SCHOOL OF GRADUATE STUDIES

DEPARTMENT OF ECONOMICS

(PhD in Development Economics)

PhD SEMINAR - I

Land Reform , Poverty Reduction and Growth : Evidence from Ethiopia

By
Bizuayehu Ambaye Misganaw
(2nd Year PhD Student)

Advisor
Dr. Melkamu
(Associate Professor)

June, 2021
Arba Minch, Ethiopia
Table of Contents
ACRONYMS AND ABBREVIATIONS ............................................................................. iv

Abstract ................................................................................................................................ v

CHAPTER 1: INTRODUCTION .......................................................................................... 1

1.1 Background of the Paper .............................................................................................. 1

1.2 Statement of the problem ............................................................................................. 4

1.3 Seminar Paper Questions ............................................................................................. 4

1.4 Objective of the paper .................................................................................................. 5

1.5 Hypothesis ................................................................................................................... 5

1.6 Methodology ............................................................................................................... 6

1.7 Significance of the Study ............................................................................................. 6

1.8. Organization of the Paper............................................................................................ 7

2. LITERATURE REVIEW .................................................................................................. 8

2.1 Introduction ................................................................................................................. 8

2.2. Definition and Concepts of Land Reform, Poverty and Growth ................................... 8

2.2.1. Land Reform ........................................................................................................ 8

2.2.2 Poverty .................................................................................................................. 9

2.2.3 Economic Growth ............................................................................................... 10

2.3 Theoretical Literature................................................................................................. 11

2.3.1 The concepts and role of Land tenure ...................................................................... 11

2.3.2 Land tenure and agricultural productivity ............................................................ 12

2.3.3 Land Tenure and food Security ............................................................................ 13

2.3.4 Theory of property rights and their defining characteristics ................................. 14

2.3.5 The concept of "bundles of rights" ....................................................................... 15

2.4 Review of Empirical Literature .................................................................................. 15

2.4.1 Property rights and Agricultural Productivity....................................................... 15

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 2.4.2 on land issues, land tenure reform and property rights in sub-Saharan Africa ....... 17

3. Discussion ....................................................................................................................... 20

3.1 Introduction ................................................................................................................... 20

3.2 History of Land Tenure policy and its Arguments in Ethiopia .................................... 20

3.3 The Current Major Land Tenure Policy Problem in Ethiopia ...................................... 23

3.4 The Role of secured Property of Land on Agricultural development and reduction of
poverty in Ethiopia .......................................................................................................... 24

4. SUMMARY, CONCLUSION AND RECOMMENDATION .......................................... 27

4.1 Summary ................................................................................................................... 27

4.2 Conclusion ................................................................................................................. 28

4.3 Policy Recommendations‘ ......................................................................................... 29

Reference ............................................................................................................................ 32

LIST OF FIGURES

Figure 1: Conventional characterizations of tenure‘s impact on production and income ....... 12

Figure 2: Land Tenure and food Security: The links ............................................................ 14

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ACRONYMS AND ABBREVIATIONS
ELTAP Ethiopia Land Tenure and Administration Program
LAC Land Administration Committee
PA Peasant Association
PRSPs Poverty Reduction Strategy Papers
FDRE Federal Democratic Republic of Ethiopia
PASDEP A Plan for Accelerated and Sustainable Development to End Poverty
PPA Participatory Poverty Assessment
PRSP Poverty Reduction Strategy Paper PSNP Productive Safety Net Programme
PASDEP Plan for Accelerated and Sustainable Development to End Poverty
ADR Alternative Dispute Resolution
ECA Economic Commission for Africa
FAO Food and Agriculture Organisation
FASDEP Food and Agriculture Sector Development Policy
GDP Gross Domestic Product
GLTN Global Land Tools Network
GNP Gross National Product
IFAD International Fund for Agricultural Development
RNAA Rural non-agricultural activities

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 Abstract
Land ownership and related issues have a distinct and profound impact on poverty reduction
and wealth creation in developing countries. The brief first examines different systems of land
tenure in Ethiopia, paying attention to the effects land tenure and property rights on
agricultural productivity and thereby reduction of poverty and Economic growth of the
country. The basic purpose of this paper is to discuss issues related to land tenure system and
land rights and agricultural productivity. The paper presents the main obstacle to increased
agricultural output and there by reduction of poverty in the country is the shortage of land,
which affects the output of agriculture; it is the structure of land tenure, the lack of proper
land ownership as well as lack of improved agricultural technology particularly in most of
sub-Saharan African countries including Ethiopia. The paper recommends that secured land
ownership increases productivity and reduction of poverty and growth through access to
credit and greater on-land investment.

Key Words: land Reform, Agricultural productivity, land tenure, tenure security,
property rights

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CHAPTER 1: INTRODUCTION
This chapter conferred with introduction which entails about background of the study,
statement of the problem, objectives of the study, seminar hypothesis, significance of the
study, and structure of the paper

1.1 Background of the Paper

A tenure system that can motivate economic growth and at the same time ensure equity in
land distribution is central to poverty reduction and agricultural development in Ethiopia.
Most often, proponents give more emphasis to one or the other of these key development
questions. But in view of the national objectives to enhance economic growth and poverty
reduction, it is essential that both growth enhancing factors and access to land are well
considered and made primary components of a prospective land tenure system. Agriculture is
extremely important to the national economy as well as being the source of livelihood for
more than 85% of the population. The sector contributes about 50% to the Gross Domestic
Product (GDP) supplies raw materials for national industries and, together with the rural
population, provides an important market for industrial products and service sectors. Given
the low level of development and contribution of the other sectors to the national economy
and employment creation, the importance of agriculture is likely to continue into the
foreseeable future. It is, therefore, crucial to search for a land tenure system that encourages
agricultural growth without sacrificing equity in land distribution.

The land question remains a subject of debate in Ethiopia, in spite of the famous 1975 land
reform that made all land state property, an act that is retained by the current government and
enshrined in the constitution. The 1975 land reform abolished feudal relationships in rural
Ethiopia by confiscating all land and redistributing it to those who were engaged or wished to
engage in farming. The reform provided usufruct rights and prohibited private ownership of
land, its transfer through sale, mortgage or other means. Though credited with providing
farmers with better access to land and making them sole beneficiaries of their labour, the
tenure system under the military government (1975-1991) was widely criticised for causing
tenure insecurity, inefficient allocation of land, diminution of holdings, and inhibiting
population movement (Adal 200 and Nega 2003).

Furthermore, the system gave the state ultimate power over land, to the extent that access to
land depended on relations with the state-manipulated peasant associations, compliance with

1
state directives, and the provision of corvée labour. Non-compliance with these directives
often resulted in evictions.

In 1991 a new government came to power, and despite its stated policy of establishing a
market economy, it retained the land policy of its predecessor and maintained the status quo
in rural areas (TGE 1991). In other words, the property rights regime in terms of land and
state-peasant relationships continued as they were under the former government. In 1997 the
government introduced land documentation and certification programmes in a bid to improve
tenure security, enhance production and motivate better land management (FDRE 1997). The
government aimed to achieve these goals by issuing certificates of holdings and allowing
limited transferability of use rights in the form of bequest to one‘s heirs, short-term
subleasing, rentals and sharecropping. But land reallocation is not still ruled out, even if
farmers were issued with certificates of holdings, and various conditions, restrictions and
obligations are put on the continuity of use rights. As a result, tenure insecurity has persisted
(Ali and Gautam 2007; Rahmato 2004).

