Article 40: Land, the State, and the Constitutional Foreclosure of Property

Thesis

Article 40 of the 1995 Constitution vests all land in Ethiopia in “the State and the Peoples of Ethiopia” and prohibits its sale, exchange, or other private alienation. Peasants and pastoralists are granted use-rights to land they occupy; investors and urban property holders are granted long-term leases on state-owned land subject to administrative renewal.¹ This provision is the constitutional foreclosure of private land ownership in Ethiopia. It was inherited from the Derg’s Proclamation No. 31/1975, which had nationalised rural land, and from Proclamation No. 47/1975, which had nationalised urban land. The 1995 framers, despite drafting a constitution that otherwise embraced market liberalisation and private ownership of other forms of property, made the deliberate decision to constitutionalise the Derg’s land nationalisation rather than reverse it.²

The article’s argument is that Article 40 is constitutionally significant for reasons that go beyond economic policy. It is the second of the two foundational substantive provisions of the 1995 Constitution (Article 39 being the first), and like Article 39 it has shaped Ethiopian political and economic life more than its frequency of formal invocation would suggest. Article 40 has produced four operational consequences: it has preserved the state’s discretionary control over the most valuable economic asset in a peasant economy; it has made citizen security of tenure dependent on the political relationship between the citizen and the state; it has provided the state with a structurally permanent leverage over the rural population; and it has foreclosed the formation of a domestic propertied middle class that would have constituted political constituency for the rule of law. These consequences are not failures of implementation. They are direct consequences of the constitutional choice.

The text

Article 40 of the 1995 Constitution, in relevant part:

(1) Every Ethiopian citizen has the right to the ownership of private property. Unless prescribed otherwise by law on account of public interest, this right shall include the right to acquire, to use and, in a manner compatible with the rights of other citizens, to dispose of such property by sale or bequest or to transfer it otherwise.

(2) “Private property”, for the purpose of this Article, shall mean any tangible or intangible product which has value and is produced by the labour, creativity, enterprise or capital of an individual citizen, associations which enjoy juridical personality under the law, or in appropriate circumstances, by communities specifically empowered by law to own property in common.

(3) The right to ownership of rural and urban land, as well as of all natural resources, is exclusively vested in the State and in the peoples of Ethiopia. Land is a common property of the Nations, Nationalities and Peoples of Ethiopia and shall not be subject to sale or to other means of exchange.

(4) Ethiopian peasants have the right to obtain land without payment and the protection against eviction from their possession. The implementation of this provision shall be specified by law.

(5) Ethiopian pastoralists have the right to free land for grazing and cultivation as well as the right not to be displaced from their own lands. The implementation shall be specified by law.

(6) Without prejudice to the right to private property, the government may expropriate private property for public purposes subject to payment in advance of compensation commensurate to the value of the property.³

The structure is important. Clauses 1 and 2 establish a right to private property in tangible and intangible things produced by labour or capital. Clause 3 carves out land and natural resources from this general right and vests them exclusively in the state and the peoples. Clauses 4 and 5 grant use-rights to peasants and pastoralists. Clause 6 establishes expropriation procedure for the private property that exists (housing, businesses, equipment), but does not apply to land — because land is not private property in the first place.

The drafting choice was deliberate. The 1995 framers could have followed the model of the Indian Constitution (which contains right-to-property provisions and expropriation procedures but does not nationalise all land), the South African Constitution (which protects existing land rights and provides for restitution and redistribution within a framework of legal property), or any of the constitutions of European post-socialist states which, between 1989 and 1995, were restoring private land ownership their predecessor regimes had abolished. They chose instead to constitutionalise the Derg’s nationalisation. The choice was not casual; it was made over significant internal debate within the Constitutional Commission and the Constituent Assembly.⁴

The intellectual origins

The defence of state land ownership in 1995 rested on three arguments, all of which had ideological and practical components.

First, the TPLF/EPRDF position that private land ownership would, in the conditions of Ethiopian agriculture, produce rapid landlessness among smallholders. Peasants without alternative livelihoods, under economic pressure (drought, debt, family crisis), would sell their land to wealthier farmers or to non-agricultural buyers; the result would be the re-creation of a landlord class and the impoverishment of the peasantry that the 1975 land reform had created.⁵ This argument had a Marxist genealogy but a practical political logic. The TPLF leadership believed, on the basis of its rural-organisation experience in Tigray, that the peasantry’s attachment to use-rights was a political asset of the federation, and that converting use-rights to alienable ownership would produce social differentiation that would destabilise the rural areas where the regime’s political base was located.

