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THE ETHIOPIAN EXPERIENCE IN
INPROVING AGRICULTURAL INVESTMENT
Presented on the workshop
“MAKING INVESTMENT WORK FOR AFRICA:
A PARLAMENTARIAN RESPONSE TO THE
LAND RUSH”
Oct. 4 – 5/2012, COTONOU, BENIN
Back ground
Before 1991
The majestic period
agricultural investment caused eviction
of farmers,
Export oriented crops were promoted
Small holders shifted to export crops
and resulted in food shortage.
Back ground cont’d
The Derg regime
centrally planned economy
focuse on state farms and cooperative
development
Private investments were limited only up
to 280,000 Et Birr/135,000 USD, as a result
there was no investment on agriculture.
Back ground cont’d
After 1991
Investment legislations were established
Different policies and incentive packages
were set
An agency was organized to manage the
different investments
Country profile
Agriculture accounts
83.3% of employment
43- 45% of GDP
Up to 90% of foreign exchange earning
Commercial farms account
0.7 million ha which is 0.5% the total country’s
area
Produce 4.6 million tones of food grain, 15% of
the country’s total grain production
Country profile cont’d
Land resource
Total area 111.5 million ha
of the total area 45%(50.2 million ha) is found
in the highland and mid-high land areas, the
remaining is in the low land
arable land 74.3 million ha
Cultivated land 15 million ha
Immense irrigation potential of 4.3 million ha
Country profile cont’d
Rich in biodiversity (including crop and
animal species indigenous to country)
Opportunities
Geographical
Strategic location and proximity to the middle east and
European markets
Accessibility to port Sudan, Berbera and Djibouti
Economic
Fast economic growth , of double digit
Growing infrastructure, road, electric power,
telecommunication, health, education
Potential markets in the neighborhood and access to
foreign market destinations
Growing national demand for goods and services
Opportunities
cont’d
Natural
Diverse agro-ecologic zones
Conducive climatic condition
Abundant fertile land resource nearly 3 million ha
Huge biodiversity
Social
Cheap and abundant trainable labour availability
Hospitable society and civil service-zero corruption
Conducive political and policy
environments
POLICIES
Agricultural development Led Industrialization(ADLI)
Agricultural and Rural Development policies,
strategies
Strategic 5yrs plans /PASDEP I and PASDEP II
Programs, GTP
Conducive political and policy
environments cont’d
POLITICAL
Peace and political stability
Good governance
INCENTIVES
Income tax
Duty free import of capital goods
Capital repatriation and remittance
of profit and dividend
Conducive political and policy
environments cont’d
Taxes and duties paid can be drawn back at
the time of export of finished goods
The voucher system and bonded
manufacturing ware house facilities are also
in place
Institutional arrangements
Investment Agency
Agricultural Investment Support Directorate
Ethiopian Horticulture Agency
Textile Technology Institute
Leather Industry Institute
Ethiopian Meat and Dairy technology
Development Institute
Preconditions for investors
Valid passport/ID
Power of attorney
MOA and MOU of a company
Investment license
Profile/track records and witness from
Ethiopian embassies abroad
Bank statement/audit report
Business plan
Environmental Impact Assessment
Problems of previous investment
endeavours
Speculation on land/frequent transaction
Regional imbalance in investment flow
Lack of capacity in land administration at
lower level administration
surveying equipments and skill
knowledge of valuation/un fair land pricing
Controlling/protection of available land resource
weak legal frameworks
public rush for land acquisition/local
Problems cont’d
Financial and management skill limitations
Focus on non value added crops
Low productivity
Poor technology level
Public grievances on mal performing
investments
Corrective actions
Improving the lease agreement template
Institutionalizing Agricultural investment
Establishing National Land Bank
Establishing new land rent system
Directing focused investment crops/value chain
Creating Agricultural Economic Zone
Establishing technical and specialized support
team
Creating transparency using EAP and MOA web
Lessons learnt and Challenges
Consensus built on- investment an
opportunity/land grab
Exchange of cultural and technology
Foreign currency
Employment opportunity
Local revenue generation
Industrial raw material supply
Local investment is at its infancy
Commercialization Vs small holder agriculture
TOGETHER, WE CAN
MAKE INVESTMENT
WORK FOR AFRICA