Various studies show that agricultural production has lagged behind population growth and
the problems of food insecurity, poverty and landlessness have increased in the country over
time (Demeke, Guta and Ferede 2006; EEA/EEPRI 2002). This has raised doubts about the
appropriateness of state ownership of land to serve the goals of growth and has stimulated a
land debate that has often followed the state versus private ownership divide. Recently there
has been growing interest in the literature to land tenure arrangement in addition to
ownership types because the current system of state ownership of land is credited with
promoting equity in land distribution, it fails to ensure tenure security to the holders, which is
considered essential for growth ,poverty reduction and better land management. This paper is
a contribution towards that end.

The objective of this paper is to review the effects of land tenure and property rights on
agricultural productivity and there by poverty reduction and growth in Ethiopia. It
investigates whether it is ownership type or Tenure security is important for growth and
equity in Ethiopia, in the light of the debate on state versus private ownership of land. The
paper attempts to identify the key weaknesses of the current state tenure system in Ethiopia
and explore ways of making it relevant to both growth and equity issues. The discussion in
this paper, however, does not include land in tribal and pastoral areas, for which other tenure
arrangements (such as customary ownership) might be appropriate.

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The study is based on a review of theoretical and empirical literature. The findings of various
field studies in Ethiopia and elsewhere are widely used in the analysis. Of particular
importance are the findings by the Ethiopian Economic Association/Ethiopian Economic
Policy Research Institute (EEA/EEPRI 2002), amongst other research outputs.

The paper is organized in four sections. Following this brief introduction to the motivation
and purpose of the paper. Section 2 review the concepts and roles of land tenure theory , links
between tenure security and food security, the concepts and roles of property rights and the
bundles of right approach , links between property right and Agricultural productivity and
case study on south East Asian land tenure reform and Property right Experience. Section 3
provides the review of the changing land tenure systems under different regimes in Ethiopia
since 1975 and focuses and synthesis of the empirical evidence on the efficacy of evolving
tenure systems. Here the thrust is on key issues that are of prime importance in land tenure
debate in Ethiopia at present. Since public policy is dynamic, the paper tracks the recent
policy change particularly at national administration level and identifies policy gaps. The
final concluding section highlights the key summary findings, conclude lessons learned and
recommendations for future research and policy

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1.2 Statement of the problem
Agriculture is the backbone of the Ethiopian economy which determines the growth of all
other sectors and consequently, the whole national economy. But, since the 1980s, Ethiopia
has been a major recipient of emergency food and cash assistance from the international
community (Ethiopia Commodity Exchange, n.d.). Yet again reports like Future Agricultures
(2006) showed that agricultural development in Ethiopia continues to face formidable
challenges. The United Nations Economic Commission for Africa‘s (UNECA) (2002) report
stated that land policy has not yielded the expected results. In Ethiopia, land tenure, along
with the issue of governance, were the most pressing areas requiring institutional reforms in
Ethiopia. UNECA (2002) suggests that, though the land issue in Ethiopia is politically
difficult, it needs to be resolved quickly since it impedes the development of several key
sectors. One of the major land-related problems in Ethiopia is insecurity of tenure. Tenure
insecurity, coupled with the subsistence nature of farming, has discouraged long-term
investment and exacerbated the problem of land degradation. A study by EEA/EEPRI and
World Bank researchers (Deininger et al, 2003) confirmed that improving security of land
ownership and transferability of land in Ethiopia could have a significant impact on overall
output and household welfare. Currently, Ethiopian has implementing Growth and
Transformation Plan (GTP) by maintaining agriculture as a major source of economic
growth. The purpose of this seminar paper is, therefore, to present the contemporary
arguments on the land tenure policy of Ethiopia and the role of secured property right of land
on the Agricultural development, specifically, on poverty reduction and Economic growth of
small scale farmers of Ethiopia.

1.3 Seminar Paper Questions

Regarding the current land tenure security policy of Ethiopia, there are two major issues that
have been controversial points of debate: the debate on fairness and state protection that is
arguing for state ownership, and the debate on privatization and efficiency (those who
support private property right of land) to achieve the developmental objectives expected from
the agricultural sector. This Seminar paper intended to answer the following two questions:.

What are definition, the concepts and their defining characteristics of land reform?
Can the small-scale farmer, with fragmented and small sized plots, applying backward
technology, be responsible for attaining the intended development and food self-
sufficiency?

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 Can the current land tenure and property right encourage land-holders to make land-
augmenting investments on their land?
Which type property rights suitable for overall the performance of Agriculture sector and
thereby economic growth in the country?
If the land tenure policy is changed or rearranged, what will be its effect on poverty in the
country?

1.4 Objective of the paper

The overall objective the paper is to present a clue and initiation for researchers to undertake
detail empirical study on the role of land tenure policy of Ethiopia on its agricultural
productivity and thereby generate rising of economic growth and reduction of poverty.
Specifically, this Seminar paper has three objectives which want to address:

 To Assess the contexts , dynamics on land tenure reforms system from the perspective
of farmers in the country under different regime

 To present the contemporary arguments on land tenure policy of Ethiopia by different

economics scholars.
 To show the critical role of secured property rights of land for the ongoing agricultural
development and thereby poverty reduction and Economic Growth in Ethiopia.
1.5 Hypothesis
This seminar paper attempts to confirm the assumption that there is a strong positive
correlation that exists between well-defined property rights of land and Secured land tenure
reform for Growth and Poverty Reduction. According to Deininger (2003), the assumption
of strong positive correlation between well-defined property rights and economic
development is backed by prominent scholars. Well-specified land tenure systems and
property rights stimulate private investment by encouraging property rights holders to invest
on their property, using their own resources or credit through collateralization or transferring
it to a more efficient user (Deininger, 2003).

H1: Land Tenure reform reduces tenants‘ probability of being evicted and often also
increases the share of output received by tenants (Banerjee et al., 2002).
H2: There is a positive relationship between equitably distributed land and economic growth
and there by reduction of poverty (Deininger & Squire 1998)

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H3: There is a strong positive correlation between Secured land tenure reform and
Agricultural productivity
H4: land tenure reform could successfully contribute to a more holistic solution to food
insecurity, poverty, landlessness, and resource conflict in the rural area

1.6 Methodology
The seminar paper has conducted by studying a wide array of documentary sources both
published and unpublished materials. These include government and non-government report,
books, journals, newspaper, magazine and internet sources. In order to achieve the objectives
and to seek solutions for the lists of term paper questions of the study, I would be solely
devoted to qualitative research methods, by reviewing, examining and interpreting texts. In
doing so, I will try to employ mostly the ‗normative/ prescriptive approach‘ i.e. aiming to
discover how those framed issues or seminar paper questions should be entertained, and
partly an attempt will be made to adopt ‗conceptual analysis‘ i.e. aiming to discover the
substances of concepts relevant to the general or specific objectives of the seminar paper
topic.

