Ethiopia is grappling with a rapid increase in informal settlements across its cities, posing a significant challenge to sustainable urban development, according to a new research report by the Policy Studies Institute (PSI). Despite repeated demolition efforts aimed at curbing the growth of unplanned housing, informal settlements continue to expand, highlighting the limitations of current policies.

The unpublished study, titled “The Expansion of Informal Settlements in Ethiopia’s Cities: Challenges and Policy Options,” reveals that demolition-based strategies and limited formalization processes have failed to address the root causes driving informal urban growth. Ethiopia’s urbanization rate stands at 5.4%, notably higher than the 4.1% average for sub-Saharan Africa, with much of this growth occurring through informal means due to a shortage of affordable, accessible land.

Lead researcher Wubalem Seraw (PhD) explains that informal settlements consist of residential areas built without legal land tenure or municipal approval, often on land held without government permission under Ethiopia’s Urban Land Lease Regulation No. 123/2007. While other countries have employed reforms and land tenure normalization to manage informal settlements, Ethiopia relies heavily on house demolitions and limited legalization efforts.

“Since 2018, following political and social reforms, informal settlement expansion has accelerated across Ethiopian cities,” Wubalem said. He attributed this partly to the legal land leasing system (Proclamation No. 721/2011), which, while intended to make land affordable, has coincided with rising land valuations and increased informal growth.

Historical data underscores the scale of the issue: in Addis Ababa alone, 13,440 houses were demolished in 1994; between 2005 and 2018, 29,433 houses were torn down; and from 2018 to 2020, plans were made to demolish 17,134 more homes. Similar trends are evident in other urban centers, with informal housing in Jimma rising from 29% in 1997 to 41% in 2017.

The study identifies multiple factors fueling informal settlement growth, including high rents, widespread poverty, rural-to-urban migration, large family sizes, institutional inefficiencies, corruption, bureaucratic hurdles in land acquisition, inconsistent land laws, and a lack of replacement land for displaced families. Strict building regulations and inadequate government management further exacerbate the problem.

Surveying 1,067 households across 12 Ethiopian cities, the report found that 64.3% of residents work informally, with 56% self-employed. The average household size is 5.2 members, with over half having between five and eight people. While 81.4% earn an average monthly income of 11,275 birr, more than half live below the national urban poverty line.

Housing conditions remain precarious: although 96.8% own their homes, most are constructed with mud walls, wooden frames, and tin roofs. Access to basic services is limited—69.9% have electricity, but only 36.7% enjoy clean and reliable drinking water. Sanitation is a major concern, with 58% relying on open or communal pit toilets and 71.7% of settlements lacking sewer systems.

Wubalem emphasized that no single solution exists to this global challenge but urged Ethiopia to learn from international examples. Countries such as Rwanda, South Africa, Tanzania, Brazil, and Thailand have successfully implemented reforms involving land tenure normalization and community engagement to manage informal settlements.

The PSI report recommends that Ethiopia abandon destructive demolition policies in favor of comprehensive, data-driven interventions. It calls for an inclusive, coordinated, and forward-looking approach to urban governance that prioritizes equity, participation, and sustainability to effectively control and reduce informal settlement expansion.

As Ethiopia continues its rapid urban transformation, the report stresses that balancing growth with social inclusion and infrastructure development will be critical to building resilient and livable cities for the future.