of how rules are embedded in social life and how institutional
structures are sustained”.119 World Bank Report indicates that “the proportion of
real property is between one-half and three-quarters of wealth in most
economies”.120 This clearly shows the indispensability of effective land law
regimes that are conducive to the enhancement of social wellbeing and
economic performance. Procrastinations and failures to address problems and
challenges in these legal regimes can ultimately lead to varying degrees of
systemic corruption and polarized economic benefits in the midst of mass
impoverishment and institutional fragility.
Every success in the transposition of a challenge (or a problem) onto a
solution positively contributes to the enhancement of a country’s institutional
capabilities, which determine the dynamics in the pursuits of economic, social
and political progress. On the contrary, regression can lead to fragility. Once a
state regresses into fragility, there is the tendency to remain fragile.121 This is
because such states usually get ‘stuck’ in the midst of “combination of
unfavorable domestic conditions plus unhelpful external actors” thereby
suffering from low capability and “recurrent conflict, for a very long time”.122
That is precisely why prudence calls for proactive pursuits of prevention (rather
than post-facto curative efforts) against all risks of fragility, toward which issues
such as access to land are crucial. ■

118
Ibid.
119
Geoffrey M. Hodgson (2006), “What are Institutions”, Journal of Economic Issues,
Volume XL, No. 1, March 2006, p. 18.
120
Cited in Kenneth W. Dam (2006), Land, Law and Economic Development (January
2006), Chicago Working Papers in Law and Economics (Second Series)
121
Pritchett & de Weijer, supra note 116.
122
Ibid.