Agriculture investment opportunities in Ethiopia

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Agriculture investment opportunities in Ethiopia
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1. Introduction

• Ethiopia has huge investment potentials for
  agricultural development.
• For the past five consecutive years the
  agriculture sector was growing faster with more
  than 11 average annual growth.
• Currently investment in agriculture sector is
  found to be more attractive and profitable in
  diverse sub-sectors ranging from food products,
  industrial raw materials to bio-fuel.

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• The agriculture sector accounts for 47 of the
  GDP, provides 85 of employment and 90 of
  foreign currency earning.

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• 2. Agriculture potential of the country
• The total area of the country is about 111.5
  million ha, out of which 74.3 million ha. is
  suitable for annual and perennial crop production
  and only 15 million is under utilization.
• The irrigation potential of the country estimated
  to be around 4.3 million ha.

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• Of the total area of the country about 45 (50.2
  million hectares) is mid-hgihland and highland
  the remaining is lowland.
• The average temperature rarely exceeds 20C
  (68F). The sparsely populated lowlands typically
  have subtropical and tropical climates.
• The average annual rainfall ranges from 200 to
  2500mm.
• the agrocology is highly diversfied (18 major
  and 49 sub-agro ecological zone).

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• Major crops growing
• Food crops like maize, wheat, barley, teff,
  millet, and sorgum
• oil crops like sesame, Niger seed, rape seed,
  line seed, ground nut, safe flower and sun
  flower
• Pulse crops like soya bean, haricot bean, horse
  beans, chickpeas, lentil and field peas
• Stimulant crops like coffee and tea
• Fibre crop like cotton are the major commodities
  growing in the country.

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• commercial production of all types of Live Stock
  species, Fishery, Apiculture, Sericulture
  products is other areas of agrobusiness
• 3. Institutional arrangements
• Hence, MoARD committed and motivating foreign and
  local investors to engage in the agricultural
  sector.
• For this, agricultural investment support
  Directorate under MoARD is organized, responsible
  to provide land, comprehensive technical and
  administrative support to the users.

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4. Agricultural investment land

• Agr.investment land with an area of more than 3.7
  million ha. is delinated and nearly 1.6 ha is
  deposited in the federal land bank
• They are found in in four regional states of
  Gambella Benshangul Gumuz, SNNPR and Afar
  located in western,north western, southern and
  eastern geography of the country
• Accessible with asphalt and all weather roads
  upto the capital towns of the regions

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• Agro-ecological, soil, water potential and other
  relevant information of these lands is organized
  and is accessible to users
• Areas of suitability for major agricultural
  products like for
• food crops rice and wheat
• oil crops- sesame and soya bean
• Coffee and tea
• Cotton
• Oil palm
• Bio-fuel plants
• Livestock husbandry

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5. Information about identified
Investment Areas

• 5.1 Benshangul Gumuz
• found 700 km away from Addis Ababa. lying between
  9 30 N to 11 39 N latitude and 34 20E to
  36 30E longitude in the western part of the
  country.

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• 75 of the regions wet low land (kola), 24 mid
  altitude (weinadega) and the remaining 1 is high
  land (dega).
• mono modal rainfall patterns that start in
  April/May and ends in Septembers/October with a
  peak in August.
• The average annual rainfall is about 1116 mm.

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• Ideal for the production of high value crops
  like
• Sesame, Soybeans, Niger seed, Groundnuts, Cotton,
  Rice and Cereal crops (Sorghum, Maize, etc.)
• In the irrigable areas, fruits such as Mango,
  Banana, Papaya and Citrus
• Sugar cane is also a potential investment option
  in areas where there is ample irrigation
  potential (Beles Water Shed)
• Owing to vast area of grass land believed to have
  ample opportunities for live stock production.

