Ethiopia: Promoting Agricultural Investment for Stimulating Growth

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Fort over two decades now the government has showed a commitment towards enhancing agricultural productivity through attracting investment on agriculture both from local and foreign stakeholders. Legal frameworks are crafted and institutions are established for the provision of land for investors and licensing.

In addition, incentive provisions is also made a point. To attract investors the government offers incentives such as duty free importation of goods,tax holidays,access to affordable lease holds of agricultural lands and access to finance from the Development Bank of Ethiopia. In collaboration with other stakeholders involved in agribusiness, the Ethiopian Investment Authority, in this regard , has played a crucial role.

About the provision of land the Ministry of Agriculture and other pertinent authorities discharge their responsibilities as per their mandate. Ethiopia's Agricultural Sector Policy and Investment Framework is the government's strategic road map which identifies priority areas requiring investment to fast track the country's agriculture growth.

During the last five years 32 percent of FDI goes to the sector. As it is clearly known subsistence farming is a dominant practice in the highland parts of the country with different aggro ecology zones.

On the other hand, in the lowland area sedentary farming is seldom practiced. The policy stresses agricultural intensification in the highland parts and extensive farming, which needs investment, is to be practiced in the lowland areas targeting foreign markets. To this purpose the Ministry of Agriculture facilitates tracks of land for local and foreign investors from regions such as Southern Nation and Nationalities and People states,Oromia, Beneshangul Gumuz and Gambela.

Investors based on the agreement involved on the production of cash crops such as sugarcane,cotton,palm oil,rubber tree and bio fuels and in their business they provide support in terms of creating value chains,getting consultation from agricultural research centers, processing work and exportation mechanism by regional governments. If dispute arise, it will be settled by local institutions.

Agriculture investment in addition to engaging in the production and exporting process, it has a capacity to create job opportunities for local people and technology transfer .However, there are also some limitations which need remedial actions including benefiting the local people and environment protection.

With regard to ensuring food security so far the government has underlined that small scale farming will take the lion's share.To date it has contributed a lot in supplying food to the local market and transforming the sector utilizing agricultural technology and inputs taken as a viable solution by the government. Utilizing selected seeds and sowing in line and taking care of the crop in pre and post harvest helps to enhance productivity.

On the other hand, inputs such as fertilizer,pest and herbicides though they have their own demerit on the environment, have helped to raise productivity. In addition to these, organizing farmers in the cluster form has brought tremendous result because farmers strictly follow up the crop in the earlier time of the crop season and whenever pests or herbs occur could provide immediate response and save the crop from destruction.

But as it is rain-fed one when climate adversity occurs, it is easily shattered by the devastating result. 

Currently, the formulated policies stipulate practicing small scale irrigation and harvesting water as alternative mechanism to overcome drought and water scarcity and in some parts of the country the fruit of irrigation farming has been witnessed. Scaling up the practice is essential. As it is known both subsistence and industrial farming in the country have played a crucial role in supplying raw materials to the industries and export earning.

In the GTP II expanding both agribusiness and manufacturing is underlined and the expansion of industrial parks for these purposes has proceeded apace. It has various values.

In the first place it integrates agriculture with industries and the market,creates job opportunities for thousands,attract foreign investors, stimulate export market and ultimately it lays foundation for the establishment of self sustaining economy which relies on innovation and creativity. We have to understand that promoting agricultural investment can be an impetus for the expansion of agribusiness which is a sub sector of manufacturing.

But whenever we think of agricultural investment for extensive farming that such venture never compromise the environment because it has its own drawbacks on the effort of attaining food security itself.

Improper utilization of natural resource for farm might devastate vegetation cover and harm underground water and the ecosystem hence, before giving green light for investors to start industrial farming, proper impact assessment is essential by pertinent regulatory bodies.

In addition to this, the investment should bring benefit to the local population in terms of job creation. The other things which need remedial actions are the delay of starting farming after investors took land,giving up the job after clearing the vegetation cover and excessive use of chemical, harmful to the environment. On the other hand, negligence to supervise in the part of the regulatory bodies after the provision of land to investors should be corrected.

Hence to modernize the agriculture sector the ongoing effort of boosting investment must be strengthened.