1.7 Significance of the Study

This research has the following significance:
1. Due to the variation and dynamics of the land tenure systems of the study area, the study
has scholarly significance for the understanding of complex land ownership, social
arrangements and inequality.
2. The study gives wider understanding of land right of Ethiopia.
3. The study contributes to our understanding of reactions and oppositions against land
reforms in the country.
4. The study builds deeper knowledge on social structure and land right in Ethiopia not only
from the perspective of the past but the present and the future too.
5. The seminar paper can be used as reference material for students and scholars of
Ethiopian in general. In such a way, it will have significance for academic research
activities, policy makers, general readers and to advance the frontier of our knowledge
and perspective on land right and land tenure reforms and its role to poverty reduction
and Economic growth of the country

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1.8. Organization of the Paper

This seminar papers consists of five major chapters. The first chapter deals with general
background of the study. The second chapter reviews related theoretical and empirical
literatures, key concepts and theories. The third chapter deals with the discussion of summary
of the current land tenure situation.. The final chapter makes succinct summary, conclusions
and recommendation

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2. LITERATURE REVIEW

2.1 Introduction
This literature review assesses the concepts of land reform, land tenure reform, poverty,
growth; land tenure reform and poverty reduction, poverty reduction and Economic Growth
the linkages between them both theoretically and empirically. The review of empirical studies
concentrates on the situation in developing countries with the main emphasis on Ethiopia.

2.2. Definition and Concepts of Land Reform, Poverty and Growth

2.2.1. Land Reform
The term land reform has several meanings. The definition of land reform is not easy. This
is due to differences in land types, farming methods, the history of land acquisition, general
social and economic conditions and political aims. Still, however, definition is important
because some supposed land reform policies are not in fact intended to change the
distribution of land ownership and rural power. It may involve the restoration of land rights to
previous owners, a process known as land restitution. Land reform may involve the
redistribution of land rights from one sector to another. Land reform may also involve land
consolidation in which all land owners with in an area surrender their land and are allocated
new parcels of comparable value but in a pattern which encourages the more efficient and
productive use of the land. Land reform may also involve changes in the tenure of the land.

The type of land reform that took place in Ethiopia in 1975 is redistribution of land rights, by
taking land from individual owners of large estates and giving it to landless, tenants and farm
labourers (Warriner, 1969). This type of land reform is often used interchangeably with
agrarian reform. This is due to the fact that Ethiopian land reform goes beyond land
redistribution. It includes changes in both land tenure and agricultural organization. It also
support other rural development measures such as: changes in the technology of agriculture
facilitate farm credit, cooperatives for farm-input supply and marketing, and extension
services to facilitate the productive use of the land reallocated‘. The danger with these wider
prescriptions is that they may discourage governments from doing anything until they can do
everything (Adams, 1995). Land reform may involve remodelling of tenure rights and the
redistribution of land, in directions consistent with the political imperatives underlying the
reform.

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The Ethiopian experience, for example, was revolutionary as opposed to evolutionary
policies. The reform aimed at improving access and security of tenure for small farmers
under alternative forms of individual and communal tenure, which do not involve
expropriation and compensation.

Land reform program normally affect land tenure. So understanding the concept of land
tenure is important to see what a land reform can do.

Land tenure refers a whole set of activities and structures. Land tenure is an institution, that
is, rules invented by societies to regulate behaviour. Rules of tenure define how property
rights in land are to be allocated within societies. They define how access is granted to rights
to use, control, and transfer land and other natural resources, as well as associated
responsibilities and restraints. In simple terms, land tenure systems determine who can use
what resources for how long, and under what conditions. It is the relationship, whether
legally or customarily defined, among people, as individuals or groups, with respect to land
and associated natural resources (for example, water, trees, minerals, wildlife. Land tenure is
an important part of social, political and economic structures. It is multi-dimensional,
bringing into play social, technical, economic, institutional, legal and political aspects that are
often ignored but must be taken into account. In Ethiopia, land tenure systems have varied in
space and time. It is better to trace the history of Ethiopian land tenure system with its
problem and implication, because it has far –reaching implication in providing a brief guide
about how the land tenure system of the country has been changed and improved through
time.

2.2.2 Poverty
The concept of poverty has been variously defined. The UNDP (1997) discusses poverty as a
vexed concept almost lacking a solution. The World Bank (2000, pp. 15–16), on the other
hand, defined poverty as ‗pronounced deprivation in wellbeing‘. It further elaborates that to
be poor means to be hungry, lack of shelter and clothing, inability to seek treatment when ill
and lack of formal education or illiteracy. It also reproduced the meaning of poverty from the
viewpoint of some poor people in developing countries. Literature summarizes concepts of
poverty into three main categories (see box 1).

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 Box 1: Concepts of Poverty
Income concepts: A person is poor if, and only if, her income level is below the
defined poverty line. Many countries have adopted income poverty lines to monitor
progress in reducing poverty incidence. Often the cut-off poverty line is defined in
terms of having enough income for a specified amount of food.
Basic needs concepts: Poverty is deprivation of material requirements for
minimally acceptable fulfilment of human needs, including food. This concept of
deprivation goes well beyond the lack of private income: it includes the need for
basic health and education and essential services that have to be provided by the
community to prevent people from falling into poverty. It also recognizes the need
for employment and participation.
Capability concepts: Poverty represents the absence of some basic capabilities to
function—a person lacking the opportunity to achieve some minimally acceptable
levels of these functioning‘s. The functioning‘s relevant to this analysis can vary
from such physical ones as being well nourished, being adequately clothed and
sheltered and avoiding preventable morbidity, to more complex social achievements
such as partaking in the life of the community. The capability approach reconciles
the notions of absolute and relative poverty, since relative deprivation in incomes
and commodities can lead to an absolute deprivation in minimum capabilities.
Source: UNDP (1997, p. 37)

2.2.3 Economic Growth

Economic growth can be defined as a sustainable increase in real Gross Domestic Product
(GDP) and real GDP per capita. GDP is the total market value of all final goods and services
produced annually by resources located within a country, regardless of their ownership. Real
GDP is GDP adjusted for inflation, that is, nominal GDP divided by the price index. Real
GDP per capita is simply real GDP divided by the total population. Thus, economic growth is
a quantitative measure.

Economic growth is important because the bottom line for an economy is its ability to satisfy
human wants. According to McConnell and Brue (2002), there are six main ingredients in
economic growth. These are grouped as supply, demand and efficiency factors. The supply
factors are four in number and constitute the physical ability of the economy to expand.
These are the increase in the quantity and quality of natural resources (such as arable land,

10
forests, minerals, oil deposits, and water resources), the increase in the quantity and quality of
human resources (the physical and mental talents of individuals as well as the entrepreneurial
ability), the increase in the supply or stock of capital goods (such as tools, machinery,
equipment, factory, storage, transportation, and distribution facilities), and improvements in
technology (innovative production techniques as well as new forms of business organization
that improve the process of production).

The fifth ingredient of economic growth is the demand factor. To achieve the higher
production potential created by the supply factors, households, businesses, and government
must purchase the economy‗s expanding output of goods and services. In other words, there
will be no unplanned increases in inventories and thus resources will remain fully employed.
Therefore, economic growth requires increases in total spending to realize the output gains
made available by increased production capacity.

