Ethiopia: a magnet for investment in agriculture

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Ethiopia: a magnet for investment in agriculture

Ethiopia Commodity Exchange

Ethiopian Commodity Exchange

For those of us old enough to remember the devastating Ethiopian famines of the 1970s and 80s, and pop stars singing “We Are the World,” the idea that Ethiopia can not only feed itself but may also become a significant food exporter may come as a surprise. But it turns out that the Ethiopian famines, like most famines, were man-made, caused by neglect or deliberate policy choices.

Ethiopia’s government has made agriculture the centerpiece of its development strategy, and its investment (17% of the national budget in 2015) in policies, market mechanisms, extension services, and technology via its Agricultural Transformation Agency is paying off. The country has attracted large investments in commercial agriculture, principally food crops like rice, from Indian, Chinese, Saudi, Israeli, and Pakistani companies. In addition, increased agricultural productivity in many countries, including the U.S. and Canada, has been linked by many political economists (including Alexander Hamilton) to increased productivity in non-agricultural sectors, and Ethiopia appears to be betting on this link to spur its industrialization.

A recent article “Ethiopia: Fixing Agriculture,” in the UN’s African Renewal magazine, describes this transformation in detail.

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Managing Partner of Koios Associates, an advisory firm specialized in doing business in emerging and frontier economies. Over 25 years of experience in more than 60 countries in Africa, Asia, the Caribbean, Europe, North America, and the Middle East.

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