Main menu

Recent experience in land rental markets in Ethiopia


Due to widespread poverty, improving tenure security is not a sufficient condition to induce investment, especially long-term investment in the peasant sector. Therefore, any land-reform should focus on measures that could induce investments on land, irrigation and other alternatives that could increase the productive capacity of farm land and its sustainable utilization.

Land market is generally considered as an important instrument to improve agricultural growth as it could help land transfer from less productive to high productive farmers. Available theoretical and empirical knowledge indicate that property rights to land that are secure and easily transferable are key elements for smooth and efficient operation of land rental markets. Yet, there is no sufficient knowledge on the factors that trigger the emergence of informal land markets, its competitiveness and role in local economy and the factors that govern the functioning of these markets. Knowledge of such factors will help Ethiopian policy makers to design policies that can optimize the positive outcomes of existing rental markets.

The research is based on a survey data collected in 2004 from 4585 households sampled from all regions of the country, except the Gambella National Regional State. Based on the review made on best practices in other countries, and results from descriptive and econometric analysis of the study, numerous policy recommendations are made to enhance the positive outcome of land rental markets. First, constraints put on the free operation of land markets in terms of limiting the contract period and size of land to be supplied to the rental market should be revised to enhance the competitiveness of the market and the long-term interest of the economy. Any restrictions on size of land farmers allowed to supply for rental market which is too small and highly fragmented will not help. If necessary, it would be better to limit the upper limit a tenant or leaseholder can farm. Once the market is started to be competitive, the government could set the minimum rental fee to protect the interest of the disadvantages like female-headed households and households headed by old (retired) persons who have weak bargaining power. In general, Ethiopia's land policy should be revisited to improve the economic value of rural land, the supply of which has been diminished due to the continued degradations of productive lands and population growth

Corporate Author: 
Getnet Alemu & []. & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Ethiopian Economic Association (EEA)
Primary Descriptors: 

Land Market; Tenure security

Secondary Descriptor: 

Land policy

Geographic Descriptors: 
Cataloge Date: 
Broad Subject heading: 
Agricultural growth - Land reform
Call Number: 
330.963 PRO 2006
Serial Key Title: 
Proceedings of the Third International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Publication date: 
2013-05-27 23:06:00
Forum or Discussion date: 
2013-02-27 15:02:03
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Current frequency: