A bill proposing sweeping reforms to the urban land lease system was tabled in Parliament last month, introducing major changes to land tenure and administration. The legislation, prepared by the Ministry of Urban & Infrastructure (MUI), aspires to phase out freehold tenure in favour of a leasehold system within five years.

A review of lease rates is required every three years and 20pc of urban land is allocated for housing projects. The reform also aspires to regulate urban farmlands by recognising agricultural zones within cities, ensuring their orderly integration into urban planning. It also introduces measures to integrate urban farmlands into the leasehold system, bringing them under the cadastre framework to resolve disputes and ensure fair compensation for farmers affected by development projects.

The draft law updates the decade-old lease proclamation, introducing provisions to clarify land provision and administration. Officials cite its potential to reflect market values and ensure returns on state-owned investments.

According to Bizualem Admassu, head of the land & cadastre department at the Ministry, the reforms plan to address inconsistencies in land administration, particularly in areas transitioning from rural to urban status. He noted the strain on land policies caused by rapid urbanisation and the pressing demand for infrastructure funding.

“Cost-based lease system will help generate revenues,” he said.

The legislation also incorporates construction deadlines into bid evaluations for land auctions, addressing delays that have plagued previous projects. Past auctions in Addis Abeba usually failed to yield timely results, prompting authorities to enforce stricter project deadlines.

The bill introduces negotiated land transfers alongside the existing allotment and bidding processes. It prioritises land allocation for institutions such as embassies, state-owned industrial parks, universities, hospitals, research centres, and luxury hotels.

Anchelo Admassu, head of land preparation at the Oromia Land Bureau, identified unclear land registries as a major barrier to integrating urban land into the leasehold system. “Unsettled landholding rights and outdated records contest the transition,” he told Fortune.

Efforts to digitise property records across 143 towns in Oromia Regional State seek to address these issues. The towns are put into classifications, with Sheger City as a metropolis, Bishoftu and Adama as regiopolis, and Jimma and Neqemt as prime cities. Sheger City, divided into 12 districts and 36 weredas, has initiated the transition to leasehold ownership to fund critical infrastructure. Burayu town, a manufacturing hub within the city, began implementing the policy following a three-year study.

“Revenue generation from land leases is essential to support infrastructure,” said Kifle Tekle, head of Burayu’s land administration office.