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THE ETHIOPIAN EXPERIENCE IN INPROVING AGRICULTURAL INVESTMENT

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Title: THE ETHIOPIAN EXPERIENCE IN INPROVING AGRICULTURAL INVESTMENT


1
  • 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

2
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.

3
Back ground contd
  • 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.

4
Back ground contd
  • After 1991
  • Investment legislations were established
  • Different policies and incentive packages were
    set
  • An agency was organized to manage the different
    investments

5
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 countrys
    area
  • Produce 4.6 million tones of food grain, 15 of
    the countrys total grain production

6
Country profile contd
  • 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

7
Country profile contd
  • Rich in biodiversity (including crop and
  • animal species indigenous to country)

8
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

9
Opportunities contd
  • 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

10
Conducive political and policy environments
  • POLICIES
  • Agricultural development Led Industrialization(ADL
    I)
  • Agricultural and Rural Development policies,
    strategies
  • Strategic 5yrs plans /PASDEP I and PASDEP II
    Programs, GTP

11
Conducive political and policyenvironments contd
  • POLITICAL
  • Peace and political stability
  • Good governance
  • INCENTIVES
  • Income tax
  • Duty free import of capital goods
  • Capital repatriation and remittance of profit
    and dividend

12
Conducive political and policyenvironments contd
  • 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

13
Institutional arrangements
  • Investment Agency
  • Agricultural Investment Support Directorate
  • Ethiopian Horticulture Agency
  • Textile Technology Institute
  • Leather Industry Institute
  • Ethiopian Meat and Dairy technology Development
    Institute

14
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

15
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

16
Problems contd
  • Financial and management skill limitations
  • Focus on non value added crops
  • Low productivity
  • Poor technology level
  • Public grievances on mal performing investments

17
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 sites

18
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

19
  • TOGETHER, WE CAN MAKE INVESTMENT WORK FOR
    AFRICA

20
  • THANK YOU
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