Expropriation Procedure, Law and Practice

AbstractThis paper reviews the legal rights of peasants and pastoralists in Ethiopia in general and the Oromia Regional State in particular; and examines the adequacy of compensation payable for expropriation of rural landholdings in Oromia. The study found that although the FDRE Constitution of 1995 and Oromia Revised Constitution of 2001 provide for secured and lifetime use rights over rural landholdings and also provide for payment of “commensurate” amount of compensation. There are great discontents in the research site of the study (in Eastern Industrial Zone) due to payment of low amount of compensation because of unscientific method of valuation.

The paper also described situations in which public purposes are not implemented in accordance with the time and manner agreed in peri-urban areas of the region. The rural citizens who have been affected by the expropriation are facing difficulties to restore their life because of low amount of compensation and due to lack of commitments from the part of expropriating authorities to help them rehabilitated and public purpose has become a looming crisis to the life the farmers.

The calculation formula provided by the law is unscientific and unjustifiable both in theory and in practice and it cannot be a basis for “commensurate” amount of compensation. The law is also not sufficiently clear regarding time of payment and this has resulted in delay of payment of compensation in some cases.

The paper recommends the policy makers and implementing agencies of the regional state to rethink about the citizens whose life have been getting worst because of taking of their landholding. Particularly, it advises the concerned government organs to monitor the implementation of public purposes for which land was expropriated and to take appropriate measures on illegal sale of lands in urban and peri urban areas of Oromia.


CHAPTER ONE INTRODUCTION1.1. Background of the StudyIn rural residents of most developing countries, including Ethiopia, land is the main economic, political, social and cultural asset. It is the crucial source of generating livelihood income for society. It remains an asset that farmers have to accumulate wealth and transfer the same to future generation.

Moreover, the issue of land has not simply remained to be an economic affair but also it is very much intertwined with the people‟s culture and identity. In a nutshell, land related issues in developing countries are the most sensitive part of overall development that government needs to consider. In present Ethiopia, land is the common property of „the state and the people‟, and, hence, is not subject to sale, exchange or mortgage.1 Rural farmers and pastoralists are guaranteed a plot of land free of charge while urban residents can secure the same through ground lease arrangements.

2 The state grants only a use right over land to peasants and pastoralists in rural areas in Ethiopia in general and Oromia regional state in particular, which is provided in both federal and regional rural land use and administration proclamations.3 To secure such rights, the Constitution prohibits eviction of holders of the land without just cause and payment of compensation.4 Due to rapid growing urbanization and modernization of infrastructures as well as expansion of foreign and national investment, a large tracts of rural land in the country in general and the regional state in particular, are being taken by way of expropriation.

Expropriation is a very intrusive power held by government. While potentially devastating to individuals, the power is also necessary in a functioning society. In a democratic system, the political process provides some degree of checks and balances against governments acting unreasonably, but the legal system also enforces certain rules and procedures for expropriation.

1 2

FDRE Constitution, 1995, Art.40(3) Ibid,Arts.40(4,5,6) 3 See also FDRE Constitution, Proclamation 455/2005, Proclamation 456/2005, Proclamation130/2007, 4 Supra Note 1 ,Art.40(4)


The procedures and authority for direct expropriation are usually based on statutes. Each jurisdiction has laws that state how the government can expropriate property and when it has to compensate the owner. In most cases involving government expropriations, the applicable statute governs the rights of the land owner/ possessor to compensation.

Depending on the nature of the taking and the applicable legislation, the owner/possessor of the property can receive compensation in the form of market value of the property, injurious affection, disturbance, and special value. Interest and consultancy costs are also commonly awarded in the owner‟s compensation package. Parliamentary enactments and court decisions over time have refined and reduced the scope and application of the state power of expropriation. In respect of land, now, expropriation is exercised only in cases where designated land is used for a public purpose and accompanied by payment of fair compensation.