Second, the cultural/ideological argument that land was not Western-style property but a sacred relationship between people and territory, and that Ethiopian constitutional drafting should reflect this rather than impose alien commercial categories.⁶ This argument was made by some of the more philosophical defenders of the 1995 settlement, including Andreas Eshete. Whether it accurately described Ethiopian peasant attitudes toward land is contested; in operational terms, Ethiopian peasants treat their use-rights as economically valuable and informally trade in them through arrangements like sharecropping and leasing despite the constitutional prohibition.

Third, the practical political argument that, having abolished landlordism in 1975, the state could not now restore it without major political risk. Any move toward private land ownership in 1995 would have been a major reversal of the 1975 reform and would have been opposed by peasant constituencies the EPRDF needed for political support. The constitutional codification of state ownership in 1995 was, in this view, the path of least political resistance.⁷

These three arguments together produced the constitutional choice. None of them was demonstrably wrong on its own terms. The question is what they together produced in operation.

What it has produced

Four operational consequences of Article 40.

First, state discretionary control over the most valuable economic asset. Land in Ethiopia is, in a peasant economy, the primary store of value, the primary means of subsistence, and the primary basis of credit. By foreclosing private ownership, Article 40 made the state — federal, regional, and local — the gatekeeper of the most valuable economic resource. Every significant transaction involving land — land use changes, urban-to-rural conversion, large-scale agricultural investment, urban development, mineral extraction — requires state involvement, state permission, and state arbitration. The state’s discretionary power over land is, in operational terms, the state’s discretionary power over the economy as a whole.

This power has been exercised. The 2008–2014 large-scale land leasing programme, in which the federal government leased an estimated 3.6 million hectares to foreign and domestic investors for commercial agriculture, was constitutionally possible because the land was state-owned and the state could lease it without negotiating with the peasants who used it.⁸ The peasants were displaced (and partly compensated, often inadequately) without any private property rights being violated, because they had none. The constitutional logic operated as designed.

Second, citizen security of tenure dependent on political relationship with the state. A peasant whose use-rights to land depend on continued recognition by the state has a political relationship with the state that is structurally different from the relationship a landowner has. The peasant’s tenure is conditional on the state’s continued recognition; the landowner’s tenure is conditional on the law’s continued operation. In a Hayekian sense, the second is the rule of law and the first is not.⁹

The operational consequence is that peasants are politically dependent on the state in ways that constrain their political activity. A peasant who participates in opposition political organisation faces the risk that the state will revoke or fail to renew use-rights. This is not a hypothetical: documented cases of land tenure being used as leverage against politically active rural populations exist in the EPRDF period and have continued under the Prosperity Party.¹⁰ The state does not need to violate any law to apply this leverage; the leverage is built into the constitutional structure.

Third, structurally permanent state leverage over the rural population. Beyond individual cases, the constitutional structure produces a general dependence of rural Ethiopia on state administrative goodwill. The kebele (smallest local administrative unit) is the institution that registers and adjudicates land use within its territory; the woreda (district) is the institution that handles disputes and authorises larger transactions; the regional and federal governments handle major land-use decisions. At each level, the state’s administrative apparatus has discretionary authority that, in a system of private property, would belong to courts applying transferable legal rights. The peasant’s recourse against an unfavourable administrative decision is to a higher level of the same administrative apparatus. Independent legal recourse, of the kind that exists in private-property systems, is constitutionally foreclosed.

Fourth, foreclosed formation of a domestic propertied middle class. A constitutional architecture that prohibits the formation of a propertied landowning class prevents the emergence of the social constituency that has, historically, been the primary domestic political demand for the rule of law. In every successful constitutional democracy of the modern era — England from the seventeenth century, the United States from the nineteenth, post-war Germany, post-1949 India, post-1996 South Africa — the property-owning middle class has been the constituency that demanded predictable legal rules, judicial independence, and constitutional constraint on executive power.¹¹ These demands are made by people who have something the state could take from them. Take away the something, or make it dependent on state goodwill, and the demand for constitutional constraint loses its principal social base.