The sixth ingredient of economic growth is the efficiency factor. The economy must use its
resources in the least costly way (productive efficiency) to produce the specific mix of goods
and a service that maximizes people‗s well – being (allocative efficiency). Thus, economic
growth is a dynamic process which entails the interaction of the supply, demand, and
efficiency factors

2.3 Theoretical Literature

2.3.1 The concepts and role of Land tenure
Land tenure security and market prices of agricultural commodities are determined by
governmental laws and agricultural policies, which in disguise influence farmers‘ profit
margins and land use decisions (Ehui et al., 1994). Specifically, the land tenure plays one of
the vital roles in shaping farmers‘ land-use decisions (Li et al., 1998; Feder and Nishio, 1999;
Pandit and Thapa, 2003; Rasul et al., 2004). In areas where shifting cultivation is common,
farmers need much of investments in land development. However, their investment decisions
may be affected if they are not sure how long they would be allowed to use the ownership
right. Especially the tenant cultivators are reluctant to make investments in land management
if they do not secure land tenure rights that make them vulnerable to eviction by landlords or
government. If property rights are absent and if land tenancy is insecure, farmers do not care
much about the land use and though concentrate on short terms profit maximizing at the cost
of accelerating the degradation of land (Angeles, 1988; Feder and Nishio, 1999; Cairns,
2003).

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 Insecure land tenure or the lack of land ownership also restricts the farmers‘ access to credit
that are required for improved land practices (Fede et al., 1988; Rasul, 2003). This lack of
access to credit forces them to go for traditional land-use practices, despite their willingness
to change (Thapa, 1998b; Rasul and Thapa, 2003; Rasul, 2003). Thus, national policies
influence the land-use systems by influencing institutional arrangements such as credit and
marketing facilities, and infrastructure development (Bergeron and Pender, 1999; Rasul,
2003).

Land tenure institutions have long been considering the agricultural and economic
development but land reform has varied widely by geographic regions (Maxwell and Wiebe,
1998). In Latin American cases, land reform implied changes in the scale of land holdings
through redistribution of land resources among the rural population and breaking up of big
estates. In East Asian cases, land reform meant ―land to the tiller‖ or breaking up of
landlord/tenant relations and in Africa land tenure reform typically refers to the legal changes
in the form of land tenure intended to enhance security of tenure with a view to enhancing
productivity and encouraging better land conservation practices.

In brief, the land reforms are concentrated to food security, greater equity, productivity, better
conservation practices from changes in tenure. Thiesenhusen (1995) noted the following
outcomes from land tenure reform: (i) food security, (ii) reduction in social polarity, (iii)
increased investment, (iv) transparent production incentives, (v) poverty reduction, (vi)
increased employment, and (vii) greater equity.

2.3.2 Land tenure and agricultural productivity

The relationship between land tenure (either through legal changes or through institutional
reforms) and agricultural productivity is depicted below:
Figure 1: Conventional characterizations of tenure’s impact on production and income

Tenure evolution Changes in access

(e.g., via change in to
population  Agricultural Changes in
, technology or holdings  resources use
markets)  common  labor demand
property  productivity
 income
 sustainability
 capital
Initial tenure accumulation
system Land or tenure
reform 12  equity
and agrarian
structure (via state
intervention)
Source: Maxwell and Wiebe, 1998
According to FAO, Land tenure is the relationship, whether legally or customarily defined,
among people, as individuals or groups, with respect to land. (For convenience, ―land‖ is
used here to include other natural resources such as water and trees.) Land tenure is an
institution, i.e., rules invented by societies to regulate behaviour. Rules of tenure define how
property rights to land are to be allocated within societies. They define how access is granted
to rights to use, control, and transfer land, as well as associated responsibilities and restraints.
In simple terms, land tenure systems determine who can use what resources for how long,
and under what conditions.

Land tenure is often categorized as:

Private: the assignment of rights to a private party who may be an individual, a married
couple, a group of people, or a corporate body such as a commercial entity or non-profit
organization. For example, within a community, individual families may have exclusive
rights to residential parcels, agricultural parcels and certain trees. Other members of the
community can be excluded from using these resources without the consent of those who
hold the rights.
Communal: a right of commons may exist within a community where each member has
a right to use independently the holdings of the community. For example, members of a
community may have the right to graze cattle on a common pasture.
Open access: specific rights are not assigned to anyone and no-one can be excluded.
This typically includes marine tenure where access to the high seas is generally open to
anyone; it may include rangelands, forests, etc, where there may be free access to the
resources for all. (An important difference between open access and communal systems is
that under communal system non-members of the community are excluded from using the
common areas.)
State: property rights are assigned to some authority in the public sector. For example, in
some countries, forestlands may fall under the mandate of the state, whether at a central
or decentralized level of government.

2.3.3 Land Tenure and food Security

In agrarian society land tenure institutions directly affect food access at the household by
controlling access of resource endowments and indirectly affects the food security at the
regional or national level through food availability (and hence, food prices). Access to
resources is an important catalyst of access to food. It can be viewed as a function of food

13
availability, access, and utilization and access to food has three important dimensions like
sufficiency, sustainability, and vulnerability (Maxwell and Wiebe, 1998). Land tenure and
food security are linked in a dynamic way in which decisions about production, marketing,
consumption, and investment generate structural changes in the distribution of resources
among the households. The dynamic interlinkages are depicted in the following figure:
Figure 2: Land Tenure and food Security: The links

Tenure institutions Tenure institutions

Asset markets Endowments Expected output
Labour Prices
Land and natural resource Input markets
Capital

Consumption and Investment Production and Exchange

Decisions Decisions

Health Sustainability Resource

Allocation

Food Prices Food Entitlements Environmental

Wealth Income Outcomes
Realized output Prices
Formal and Informal
Transfer
Source: Maxwell and Weibe (1998, p. 11)

2.3.4 Theory of property rights and their defining characteristics

Property rights theory does not emphasize who "owns" land, but rather analyzes the formal
and informal provisions that determine who has a right to enjoy benefit streams that emerge
from the use of assets and who has no such rights (Bromley 1991, Eggertsson 1990, Libecap
1989). These rights need to be sanctioned by a collective in order to constitute effective
claims. Thus, property rights involve a relationship between the right holder, others, and a
governance structure to back up the claim. Property rights consist of two components: the
rule and its enforcement mechanism. The rules may derive from state law, customary law,
user group rules, and other frameworks. Enforcement of statutory law is usually the
responsibility of the state, which means that the rights ground on formal laws. Property rights

14
based on other types of rules may be enforced by customary authorities or by a user group,
which manages the distribution of rights or members of that group "define or enforce rights
among themselves" (Schlager and Ostrom 1992, 254).

The recent literature on property rights over land and other natural resources commonly uses
a broad classification along open access (no rights defined), public (held by the state),
common (held by a community or group of users), and private (held by individuals or "legal
individuals" such as companies) property regimes. Such classification can only be a rough
guide to the effective entitlements that a right holder in one of the stylized property regimes
holds in reality (cf. Benda- Beckmann and Benda-Beckmann 1999).

2.3.5 The concept of "bundles of rights"

For the purpose of analysing the distribution of rights among different user groups and
between individuals under various tenure regimes in Ethiopia it is useful to take into
consideration the concept of bundles of rights which is developed by Schlager and Ostrom
(1992) whose interest was primarily in analysing common property regimes used by
collectivises of resource users. However, it is assumed that their differentiation of bundles of
rights is equally applicable for the analysis of other forms of land tenure regimes, in
particular on finding some hybrid types of regimes that are not completely state ownership,
nor common property, nor private ownership. It is therefore considered that an analysis of
changing levels of rights bestowed upon rural peasants in Ethiopia at different times, places,
and under changing political regimes a telling example for such analysis.