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investment land in hectares Towns Wereda/District Geo. Coordinate
161,055 Mambuk Dangur 35 38 36 14E 11 02 11 44 N
327,206 Mankush Guba 35 05 36 14E 10 54 11 55 N
131,882 Debrezeit Wombera 35 10 35 57E 10 33 11 05 N
71,841 Assosa Assosa 33 07 34 27E 9 40 10 20 N
691,984 Total
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5.2 Gambela

• located between 61919 84235
  North/attitude and 330020 352228 East
  longitude, 800kms from A.A, in the western
  geography
• an area of about 3 million ha.
• 444,150 ha. is identified for investment
• The average annual rain fall ranges from
  463mm-2500mm.
• Altitude ranging from 410 to 2300 masl.

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• monthly mean max temperature ranges between 38
  42c.
• The major soil groups in the study area are
  Eutricvertisols, Eutric Fluvisols, Cambisols,
  Nitosols, and Mollic gleyso.
• The major land cover of the identified areas are
  open woodland, open wood land with scattered
  swampy and shreds grass land.

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• The most important crops produced in the proposed
  investment areas are
• Maize, Sorghum, Rice, Haricot beans, Sesame,
  Groundnuts, Millet, Safflower, Teff
• Coffee, Spices and Vegetables
• also ideal for the production of fruits, such as
  Mango and Banana

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investment land in hectares Towns Wereda/District Geo. Coordinate
132,490 Trigol Akobo 33 0020 33 3011E 7 43 13 8 1402N
385, 049 Dima Dima 34 0030 35 1147E 06 19 19 07 3253 N
101,253 Itang Itang 33 5946 34 2704E 08 01 35 8 4235 N
55,784 Pigniwedo Goge 33 5439 34 5159E 7 20 44 7 5419 N
57,400 Nginngang Jikawo 33 2745 34 815E 8 0116 8 2834 N
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investment land in hectares Towns Wereda/District Geo. Coordinate
34,540 Shentewa Jor 33 2623 34 0354E 7 20 30 8 1731 N
62,683 Metar Wantawo 33 0954 33 3018E 8 08 20 8 2804 N
444,150 total
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5.3 SNNP Regional State

• altitude 350 570 m.a.s.l.
• Average max.temp.ranges from 21C 39C,
• Average Annual rainfall ranges from 250mm
  480mm.
• Soil type is deep alluvial and fluvial soil
• The area is endowed with big rivers,flow
  throughout the year and has a gentle sloping
  surface of 1-2, which makes it very much
  suitable for developing irrigation schemes.

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investment land in hectares Towns Wereda/District Geo. Coordinate
76,409 Omorate Dasenech 35 53 36 05E 4 37 05 03 N
71,473 Kangati Gnangatom 35 44 36 11E 05 10 05 35 N
16,292 Dimake Hamar 36 12 36 17E 05 11 05 23 N
16,451 Gazar Southern Ari 36 21 36 39E 05 54 06 11
180,625 total
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5.4 Afar Regional state

• located between 39 38 3.48 42 27 28.8
  North latitude and 8 50 28.68 14 34
  51.24East longitude, 750kms from A.A, in the
  eastern and eastern north of the country.
• a total area of about 9.6million hectares.
• 409,678 ha. land suitable for agriculture
  business is identified

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Potential area for investment in hectares Wereda/District Geo. Coordinates
33,694 Asayta 41 15 - 41 37 E 11 0 - 11 55 N
131,014 Dubti 40 26 - 41 29 E 11 15 - 12 14 N
35,896 Afambo 41 31 - 41 48 E 11 02 - 11 40 N
88,337 Mille 40 25 - 41 22 E 11 9 - 11 43.2 N
14,124 Gewane 40 14 - 40 43 E 9 47 - 10 29 32N
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Potential land for investment in hectares Wereda/District Geo. Coordinates
23,168 Amibara 40 5 - 40 27 E 8 O 58 - 9 O 49 N
14,484 Awash Fentale 39 O 48 - 40 O 11 E 8 O 49- 9 O 17 N
55,003 Dalifage 40 O 08 - 40 O 34 E 10 O 18 - 10 O 41 N
13,958 Dewe 40 O 04 - 40 O 30 E 10 O 35 - 10 O 51 N
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6. Pre conditions expected from
investors

• Investment License
• Valid pass port for the foreigners
• Investment permit (for foreigners)
• Company profile, past experience of the
  investors.

