African land grab: what Indian companies do in Ethiopia is what they are not allowed to do in Inida Posted by Keffyalew Gebremedhin

October 20th, 2011 Print Print Email Email

The question of land grab in Ethiopia and indeed in other developing countries would remain a topic of national and international conversations. The Ethiopian government is fully aware of this and has been fighting to influence its direction, although unsuccessfully to date. What it is doing is to deny traction to the criticisms against its policy of doling out Ethiopian lands to foreign investors.

What it should have done, which is right and proper is to begin to see reasonings by all sides in their proper light, especially the concerns of Ethiopian citizens. It has miserably failed to engage and convince citizens about the present and long-term implications of farmland grabbing. To date, we know that 3.6 million hectares have been put on offer for chicken feed to international investors. Seventy percent of foreign investors in agricultural lands in Ethiopia today are Indians, some of them such as Karuturi, who have shifted gears to tendering Ethiopian lands piece by piece to Indians specifically from the southern part of the country. The indication is that this would give rise to serious indignation by citizens at home and abroad.

What drives the government into this straightjacket is the hunger for power, not the national interests of Ethiopia. This has been ably dealt with by Ethiopia’s foremost economists and specialist in land tenure Prof. Dessalegn Rahmato in his Land to Investors: Large-scale land transfers in Ethiopia, 2011. Thus, he sees the rational for the government’s stubborn direction by its desire to redefine the agrarian structure of the country as well as the future course of agricultural production in Ethiopia in a manner that will increasingly marginalize the rural population to make them dependent on its handouts in return for their political support.

In the process, Prof. Rahmato says, this has alienated land from those who have customary rights and rights of longstanding usage, and transferred it, without consultation or consent, to investors from outside the communities concerned as well as from outside the country. For this, government has the advantage and possibilities because of its statutory right of ownership of land. In Ethiopia, by law the state has juridical ownership of the land and in contrast to peasant farmers and pastoralists that only have right of use. Whether government likes the interpretation or implications of this, it has made the Ethiopian state responsible for all the land grabbing in the country.

The question now is why does it have to go through this irresponsible path, already the rigmarole of which has caused its image within the populace and on the international media irreparable harm as unfeeling and uncaring for its own citizens. Because power has been TPLF/EPRDF’s goal. It enables it, according to Prof. Rahmato, to concentrate all authority in the hands of its public agents and local administrators, which ensures TPLF/EPRDF’s permanence in power.

Therefore, the government’s fierce defenses of the land grab policy have been consciously designed to consolidate its powers in rural Ethiopia, where 85 percent of the population is domiciled and is dependent on small-scale agriculture and pastoralism. That is why government reacts strongly with senseless denials of the dangers arising from the land grab it has been exercising and promoting. Often, its defenses are fired from the top by the prime minister and his deputy down to others in the lowest rungs of power within the party and administration–if at all they are distinct as they ought to be.

Echoing that tone, the very same responses were recently regurgitated by the public relations officer of the ministry of agriculture Wondimu Flate. As if to persuade environmentalists, he underlined, “Plots are transferred only after making sure that these and other procedures including environmental impact assessments are conducted.”

In terms of technological inputs, especially fertilizers and their distribution, there is a disheartening report from the Ethiopian Central Statistics Agency (CSA). According to the Agency’s data from 2010, Ethiopia used 1.2 million tons of fertilizers. Of this amount, 433,515 tons was distributed in Tigray alone. Amhara and Oromia, the regions that have the most lands and agricultural activities received a total of 347,430 tons.