2.4 Review of Empirical Literature

2.4.1 Property rights and Agricultural Productivity
The link between access to land and agricultural productivity can be established in different
ways: Firstly, the presence of property rights eliminates the anxiety and uncertainty of
expropriation that encourage the farmers to make long term investment decision on land and
to adopt the best cropping system. Secondly, the title of land makes it easy for farmers to use
the land as collateral for credit. It is hypothesised that for farmers who have collateral can
easily get access to financial market and increase the supply of credit available to them
(Feder and Noronha, 1987, The Economists, 2001).

As a result, agricultural investment and adaptation of modern technology will follow. Thus,
access to credit enables the farmers to make durable investment in one hand and intensify the

15
production systems in inputs in other hand and thereby boosting the agricultural productivity
(Platteau, 1993). The effect of property rights in agricultural productivity is basic
consideration in the application of technology. However, simplistic analysis of efficiency
may lead to distorted results. For instance, in the Njoro District of Kenya, the positive
relationship between agricultural productivity and titling does not stem from improved tenure
security rather than large-scale farmers having access to factors like imperfect labour market,
capital, and insurance markets that small farmers do not have (Carter, et al., 1991). In
Ethiopia, land with less secure tenure had lower total factor productivity, but this was due to
low input quality rather than applying less input (Gavian and Ehui, 1999).

One study in Bangladesh reveals that net per acre output is highest in owner-cultivated farms
and lowest in sharecropping farms (Hossain, 1977). For farmers cultivating their own land as
well the land others, per acre output is the highest compared to the farmers of sharecropping
or cash annual rental basis (Jabbar, 1977). Another study concluded that the differences in
output per acre were due to the differences in the amounts of output used by different groups
of farmers (Zaman, 1973). The net per acre output varies not only across different groups but
also within the sharecropper or cash rental contract. Per acre output in farms rented on cash
basis is higher than that in sharecropping farms [the difference between these two sub-groups
is in the form of rent; in the former case, lands are leased out for a fixed amount of cash
money generally for one year and, in the latter case, the owner gets a share of output,
generally 50%] (SESB 1986).

Thus, the empirical evidence of the relationship between tenure security and agricultural
productivity remains scattered. There is a compelling case of the linkage between the two as
is observed in the case of Thailand (Feder et al., 1988). They found that secured property
rights increase the demand for improvements of land and the supply of credit through the
possession of land as collateral. The ultimate result leads to greater-long term investments in
productive and land conserving technology and short-term investments in inputs leading to
sustainable production. Thus, greater security leads to higher productivity through increased
incentives of the landowner to make both long-term and short-term investments (Feeder and
Noronha, 1987). In Sub-Saharan countries the results have been inclusive. In Ghana, Kenya,
and Rwanda it was noted that ―regression analysis indicates no relationship between cross-
sectional variations in land rights and productivity‖ (Migot- Adholla et al., 1991, p.172).

16
However, the theoretical benefits of property rights still have profound influence on land
policy among donor and African governments (World Bank, 1993; Uganda, 1993; Platteau,
1992)

2.4.2 on land issues, land tenure reform and property rights in sub-Saharan Africa
Land issues and land tenure reform in sub-Saharan Africa is characterised by a range of
farming systems all with varied rights under multiple forms of tenure. This includes private
landholding with freehold title deeds, communal public lands under customary tenure, and
state-held land where either the state retains legal ownership upon which various forms of
tenure based on leaseholds or permit systems were devised by the state, underpinned by
complex legal and administrative systems. Usually the state bureaucracy plays a significant
role in rural land administration, with traditional leaders being provided with limited
responsibilities over land management and people in areas where usufruct rights to the land
are still practised.

The household and individual plots and commons found on customary lands provide
subsistence to millions of people. Nonetheless, the implementation of market liberalization
and democratization policies has had an indirect if not direct impact on customary
management arrangements. The introduction of modern forms of governance based on
elections and statutory arrangements has, in some cases, been the beginning of dysfunctional
combinations of old and new institutions and practices (Adams et. Al., 1999).

As far as rural land ownership in sub-Saharan Africa is concerned, this situation has made it a
key issue constituting a problem that has largely remained unresolved in many countries
since colonial times (Rukuni et. al., 2006). Historical conflicts and inequities over access and
ownership of land rooted in colonial land dispossession are intense in countries such as South
Africa, Namibia, Malawi, Kenya and Zimbabwe. Inequitable land distribution in Africa
relates also to rural poverty and political instability. Increasing tensions over land are found
in the ethnic violence in northern Ghana (1994-95), the land violence in the Tana River
district of Kenya (2001), the civil war in Rwanda, civil eruption in the Ivory Coast and
Zimbabwe‘s land occupations and violence.

Participatory land policies that empower local communities should be promoted in Africa.
Research and rural extension are important tools in this (UN 2009).

17
2.4.2.1 Land insecurity as a cause of Africa’s agricultural crisis
Agriculture is one of the most important sectors in sub-Saharan Africa, which has two major
components; food production and export commodities; food production including meat is the
livelihood for most Africans. Export crops provide many African countries with their main
source of foreign exchange and thus the capacity to import, invest and develop.

Particularly in sub-Saharan Africa, the situation of food production is giving a very gloomy
picture and the general panorama is not improving since securing food production remains
the greatest challenge. The key reasons for the creation of the problem derive largely from the
way the cause of agricultural crisis is generally characterised in most of the sub-Saharan
African countries. These are a bias against agriculture in government policy, high population
growth rates in the rural areas, a decline in the rate of which arable land and harvested areas
are being developed, a lack of technological change, which is leading to wide spread
stagnation or even decline in crop yields, accelerated degradation of the environment that is
making it more and more difficult for most sub- Saharan African countries (Tenaw, 2008).
Besides problems of land insecurity and conflicting claims on landform important reasons for
Africa‘s low agricultural productivity.

A high-level meeting, Sustainable Development in African Agriculture in 21st Century, on

African agriculture recommended in February 2009 that food production should be increased.
Now African countries spend an average of 4 to 5 percent of their total budgets on agriculture
(UN 2009).

Despite all these constraints, the sub-Saharan agriculture is facing, taking into account the
overall food production system in the continent it is evident that the agriculture and especially
small-scale farming to this day represents the economic foundation of most sub-Saharan
African countries. Where land tenure reforms have been introduced, local farmers are often
uncertain about the nature of their rights and confused about the extent to which institutions
and laws affect them. Matters are further clouded by local and national political conflicts over
land management roles in areas where traditional customary land law prevails. The
development and implementation of effective land policies, including clarifications on land
tenure systems, are crucial aspects of economic governance within the smallholder sector.
Local institutions are usually disempowered and weakened with little role in the regulations
and enforcement of sanctions (Harnevik et.al., 2007).

18
Common to the vast majority of sub-Saharan African countries is scarcity-induced conflicts
due to the inability of land tenure systems to respond to challenges and faulty state policies.
The grave situation is characterised by very high rural poverty rates and an extreme share of
poverty in rural areas, as for example the respective figures for Zimbabwe are 48.0 and 90 per
cent, Tanzania 49.7 and 82.3 percent and for Ethiopia 45.0 and 86.3 per cent.