This study is conducted to describe the concept of expropriation and the valuation methods followed in Oromia regional state presently, and to assess the fairness of amount of compensation paid in the event of rural land expropriation. It also examines the issue of public purpose requirement for the cause of expropriation.

1.2. Statement of the ProblemIn Ethiopia in general and Oromia regional state in particular, presently urbanization and investments are expanding. This reality necessitates the expropriation of rural land for such more useful public purposes by the government. In relation to compensation to be paid for rural land expropriation, it is argued that there is `no uniform system of valuation of amount and mode of just compensation. This is partly related to public ownership of land in the country. Although the constitution has guaranteed the right against eviction of farmers from their use right without just cause and payment of commensurate compensation, other laws are criticized for lacking clear enforcement procedures regarding the payment of fair compensation to the farmers.

Still it is not clear whether legislations adopted by the government both at the federal and regional levels adequately address the issue of just compensation for rural land expropriation, and whether the practice is compatible with the law regarding the amount of compensation to be paid and mode of valuation in Oromia regional state. Another debatable issue is whether the cause for expropriation is genuine for in most cases lands expropriated under the guise of public purpose 2

are fenced by those investors without making any use of it for the purpose it was expropriated in accordance with the manner and the time of contract of lease. Therefore, it is imperative to critically examine the laws, the policies as well as the practices in Oromia with specific reference to issues of expropriation, i.e., the notion of public purpose and compensation paid during the termination of use rights over the rural and peri-urban landholdings.

1.3. Research QuestionsThis research has sought to answer the following questions: i. What is the extent of the farmers‟ rights and tenure security over their landholdings in Ethiopia in general and Oromia in particular? ii. Does the expropriation of use right over rural and peri urban landholdings in Oromia constitute compensable interest? iii. Can the rural land users‟ claim just amount of Compensation for the expropriation of their landholdings? iv. Do laws and policies adopted in relation to expropriation of rural landholdings in Ethiopia in general and Oromia effectively address issues of expropriation and compensation? v. What constitutes “public purpose” under Ethiopian laws?

Is the expropriation power in fact exercised to achieve the public interests? vi. vii. Is the amount and mode of compensation being applied in Oromia adequate? Is there clearly defined right of appeal against the administrative decisions on the amount and mode of compensation in the regional state? viii. ix. Is there a requirement for a specific time for the payment of compensation? How far is the practice compatible with the law in the regional state?

1.4. Literature ReviewThose researchers who conducted research on land expropriation and compensation in Ethiopia in general and Oromia regional state in particular have indicated that there are many shortcomings regarding the legal frame work and practice.


Daniel W/ Gabriel examined that the authority of the state to expropriate land held by farmers and other citizens is limited by public purpose and payment of “commensurate” compensation5. He argued that if the state takes apiece of land from a person without a public purpose that amounts to illegitimate expropriation or confiscation of land.6 He also added that the same is true if the state takes some body‟s plot of land without the payment of compensation. Furthermore, he stated that payment of compensation in the case of expropriation is founded, among others, upon the justification that the public should not enrich itself at the expense of its member and payment of compensation introduces disciplined taking.

He highlights the two common views about payment of compensation, i.e., indemnity principle and taker‟s gain principle. He also tried to determine the contents of the market value approach to compensation. Besides, he reviewed the three approaches to valuation of property in the course of expropriation: comparable sales approach, income capitalization approach and replacement cost approach.7

Based on the federal laws and practice in Amhara regional State, he reached conclusion that “there is no problem with the wordings of the FDRE constitution and the fact that land is owned by state by itself does not imply the nonpayment of compensation.”8 According to his findings, the implementing proclamations and regulations fail to implement the principle of “commensurate” Compensation enshrined in the constitution. He also found that the valuation method followed in Urban and a peri-urban area is the replacement cost approach due to underdeveloped real property market in Ethiopia.9 Accordingly, as per his findings, the market price of houses and buildings is greatly based on the price of construction materials, instead of the value and location of the land, where the building is situated, which might be partly attributable to the state ownership of land in the country. He further criticized that expropriation procedure has been adversely affecting the landholder‟s rights which is resulted because of ineffectiveness of the relevant laws to uphold the constitutional guarantee for commensurate compensations and non observance of the same in practice. Finally, he concluded that the value 5

