Land Tenancy and Poverty in Ethiopia

By Daniel Teferra (PhD)*

A paper presented at the 9th International Conference on African Development

College of Business and Economics

Addis Ababa University, May 27-28, 2016

            Ethiopia is poorer today than it was fifty years ago. For instance, in the early 1960s, the per capita incomes of Ethiopia, South Korea and Taiwan were very close. About fifty years later, the two Southeast Asian countries became richer while Ethiopia got poorer.

For example, in 1961, the three countries had per capita incomes ranging from 2.3% to 3.5% of the United States’ income. By 2014 South Korea’s and Taiwan’s incomes were 51.2% and 80.0% of the U. S.’ income respectively while Ethiopia’s per capita income dropped below 1% (see fig. 1).

What went wrong? South Korea and Taiwan implemented a land reform program and freed their peasantries while Ethiopia did not.

The U. S. involvement was instrumental in the success of land reform programs in Taiwan and South Korea. In the 1960s, America invested heavily in land reform and economic development in order to prevent the spread of Communism in Southeast Asia. For instance, U. S. aid provided 85% of the money needed for the land reform program in Taiwan.

Under its land reform program Taiwan sold public land to tenant farmers at affordable prices. The government severely restricted the size of individual holdings forcing landlords to sell most of their land to the government.  The land was then redistributed to the peasants.

The government won the support of the peasants with its land reform program. Private ownership of land motivated the peasantry. Productivity increased thereby generating surplus and freeing labor for industrialization. Rural income rose and the status of the peasants improved significantly.

Likewise, South Korea carried out a land reform program prohibiting tenant farming. Under land-to-the-tiller initiative, land was transferred from landlords to their tenants while the original owners were compensated. About twenty five years later the income gap between rural and urban areas declined and income per capita doubled.

How about Ethiopia? In the 1960s, there was no Communist threat in Ethiopia until a decade later. The Monarch was firmly in control and was a U.S. ally. He did not feel the urgency for a land reform program. “Not now; later” was his response to a Newsweek reported who asked him when he was going to implement a land reform program.

Ethiopia has still not freed land and the peasantry. Land is a government monopoly. Peasants lease use-rights from the government and work as tenants of the State lacking the security and independence of an owner.

The cornerstone of Ethiopia’s land policy was (still is) the Land Reform Proclamation of 1975. The Proclamation did not end land tenancy. Instead, it abolished private ownership, and put all land under government control. Consequently, big landlords as well as small landowners lost their lands.

For instance, 54% of the peasants in the Sidama/Oromo regions had owned their own lands prior to the Proclamation. But the Proclamation abolished their ownership rights and allowed them use rights only. Furthermore, the Proclamation annulled all pending land cases. As a result, peasants who had been unlawfully evicted from their lands lost the right to get their holdings back.

Prior to the Proclamation of 1975, there were two major land issues in Ethiopia. The first was the worsening situation of landlessness among peasants in the north due to the failure of the rist system to absorb a rapidly growing population. The second was the rising rate of land tenancy in the south (Sidama/Oromo regions), driven by absentee landlordism.

For instance, absentee landlords made up 25.1% of the population and owned 33.3% of the land in the south. At the same time, landless tenants in the south accounted for 46% of the population (see Table 1 below). The government confiscated the land from the absentee landlords, without compensation, and accorded the tenants use rights, but not private ownership rights, to their existing holdings.

Figure 1

Per Capita Income Comparison

As % of U. S.’ Income

1961 & 2014


Source: Based on information from Higgins, Economic Development 1968,

Development Indicators & Wikipedia

Table 2

Percentage of Tenants & Absentee Landlords

And Land owned by them in 9 Provinces, 1966


Wholly Rented (%)

Partly Owned & Partly Rented (%) Absentee Landlords (%) Absentee-owned Land (%)
Illubabor 73 2 42 42
Kaffa 59 3 18 34
Wallaga 54 5 29 28
Shoa 51 16 35 45
Harrarge 49 5 23 48
Arssi 45 7 28 27
Gamo Goffa 43 4 10 42
Sidamo 37 2 25 42
Wallo 21 20 26 13
Bale n/a n/a 15 12
Total 46 9 25.1 33.3

Source: (see: Daniel Teferra, The Phenomenon of Underdevelopment in Ethiopia, PhD Thesis, UW-Madison, 1979, Tables II-10 p. 79 & II-12 p. 81), based on information from Ministry of Land Reform and Administration quoted in Commercial Bank of Ethiopia, Market Report, Jan/Feb 1974.

The current rulers like their predecessors believe that peasants should not have private ownership of land. They argue that land privatization will bring back the old landlordism. They say that if land is privatized, peasants will sell their lands during bad years and flock to the cities to beg for food. There is however no evidence to support these assumptions.

In the first place, landlordism has not left Ethiopia at all. The government is the landlord.  It owns all the land and leases out parcels of it to the people at any price it chooses. The government has the power to withdraw the lease at any time.

Secondly, peasants live off the land and they will starve if they don’t have land. Therefore, selling their holdings is the last thing that comes to mind for them. Even if they sell their lands, they will buy food or improve their lives with the money. They will not go to the cities to beg for food.

The truth is that the government doesn’t want to relinquish its land monopoly. The opposition groups do not favor turning land over to the peasantry either. They want to have for themselves the land monopoly that the government is currently enjoying.

At the moment, there are no possibilities for a land reform program in Ethiopia. Furthermore, international politics is not in Ethiopia’s favor. With the collapse of the former Soviet System, America’s incentive to invest in a land reform program and economic development in Ethiopia has vanished.  The U. S. has shifted its priority to fighting Islamist militants while limiting its involvement to merely short-term programs such as food security and poverty alleviation.

External factors are secondary, not primary in eradicating poverty. Thus, ultimately, the push for a land reform program and economic development has to come from within the country itself. Unless peasants own the land they work and the age-old land tenancy is ended, poverty will persist in Ethiopia.

*Emeritus Professor of Economics at FSU; University of Wisconsin-Whitewater,