National policies in Africa should promote equitable access to land for women farmers, for
women farmers‘ form 80 percent of food processors in Africa. However, many of them lack
secure land use rights and equitable access to finance, insurance, education and land (UN
2009).

19
3. Discussion
3.1 Introduction
This chapter conferred with seminar findings which entails about review of Land tenure
arrangements under different regimes in Ethiopia, The debate over land in Ethiopia:
ownership type, The Extent of Land Tenure Policy Problem in Ethiopia, The Role of secured
Property of Land on Agricultural development and thereby reduction of poverty and
Economic Growth in Ethiopia.

3.2 History of Land Tenure policy and its Arguments in Ethiopia

Historically, in Ethiopia the north-south regional distinction was reflected in land tenure
differences. The pattern of land tenure policy and property rights farmers have held are
basically dependent mainly on policy exercised by three different political regimes since the
beginning of the 20th century namely; the imperial, the Derg and the current regimes. The
social structure of the land tenure policy in Ethiopia was traditional during the imperial
regimes (Crewett et.al. 2008).

During the imperial regime, which was called ―the feudal system land tenure regime‖,
exercised before 1975, the land tenure types refer mainly to the imperial administrative
classification which is commonly distinguished between communal (rist), grant land (gult),
freehold, or sometimes referred to as private (gebbar tenures), Church (Samon), and state
(maderia, mengist) tenure regimes. This type of land tenure system accommodated by the
Ethiopian empire is described as one of the most complex compilations of different land use
systems in Africa (Brietzke 1976). It was a time when more than 70% of the fertile land was
owned only by 1% of the property owner of the entire population in Ethiopia, because during
imperial regime, land was concentrated in the hands of absentee landlords and the church,
tenure rights were highly insecure, and arbitrary evictions took place.

In short, the government could not make any meaningful land reform until its demise in 1974 for
two main reasons: one, the emperor (Haile Sellassie) himself and his family, together with the
barons and lords in both houses of parliament were owners of vast tracts of land, and any change
in land reform would mean harming their interest; second, because of lack of information on its
advantage, peasants of the northern provinces resisted and opposed any attempt of land
measurement and registration. Finally, peasant rebellions, popular unrest and most of all student

20
movements which rallied on the famous slogan ―Land to the Tiller‖ became reasons for the
downfall of the feudo capitalist state in the country.

After the overthrow of the imperial regime in 1974, the socialist Derg regime that had
overthrown the imperial regime and announced a Marxist-oriented ideology. He profoundly
altered the agrarian structure and the mechanisms of access to land. The "Public Ownership
of Rural Land Proclamation" nationalized all rural land and set out to redistribute it to its
tillers and to organize farmers in cooperatives, thereby abolishing exploitative landlord-
tenant relations so pertinent under the imperial regime. The major changes brought about
during the Derg regime were "agrarian socialism" including the quest for collectivization of
small-scale farms and the establishment of state farms. Overall, the Derg regime failed to
increase agricultural productivity with its agrarian reforms. Broadly speaking, landless, wage
labourers, tenant cultivators, and poor, powerless 'rist' rights holders are often considered as
the winners of the Derg reforms

As regards land tenure system during Ethiopian People Revolutionary Democratic Front
(EPRDF) took power in 1991 following the fall of the Derg. Immediately 1991 declaration on
economic policy, the Transitional Government of Ethiopia (TGE) announced the continuation
of the land policy of the Derg regime (TGE, 1991). Then after, in 1995, the third land tenure
regime has announced which was state ownership of land by instituted in Ethiopia‘s new
constitution and there are no private property rights in land. Article 40(3) states: “The right to
own rural and urban land as well as natural resources belongs only to the state and the
people. Land is an inalienable common property of the nations, nationalities and peoples of
Ethiopia and shall not be subject to sale or to other means of transfer” (FDRE, 1995).
Though, EPRDF government has committed to a free market philosophy, it has made little
substantive change to farmers‘ land rights, which are still considered inadequate (Hoben,
2001).

In Ethiopia, both the derg and EPRDF land tenure regimes indicated that, though there was a
change in land property right from feudal system to state ownership, land property right is not
well defined so far. Property rights which are not well-defined breed insecurity. Thus, the
history of Ethiopian land regime indicated that the land property right is not secured. The role
of property right of land is related to Ethiopia‘s pursuits of enhancing national
competitiveness and productivity, and accelerating economic performance in agriculture and
other sectors (industry and various services). Research and studies in Ethiopia showed that

21
insecurity of land tenure restricts rights in land, reduces incentives to productively invest in
land, and limits transferability of land. In turn, these pose significant constraints to
agricultural growth and natural resource management (EEA/EEPRI 2002; IMF,1998;
Deininger et al. 2004; Rahmato, 1994).

In Ethiopia, everyone recognizes that land is a critical issue, and developing an effective
policy framework is vital for the future of agricultural development. However, the land issue,
perhaps more than any other policy issue, is hotly contested (Samuel, 2006). According to
Crewett and Korf (2008), land policy in Ethiopia has been controversial since the fall of the
military socialist Derg regime in 1991. While the current Ethiopian government has
implemented a land policy that is based on state ownership of land (where only usufruct
rights are given to land holders), many agricultural economists and international donor
agencies have propagated some form of privatized land ownership. Thus, in this seminar
paper, we will see the historical arguments of land tenure policy in Ethiopia by distinguishing
taking in two antagonistic discourses: (1) the discourse of fairness and state protection that is
arguing for state ownership, and (2) the discourse of privatization and efficiency (those who
support private property right of land). Though, there is hardly any ideological difference
between the Derg and EPRDF regarding land policy since both gave a usufruct rights to land
holders, the arguments presented here are based on the EPRDF land policy. Therefore, this
section tried to show the two opposing arguments and how the principles of fairness versus
efficiency are played out against each other.

Ethiopian land rights have traditionally been tightly linked with the exercise of power over
the rural peasantry – in the imperial period where large parts of the peasantry were denied
land ownership (Crewett and Korf, 2008). That is why EPRDF government argues that state
ownership of land policy is designed to equally distribute land to all who claim rights to
ensure access for the needy, to provide them with the means to make a living as farmers in
rural areas, and to protect them from selling or mortgaging their land, thereby safeguarding
them from the grabbing hand of an urban bourgeoisie and rural elites. The government also
explains that this land policy is aimed at preventing political unrest (MOIPAD, 2001).
Particularly, the government claims that state ownership prevents the accumulation and
concentration of land in the hands of a small number of urban and bourgeois land owners,
who acquire large tracts of land through distress sales by poor peasants, which would lead to:
subsequent peasant eviction and poverty, the resurgence of exploitative tenancy institutions,

22
and undesirable rural-urban migration of the then landless peasantry (Adal, 2001; Jemma,
2001).

The proponents of privatization of land (EEA/EEPRI 2002; IMF,1998; Deininger et al. 2004;
Rahmato, 1994) argued that state ownership of land yields negative effects on land
productivity and therefore produces lower efficiency levels than would be achievable with the
working of a private land market. Particularly, those in favor of private property rights assert
that state ownership provides barriers to full-scale efficiency, because: it prevents the
emergence of a dynamic rural land market that allows entrepreneurial agents to access credit
and land, it discourages farmers on marginal land to out-migrate and ties the farmer to
inefficient uses of his land, which subsequently leads to fragmentation of plot size,
overpopulation in the rural areas and resource degradation, and it perpetuates the legacies of
the Derg regime‘s redistribution programs that are creating tenure insecurity and
discouraging land owners from investing in sustainable resource use (Crewett and Korf,
2008). Because, since the Derg reforms in 1975, peasants have become the ‗tenants of the
state‘ (Abebe, 1998).

