Ethiopia: Promoting Agricultural Investment for Stimulating Growth


In the last two decades the government showed its commitment for the enhancement of agricultural productivity through attracting investment on agriculture both from local and foreign stake holders. Legal frame works crafted and institutions are established for the provision of land for investors and licensing. In addition, incentive provision also rendered.

To attract investors the government offers incentives such as duty free importation of goods, tax holidays, access to affordable lease holds of agricultural land and access to finance from the Development Bank of Ethiopia. The Ethiopian Investment Authority in this regard played crucial role with the collaboration of other stake holders involved in agribusiness.

With regard to the provision of land, the Ministry of Agriculture and other pertinent authorities deliver their responsibilities up on their mandates. Ethiopia’s Agricultural Sector Policy and Investment Frame Work is the government strategic road map which identifies priority areas requiring investment to drive the country’s agriculture growth. So far in 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 high land parts of the country with different agro-ecology zones.

On the other hand, in the low land area sedentary farming seldom practiced. The policy stress agricultural intensification in the high land part and extensive farming which needs investment is to be practiced in the low land areas which targets foreign markets. To this purpose, the Ministry of Agriculture acquired tracks of land for local and foreign investors from regions such as Southern Nation and Nationalities and People’s Region, Oromia, Benishangul-Gumuz and Gambella.

Investors based on the agreement involved on the production of cash crops such as sugar cane, cotton, palm oil, rubber tree and bio fuels.

In their business they are provided support in terms of connecting value chains, getting consultation from agricultural research centers, processing work and exportation mechanism by regional governments and 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 underlined that the small- scale farming will take the lion share and to date it contributes a lot in supplying food to the local market and to transform the sector utilizing agricultural technology and inputs taken as a viable solution by the government.

Utilizing selected seeds and sawing in line and taking care of the crop in pre and post- harvesttime helps to enhance productivity. On the other hand, inputs such as fertilizer, pest and herbicides though they have their own demerit on the environment, 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, pest or herbs occur could provide immediate response and save the crop from destruction but as it is rain fed when climate adversity occurs, it is easily shattered with the devastating result.

Currently, the formulated policies stipulate practicing small scale irrigation and harvesting water as alternate mechanism to overcome drought and water scarcity and in some parts of the country the fruit of irrigation farming has been witnessed and scale upping the practice is essential.

As it is known, both subsistence and industrial farming in the country have played crucial role for supplying raw materials to the industries and export earnings. The government underlined expanding both agribusiness and manufacturing and the expansion of industrial parks.

It has various values. In the first place it integrate agriculture with industries and the market,create 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. There we have to understand that promoting agricultural investment can be an impetus for the expansion of agribusiness which is a sub sector of manufacturing.