Article 40 is not the only reason Ethiopia has not produced a domestic constituency for constitutional rule of law. But it is one of the structural reasons, and possibly the most important. The Acemoglu-Robinson framework predicts that institutions become inclusive when a sufficient social coalition has the interest and the means to make them inclusive. Article 40 prevents the formation of one of the principal coalitions that has, in other historical cases, played this role.

The contemporary debate

Article 40 has been the subject of recurring debate since 2018, in two registers.

First, the urban land-leasing crisis. Urban land in Ethiopia is held under long-term leases (typically 99 years) granted by the regional or city administration. The lease system, formalised by Proclamation No. 721/2011, has produced widespread corruption, opaque allocation, and what critics describe as informal commodification of land that the constitution forbids from being commodified.¹² Reform proposals from the Abiy government have included various technical changes to the lease system, including more transparent auction mechanisms and tighter administrative oversight, but have not addressed the constitutional foundation. The reformers know that addressing the constitutional foundation would require constitutional amendment.

Second, the broader debate over Article 40 in the National Dialogue Commission and constitutional reform discussions. Various participants have proposed liberalisation: some advocating outright privatisation of land, others proposing forms of group ownership or transferable use-rights short of full private property. The proposals have not, as of mid-2026, produced any concrete amendment proposal. The Abiy government’s posture has been to encourage discussion without committing to substantive change, and to use the National Dialogue process partly as a deflection of pressure for more fundamental reform.¹³

The reason Article 40 is hard to reform is the same reason Article 39 is hard to reform: the constitutional architecture is interlocking. State land ownership is part of the broader theory of the state as guardian of the people’s collective resources. Privatising land would, on the official framing, betray the constituent subjects (the nations/nationalities/peoples) whose collective property is being privatised. The constitutional theory of Article 8 (sovereignty in the peoples) flows directly into the constitutional theory of Article 40 (land as the peoples’ common property). Reforming one without reforming the other is theoretically inconsistent.

Steelman of the defenders

The constitutional-defenders’ case for Article 40 has serious force.

The first argument is that the alternative — private land ownership — would, in the actual conditions of Ethiopian agriculture (smallholder, drought-vulnerable, low-capital, high-population-pressure), produce massive landlessness within a generation. The empirical comparison most commonly cited is post-1991 Eastern Europe, where the restoration of private land ownership produced rapid consolidation into large commercial holdings and the rural population’s transition into urban precarity. Ethiopia, with limited urban-industrial absorption capacity, could not manage the transition. State land ownership prevents the worst case.¹⁴ This is a serious argument and the reply has to acknowledge its force.

The second argument is that Article 40, in combination with the peasant association structure inherited from the Derg, has actually delivered on the 1975 reform’s promises: it has prevented the re-emergence of landlordism, has provided basic tenure security to roughly 17 million rural households, and has produced agricultural output sufficient to support a population that has roughly doubled since 1995.¹⁵ Whatever the costs of constitutional design, the substantive outcomes are not contemptible.

The third argument is that the political-economy implications of Article 40 — particularly the inability of a propertied middle class to form — are precisely what the constitutional drafters intended, and that what looks like a flaw to a Hayekian critic looks like a feature to a developmental-state theorist. The Ethiopian state’s capacity to direct economic development, the developmental-state argument goes, depends on its retention of strategic control over land and other key resources; releasing that control would constrain the developmental state’s ability to pursue national objectives.¹⁶ This argument is more honest than the rule-of-law defenders may want to admit. The 1995 constitutional design did intend something like a developmental-state arrangement; Article 40 is part of that arrangement; and the rule-of-law critique is not an internal critique of the design but an external one.

The reply

The reply is twofold.

First, that the empirical alternative — private land ownership in conditions like Ethiopia’s — has been managed in other places (Vietnam after Doi Moi, India where it was never abolished, the Philippines, Indonesia post-Suharto) without the catastrophic consequences the defenders predict. The Eastern European comparison is misleading because Eastern Europe had been industrialising before its socialist period; Ethiopia is still in the early phase of agrarian transition. The conditions for catastrophic land-market dynamics are different.

Second, that even if the developmental-state argument is taken seriously, the operational record of Article 40 has not been developmental-state success but a mixed record at best. The state’s control of land has not produced rapid industrialisation, has not produced agricultural transformation comparable to East Asian developmental states, and has produced significant corruption, displacement, and political instability. The cost of Article 40 has not been compensated by the benefits the developmental-state framework was supposed to deliver. The constitutional argument has to be evaluated against the actual record, not against the theory.

