The Addis Abeba City Administration has finally decided to lease land through negotiation, an approach that had been stalled for months, pending the ratification by the cabinet of the land lease directive that was drafted by the Land Development and Construction Permit Authority.

"We are now ready to lease land both through auction and negotiation," said Mekuria Haile, general manager of Addis Abeba city administration.

The draft directive states that the amount of capital and type of service will be considered to lease land through negotiation.

Foreign investors can negotiate for land if their investment types create significant employment, use local resources and produce for the export market, according to the document.

The directive also shows more interest in those foreign investments that are labour intensive, employ production technology that could be transferred, help save the country's foreign currency reserve by bringing with them capital goods, and those that bring at least half of their capital with them.

Other investments that could be given land through negotiation are universities, institutions that provide new types of training, higher hospitals, health research institutions, and those that employ technology that is not popular locally. Four star hotels that use attractive architecture and use limited space, developers that wish to redevelop an existing holding, real estate firms and industries that wish to construct on reconstruction sites will also be allowed to negotiate.

Those who come forward to negotiate will be expected to submit 15pc of the estimated lease price in a blocked account, as well as construction proposals, environmental assessment of their projects from the Environmental Protection Authority, as well as a support letter from pertinent government offices, such as the Ministry of Foreign Affairs and Ministry of Culture and Tourism.

Foreign investors are also expected to present bank documents indicating that they have deposited at least half of their capital in the bank before signing the lease contracts for plots which they have negotiated successfully for.

"The investor is expected to deposit the money in a blocked account in a bank in Addis Abeba," the directive says.

If investors fail to undertake intended projects, they cannot pass the plot to third parties but must give it back to the administration together with five per cent of the lease payment as a fine. After the fine is deducted, the cash they have paid will be reimbursed without interest.

Land will be given though negotiation in industry zones if only the investment is in government priority areas.

Land used to be given through both lease and negotiation until sometime through the mayoralty of Brehane Deressa, when Minister Kassu Illala of Works and Urban Development (MoWUD) suspended it due to fear of corruption.