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• memorandum of association and memorandum of
  articles
• Power of attorney of the company for the
  foreigners.
• Shall prepare and submit appropriate business
  plan.
• Shall sign a contract agreement before starting
  any developmental activities

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7. Policies and Incentives packages

• Ethiopia offers one of the most attractive
  policies and incentives packages (reference
  investment Promotion of (Act 375/1996, Act
  249/93, 543/2007 labor act 466/1997 and 456/1997
  land administration and land use proclamation).

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• Private investors shall have a right to acquire
  land, to use on, by rent from the government on
  the agreement to be made.
• Landholder may transfer permanently his holding
  right
• Any investor who rented rural land in lease may
  secure as mortgage right to use his land or an
  asset produced on it, or both for effected period
  of the lease.

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• The Investor can mobilize its laborer from region
  to region with out any restriction with
  efficient, economic manner and standard benefit
  of the workers.
• investors are allowed introducing or employing
  scientists and technicians in case of local
  unavailability

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• income tax exemption from 2-5 years depending up
  on the area of investment, the volume of export
  and the location in which the investment is
  undertaken.
• Income derived from an expansion or upgrading of
  an existing agricultural enterprise is exempted
  from income tax for a period of two years, if it
  exports at least 50 of its products and
  increases, in value, its production by 25.

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• the government gives 2 to 5 years land rent
  payment grace period based on the commercial crop
  harvest period, which gives economic yield
• Business enterprises that suffer losses during
  the tax holiday period can carry forward such
  losses for half of the income tax exemption
  period, after the expiry of such period.

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• A 100 percent exemption from the payment of
  import customs duty and other taxes levied on
  imports is granted to goods and construction
  materials necessary to establish a new enterprise
  or for the expansion or upgrading
• as well as, spare parts worth up to 15 percent of
  the value of the imported capital goods
• These incentives may be transferred to investors
  enjoying similar privileges

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• Exemptions from customs duties or other taxes
  levied on imports are granted for raw materials
  and packing materials necessary for the
  production of export goods.
• Taxes and duties paid are drawn back at the time
  of exports of finished products.
• The voucher system and bonded manufacturing
  warehouse facilities are also in place.

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• All goods and services destined for export are
  exempted from any export and other taxes levied
  on exports.
• Concerning the Credit Policy of the government,
  the project is accepted by the Ethiopian
  Development Bank, if the investor secured
  (deposit) 30 of the investment (In cash) the
  Bank gives up to 70 loan.

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• Projects under this category include live
  animals, horticulture, horticulture and
  floriculture crops, cotton and other foreign
  currency generating projects.

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• Borrowers to obtain financing for expansion are
  required to provide an initial equity
  contribution of 30 of the total required
  expansion capital.
• This can be in form of cash or in form of the
  projects assets
• The Banks gives its clients a maximum grace
  period can not exceed 3 years.

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• Investment Guarantee
• Capital repatriation and remittance of dividends
  and interest is guaranteed to foreign investors
  under the investment proclamation.

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• Other Guarantees
• Ethiopia is a member of the World Bank affiliated
  Multilateral Investment Guarantee Agency /MIGA/
  which issues guarantees to investors
  (expropriation)
• Moreover, Ethiopia is at any time ready to
  conclude bilateral investment promotion and
  protection agreements with any country.
• Ethiopia has also signed the World Bank treaty,
  ''the Convention on Settlement of Investment
  Disputes between States and nationals of other
  states /ICSID/,

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• Thank you !!