Extract

With an area of 1.14 million square kilometers, a mean annual average temperature of 20 degrees Celsius, seasonal rainfall, 12 major river basins, 11 lakes, 9 saline lakes, 4 crater lakes, two-thirds of its total land area arable, and only a small portion of its irrigable land developed so far, Ethiopia has become one of the most attractive destinations for large-scale foreign direct investment (FDI) in commercial farming. FDI inflows in the agricultural sector currently stand at 32 percent of the overall FDI in the country. Agriculture contributes to 85 percent of rural employment, 43 percent of gross domestic product (GDP) and 86 percent of the country’s foreign currency earning. Having struggled with different unsuccessful agricultural policies over the years, Ethiopia has recently made a major shift away from small-scale labor-intensive production towards large-scale commercial farms with the introduction of the Plan for Accelerated and Sustainable Development to End Poverty (PASDEP) and the Growth and Transformation Plan (GTP). These two plans are expected to enhance productivity in agriculture by increasing the participation of foreign investors in the sector and thereby boost the country’s economic development and FDI inflow, as well as create new seeds, better jobs, schools, clinics, roads and local food sufficiency.