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July 29, 2009

Ethiopia sets aside land for foreign investors

by Tsegaye Tadesse

Ethiopia has marked out 1.6 million hectares of land for investors willing to develop commercial farms, an investment official said on Wednesday.

Companies from Gulf and east Asian nations have rushed to buy up farmland around the world to secure food supplies. Africa has become a favourite target, despite concerns about the effects of investment on host countries.

Although Ethiopia has rivers and rich soil, it features among the drought-hit and chronically food deficit nations, with up to 4.9 million people dependent on food aid.

"The government has verified and delineated 1.6 million hectares of virgin land suitable for large-scale commercial farming in different parts of the country," Esayas Kebede, Director of the recently formed Agricultural Investment Support told Reuters.

Some 8,420 foreign and local investors have already received licenses for commercial farms, but only 2,000 of them are known to have started work on their projects, he said.

"The contribution to the country's economy , of those companies which began work is yet to be quantified. They are just beginning," he said.

Foreign firms that have started large scale commercial farming include Indian companies in sugar cane, tea and cotton production, a Saudi Arabian company in palm oil plantation and Chinese companies in sesame seeds, Esayas said.

Esayas said his country enjoyed balmy weather, unlimited water resources and infrastructure such as roads, power and telephone lines.

The government considered inviting those with technological knowledge and finances to develop its resources was an effective way to eliminate hunger and poverty.

"Production in quality and quantity of food and other exportable commodities are our topmost priority," he said.

The land set aside was in Benishangul - Gumuz and Gambella in western Ethiopia and in the Southern Nations, Nationalities and People's region and Afar.

The land can be used to grow coffee, cotton, sesame, soya beans, forage crops, sugar cane, palm oil and horticulture, Esayas said.

A further 800,000 hectares in Oromia region and 300,000 in the Amhara region were also in the process of being parcelled out for commercial farming, he added.

He said the government offered incentives, like financing, to those willing to start commercial farms in Ethiopia.

"Investors who qualify have the opportunity to receive loans from local banks up to 70 percent of their capital investment as well as attractive incentives and tax holidays," he said.

Ethiopia, which is Africa's biggest coffee producer is also the world's fourth largest exporter of sesame seeds.

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