Over the last 12 months, the Ethiopian real estate market has endured a series of shocks, from the suspension of bank loans to a significant increase in the land transfer tax. However, the latest development threatens to deliver a fatal blow.

A draft regulation is circulating that could confiscate any property acquired in the last ten years unless the owner can provide a legal receipt for the source of the funds. This is particularly catastrophic for members of the diaspora who have purchased property in the past decade. Many have spent their entire lives saving money to buy a home in their homeland, often sending money through informal channels, which means there is no legal receipt for these transfers. The government is aware that such transfers have been widespread and continue to be so.

While it is understandable for the law to punish informal transfers moving forward, applying it retroactively for ten years is unreasonable. This approach would penalize not only those who used informal channels but also those who used bank transfers but did not retain the receipts.

The draft law stipulates that once notified of an investigation, individuals have 30 days to prove that the funds for their property were legally earned. This evidence must be provided in person. What if someone cannot travel to Ethiopia within 30 days due to medical reasons? Why is providing evidence through a representative not acceptable?

If this law passes as currently drafted, who would invest in Ethiopian properties knowing they could be easily confiscated without meeting the legal standards for criminal charges? It will spell the end of the Ethiopian real estate market, taking with it a nascent industry and the livelihoods of thousands of workers.


By Editor

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