Therefore, the land reform policy undergone in Ethiopia has helped in destroying the feudal
order; changed the landowning patterns i.e land is transferred from feudal landlords to
government/state landlords which deprived citizens‘ right to freely decide what to do with
their farm land, particularly in favour of peasants and small landowners to reduce poverty

3.3 The Current Major Land Tenure Policy Problem in Ethiopia

In this section, the extent of the problems that land tenure policy problems created in Ethiopia
which are explored by researchers‘ will be presented. The inappropriate land tenure policy of
Ethiopia has been restricting economic development, specifically the agricultural
development. Land rights have been and remain a central problem in the development of the
agricultural sector (Tafesse Olika 2006). According to Haile Kibret (1998), among the major
constraints that has been faced by Ethiopian agriculture is inappropriate land tenure policy
which stimulates ecological degradation of potential arable lands and increases in the
unemployment rate due to increases in the population. Yonas Ketsela (2006) has pointed out
ineffective policies governing land ownership and land titles as the main structural constraint
for Ethiopian agriculture. The policy problem related to land ownership consequently leads to
land fragmentation, very limited/unavailable credit systems, very limited/unavailable land
and crop insurance mechanisms, archaic mode of production and low uptake of technological

23
innovations, low levels of productivity, degradation of land and other natural resources,
neglect and lack of agricultural investment.

Particularly, the fundamental criticisms are given on the current Ethiopian Peoples‘
Revolutionary Democratic Front‘s (EPRDF) land policy. According to Desalegn Rahmato
(2006), The EPRDF land policy promotes insecurity of tenure because it allows, among other
things, periodic redistribution (or at least the threat of such redistribution). It is also
inefficient because it limits land transactions and has inhibited the emergence of a dynamic
land market. The other important critics is that it promotes fragmentation of land and growing
pressure on land resources because it discourages rural people from leaving their farms for
other employment opportunities. Again, it inhibits dynamic differentiation within the
peasantry as well as the emergence of an enterprising class and it gives the state immense
power over the farming population because land is state property.

3.4 The Role of secured Property of Land on Agricultural development and

reduction of poverty in Ethiopia

Before portraying the relationship between land tenure policy and agricultural development
explored by Economics scholars, let we comprehend the history of developmental plan in
Ethiopia and the meaning of structural transformation, specifically agricultural
transformation. Ethiopia has a long history in implementing development plan. It was during
the Imperial period at the end of 1957 that the first development plan launched. The second
five-year plan continued from 1962 – 1967. The third five-year plan went on up to 1974. In
1974, Derg replaced the Monarchy and the National Development Plan was established
between 1974 – 1991 which was known as the ten-year perspective plan based on a socialist
state aimed at building a socialist economy (commanding the economies under state control)
and land was also nationalized (Ibid).

After the Derg regime collapsed in 1991 and EPRDF took control over state power, reforms
on liberalization of economies was established. By then, the EPRDF had initiated the five-
year development program known as Peace, Democracy and Development Program to peace
and security. In 2002, EPRDF launched Sustainable Development and Poverty Reduction
Program (SDPRP) with goal Agriculture Development-Led Industrialization (ADLI). In
2005/06, the Plan for Accelerated and Sustained Development to End Poverty (PASDEP)
was built on the directions perused under SDPRP to achieve the Millennium Development

24
Goals. Since 2010/11, Growth and Transformation Plan (GTP) has been implementing with
targeting a vision building an economy which has a modern and productive agriculture sector
with enhanced technology and an industrial sector that plays a leading role in the economy,
sustaining economic development and securing social justice and increasing per capita
income of citizens so as to reach the level of those in middle-income countries (MoFED,
2010).

In the conventional economic literature, when the term transformation is applied in

economics, it is most often referred to as structural transformation. Structural transformation
is the broader economy-wide phenomena which indicate the shift in the relative importance
of economic sectors. Structural transformation constitutes agricultural transformation,
industrialization, and migration and urbanization (Ibid). Agricultural development and
thereby reduction of poverty , which is the concern of this paper, is a secular decline its share
of in both output and gross domestic product (GDP), with the consequent increase in the
combined share of industry and services. It is the process of increasing rural labor
productivity and agricultural productivity, generates surplus towards the development of the
nonagricultural sector and thereby reduction of poverty. By then, linking agriculture to the
rest of the economy successfully through improved infrastructure and development of
markets to diminish the role of agriculture to just one of numerous major sectors of the
economy (Roehlano and Jesus, 2013). Among the pillar strategies toward the attainment of
the objectives of the GTP in Ethiopia include ―maintaining agriculture as a major source of
economic growth‖ and ―creating favorable conditions for the industry to play key role in the
economy‖ (Stebek, 2013).

However, to bring a successful agricultural transformation, getting institutions right that

protects and enforces property right is an important requirement. Property right assigned for
privates plays a crucial role for efficient allocation and use of resources. According to Nigatu
(2006), within the Ethiopian context, land tenure security encourages farmers investing in the
augmentation of their land which increases land productivity and the vice versa discourages
investment on land. Agricultural productivity, which is one of the major goal of agricultural
transformation, would achieved when the confidence of the farmers to invest on their land
increases through implementing well defined property right of land (which is privatization).

One of the crucial institutional weaknesses in sub-Sahara African countries including

Ethiopia is that property rights are poorly defined. The demarcation between common and

25
private properties is not clear. Land in most societies are either communally owned by
communities or owned by State.

However, the property-rights school argues for the formalization of property rights in land,
which is argued to be the most important step toward intensification of agricultural practices
and thus critical for agricultural growth and reduction of poverty and thereby economic
growth. It is argued that well-defined (implying private) property rights guide incentives to
achieve a greater internalization of externalities and thereby create opportunities to access
finance and enhance efficiency in land markets. For economic specialization to develop, it is
thus important that well-defined property rights are established and that suspicion and fear of
fraud do not pervade transactions (Anonymous, 2014). Consequently, theories and empirical
studies directed that Ethiopian agricultural transformation which targeted productivity,
specialization and intensification of agriculture would succeed through well-defined property
right of land, which is privatization of land.

26
4. SUMMARY, CONCLUSION AND RECOMMENDATION

4.1 Summary
The purpose of this seminar paper is to present the contemporary arguments on the land
tenure policy of Ethiopia and the effect of secured land tenure and property right of land on
the Agricultural development, specially, on poverty reduction and Economic Growth of
Ethiopia. There are two major issues that have been controversial points of debate regarding
the current land tenure policy of Ethiopia. These are the debate on fairness and state
protection that is arguing for state ownership, and the debate on privatization and efficiency
(those who support private property right of land) to achieve the developmental objectives
expected from the agricultural sector. This paper has prepared by relied heavily on known
data such as internet, articles, newspapers and textbooks and documents which were written
about the ―The Effect of Land Tenure policy reform on poverty reduction and Economic
growth‖ and a contemporary argument on ―Property Right of Land‖ in Ethiopia.