Multi-causal accounting

Ethiopia’s economic and political pathologies are not solely attributable to Article 40. The structural weakness of the agricultural economy, the limited industrial base, the climate vulnerability, the demographic pressure, and the underdevelopment of legal institutions independent of the executive are all part of the picture. Article 40 is one element. Its constitutional weight is in its interlocking relationship with Articles 8 and 39, which together produce the foundational theoretical commitments of the 1995 settlement.

What the article establishes

Article 40 is the constitutional foreclosure of private land ownership in Ethiopia. Its consequences — state discretionary control over the most valuable economic asset, citizen tenure dependent on political relationship with the state, structurally permanent state leverage over the rural population, foreclosed formation of a propertied middle class — are direct consequences of the constitutional choice. Together with Article 39 (on political secession) and Article 8 (on the constituent subjects), Article 40 constitutes the foundational theoretical commitment of the 1995 settlement. Each is contested; each could be reformed; none has been reformed; together they continue to shape Ethiopian constitutional politics.

The next article — Zef Hailu’s signature contribution to this series — takes up the operational mechanism by which the constitution as a whole, however ambitious in text, has failed to function as binding constraint: selective implementation, constitutional illiteracy, and interpretation by political connection.

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References

Footnotes

1. 1995 Constitution, Article 40. ↩

2. Proclamations No. 31/1975 and 47/1975. On the inheritance, see Dessalegn Rahmato, The Peasant and the State: Studies in Agrarian Change in Ethiopia 1950s–2000s (Addis Ababa: Addis Ababa University Press, 2009). ↩

3. 1995 Constitution, Article 40, key clauses. ↩

4. On the Constitutional Commission’s land debate, see Fasil Nahum, Constitution for a Nation of Nations, ch. 6, and Tsegaye Regassa, “The Making and Legitimacy of the Ethiopian Constitution,” Afrika Focus 23, no. 1 (2010). ↩

5. For the TPLF position, see Meles Zenawi’s writings, particularly his 2006 paper “African Development: Dead Ends and New Beginnings,” and the discussion in Alex de Waal, The Real Politics of the Horn of Africa (Cambridge: Polity, 2015). ↩

6. For the cultural argument, see Andreas Eshete’s various writings, including those collected in Ethnic Federalism: The Ethiopian Experience in Comparative Perspective, ed. David Turton (Oxford: James Currey, 2006). ↩

7. On the political logic of the 1995 land decision, see Dessalegn Rahmato, The Peasant and the State, and Tom Lavers, “The Political Economy of Agrarian Change in Ethiopia: Land, State and Society,” PhD thesis, University of Bath, 2012. ↩

8. On the 2008–2014 land leasing programme, see Dessalegn Rahmato, “Land to Investors: Large-Scale Land Transfers in Ethiopia,” Forum for Social Studies Policy Debate Series, 2011; The Oakland Institute, Understanding Land Investment Deals in Africa: Country Report: Ethiopia (Oakland: Oakland Institute, 2011). ↩

9. F.A. Hayek, The Constitution of Liberty, chs. 9–11, on property and the rule of law. ↩

10. For documented cases of land tenure used as political leverage, see Human Rights Watch, Development Without Freedom: How Aid Underwrites Repression in Ethiopia (New York: HRW, 2010). ↩

11. Daron Acemoglu and James A. Robinson, Why Nations Fail (New York: Crown, 2012), chs. 7–9. ↩

12. Urban Lands Lease Holding Proclamation No. 721/2011. On the operational pathologies, see Berihun Adugna Gebeye, Constitutionalism in Ethiopia: Theoretical and Practical Issues (Edward Elgar, 2021). ↩

13. National Dialogue Commission process, see Ethiopia Insight discussions of constitutional reform debates, 2024–2026. ↩

14. For the structural defence of state land ownership, see Tom Lavers’ work and the broader developmental-state literature on Ethiopia. ↩

15. Empirical outcomes literature: Dessalegn Rahmato; Sam Jones, “Ethiopia’s Macroeconomic Performance: Achievements and Challenges,” IMF Working Paper, various. ↩

16. On the developmental-state framing of the 1995 settlement, see Vaughan and Tronvoll, The Culture of Power in Contemporary Ethiopian Political Life (Stockholm: SIDA, 2003). ↩