Committing the private sector to sustainable, agriculture-led industrialisation

Representing 41% of the GDP and employing 85% of the population, agriculture is the driving engine of the transformation of Ethiopia’s economy. With nearly 73 million hectares of cultivatable land, the government is focusing on agriculture-led industrialisation of the country, the economy of which is growing at a rate of 8% per annum.

Based on the experience, lessons and progress attained in recent years, the Growth and Transformation Plan 2010-2015 is aiming to double outputs from the agriculture sector and to shift to an industrialised economy within five to ten years. Minister of Agriculture M Tefera Derbew adds that he “wants to increase the involvement of the private sector” to achieve these ambitious but feasible objectives.

To reach that, the country must fulfil its huge potential in terms of expansion of cultivatable land. The government has readied 3.6 million hectares of land for large-scale commercial farming. The land is fertile and there is enough rainfall to produce many types of agro-commodities. Developing this land would allow production of huge amounts of agricultural raw materials to support the booming industrial sector, but also to support the export strategy of the government.

His Excellency Wondirad Mandefro, State Minister of Agriculture tells us that productivity is the real challenge: “Our productivity level is still very low when it comes to aggregate productivity per hectare – it is reaching up to 1.8 tons per hectare, which is still very low compared to high-yield crops like wheat, where productivity is around 6 to 7 tons'. HE Wondirad believes the solution to this is the education and participation of farmers and their “uptake of new technology, based on the best level of productivity and best practices.” The government wants to see an increase of maize production to 11 tons per hectare.

Other investment opportunities also exist in the areas of horticulture, floriculture, agro processing and livestock for meat and leather industry. The floriculture sector is growing particularly quickly. Starting from nothing, the sector is now the second largest exporter of flowers in Africa, and Minister Derbew envisions becoming leader in flower production and export.

Attracting foreign investors is key to develop agriculture in a sustainable way. “We have got huge potential in the agriculture sector, in the industry sector, we will no let investors down if they come and invest in Ethiopia,” said Mr Derbew. With available land, tax-free and duty-free privileges, investors will benefit from cheap labour costs and a stable and peaceful environment. This is crucial to develop the green economy strategy in Ethiopia, the first of its kind in Africa. The investment culture is changing, thanks to the commitment of producers implementing capacity building and ecological solutions. The idea behind this is to create a whole value chain, both beneficial for domestic opportunities and exports.

The government has set an ambitious and comprehensive strategy to develop the country based on agriculture-led industrialisation. Part of it is the huge hydroelectric dam, the Grand Renaissance Dam, which will support the vision of becoming a middle-income country in the coming ten years.