文I马克·沃尔顿（Merkineh Waltore Goddebo） 中国人民大学经济学院研究生 埃塞俄比亚前政府官员 翻译I 潘心怡
Agricultural Investment Challenges and Opportunities in Ethiopia
By Merkineh Waltore Goddebo, Master Student of Economy Department, Renmin University of China; Former Ethiopia Government Official
Ethiopia is one of the world’s fastest growing economies for the last 15 consecutive years. The country has managed to register double-digit economic growth during this time. This high growth has contributed to a sustained increase in per capita income and a decline in absolute poverty, as well as improvement in standards of living. The high and sustainable economic growth observed over the past years coupled with the country’s untapped human and natural resources helped Ethiopia to allure potential foreign investors.
The country has an area of 1.14 million square kilometers, ranking the ninth largest country in Africa, with its arable land 513,000 square kilometer (45%) and irrigated land 34,200 square kilometers (3%). It has a population of over around 104 million, the second largest population next to Nigeria in Afric. Addis which is Ababa is the capital city of the federal government and the headquarter of African Union and some other international organizations.
Actually, agriculture is the backbone of the Ethiopian economy. The sector accounts currently for about 45 percent of the GDP, 90 percent of the total foreign exchange earnings and 80 percent of the employment. It also plays a crucial role in providing row materials to the local industry. Available climate condition makes things favorable for living and agricultural production and also fertile lands and water resources accessible in the country.
The country endowed with abundant agricultural resources and having an altitude ranging from 148 meters below sea level to 4,620 meters above sea level. Due to these facts the country possesses one of the largest and most diverse genetic resources in the world. There are two rainy season in the country. These are the short rainy season, Belg, during the mid- February to the end of April, and the main rainy season, Meher, covering the months of June to September. Rainfall distribution throughout the country varies depending on agro- ecological conditions of each specific area. Rainfall ranges from 2,200mm in the southwest to below 100m in all low land areas.
Challenges in Agricultural Sector
Ethiopia has a number of potentials, but still there is a shortage of food security in the country. The main problem is global climate change. Because of 2015/2016 El Niño induced drought, below average 2016 autumn rains in the southern and southeastern parts of the country have led to a new drought in lowland and pastoralist areas, as well as areas across the country. The drought is also caused in part by the El Nino warming phenomenon over the Pacific Ocean, a cyclical phenomenon that many scientists considered it has intensified in recent years because of global climate change.
Furthermore, southern and eastern Ethiopia continues to struggle with the impact of the Indian Ocean Dipole-induced drought, exacerbated by disease outbreaks, large scale loss of livelihood assets and displacement. The humanitarian situation countrywide has been further compounded by below average spring rains the third consecutive poor/failed rains in the southern drought belt. The other constraint in agricultural sector is the full package usage of fertilizer in their agricultural plot of land and saving system is not in higher level.
As a result, some 5.6 million people in Ethiopia require emergency food assistance in 2017. Drought conditions are expected to peak during the dry December to March season, which is likely to lead to a sharper deterioration in livestock body conditions, and impacting milk production and nutrition status of the families that depend on livestock for their food and income. During the dry season, the response will be complemented by supplementary food based on regular screenings to ensure the most vulnerable are reached.
Short-term and Mid-term Solutions
Irrigation needs to be introduced in a significant way for a sustainable attainment of food security at the national level. However, food insecurity at the household level could still last despite growth of food and cash crops at national level. The medium-to long-term target is to reduce the absolute size of the food insecure rural population substantially and make them exit from food aid and alleviating poverty as well. Agricultural research, water harvesting and small scale irrigation and focus on increased water resource utilization to ensure food security are other solutions.
In the short-run, the objective is to support a relatively small numbers of food-deficit households by fiscal transfer of resources. Similarly, agricultural research, water harvesting and small scale irrigation and focus on increasing water resource utilization to ensure food security.
During this transition, there will be continued reliance on food aid. There are two main issues in this regard; ensuring a timely intervention to avoid lacking of food, and using the resources of food aid to build the potential of agriculture and rural infrastructure. The concept of linking relief with development has been applied since the late 1980s. Various activities of environmental protection such as soil and water conservation, terracing and afforestation carried out over the years have shown positive results, and impacts will be improved and continued in the future. Emergency capabilities have also been strengthened in the past few years by reorganizing the Disaster Prevention and Preparedness Commission (DPPC), and establishing a Food Security Reserve Administration (FSRA). Monitoring, surveillance, early warning, and strategic food reserves capabilities will continue to be augmented to better deal with emergency situations of famine.