Daniel W/Gebriel, Land Valuation for Expropriation in Ethiopia: Valuation Methods and Adequacy of Compensation, 7th FIG Regional Conference, Spatial Data Serving People: Land Governance and the Environment – Building the Capacity Hanoi, Vietnam, (October 2009) 6 Ibid 7 Ibid 8 Daniel W/Gabriel,Compensation during Expropriation, in Muradu Abdo‟s (Eds.) Land Law and Policy in Ethiopia since 1991: Continuities and Changes, Ethiopian Business Law Series, Vol. III (2010), 191-234 9 Ibid


of the rural land expropriated that is calculated on the basis of the previous five year‟s average annual income of the farmer does not adequately compensate the farmer‟s loss.10

Gudeta Seifu also argued that law is an instrument to promote tenure security in Oromia Regional State11. He asserted that three factors affect tenure security: duration of the rights of holders, the assurance of rights for all land holders and robustness of rights of holders. He surveyed the Oromia regional state‟s rural land laws in light of duration of rights in land given to holders, guaranteed use and transfer, and guaranteed disposal right of property on the land.12

Likewise, Abebe Legese stated that law of compensation applicable in the case of expropriation of rural lands in Oromia is vague; particularly, in relation to the amount and mode of compensation and the practice is also incompatible with the laws.13 He argued that even the practice in the regional state is not similar14.

Bereket Bushura examined the law of compensation applicable up on expropriation of rural land holding rights in the regional state of SNNP.15 He found that provisions of law that provide for compensation for various interests such as permanent improvements to land, the right to get substitutable land, and things attached to the land as well as payment of compensation are vague and have to be replaced by a clear provisions. Some important property rights such as the right to claim compensation for immovable in the regional state are not clearly provided. 16 He also found that there are gaps and disparities between the laws of federal and regional rural land administration and use proclamation of the region of SNNP especially in relation to the right to



Ibid Gudeta Seifu, Rural Land Tenure Security in the Oromia National Regional State, In Muradu Abdo Eds., Land

Law and Policy in Ethiopia since 1991: Continuities and Changes, Ethiopian Business Law Series, Vol.III (2010) 12 13

Ibid Abebe Legese, The Law of Expropriation and Compensation in Oromia Regional State,[Unpublished, AAU, Law Library], (2004) 14 Ibid 15 Bereket Bashura, „The Law of Compensation Applicable upon Expropriation of Rural Land Holding Right in the Regional State of Southern Nations, Nationalities and Peoples‟, [Unpublished, Addis Ababa University, Law Faculty, 2006) 16



substitutable land compensation. Above all, he argued, there is a chronic contradiction between the law and practice in the regional state.17

Despite the contributions these studies made to the understanding of the concept of compensation for expropriation of rural lands in Ethiopia in general and regional states in particular, certain questions still remain unanswered. For instance, Daniel W/Gabriel conducted his research on the basis of the federal laws and Amhara Regional State only. Hence, his findings cannot represent the reality of entire country in general and the situation of Oromia regional state in particular. Gudeta Seifu didn‟t analyze the laws of the Oromia regional state in light of adequacy and fairness of compensation since his focus was on the tenure security. Thus, the issue as to the fairness and adequacy of amount and mode of compensation in Oromia regional state demands further research that will describe thepractice and analyze the provisions of laws related to the issue. Moreover, the studies conducted by Abebe and Bereket got limitations due to passage of time and there have been improvements in relation to adoption of laws on the issue of rural land expropriation and fairness of compensation. Because they conducted these studies in 2004 and 2006 respectively; and their findings of the time cannot reflect the current situation in Ethiopia in general and Oromia regional state in particular. Besides, the findings of the above researches failed to address whether there are really public purposes and just causes behind expropriation of the land.

