Oromia Regional State President Shimeles Abdisa introduced a land lease directive for flower farm investors a month ago, featuring new lease rates based on proximity to city centres categorising the region into six areas. It is seen as a milestone by regional land management officials, to boost urban agriculture.

A total of 143 towns are included, from the least to the most urbanised areas, each with corresponding lease and rent rates ranging from 1.84 Br for a square meter to 4.04 Br. Leases are set for 15 years, with payments spread over seven years and a 10pc down payment required upfront.

This is the first such lease rate introduction in the region, following a three-year study by the Oromia Land Bureau. Officials expect it will lay a foundation for urban agricultural land leases, improving regulation, revenue collection, and investment opportunities in the floriculture sector.

According to Yilma Sisay, the land planning & program director at the Bureau, the rates are designed to align urban cities with appropriate revenues to expand floriculture. He believes it will bring transparency, boost government revenues, and properly document landholding rights.

"Investor expectations and policy requirements will match," Yilma told Fortune. "The benefits depend on the returns it brings to the region."

Nearly 70pc of horticulture exporters in the country are found in the regional state. Urban areas like Bishoftu (Debre Zeit), Batu (Zeway), and Holeta towns, cultivate roses, summer flowers, and cut flowers.

Lease rates will be revised every 15 years based on inflation rates and market value. The directive applies to land provided through bids or allotments to determine exact land use.  Sheger City falls under the Metropolis category, while Regiopolis includes Bishoftu, Shashemene, and Adama towns. Prime cities include Maya, Robe, Nekemt, and Jimma, with Batu and Holeta among the Higher cities.

Officials from the region's Investment Bureau have identified poor land policy as a major factor in the underdevelopment of the floriculture industry, with only 72 flower investment licenses issued from 25,000 permits over the past 32 years.

Dereje Abdena, investment information director at the Bureau, said defined lease rates will also help bridge investment gaps, and improve the business environment, increasing foreign direct investment (FDI).

"It’s a step to attract investors," Dereje told Fortune.

Ethiopia has seen major success in flower exports since the mid-2000s, reaching 225 million dollars in 2015 and over half a billion last year. However, FDI rates have declined, dropping by 16.4pc to 3.3 billion dollars last year.

Horticulture Producers & Exporters Association (EHPEA) has welcomed the policy shift in Oromia, with 72pc of its 126 members operating in the region. Its president, Tewodros Zewdu, believes that land-holding rights will majorly boost floriculture investments. He recalled several appeals to regional bureaus for a thorough landscape study.