Ethiopia's Economic Climate

Investment Opportunities In Agriculture & Agribusiness

Livestock Development

The country has numerous commercial cattle breeds, extensive land for ranching and a proven export potential for live animals and livestock products. The Horn of Africa is already a major supplier of such products to Middle Eastern markets. Private investors are highly encouraged to participate in the areas of commercial breeding, production and processing of meat, milk, eggs and animal feed.

Fisheries

Ethiopia's extensive inland waterways and lakes contain substantial proven reserves fish and other aquatic resources. The potential annual fresh-water fish production is estimated at about 45,O00tons, of which only 20% is at present being exploited. The development of this sector is currently constrained by lack of cold storage and transport facilities, poor fishing equipment and inadequate processing capacity.

Bee-keeping and Apiculture

The flora of Ethiopia is very heterogeneous. It is estimated to contain 7,000 species of higher plants of which about 12% are indigenous to Ethiopia. There are about 10 million bee colonies and over 800 identified honey source plants in the country. Although smallholder farmers use traditional beehives, the annual honey and bee wax production is estimated at 24,700 tons and 3,200tons, respectively. More than 90% of honey produced is used for domestic consumption. Ethiopia is the largest honey producing country in Africa, and the fourth bee wax producing country in the world after China, Mexico and Turkey. Present studies show that, under modern management, the traditional yield of 5kg of honey in one harvesting season can be improved to 15-20kg. Such vast and untapped potential suggests that apiculture provides opportunities for substantial new investments and vastly increased commercialization.

Commercial Forestry

At the turn of this century the forest cover of Ethiopia was over 40%. However, forest resources are being depleted rapidly. The deforestation rate is estimated to be about 175,OOOha per annum. The most recent estimations indicate that only 3.6% of Ethiopia's land area now has forest cover. An estimated three million hectares of natural forest presently remains in 587 identified zones. These have now been designated National Forest Priority Areas (NFPA). Of these, 13 areas are currently administered under integrated management systems, with about 80,OOOha of commercial forest having been established for limited, sustainable exploitation. To reverse the dangerous trend of current deforestation and at the same time maximize the use of resources, undertaking a sound forest development program that includes private investors has become imperative.

Potential activities for private investors in this domain include:

• The production and marketing of gum and incense;
• Commercial plantation, e.g. Timber;
• The production of Neem trees and Pyrithrium as sources of raw materials for plant protection chemicals;
• The establishment of integrated forest-based industries such as pulp and paper, particle board and chipwood production, based on plantations of eucalyptus, pine and incense; and
• The establishment of rubber plantations and the production of ornamental tree seedlings and shrubs.

Agri-Business: Fertilizers, Agro-chemicals, Farm Machinery and Implements

Recently a growing number of farmers in Ethiopia have had access to fertilizers; total consumption reached 251,000 tons in 1996. Yet at present, the average fertilizer use is estimated at just 9 kg/ha and only a third of cultivated land (2.8 million hectares) is treated with even these low applications of fertilizer. It is estimated that currently only 20% of Ethiopia's farmers have access to fertilizers.

At present Ethiopian does not produce mineral fertilizers. However, some initiatives are being taken to produce these chemicals based on the country's natural resources. To this end, a technical and economic feasibility study to construct a single super phosphate (SSP) plant, (20% P2 )%) and an identification study for a coal-phosphate fertilizer complex project have both been conducted. The Calub Gas Project, currently in the pipeline for privatization, is also expected to produce considerable amounts of fertilizer.

Agricultural pests are always a serious threat to crop production in Ethiopia. Although no systematic loss assessment studies have been done, the annual pre and post-harvest losses are estimated to be at least 30%, equivalent to two million tons of grain. At present, agro-chemical application is the best available pest control mechanism in the country. Hence potential investors are welcome to participate in the production of different kinds of plant protection chemicals and equipment, for which there is likely to be an increased demand as agricultural growth continues.

<- Previous - Next ->