Therefore, this research is believed to be unique in that it is sought to fill the gaps in the aforementioned and other previous researches due to their inability to reflect the current reality and their weak focus to the issue of examining the laws applicable to compensation for rural land expropriation in the Oromia regional state by backing the theoretical frameworks with application of laws in their actual spirit. More over, it will be significant in bridging the gap existed in relation to the lack of understanding on the effectiveness of laws adopted in relation to payment of just compensation for expropriation of rural lands and their practical implementation in Oromia regional state.




1.5. Objectives of the study1.5.1. General Objectives The basic objective of this research is to examine the laws applicable to compensation of rural land expropriation in Oromia regional state in one hand, and the adequacy and fairness of the amount of compensation both theoretically and practically, on the other. In a nutshell, it is sought to determine whether the right to compensation for expropriated rural lands in the region is clearly and adequately provided by the law, and to examine whether there is a discrepancy between the law andthe practice and the existence of similar practices of valuation and amount of compensation in the region. It is also aimed at examining the existence of public interest for the cause of the expropriation of the land. 1.5.2 Specific Objectives This research is aimed to:  Determine the extent of tenure security on landholdings in Oromia and the legitimacy of claiming of adequate amount of compensation;  Analyze the pertinent provisions of laws adopted in relation to compensation for expropriation of rural lands at the federal level and Oromia regional state;  Assess the amount, mode and adequacy of compensation being applicable in the region;  Assess whether there are clear guidelines of law on how to pay uniform amount of compensation;  See whether there is specified time of payment of compensation;  Critically assess the availability of the right of appeal against the administrative decision on the amount of compensation on the use right of rural lands in the regional state;  Critically examine whether the practice regarding public purpose is going in line with the law; and  Suggest possible recommendations for the problems which could be revealed as research findings.

1.6. Significance of the StudyIt is believed that this study will contribute to the effort of strengthening the legal framework and practical performance of government organs concerned with rural land administration and payment of compensation for rural land expropriation in the Oromia regional state. Moreover, it will also be a base for potential researchers to conduct further studies on the issue. 7

1.7. Methodology of the StudyIn conducting this research, both qualitative primary and secondary data have been employed to be collected in the following methods. 7.1 Methods 7.1.1 Primary Data: Interview: The method employed to obtain primary data is face to face interview with different people including farmers whose landholdings have been expropriated for the purposes of investment and urbanization mainly around Dukem-Bushoftu Industrial Zone (The Eastern Industry Zone). The interviewees have been selected purposely for they are those whose situations are devastating due to expropriation of their landholdings. The concerned officials from the Bureau of Investment, Bureauof Rural and Agricultural Development Legal Department, Bureau of Land Administration as well as judges and lawyers were also used as input for the study.

The Dukem town and the Research Site is one of the industrial zones selected by the federal government. A number of hectares of the rural lands have been expropriated due to the expansion of urbanization, investment activities, construction of public services such as Addis Ababa-Adama high way road construction, Eastern Industry Zone and other activities. It has been observed that rural land is extensively expropriated around the Dukem Town (Peri-urban areas) mainly for establishment of Eastern Industry Zone. The Industry Zone, which is under construction by the Chinese Company, has caused the expropriation of 500 hectares of land from the possession of farmers. It is believed to plant 80 different kinds of industries including manufacturing, garment, agro-processing and different factories for production of various goods. This area has also been affected by Addis Ababa-Adama road construction by the Chinese company called EIZ construction (which has affected 33.1 hectares of land).18 Moreover, the Ethiopian Railway Authority has also expropriating rural land for the construction of EthioDjibouti Railway.


