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This study’s objective is to assess the socioeconomic effects of good governance practices in urban land management in two particular Ethiopian towns. Both qualitative and quantitative research methods were employed to achieve this objective. Questionnaires, interviews, and focus group discussions were used to collect data, and the collected data were analyzed descriptively. According to the study’s findings, the poor were hit particularly hard by weak governance in urban land management, since they could not afford to bribe authorities to acquire services or legal protection. Development was hampered by poor governance and corruption in the management of urban land, which raised business risks, decreased investment incentives, and restricted access to financing in the towns. Communities bribed officials to remove limits on land-use planning and to influence the decision to stop the implementation of environmental protection rules. Due to their unregistered land, the majority of suburban inhabitants did not pay property taxes. Similarly, since paying property taxes was seen as a necessary step in towns’ regularization process, informal settlers were prohibited from doing so. As a result, residents in urban areas began to construct homes without registering their land and land rights. As a result, after being delimited to the towns, more landowners in peri-urban regions utilized their property for residential purposes and unlawful transactions, while fewer were using it for agricultural purposes. Consequently, due to poor governance in urban land management, land-related socioeconomic development was unable to be fostered.