THE ETHIOPIAN EXPERIENCE IN INPROVING AGRICULTURAL INVESTMENT Presented on the workshop

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 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.

4. 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

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 country’s area • Produce 4.6 million tones of food grain, 15% of the country’s total grain production

6. Country profile cont’d Landresource • 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 cont’d • 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 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

10. 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

11. Conducive political and policyenvironments 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

12. Conducive political and policyenvironments 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

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 cont’d • 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