The 33.1 hectares of land has affected 25 farmers land and 2, 257,386.30 Birr has been paid in the form of compensation. Interview With Ato Chala Bekele Dukem Municipality Land And Administration Office, August 8, 2011, Zaraay Surafel, Finfinne Surrounding Special Zone, Akaki Woreda Agricultural Office Agronomy Department Head And Chair Person Of Land Valuation And Compensation Committee Of The Woreda, July 12, 2011


Due to the importance of Dukem Town for construction of dwelling houses, private investments and public service utilities, the rural land has also been urbanized and added to the master plan of the town. For these and otheractivities which could constitute “public interest”, the public authorities believe that anything that might be needed by investors (domestic and foreign), cooperatives, government agencies NGOs, religious institutions and so forth will justify the expropriation of rural land upon payment in advance of compensation. 19 According to the data organized by the Akakai woreda in 2009, 440 hectares of rural land has been taken for investment activities on the public purpose justification. Thus, the concern of this study is to review the law applicable on the expropriation and adequacy of compensation in Oromia Regional State Finfinne Surrounding Special Zone Akaki Woreda (Dukem and its vicinity). Documents: In addition, primary documentary sources including the FDRE constitution, federal land administration proclamation No. 89/1997, Federal Land Administration proclamation No. 455/2005, Federal Rural Land Administration and Use Proclamation No.456/2005,Oromia Rural land use and Administration proclamation No. 56/2002, proc No.70/2003, proclamation No.103/2005, a proclamation to amend proc. No.56/2002; proc No.130/2007 have been analyzed in relation to compensation for rural land expropriation in Oromia regional state. 7.1.2 Secondary data: The study also has used the relevant literature materials as secondary sources.

1.8. Limitation of the StudyUndertaking the study was not an easy task; particularly, obtaining information for the purpose of the study has been a demanding and burdensome task owing to the tedious bureaucracy in the government organizations concerned with the land expropriation. Worst of all, it was difficult to get relevant data to be used as input to the study due to the absence of organized information on the issue in the research site. For instance, there is no organized data that show the total size of land expropriated and the number of family affected by expropriation proceedings in Akaki Woreda.




1.9. Structure of the StudyThe study is organized into four chapters as follows. The first chapter introduces the reader with the study. It highlights the reasons that necessitated the research and the objectives that are intended to be achieved. It presents the statement of the problem, research questions, general as well as specific objectives of the research, literature review, significance and the research methodology briefly.

The second chapter deals with issues related to rural land tenure security and use rights those farmers and pastoralists have over their landholding. A discussion on land tenure systems highlights the laws, policies and practices from pre-1974 period up to the current government regime. The current land policy issues in Ethiopia in general and Oromia in particular have been given concerns under this part. The effects of rural land certification and registration on tenure security in the Oromia as well as limitations of the existing pertinent law have been covered.

The third chapter deals with the conceptual framework of expropriation and compensation in general and in light of relevant laws of Ethiopia. An attempt has also been made to raise and discuss the public purpose requirement as a limitation on the power of state to take property rights of private individuals. Furthermore, whether the expropriation of the farmers‟ landholdings has achieved its very purpose is the other issue to be discussed in detail. It ends by discussing the concept of just compensation in the context of Ethiopian law.

In the last chapter, but not certainly the least, the laws and the practices regarding the adequacy of compensation for taking of landholding rights over rural lands in Oromia have been critically assessed. The valuation method and systems; the compensation schemes and compensable interests in Ethiopia in general and Oromia in particular have been critically analyzed. The provisions of laws, including the FDRE constitution, the 2001 Revised Oromia Constitution, the implementing proclamations and regulations which areadopted in relation to the issue at hand both at federal and the Oromia as well as practices around the Eastern Industry Zone have been examined. Finally, the study closes with conclusions and possible recommendations.


CHAPTER TWO 2. Land Tenure Security and Rights of Land Users in Oromia Regional State In agrarian country like Ethiopia, land tenure system is not only an economic affair but also it is highly interconnected with the people‟s culture and identity. This partly explains why land related issues usually generate deep emotional reactions. For rural residents of most developing countries, land is the primary means of production used to generate a livelihood for a family. It is also the main asset that farmers have to accumulate wealth.20

Land tenure, as an institution, not only governs access to and control over land and land based resources and the flow of the benefits thereof. It is also a source of expectations, a basis for actors to simulate and predict each other‟s behavior in the sphere of activity to which the regime applies and thus the fundamental role it plays in a society should not be overstated. 21 The kind of tenure system and security of landholding in a country is one of the most important issues to be examined, particularly, in developing countries. This is because; it is a tenure system of a country that defines and regulates basic elements in any right to land like access to rural land, tenure security and rights and obligations of the land holders.

