Ethiopia is the best place for horticulture businesses

Ethiopia is a country blessed with various natural resources. Investors who recognize this are now flocking to this East African country to invest in agro-forestry and earn more dollars. Today, both local and international investors are exporting their products to foreign countries.

Ethiopia boasts a suitable climate, proximity to Middle East and EU markets, cheap and abundant labor, and a reliable transport system that supports the growth of the floriculture industry. Like many other developing nations, Ethiopia is pursuing rapid economic growth, diversifying its export base, and earning foreign exchange to reduce exposure to price volatility in international markets.

The first floriculture companies emerged in the early 1990s, and with government support, Ethiopia has attracted foreign investors in recent years to export cut flowers, mainly to European markets. Investors are enticed by an improved investment code, a five-year tax holiday, duty-free imports of machinery, easy access to bank loans, and readily trainable labor. Moreover, this development has created employment opportunities for unemployed citizens, with women accounting for 70 percent of the workforce in rural areas.

The flower subsector of the horticulture industry in Ethiopia is only 20 years old but has quickly become one of the top four countries in supplying quality flowers to the world, ranking second in Africa after Kenya. The conducive agro-ecology and topography of Ethiopia make it an attractive destination for investors in agro-forestry and agro-processing. The country’s railway infrastructure connecting Djibouti and Ethiopian Airlines’ direct flights to market destinations, especially European countries, provides efficient logistics at reasonable costs.

The government’s incentives, such as five to seven years of tax relief and duty-free imports of capital goods, have encouraged more investment in the flower sector. Over the past years, flower exports have shown an annual growth rate of 9.8 percent, with increasing market destinations leading to better selling prices and a reliable source of foreign currency. However, the flower sector’s growth area is limited to 1,700 hectares of land, and further investment could significantly alleviate foreign currency shortages.

While Kenya has been a leader in exporting cut flowers since the 1990s, Ethiopia is quickly catching up, surpassing countries like South Africa and Mozambique. European markets are the primary destination for Ethiopian flowers, with 76 percent of exports going to Europe, followed by Saudi Arabia, Kuwait, and the United Arab Emirates.

The Aalsmeer Flower Auction in the Netherlands, the largest in the world, plays a crucial role in distributing Ethiopian flowers globally. Ethiopian flowers exported to this market are bought by European wholesalers and distributed to various countries.

In nine months, Ethiopia earned more than $390 million from the flower export trade in the past ten months, with the Netherlands being the primary destination.

The horticultural sector in Ethiopia has created around 200,000 jobs, with the flower subsector contributing 80 percent of new employment opportunities. Ethiopia’s progress in becoming the fourth-largest flower exporter in the world is remarkable, considering its humble beginnings two decades ago.

To enhance competitiveness and quality, Ethiopia is adopting a consolidation system and implementing wetland management, hydroponic irrigation, and integrated pest management systems. These efforts have improved the quality of Ethiopian flowers and positioned the country as a strong competitor in the global market.

The leadership’s continued support for horticulture farming is due to the promising success witnessed in the area. As a result, the horticulture subsector yielded 344 million quintals during the past 10 months of the current fiscal year, exceeding the plan by 26 million quintals. Compared with the same period last year, the current performance shows a 222 million quintal increment.

The result indicates the special attention given by the government to inspire private investors’ involvement in the sector. This shows the possibility of maximizing production by providing increased assistance to businesses.

Previously, there were various grievances related to service provision, including the provision of land, which remains a concern for investors. Many investors are keen to increase their businesses and request an increased amount of foreign currency supply to purchase inputs for production and land. With the requirement of different infrastructure, including seamless logistics and power supply, for efficient horticulture farming, the government has shown special concern for the sector by providing attractive incentives.

One of the business community’s primary grievances was the delay of horticulture products in ports, which has been reduced from 12 days to 9, and efforts are yet underway to further minimize it.

The various technologies applied in the horticulture sector can also be utilized in the Yelimat Tirufat projects, which are implemented in every household with a small plot of land. Indeed, the horticulture sector is effective in utilizing a small number of people and a small plot of land.

By and large, the government has given prime attention to the horticulture sector; initiatives like the Green Legacy are going parallel to this with a vision of ensuring food security by planting a number of seedlings. This all tells us that Ethiopia is the best alternative for the horticulture business

BY GIRMACHEW GASHAW

THE ETHIOPIAN HERALD FRIDAY 21 JUNE 2024

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