Ethiopia has three land tenure regime periods, such as a feudal system, state ownership by
Derge with socialist ideology and state ownership by EPRDF with market economy.
However, both regimes are characterized by insecurity of land which discourages investment
and agricultural developments. Though everyone recognizes that land is a critical issue, the
land issue is a highly controversial policy than any other policy. The source of the contention
is that the current government has implemented state ownership of land while many
agricultural economists and international donor agencies have propagated some form of
privatized land ownership.

The EPRDF government argues that state ownership of land prevents the accumulation and
concentration of land in the hands of a small number of urban and bourgeois land owners.
This is to justify that in the imperial period large parts of the peasantry were denied from land
ownership. However, the proponents of privatization of land argued that state ownership of
land yields negative effects on land productivity and therefore produces lower efficiency
levels than would be achievable with the working of a private land market.

The effect of insecure land tenure policy in Ethiopia stimulates ecological degradation of
potential arable lands and increases in the unemployment rate due to increases in the
population. Particularly, the EPRDF land policy criticized by scholars because of it promotes
insecurity of tenure by allows periodic redistribution; it is inefficient; it promotes

27
fragmentation of land; it inhibits dynamic differentiation within the country and it gives the
state immense power.

Ethiopia has a long history in implementing development plan since at end of 1957, which
was an Emperial period, until now. The current government of Ethiopian, EPRDF, has been
implementing, growth and transformation plan has been implementing since 2010/11 with
targeting a vision building an economy which has a modern and productive agriculture sector
and an industrial sector that plays a leading role in the economy. In economics,
transformation is conventionally called structural transformation which has a broader
economy-wide phenomenon which indicates the shift in the relative importance of economic
sectors. One of the goal of structural transformation is agricultural transformation which aims
to achieve rural labor productivity and agricultural productivity to generate surplus towards
the development of the nonagricultural sector and thereby reduction of poverty. However, in
Ethiopia, poorly defined property right is a major constraint to achieve the goal of
agricultural development. Therefore, protecting property right of land is the most important
step toward intensification of agricultural practices and thus critical for agricultural and
economic growth and which in turn helps to achieve agricultural transformation and
reduction of poverty of a country, Ethiopia.

4.2 Conclusion

This paper has tried to present the contemporary arguments on land tenure policy of Ethiopia
by different economics scholars on the basis of two antagonistic points, such as state
ownership of land and private ownership of land. From the arguments this paper explored
that well defined property right of land (privately owned land) has a crucial role for
succeeding and accelerating agricultural transformation of Ethiopia. Because, the role of
private property rights of land guide incentives to achieve a greater internalization of
externalities and thereby create opportunities to access finance and enhance efficiency in land
markets. Then, rural labor productivity and farm productivity increases through efficient
utilization of arable land and incentivizing long term investment and intensive agriculture.
Thus, protecting and enforcing private property rights of land helps to achieve the ultimate
goal called agricultural transformation of Ethiopia.

28
4.3 Policy Recommendations’

Successful land tenure reform must balance the efficiency and tenure security benefits of free
holding with political, institutional, and equity concerns. The following policy issues and
processes are tentatively suggested for consideration:

(a) Improving land policy

The general problem related to land policy in Ethiopia is that land belongs to the government.
The farmer can farm only as long as he/she stays on the farm and neither can sell nor lease
land legally. Tenure security is vital for a successful agricultural development in Ethiopia,
where about 85% of the population lives in rural areas.

Due to lack of security of tenure and land ownership, the incentives to invest or make
improvement in land and natural resources are missing. As a result, today there is abundant
land and soil degradation in rural areas since farmers do not care to plant trees or other
greeneries around their huts. Nor does he/she build terraces to protect the soil and conserve
moisture because of the feeling of land insecurity of land from the state or government
monopoly of land ownership. A study by the Ethiopian Economic Association in 2002
indicated that the majority of smallholders (76%) were not sure whether their land would
belong to them in the future. Especially in the central highlands, unprecedented population
pressure has contributed to decreasing plot size.

Decline of the average land holding has made an increasing number of households dependent
on inadequately small and unproductive plots. Due to this worsening situation, the
government of Ethiopia was obliged to apportion land, not in hectares but in square metres.
This has resulted in loss of fertility, degradation and ecological imbalances with long
reaching consequences especially in the northern and central highlands.
If agricultural development is ever to bring betterment for the lives of farmers and improve
the national economy in Ethiopia land should be privatized. Privatization of land creates
optimal patterns of land of different sizes through market transactions and increases
productivity.

b) Developing land administration and registration in the Region

The Regional State has developed a systematic compulsory registration of title. All land
units/private, common, state land were brought into the register and properly identified.

29
Attention should be given to all the process to ensure a clear understanding of land
registration and updating of land records. Public information and education will encourage
participation and clear communication between and among the local community and the
government and political organs at various levels for better efficiency and success. Particular
efforts should be made to ensure women's participation (Tiruneh et al., 2000c). In addition:
In order to strengthen land registration the authorities should continue to get local and
international experience through seminars, workshops and field visits.
The lesson from the pilot cadastral surveying should be implemented throughout the
region step-by-step.
Assessment of costs and impacts of land registration and certification should be studied
well in the future. Reviewing way of working and guidelines should be developed and
refined in the future.
Documentation and archiving of the data should be well organized at all levels of
registration
c) Developing Agricultural Co-operatives#
Smallholders in Ethiopia represent the vast majority of the farmers. The country's recent rural
development strategy has been the active promotion of marketing cooperatives as a means of
commercializing smallholder agriculture. Certainly, without cooperatives smallholders in
Ethiopia would be out of the market. It is to be considered that liberalization of the
agricultural marketing and the breaking up of the monopolies as a positive measure, which
offers the cooperatives new challenges and potential. Cooperatives should play the role in
increasing agricultural production and at the same time fully participate in marketing and
agro-processing alongside other types of enterprises (Bernard et al., 2008).

In particular in highlands Ethiopia there are plenty community rooted informal types of
cooperative societies, which have the potential to play an important role in socio-economic
development and poverty eradication at the local level.

d) Improving small-scale farmers' income

In Ethiopia, the population group that would suffer most from agricultural crisis and
undernourishment is the poor segment of the rural population, which in the Ethiopian context
means the small-scale farmers. One of the most significant reasons for this is the unequal
share of food crop and cash crop products by the small-scale farmers.

30
For example in Ethiopia, food crops are produced by the small-scale farmers on little land in
remote areas for home consumption and marketing purposes. On the other hand, cash crops
are export commodities, which through trading fetch earnings more than the food crops.
Thus, income distribution of the cash crops among the small-scale farmers is minimal, even if
they are engaged in producing them as portfolio entrepreneurs. This is one of the determinant
factors of the future of the small-scale farmers in Ethiopia. Therefore, in order for agriculture
to become sustainable and income distribution among the small-scale farmers economically
viable, incomes should be distributed evenly.

e) Preserving traditional institutions

In Ethiopia, traditional institutions (informal and indigenous institutions) have played
important roles in conserving the natural resources, preserving culture and settled resource-
use and land disputes. Due to policy changes, these traditional institutions have lost their
roles and have consequently caused little or no food production in many parts of the country.
As a result, the country has become dependent on either by direct or supplemented food aid.
In order to avoid these problems, thus there is a dire need to preserve the traditional
institutions.

31
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