In Ethiopia, tenure security is one of the controversial issues particularly in relation to the extent of rights of farmers over their landholding in general and the adequacy and fairness of the amount of compensation paid during rural land expropriation that may emanate partly from state ownership of land in the country.22 In this chapter, tenure security of rural landholding in the current Ethiopian situation and rights of landholders will be reviewed on the basis of Federal and Oromia Regional State rural land administration and land use laws.


P. Groppo, Land Reform, Land Settlement and Cooperatives, (Editoria Group, FAO Information Division, 2003), p.103 21 Bereket Bashura, „The Law of Compensation Applicable upon Expropriation of Rural Land Holding Right in the Regional State of Southern Nations, Nationalities and Peoples‟, [Unpublished, Addis Ababa University, Law Faculty, 2006), p.27 22 Klaus Deininger, et al, “Land rental in Ethiopia: Marshallian Inefficiency or Factor Market Imperfections and Tenure Insecurity as Binding Constraints?” Selected Paper Prepared For Presentation At The American Agricultural Economics Association Annual Meeting, Portland, (July 29-August 1, 2007), p.5


2.1 Conceptual Framework for Rural Land Tenure and Tenure Security So as to understand the meaning of key terms in this chapter, it is vital to define what constitutes land tenure and come up with workable definition for the sake of convenience. While land tenure is broadly understood as property relations in land and their administration 23, FAO has defined the term “land tenure” as: “the relationship, whether legally or customarily defined, among people, as individuals or groups, with respect to land… [It] is an institution, i.e., rules invented by societies to regulate behavior regarding on how land is accessed and used.”24 There are three things to be noted regarding land tenure in this definition. Firstly, it refers to people‟s relationship to land. Secondly, land tenure is an institution through which individuals‟ access to land and use right is determined. Thirdly, it denotes rules of the game through which the content of rights and duties of individuals with respect to land are defined. 25 The relationships are usually defined by customary rules or formal laws. In both cases, tenure rules define land property rights regarding access, control and transfer of rights with corresponding duties and restraints.26 Similarly, Middleton has defined land tenure as “a system of relations between people and groups expressed in terms of their mutual rights and obligations with regard to land.”27 This definition signifies that rules ofland tenure define how property rights to land are to be allocated within society. In a nutshell, according to FAO‟s definition, land tenure systems determine who can use what land for how long, and under what conditions. Ogolla and Mugabe, on the other hand, maintained that land tenure defines “the methods by which individuals or groups acquire, hold, transfer or transmit property rights in land.”28 There are varieties of property rights in land such as the right to use, transfer and improve, to appropriate returns and the like.29 This bundle of rights may be transferred or transmitted either individually or together at the discretion of the 23

Gudeta Seifu, “Rural Land Tenure Security in the Oromia National Regional State”, In Muradu Abdo Eds., Land Law and Policy in Ethiopia Since 1991: Continuities and Changes, Ethiopian Business Law Series , Vol.III (2010), p.112 24 FAO Corporate Document Repository, Land Tenure and Rural Development, Rome (2002), p.7 25 Gudeta Seifu, supra note 4 26 Abebe Mulatu, compatibility between rural land tenure and administration policies and Implementing laws in Ethiopia, In Muradu Abdo‟s Eds., Land Law and Policy in Ethiopia Since 1991: Continuities and Changes, Ethiopian Business Law Series , Vol.III (2010), p.2 27 Yegremew Adal, Some Queries about the Debate on Land Tenure in Ethiopia, Institute of Development Research, Addis A