In addition, on the potentials of land grab for employment, I refer Mr. Flate to the above-mentioned World Bank report that this webpage had analysed in an article entitled…of 23 August 2011. It clearly concludes that there is nothing promising about land grabs in terms of employment creation, as shown here:

“Given the central nature of asset and employment generation through planned investments, the level and recording of information on planned (temporary or permanent) employment and physical investment is surprisingly limited. The patchy data that are available suggest that investments create far fewer jobs than are often expected (or promised, as discussed later) and that their capital intensity varies widely. For example, projected job creation ranges from less than 0.01 jobs/ha (for a 10,000 ha maize plantation) to 0.351 jobs/ha (for an outgrower-based sugarcane plantation) in the Democratic Republic of Congo. Expected job creation in Ethiopia is similarly limited, with an average of 0.005 jobs/ha for cases where figures are given…Case studies point to high expectations in employment generation, which, at least in some cases, do not seem to be commensurate with the investment or the qualifications of the local populace. The extent to which assets are provided or local people gain access to knowledge and technology varies widely across investments. Most successful investments provide social services and encouragement for local entrepreneurship. As many of the projects considered began only recently, few positive impacts have yet materialized. Careful future monitoring
as well as attention to the time profile of benefits and the distribution of risks will be important.”

For Prof. Ghosh, what is ignored in this unholy alliance between the government of Ethiopia and the Indian companies is water use. This refers to the quality of the agreement the Ethiopian government has signed with the companies. Ghosh revealed that in Ethiopia Indian companies are given agricultural lands carte blanche, since the agreements do not place any restrictions on both land and water use. For instance, this has enabled investing companies to do whatever they liked. For instance, the companies have ventured into opening canals and turning the direction of rivers.

This has already encroached in multiple ways on traditional rights of the indigenous populations, that for inexplicable reason have already been betrayed by their own government. In that, this corporate pattern of food production has already begun showing its dangerous features to the local people, which in the future is likely to affect the whole country. In that sense, the Indian professor says, land grab is a misnomer since what in reality it represents is a rush to grab surface and ground water and mineral inside the lands. This is consistent with historical experiences.

What are her fears and concerns for the future? As a concerned Indian, she opined, all Indians should be worried for these poor countries not only as a matter of international solidarity. But also because, if Indian companies are allowed to behave in such exploitative manner as all previous generations of colonialists had done toward local peoples and poor countries, they should also be concerned that there is no reason these investors and their corporations could not behave towards Indian citizens in the same manner in India itself.

  1. Dawi
    | #1

    This article is a re-hash of what Prof. Al wrote the other day. None of them are reading the Contractual Agreement available to come up with real analysis for Ethiopians.

    By re- posting non-development (green) advocates opinion again and again don’t get us any where or bring us a new idea. There is a bias by the “greens” to keep us backward so that they come and take pictures of us in our natural settings. However, we need to solve our problems of food and sub-standard livelihood; commercial farming kick started by the Indian & other investors shall be a great catalyst. We have to be able to use our resources in all kind of ways to develop and be a middle income.

    I know the “land grab” is controversial but attracting foreign direct investment by itself is very competitive among developing countries. Listening to Zemedeneh Negatu from Ernst & Young Ethiopia, it is not easy to attract mega investors; a lot of work is involved within a limited time frame. Otherwise some other hungry country will grab the investor. It is a cut throat business and off course, it has to be give and take.

    If the TPLF Dictatorship was able to attract few, it’s because dictatorship in general define and establish a pro-investment legal framework insuring economic liberties without dealing issues a Democracy encounters. Meaning no opposition parties to make serious compromises with. China’s command in this arena was able to attract Foreign Investment that turned 400 million citizens from poverty to middle income. It may surprise you but the Lion’s share of economic miracles happened under dictatorship.

    The economic Tigers of the 1980′s were the dictatorship of S Korea, Singapore and Taiwan. In the 70th was the military government of Brazil. Another is Pinochet of Chile. You know it’s funny but Taiwan was equal to Kenya in 1950.

    Having said that, in the following Agreement article 3 (Writes of the Lease) with Karuturi gives the government the option to cancel the contract within six months if that is what is desired. So what is complicated about this lease? May be the Keffyalew Gebremedhin
    should elaborate once and for all so that we all understand it.

