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-processing and make a good fortune. 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 vulnerability 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 with 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.
Tewodros Zewdie is the Executive Director for the Ethiopian Horticulture Producers and Exporters Association. According to him, the association is deploying utmost efforts to ensure the competitiveness of Ethiopian-based horticulture exporters.
The association he has led is undertaking evidence-based policy advocacy interventions to create a better business environment for the sector operators. In doing so, various amendments are undertaken towards revising policies, proclamations, directives, regulations, among others.
So far, the association has managed to offer training exceeding 10,000 workforces of the industry on a wide spectrum of issues including compliance, crop-specific topics, biological control of pests, integrated pest management, solid and liquid waste management aimed at elevating and building the capacity of the horticulture sector operators, according to Tewodros.
Mentioning the presence of potential partners globally, he said the association has been linking Ethiopian-based growers with international buyers through business-to-business schemes, thereby executing ranges of sales agreements with buyers in Europe, the Middle East, Far East, North America, and other destinations.
Furthermore, HortiFlora Expo, which brings wide segments of Horticulture supply chain actors under one roof, has brought lots of buyers from Europe, the Middle East, Far East, US, and Canada, as well as African Countries. Besides, it has given additional impetus to members to broaden its market destination.
Recently, the GCS, in cooperation with the Ethiopian Horticulture Producers and Exporters Association (EHPEA), prepared an awareness-raising horticultural farms’ visit to media practitioners.
Addressing the gathering, Government Communication Service State Minister Selamawit Kassa mentioned that the farms visited by the media crew are the manifestation of the government’s prime attention to the sector and its unwavering support to horticulture companies. The sector yielded 344 million quintals during the past 10 months of the current fiscal year. Selamawit indicated that the performance is exceeding the plan by 26 million quintals. Compared with last year’s same period, the current performance has a 222 million quintals increment.
“The result indicates the special attention given by the government to inspire private investor’s 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.
The sector is the second largest in terms of boosting forex to the country and the opportunities in the global market. According to Tewodros, the industry kept on bringing more than half a billion USD every year.
He stated that the cost of doing business in the horticulture sector is getting expensive in many countries, and hence it is becoming a windfall opportunity for Ethiopia to lure more investment.
“Ethiopia is one of the top five producer and exporter countries in the cut flowers globally following Columbia, Ecuador, the Netherlands, and Kenya, however a lot remains to be done in fruit and vegetable. Also, Rwanda and Uganda are also on the pipeline to create favorable conditions for investors.
“We have been engaging in various tasks such as carbon and water footprint reduction, expanding investment lands of the horticulture farms to create a better enabling environment for members in the sector,” he remarked.
He also called on the government and other stakeholders to ensure sustainable peace and put consolidated efforts to unleash the potential of the country to help attract more investors in the sector.
State Minister Selamawit further noted that many investors are keen to increase their businesses and request an increased amount of foreign currency supply to purchase inputs for production and land. “From the field visit, we understood that the sector generates a significant amount of hard currency by producing flowers and vegetables on a plot of land.”
Indicating the requirement of different infrastructure including seamless logistics and power supply for efficient horticulture farming, she pointed out that 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.
Selamawit also expressed appreciation for investors’ courage and enthusiasm for the sector’s development and Ethiopia’s economic progress.
The various technologies applied in the horticulture sector can also be utilized in the Yelemat 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.
The government has given prime attention to the horticulture sector, the State Minister noted, adding that initiatives like the Green Legacy are going parallel to this with a vision of ensuring food security by planting a number of seedlings.
BY GIRMACHEW GASHAW
THE ETHIOPIAN HERALD WEDNESDAY 3 JULY 2024