Agricultural Investment Opportunities in Ethiopia
Nowadays Ethiopia has become an increasingly attractive investment destination, because of the following reasons: Micro economic stability and growing economy; adequate guarantees and protection; transparent lows and streamlined procedures; ample investment opportunities; abundant and trained labor forces; wide domestic, regional and international market opportunities; competitive investment incentives packages; welcoming attitude of the people to FDI; pleasant climate and fertile soils; and low production cost. Furthermore, the Ethiopian investment codes also provide guarantees to create a reassuring business environment for potential foreign investors. Specific investment guarantees have been issued for FDI.
Ethiopia has suitable climate and soil conditions required for the production of a variety of food crops. The major food crops are cereals, and oil seeds. Wide range of fruits and vegetables and cut flowers are among fast growing export agro- products. Organic coffee, cotton, tobacco, sugar cane, tea and spices are the main commercial cash crops grown in Ethiopia. Ethiopia is Africa leading producers of coffee Arabica. The word “coffee” is said to come from kaffa, a region where coffee has long been a wild crop. There are huge potential areas for the cultivation of various agricultural products in all the country and provinces (regional states), like, maize, rice, horticulture coffee, tea, cotton, oil crops, pulse, rubber and palm oil.
Other opportunities in Ethiopia to invest in agriculture are making favorable condition for investment. The government also committed to avail considerable amount of domestic credit to promote FDI. Public banks such as the Development Bank of Ethiopia are established to support the country’s economic transformation. Thus investors who are investing in areas of agriculture, manufacturing and agro industry are eligible to obtain loan from Development Bank of Ethiopia.
Current Challenges in Ethiopia
When it comes to the recent condition, Ethiopia has experienced unrest around some parts of the Oromiya and Amhara Regional Governments. The primary causes of the unrest were related to bad governance. In the delivery of public services and development outcome that could not match the rising expectation of citizens, particularly the youths. Lacking of employment opportunities for the rising youth population was another major cause of the unrest. According to different researches, unemployment rates have been decreasing but remain high and unemployment caused by urbanization has increased. The supply of labor in urban areas has been increasing, driven by demographic changes and migration; the supply of jobs is supposed to be increased to match this. Though unemployment in Ethiopia is by and large an urban phenomenon, recently rural areas began to experience unemployment and under employment.
The public unrest in some part of the country was also associated with the expansion of urbanization and industrialization. Although both urbanization and industrialization were the outcome of the country’s economic development and have positive effects on the livelihood of the population, miss-management in compensating the displaced farmers from their land causes grievances.
The other factor that highly contributed to the unrest was the poor governance in connection with government services. For those unrest problems the government has taken short and long-term measures in further improving the private sector development and FDI flows. Short term and immediate actions were targeted to clear negative perceptions created in the aftermath of the recent unrest occurred in some Oromiya and Amara Regional Governments. Currently, the government of Ethiopia has put in place a six-month State of Emergency from March 2018 and the following six month to restore peace and order as well as to restrain destructive activities which targeted economic pillars of the country including foreign investments.
Based on the investment law the government has given over 116 million birr financial support for horticulture companies affected by the recent unrest in Oromia and Amhara regional states following an assessment made on the scale of damage. It will also continue to give support for the affected companies based on the on-going assessments. For those companies which managed to cope with the damage by their own, the government has given one year grace period of income tax payment and duty-free privilege. In addition, the government has made a close follow-up to reassure peaceful environment and boost investors’ confidence.
In the long terms the government has officially announced that ensuring good governance and deepening the democratization process across the country like, releasing a number of opposition party leaders from the prison and working closely with the public at large is its primary priority would help to overcome the problem. In this regard, a command post for national mobilization effort for good governance has been established. Currently, the country is carrying out a number of reforms, starting from last year with a cabinet reshuffle and changes in local administration related with good governance issues.
The government has established a 10-billion birr Revolving Youth Fund that benefits the youth through creating jobs and the economic development of the country. The initiative is a response to the economic questions raised by the youth; and it also addresses other areas of concern.
The other problem in the country is rent seeking mentality (corruption). Although the level of corruption and tolerance to corruption is comparatively low, rent-seeking political economy remains to be a challenge in urban areas. But it attributed to Ethiopians’ ethical ambivalence in explaining corruption as demonstrated in the popular saying ‘sishom yalbela sishar yiqochewal’, loosely translated as ‘eat when you hold office for you shall regret later when you don’t have it anymore.’