(Taken from LAND LAWTEACHING MATERIAL Prepared by DANIEL W/GEBRIEL and MELKAMU BELACHEW under the sponsership of JUSTICE AND LEGAL RESEARCH INSTITUTE)
Rural Land Lease 3.3.1 General
Rural land lease can also be termed as agricultural land lease as known elsewhere. However, in Ethiopia, there is another form of lease of rural land for investment purpose. The purpose of this part of the discussion is to discuss briefly the types of rural land leases recognized by Federal and Regional rural land proclamations. For the purpose of clarity we shall use the Rural land Proclamations of the Federal (Proc. No. 456/2006), Oromia (Proc. No.130/2007), Amhara (Proc. No. 133/2006) and Tigray regions (Proc. No. 136/2007).
Lease is one form of land holding rights recognized by rural land proclamation. The Federal rural land administration and use proclamation No. 456/2006 in its definition of “holding rights”, among others, include lease as one form of right. Hence, rural farmers are allowed to lease or rent their land to any person who wishes to involve in the agricultural sector.
3.3.2 Types of Rural Land Lease Arrangements
The readings of the federal rural land proclamation and that of others reveal that there are three types of lease arrangements concerning rural land holding.
Farmers usually rent out their land to a fellow farmer on the basis of share cropping or on cash base. Studies show that the first one is prevalent. Farmers may rent their land to fellow farmers for different reasons, some of which may be need of cash money, lack of capacity to farm the land (because of old age, widow or divorcee woman, sickness, poorness, large area, temporary departure from the area etc.) The law makes a limitation as to the size of the land which should be rented, which is “a size sufficient for, the intended development in a manner that shall not displace them…” It means, at least, the farmer should not rent all his land or a significant part of which would left him with insufficient produce for his livelihood.
The second requirement seems that the farmers need to have a land holding certificate. As you shall see it in the next chapter, efforts are being made in every region to identify and register every plot of rural land so as to issue possession certificate to farmers. Hence, the practicality of this prerequisite is depending on the issuance of such certificates.
The third requirement is that consent of some interested person. The federal legislation needs the consent of other “members who have the right to use the land” (Art. 8(2)), while the Tigray needs the approval of a spouse (Art. 6(2). The Oromian one comes up with different approach, in that the rent is valid “if it is registered and approval by Oromia Agricultural and Rural development Bureau Art. 10(3).”
Although not mention in the Federal Proclamation, the maximum lease period is fixed in the regional proclamations. According to article 10(2) of the Oromian law, “duration of the agreement shall not be more than three years for those who apply traditional farming, and fifteen years for mechanized farming.” The Tigray legislation agrees with the three year period concerning the traditional farming mechanism but prescribes 20 years for the modern farming mechanism one (Art. 6(3).
Leasing to investors
The farmer may lease out his land to an investor, a licensed person who wishes to involve in agriculture. This kind of arrangement is made between the holders of the land and the investor only. Of course, the above requirements are also applied for this type of lease agreement. The difference between the first and this one is that the lessee in the first one is a fellow farmer, and here an investor. The question that can be raised is whether the investor can use the land for other investment purposes or not? The purpose of the law seems that to provide investors an opportunity to rent land for agriculture purpose. It is also against the interest of the farmer and the locality to use the farming land for other purposes. The other good reason is that since each farming plot shall be designated as farming land (according to land use regulations) it is highly improbable to change the land use right (agriculture) to other purposes, such as mining and etc.
The law also provides a mechanism that enables the landholder to develop his land jointly with the investor. Hence, without losing a substantial right, the farmer may be benefiting from the material and technology of the investor.
State lease of land to investors
The FDRE Constitution, under Art. 40(6), gives an opportunity for investors to get land in rural areas. Accordingly the government is obliged to “ensure the right of private investors to the use of land on the basis of payment arrangements established by law.” the Federal and Regional rural land legislations have also upheld this principle. The leased land may be for the purpose of agriculture, like big commercial agricultural lands, or for any other investment purposes (mining, quarry, industry.) The common type of such investment activity in Ethiopia is the horticulture investment wherein investors heavily lease rural land for the growing and collection of flowers and commercial fruits. As we shall see it later on, such investment is possible to mortgage.
Selected Readings from the Federal and Oromian Rural Land Proclamations
8. Transfer of Rural Land Use Right
1) Peasant farmers, semi pastoralist and pastoralist who are given holding certificates can lease to other farmers or investors land from their holding of a size sufficient for, the intended development in a manner that shall not displace them, for a period of time to be determined by rural land administration laws of regions based on particular local conditions,
2) The rural land lease agreement to be concluded in accordance with Sub-Article (1) of this Article shall secure the consent of all the members who have the right to use the land and be approved and registered by the competent authority,
3) A landholder may, using his land use right, undertake development activity jointly with an investor in accordance with the contract he concludes. Such contract shall be approved and registered by the competent authority.
4) An investor who has leased rural land may present his use right as collateral.
Art. 10. Renting of Private Holding
1) Without prejudice to Article 7(1) any peasant, pastoralist or semi pastoralist has the right to rent out up to half of his holding.
2) Duration of the agreement shall not be more than three years for those who apply traditional farming, and fifteen years for mechanized farming.
3) Land renting shall be valid before the law, if and only if it is registered and approval by Oromia Agricultural and Rural development Bureau. The agreements made prior to this Proclamation shall be treated according to this proclamation.
4) Necessary support shall be made to make the valuation of land for renting coincide with the prospective return from that land.
5) Any organ who rented rural land is obliged to apply proper preservation and conservation for the duration he holds the land.
6) Any agreement made on land renting shall bear the consent of all individuals who have rights on that land.
7) For any rented land, the land tax shall be paid by the name of the landholder.
8) Any land holder, having the right to use land, can make special agreement with any investor to develop his holding. The agreement shall be registered and approved by Agricultural and Rural development office in the vicinity.
Art. 11. Land Renting by Government
1) The government can rent out the land not held by the peasants or pastoralists or semi pastoralists.
2) The agreement to be made by Sub-Article 1 of this Article shall protect the benefits of the peasants, pastoralists or semi pastoralists.
3) The renting price of rural land by government shall be subject to revision as necessary.
4) The duration of the renting agreements shall be decided by the government.
Art. 12. Investment Land
1) In accordance with the existing investment law of the Region, any private investor shall have access to rural land and is obliged to conserve accordingly.
2) Private investors are obliged to plant indigenous trees at least on 2% of the given land.
3) The investment land shall be determined in the way that it shall protect the natural recourses of the surrounding.