    3.7 Terminate the land lease agreement subject to at least 6 months prior written notice.

  2. Sheger
    | #2

    16 birr is probably good for brake fast and you might give lunch and dinner to one some how not to all famiily but no matter what, we don’t live to eat, we eat to live. Don’t do some thing that you don’t want other to do to you.

  3. Dawi
    | #3

    Sheger said:

    “16 birr is probably good for brake fast and you might give lunch and dinner to one some how not to all famiily but no matter what, we don’t live to eat, we eat to live. Don’t do some thing that you don’t want other to do to you.”

    Undervalued currency makes spending power weak however, this would encourage to purchase locally produced stuff and discourages import. Folks would be gardening, growing local vegetables and fruits. Local farmers will produce more food because of the demand for local food in Addis other importing cities will grow.

    It makes the country a welcoming place for foreign investments, which helps create jobs locally. Eventually the country would have a trade surplus by exporting stuff. I know of one Ethiopian American who just bought a Condo in Addis taking advantage of low currency there. She sends money every 3 months as payment by working as a janitor; she wouldn’t have done it otherwise.

    Looking the issue from US, it is more expensive to buy local goods than China or Ethiopia made goods. Given the dollar is strong Americans would import more from China and hence this unfortunately contributes to the high Trade Deficit.

    Why Does China Wish to Undervalue the Yuan?

    Because – China’s engine of growth is exports. The lower the value of the Yuan, the better it is for China’s exporters.

    I think the idea of the Meles authoritarian government is to get the Chinese results.

    What other alternative example can bring same result is the question some of you need to answer. If we don’t have a better alternative what is the point?

  4. Mekuria
    | #4

    The ongoing land grab is the worst deal Ethiopian government has ever made with other countries and foreign companies. The opposition against land grab is not about opposing Foreign Direct Investment(FDI), hiding behind radical environmentalists. For that matter all FDI projects are not good. Countries need to evaluate FDI schemes from economic and non-economic perspective. Look at how countries like China and India strictly evaluate the FDI schemes that try to enter their countries. They reject a large chunk of the FDI if they see them as bad for their countries long term interests.

    If one believes giving Ethiopia’s land to foreigners for the lease of 100 years at dirty cheap price is proper and beneficial FDI, he/she should have his/her head examined. Or else land grab advocates are ignorant of the FDI process in other countries. Simply put, the current land grab is not only unwise as an economic investment and a way to attract FDI, it will also create national security problem down the road. We can do better with our fertile land than giving it away.

  5. Dawi
    | #5

    Mekuria says:

    “..For that matter all FDI projects are not good. Countries need to evaluate FDI schemes from economic and non-economic perspective…”

    I am saying this FDI is good. The country doesn’t have the money to develop the land, it gets food aid year in and year out from donor nations. It decided to lease its land by giving attractive rates with a guarantee the tenant develops it in a short time. That brought Karaturi and others to invest hundreds of millions .

    If the country decides to cancel the lease it can do it by giving the tenant 6 months time. I imagine it pays compensation for the tenant. That is only fair however, I will say it again Karaturi must be stupid to sign such a deal where it can be kicked out of the country with a 6 months notice.

    If you have read the contract prove me wrong; I like to know where I am wrong please.

    “…We can do better with our fertile land than giving it away…”

    What give away you are leasing it. You had the land for the last 3,000 years didn’t you?

    What do you have to show for it ?

    The fact is no one is giving developing nations loans to develop farm lands, therefore, you lease some of it. What is wrong with that? We know they don’t give you loans for hydro power most of the time either for some “environmental” reasons? please!!

    The government has the option to cancel the lease with a 6 month notice at any time it wants. That can be for any reason. What else do you want?

    You logic is telling us to put our money under our mattresses that may be fine for you but, i prefer to put it in the bank. Yes it is risky but there is a reward. Leasing your land IMO, is the same thing. As you are able to take your money out of the bank you can kick the tenant out of your land when you’re ready to use it. In the mean time, we get farming skill transfer, rent and food. Karaturi has said he will supply the local market first & the surplus will be exported. The cost of food produced in the country is bound to be cheaper any time.

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