May 2, 2025
For some reason, it has been customary for The Council of Ministers to introduce highly controversial legislations along with several other draft legislations. The draft on Property Ownership for Foreigners is not an exception (Photo : SM)
By: Getahun Tsegaye
Staff Reporter
Addis Ababa, Ethiopia – Ethiopia’s Council of Ministers this week approved a draft proclamation allowing foreign property ownership under specific conditions, alongside endorsing key economic and trade measures during its 44th session.
The draft, now headed to the House of Peoples’ Representatives for legislative debate, is framed by the government as a “catalyst” for investment and urban renewal, aimed at addressing chronic housing shortages, attracting diaspora and foreign investment, and stimulating job creation in construction and related sectors.
The Council described the initiative as a carefully balanced step meant to attract foreign investment while preserving citizens’ land rights. It emphasized that the move could “stimulate housing development, improve accessibility, align supply with demand, and create meaningful employment opportunities.”
However, this policy is being introduced against a backdrop of significant macroeconomic challenges, as the Ethiopian birr continues to decline in value against the U.S. dollar. The unofficial market exchange rate is now nearly double the official rate, according to an independent economist based in Addis Ababa—referred to here as Tesfaye for security reasons—who spoke to Borkena.
The government, while acknowledging the difficulties the public is facing, has defended the ongoing devaluation as a necessary economic correction. “We cannot afford to maintain an artificial exchange rate that distorts our economy and drains foreign reserves,” the Ministry of Finance said in a statement following the devaluation. “Gradual adjustment of the exchange rate will help improve export competitiveness, reduce the black market gap, and ultimately stabilize the external sector.”
The economist expressed concern over the policy, warning that devaluing the birr without meaningful improvements in exports or broader economic reforms could end up doing more harm than good. “If we don’t have the export capacity to match this shift, all we’re doing is making everyday goods more expensive for ordinary people,” he said. Citing recent trends, he added, “The cost of living has been rising steeply—annual inflation is now above 28%, and food prices alone have jumped over 30%. For low- and middle-income families, especially in cities, this is becoming unsustainable.”
At the same time, the government’s aggressive urban redevelopment projects, particularly the corridor development initiative in Addis Ababa, have drawn fierce criticism from human rights organizations and local communities. Amnesty International recently issued a call for an immediate halt to the evictions linked to these projects, citing violations of due process and inadequate resettlement provisions. In its response, the government has defended the program as essential for the future of Ethiopia’s capital. “Addis Ababa is growing unsustainably,” the city administration stated. “The corridor development is not about displacing people—it is about transforming outdated urban structures into inclusive, livable, and economically vibrant environments. The beneficiaries will not only be the investors but the city itself and future generations.”
Officials argue that the relocation of residents is conducted under legal frameworks, with compensation and new housing alternatives provided. “We are not ignoring the hardships,” Adanech Abebe, Addis Ababa’s Mayor, said multiple times regarding the matter. “But we must modernize. Infrastructure development, new transport links, and commercial centers require space. We are trying to do this responsibly.”
Nevertheless, some residents and experts remain skeptical. Tesfaye warned that the current approach risks “creating enclaves of prosperity surrounded by poverty,” particularly if foreign investors are allowed access to prime real estate in central urban zones. “We’ve already seen how these developments push people out to peripheral areas with fewer services. Adding foreign buyers could drive prices up further and deepen inequality,” he said.
From the perspective of a political analyst and professor at Addis Ababa University, the Cabinet’s recent approval of tariff reductions under the African Continental Free Trade Area (AfCFTA) Agreement is seen with cautious optimism, but grounded in concern over current geopolitical and structural challenges.
“On paper, Ethiopia’s move signals commitment to economic integration, but policy cannot be divorced from geopolitics. The conflicts in the Horn of Africa, particularly in Sudan and parts of northern Ethiopia, create an unstable foundation for free trade,” the analyst notes.
Though the Ethiopian government presents the tariff reduction as a path toward “self-reliance,” skepticism persists regarding the country’s capacity to leverage this policy given its limited infrastructure and persistent regional insecurity.
“It’s paradoxical to talk about self-reliance through external trade integration when our road and rail networks to key markets are underdeveloped or disrupted by insecurity,” the expert argues.
In addition to internal barriers, there is concern over regional market dynamics.
“The AfCFTA is built on the idea of complementarity, but the current export portfolios of Ethiopia, Kenya, and Uganda suggest competition rather than synergy. Without diversification and value addition, integration could just mean intensified rivalry,” the analyst cautions.
The Council also ratified an €11.5 million grant from the Italian government for green economy programs and a 38.1 million SDR concessional loan from the World Bank for educational reform. In addition, the government endorsed Ethiopia’s membership in the Africa Finance Corporation and approved an Air Transport Agreement with Austria aimed at boosting Ethiopian Airlines’ reach and stimulating tourism and trade.
These actions signal a government intent on overhauling its economic model, despite facing significant pressures both at home and abroad. A sociologist, identified here as Meron, described the current situation as “a high-stakes gamble on modernization,” noting, “the real question is whether this transformation will be inclusive or end up marginalizing the very people it claims to uplift.”
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