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Published On  Oct 16,  2011
   
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New Law Puts Private Possessions under Lease

Council of Ministers to determine details whether lease price or term apply

 

Unlike the previous two lease laws that have been passed, the urban land lease holding proclamation, passed on Tuesday, October 12, 2011, heard hardly any debate or discussion.

The bill for the law did not get to see the traditional procedures of being tabled to parliament by members of parliament (MPs), discussed by a relevant standing committee for review, and then sent back to the parliament for discussion with the public before being passed.

The provisions in it were topics that have taken the public by surprise; dumbfounding many in the city. All old land possessions will be put under a lease system, according to the law.

However, whether this is to mean that lease payments will be made on previous holdings or just governed by the length of holding limited under the lease law remains elusive. The modality of conversion has yet to be determined by the Council of Ministers on the basis of a detailed study to be submitted by the Ministry of Urban Development & Construction (MoUDC).

The law was passed, with only one objection coming from Girma Seifu, the sole opposition MP (Medrek). 

“What can I say, the government is clearly telling us that it is becoming part of the land grabbing mob,” Girma told Fortune.  “Even if the council does not levy lease payment on old possessions, I think this only means the government is telling property owners that their house is likely to be taken away from them when the lease period is over.”

A period of lease may be renewed upon its expiry on the basis of the prevailing bench mark lease price and other parameters, the law says, however the lessee shall not be entitled to compensation where the lease period is not renewed. 

Another disappointment is the provision for the transfer of leasehold rights before commencement of construction or half-completed construction. In such cases, the lessee only retains the effected lease payment including interest, value of the executed construction and five per cent of the transfer lease value. The remaining goes to the appropriate body.

When plots are parcelled while converting old possessions into leasehold, the owner of the plot has to pay the lease price of additional land obtained, says the new law, however, only property lying on the plot given up gets compensation.

This is contrary to what the government has been saying about rent seeking, according to Girma.

“Who is the rent seeker know, the development strategy of the government states that an economy which depends on unprocessed natural resources is rent seeking,” Girma told Fortune. “To be honest this is nothing more than claiming the right to exploit the country’s resources solely.”

Land has been a major source of corruption, the government claimed last year when it took measures on those who had leased land and not commenced construction. The Addis Abeba City Administration had reclaimed close to one million square metres of land claiming developers had failed to start projects according to the lease deal.

Under the new law, provisions have been set for the duration of time to commence and complete construction. A time limit of 24 months has been set for small construction projects while 48 months was set for large constructions. Those in between have 36 months to complete construction. This deadline, although it can be extended, cannot pass exceed six months for small constructions, or one year for medium and large constructions.

The law is aimed at controlling corruption and abuse prevalent in the previous land lease system, reads the preamble of the law.

As a result, the law has dissolved the lease board because it has failed to affect its responsibilities transparently, which in return has led to an unethical implementation of the lease law.

The proclamation, which repeals the former lease holding proclamation, also states that, any officer or employee in charge of implementing this proclamation caught in activities with the intent of obtaining undue advantage for oneself or another might end up with up to 15 years of rigorous imprisonment.

Unless the offence is punishable with an even more severe penalty under the criminal code, granting an urban land in contravention of the proclamation is punishable by seven to 15 years of rigorous imprisonment and a 40,000 to 200,000 Br fine.

The punishment for failure to disclose any information pertinent to a tender, restricting sale of bid documents, distorting or reversing the process of a tender is also set as five to 12 years of rigorous imprisonment with a fine of 30,000 to 150,000 Br.     

However, this will not solve the problem, contends Girma.

“Increasing punishment will not eradicate corruption, its just leads to people asking for more bribes commensurate with the possible punishments,” he told Fortune. “What should be done is bringing a systemic change.”

The law was passed along with the proclamation for the establishment of the Ethiopian Federal Police Commission and a proclamation for Veterinary Drug and Feed Administration and Control.

“I do not understand why they choose to make it so fast and surprising,” Girma, who claims not to have had time to read all the proclamations in the short period of time allotted, told Fortune. “Such kinds of laws have to be discussed by the public and the responsible standing committee in the parliament.”

By Hruy Tsegaye
Fortune Staff Writer

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