At a time when Saudi Arabia is considering investing in agriculture at overseas destinations to meet its growing food requirement, Ethiopia has offered its abundant agricultural resources that the Kingdom can benefit from.
“After all, the relations between Saudi Arabia and Ethiopia are longstanding. There is geographical proximity and the religious values and linguistic affinities that we share have brought the two countries close and strengthened the bonds. So, Saudis should have no hesitation in turning toward Ethiopia for investment,” Ethiopian Consul General Tekleab Kebede said in an interview to Arab News on the occasion of his country’s national day.
Ethiopia is strategically located in the northern part of Africa known as the ‘Horn of Africa’ at crossroads between Africa, the Middle East and Asia. Its capital Addis Ababa can be reached within a couple of hours by air. “Ethiopia is endowed with abundant agricultural resources. Having an altitude ranging from 180 meters below sea level to 4,620 meters above sea level, the country is characterized by diverse physical features that comprise 18 major agro-ecological zones and 62 sub-zones each having its own physical and biological potential. Thus, the country possesses one of the largest and most diverse genetic resources in the world,” he said.
Saudis are known to have invested billions of dollars in Ethiopia and the rest of Africa, mostly in real estate, but now they can turn to the country’s agriculture sector that has great potential, he added.
Out of the total land area of 113 million hectares, about 56 percent is regarded as suitable for cultivation. However, only 14.8 percent of the total land is currently under cultivation. About 3.7 million hectares of land is available for irrigation, but only 160,000 hectare (4.3 percent) is developed and used. Investors have been leasing agricultural lands or crops.
Agriculture is the mainstay of the Ethiopian economy, and has the soil and climate for the production of a variety of crops. Currently, as many as 146 types of crops are grown. The major food crops are cereals, pulses and oilseeds. The main cereal groups include teff, barley, wheat, maize and sorghum. Pulses comprise peanuts, beans, peas, chickpeas, lentils, rough peas, fenugreek, soybeans, haricot beans and several varieties of oilseeds.
Among the country’s major oil crops are sesame, niger seed, groundnut, rape and linseed. Sunflower and castor beans also have high potential. Coffee, cotton, tobacco, sugarcane, tea, spices and horticulture are the main commercial cash crops grown in the country. The broad range of fruit and vegetables include citrus banana, mango, papaya, avocado, guava, grapes, cabbages, cauliflower, okra, egg plant, tomato, celery, cucumbers, pepper, onion, asparagus, water melon, carrots and green beans.
Cut flowers and vegetables are fast-growing exports. Although the livestock sub-sector has large resources, which include 32 million cattle, 24 million sheep and 18 million goats, its contribution to the national economy can be larger. Opportunities are also available in ostrich, civet, cat and crocodile farming.
The potential annual freshwater fish production is estimated at about 45,000 tons, of which only 20 percent are exploited at present, he said, adding that potential activities for private investors in commercial forestry also exist. They include the production and marketing of gum and incense, large-scale plantations for timber, the establishment of integrated forest-based industries such as pulp and paper and chipboard, and the establishment of rubber plantations.
Ethiopia remains the largest honey-producing country in Africa and the fourth largest beeswax-producing country in the world. Commercial floriculture is still a relatively new industry in Ethiopia but it has emerged as a major nontraditional export sector. The rose industry has been developed successfully since 1998.
Against this background, the consul general said, Ethiopia can be the best destination for agricultural investment for Saudis and other Gulf investors. “The country is endowed with immense agricultural land and water that can grow varieties of food and cash crops,” he emphasized.
Asked about the levels of economic ties between the two countries, the consul general said they both had signed a general agreement on economic, technical and cultural fields in October 2002. This agreement has envisaged promoting the cooperation of the two countries in economic, trade, investment, scientific and cultural fields.
Since then, some encouraging results have been made in different fields including the provision of $18.8 million approved in May last year to co-finance the Azezo-Metema road connecting Ethiopia with Eastern Sudan, and a $6.53 million loan to be used to partially finance the execution of west Ethiopia’s 100 km Assosa-Kurmuk road project connecting Ethiopia with Western Sudan. “The flow of investment and exchange of trade between the two countries are increasing,” he said.
The current foreign investment policy of the Ethiopian government is attracting considerable foreign investment. Especially in the last five years, the volume of foreign direct investment (FDI) to Ethiopia has been steadily increasing. Accordingly, Saudi investment volume has increased substantially. In the last 10 years, according to the statistics of Ethiopian Investment Agency, Saudi investment volume has reached about $3 billion. According to the latest report of 2007 from the World Bank, Ethiopia is the ninth biggest economy in Africa when measured in purchasing power parity (PPP), and is registering the fastest economic growth in Sub-Sahara Africa. “Political and social stability, as well as a more predictable macroeconomic climate, have helped Ethiopia to attract FDI,” the consul general said. With a domestic market of around 80 million people, and a regional one in excess of 300 million, there is ample scope for local sales. Through the African Growth and Opportunities Act (AGOA), there is also huge potential for exporting products to the US — duty- and quota-free.
To encourage private investment and promote the inflow of foreign capital and technology into Ethiopia, a number of incentives such as hundred percent exemption from the payment of import customs duties and other taxes levied on imports are granted to an investor to import all investment capital goods. Ethiopian products and services destined for export are exempted from the payment of any export tax and other taxes levied on exports. Any income derived from an approved new manufacturing and agro-industry investment or investment made in agriculture shall be exempted from the payment of income tax for about 5 years depending upon the area of investment, the volume of export, and the location in which the investment is undertaken. “The strong commitment of the Ethiopian government to create a supportive environment for the development of the private sector have positively affected export growth. In the last five years, export volume increased by about 30 percent,” he said.
Apart from the conducive and continually improving free market-oriented policy environment, Ethiopia has various advantages for the development of its export sector. These include the abundant and capable labor force, low wage levels, a wide-ranging weather and soil conditions, preferential access to the European Union markets and proximity to the Middle-East markets. The preferential access to the Common Market for Eastern and Southern African States (COMESA) with a total population of more than 260 million also offers substantial market opportunities for several export items from Ethiopia. The trade volume between Ethiopia and Saudi Arabian, both directions, in the year 2006 was about $750 million.
The consul general, who has been here for 12 years having served earlier his country’s diplomatic missions in Ottawa and Stockholm, said that the Ethiopian expatriates totaled 100,000 across the Kingdom, 80,000 of them in Jeddah and the rest of Western Province alone. The country — bordered by Djibouti and Somalia to the east, Eritrea to the north, the Sudan to the west and Kenya to the south — is the second largest in Africa, the first being Nigeria.