Addis Abeba's Costly Pursuit of Prosperity Bulldozes Dreams on Bargain Prices

Feb 1 , 2025.

Urban renewal is seldom gentle to those on the receiving end of redevelopment. Take several neighbourhoods of Addis Abeba where bustling life once thrived. Silence now reigns on them, bar the bulldozers flattening not only the land tens of thousands once lived on. The livelihoods of thousands of families have been displaced in the name of "prosperity."

Federal and city officials continue to tout these mass evictions as part of a grand urban renewal scheme, yet for many residents, it marks the end of a stable life and the beginning of exile within their own city. The recent evictions and relocations have yet to be documented. But, in the six years beginning in 2009, over 20,000 households — some 100,000 people — were evicted from central Addis Abeba. According to one survey, 41.3pc of businesses forced to relocate did not survive in their new zones, and 29.1pc of evicted households found no income opportunities at all.

The administration of Prime Minister Abiy Ahmed (PhD) has unveiled multi-billion-dollar developments, a commercial and residential complex on the site of "old "Addis Ababa neighbourhoods. Officials insist evicted families are provided “affordable” housing in the outskirts, with reasonable compensation for those who own properties. Experience suggests otherwise.

The land lease system, introduced under the EPRDF regime and amended in 2011, fundamentally altered the market by auctioning off what was once "public land" to the highest bidder. The massive constructions that followed led to the sector’s share of GDP growing to 16pc, but a 2017 UN-Habitat report showed that housing costs in the city jumped up to 274pc in the mid-2000s and early 2010s. Condominium housing has become another financial trap where 52pc of those relocated to government-sponsored buildings have defaulted on their mortgages.

Developers have reaped rewards from generous land allocations and murky bidding procedures. Politically connected business elites, along with foreign-owned firms, particularly Chinese and Gulf-based companies, have snapped up plots for luxury towers and malls. Although land lease payments ostensibly fund public infrastructure and affordable housing, revenues often vanish into bureaucratic inefficiencies or politically motivated projects such as the “Beautifying Sheger” initiative, which appeals to aesthetics rather than social welfare.

Addis Abeba's predicament, caused by the state's unrestrained use of the "eminent domain" concept, should not be considered unique. Nor is it confined to African capitals.

In the United States, a Supreme Court case of Kelo v. City of New London ignited a debate about whether private property can be seized for economic development. Susette Kelo’s home in Fort Trumbull, Connecticut, was bulldozed to make way for what was supposed to be an expansion for the drug manufacturer, Pfizer, and other commercial ventures. The Court ruled five to four that economic growth qualified as a “public use.”

Yet, grand promises soon collapsed. Pfizer left town, and the land remains vacant. The fiasco cost New London millions in legal fees and lost property tax revenues. A 2020 National Bureau of Economic Research report revealed that under 40pc of such projects achieved the forecasted employment levels, while nearly a quarter never materialized. Homeowners, however, still had lost their properties.

Some public projects may truly depend on expropriation. Highways, ports, and airports that benefit entire regions can stall if a handful of property owners refuse to sell. The power of governments to consolidate land efficiently, especially when coupled with a fair compensation regime, could provide vital infrastructure for wider public use. The problem comes when fairness and transparency are often lacking, which leaves poorer communities vulnerable.

In her dissent over the Kelo case, Justice Sandra D. O’Connor warned that lower-income neighbourhoods would suffer the brunt of such takings, a concern borne out by studies showing poor areas are disproportionately targeted.

Ethiopia embodies similar tensions but on a far larger scale. Its constitution declares land the property of the “state and peoples,” and the current expropriation framework, updated in 2019 and again amended in 2024, mandates compensation for improvements on the land but not for the land itself. This arrangement distorts decision-making by undervaluing land’s intrinsic worth. It also incentivises authorities to seize parcels cheaply for public — or ostensibly public — projects whose economic and social merits go untested.

Critics have merit in their argument that if the law recognised land value in the compensation formula, local communities and developers would have stronger incentives to use land sustainably. There would also be fewer motives for successive regimes to exploit murky redevelopment deals under the banner of "development, renewal and prosperity."

The appetite for development stretches back generations. In the early 1930s, Emperor Haile Selassie and a group of foreign-educated modernists fantasised about forging “the Japan of Africa.” Multinational corporations were beckoned, and swathes of land were leased to foreign ventures. In the decades since, the Revolutionary Democrats shifted from Soviet-inspired collectivism under the Derg to a developmental state model, with farm expropriations and factory expansions at the core.

New roads and factories promise jobs and prosperity within Addis Abeba's orbit, but older residents often lack the skills to transition from farming to factory work. Official figures in some industrial parks reveal monthly wages of around 26 dollars, a pittance compared with prior earnings from harvests. In the worst cases, bulldozers arrive before locals even learn their land has been transferred to a new owner.

Compensation rarely covers the lasting costs of eviction, leaving residents to spend any payout within months. They move to cramped city fringes or attempt precarious work as day labourers.

Economic growth, once double-digit for successive years, has slowed but did not diminish official faith in big projects. However, the frustration for many Ethiopians lies not in the ambition but in the top-down manner of implementation and enforcement, which underestimates the social disruptions that follow mass expropriation. A fairer compensation mechanism that counts the land as a valuable asset could limit abuses and address the damage to those uprooted.

It would leave the state’s ownership of land intact, since the government retains the right to expropriate for public purposes, but it would force a deeper reckoning with whether a given project truly warrants the upheaval it brings.

Such a shift could meet international standards, where expropriation laws recognise that land value should factor into any credible compensation scheme. It could also spur local authorities to consult communities more openly, encouraging inclusive planning and creating labour programs that help displaced families adapt. Elsewhere, cities like Bogota, in Colombia, and Sao Paulo, in Brazil, have managed urban growth without mass expulsions by encouraging participatory planning, community land trusts, and zoning that balances economic expansion with social equity.

Whether Ethiopia’s contemporary leaders are prepared to rewrite the constitutional framework is unclear. Yet, the question of how much “creative destruction” is necessary before the gains of development trickle down to the very people who are making way for it looms large. If the authorities keep ignoring the intrinsic value of land, the bulldozers will continue to roll, displacing communities in pursuit of glitzy ambitions, they only wish to have a volcanic discontent.

A new expropriation policy, one that compensates the structure and the soil beneath it, could nudge the country and its people toward a future in which development is measured not by how many old homes are razed but by how many lives are improved. That, at least, would be progress worthy of its name.

PUBLISHED ON Feb 01,2025 [ VOL 25 , NO 1292]

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