VZCZCXRO8589
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHDS #0247/01 0390620
ZNR UUUUU ZZH
R 080620Z FEB 10
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 7672
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUEPADJ/CJTF HOA
RUEAIIA/CIA WASHINGTON DC
RUEKDIA/DIA WASHINGTON DC
RUEWMFD/HQ USAFRICOM STUTTGART GE
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 ADDIS ABABA 000247 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/E JWIEGERT; AF/EPS - ABREITER AND GMALLORY; 
EEB/IFD/OMA - JWINKLER AND EEB/CBA - DWINSTEAD; EEB/TPP/BTA 
DEPARTMENT PASS TO USTR FOR PATRICK COLEMAN, BARBARA GRYNIEWWICZ 
DEPT OF COMMERCE FOR ITA MARIA RIVERO 
DEPT OF TREASURY FOR REBECCA KLEIN 
USAID FOR AFR/EA - HELLYER, DALTON, AFR/SD - CURTIS; EGAT - JHESTER, 
JYASMAN AND GMYERS 
 
E.O. 12958: N/A 
TAGS: EAGR EINV ETRD ECON EFIN BEXP AF ET
SUBJECT: FOREIGN INVESTORS GRAB UP MORE LAND IN ETHIOPIA 
 
REF:  09 ADDIS ABABA 2900 
 
ADDIS ABAB 00000247  001.2 OF 002 
 
 
SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION. 
 
¶1. (SBU) SUMMARY:  The Government of Ethiopia's (GoE) recent high 
profile land deals and shift in agricultural policy (reftel) have 
attracted additional foreign investors to the agricultural and 
tourism sectors.  In January, Egyptian Prime Minster Dr. Ahmed Nazif 
led a large delegation to Ethiopia to announce the National Bank of 
Egypt's lease of 49,400 acres of land to grow cereals.  Press 
reports indicated that these cereals are headed for export to Egypt. 
 Former Nigerian President Olusegun Obasanjo and Djiboutian 
President Ismael Omar Guelleh separately leased land plots to build 
hotels outside of Addis Ababa, while Guelleh already leases a 7,400 
acre farm that started exporting wheat back to Djibouti last year. 
Finally, the South African private equity investment fund Agri-Vie 
invested USD 3.5 million in a company that is growing and processing 
various fruits to manufacture juice products.  These juice products 
will primarily target the European and the Middle Eastern markets as 
reported by the company to Econoff.  Despite the benefits of 
increased foreign investment, political opposition members and 
international critics remain skeptical about the GoE's motives and 
the land policy's affect on poor, rural Ethiopians.   End Summary. 
 
 
Egyptians Eye Investment Opportunities 
-------------------------------------- 
 
¶2. (U) The Egyptian Prime Minister, Dr. Ahmed Nazif, led the latest 
charge of foreign agricultural investment during a January visit to 
Ethiopia.  Nazif, alongside his delegation of several cabinet 
ministers and 26 agricultural companies, announced that the 
state-owned National Bank of Egypt plans to invest USD 40 million in 
the lease of 49,400 acres of land in the Afar region to grow 
cereals.  Press reports stated that these cereals would be exported 
to Egypt despite the GoE's 2007 "temporary" export ban on all 
cereals that has never been formally lifted.  (Note: It appears 
Saudi, Djiboutian, and now Egyptian investors have somehow bypassed 
this ban, while other investors informed Econoff that they have not 
been allowed to export cereal grains (reftel).  End Note.)  The bank 
is also poised to open an office in Ethiopia to serve existing and 
new Egyptian projects and plans to offer credit of USD 14.6 million 
to six Ethiopian banks according to local press reports. (Note: the 
domestic banking sector is closed to foreign banks; however, other 
foreign banks such as Germany's Commerzbank do have offices in 
Ethiopia to facilitate relations with Ethiopian banks.  It is 
unclear how the National Bank of Egypt could offer credit in 
Ethiopia in evident violation of banking and financial regulations. 
End Note.)  Beyond the focus on agriculture, Nazif signed a 
memorandum of understanding with GoE Prime Minister Meles Zenawi to 
form an Ethio-Egypt Council of Commerce.  Meles said during the 
signing ceremony that relations between Ethiopia and Egypt had 
evolved from distrust towards friendly cooperation.  Other areas of 
Egyptian business interest included livestock, drug manufacturing, 
and hydroelectric power. 
 
Former Nigerian President and Djiboutian President Also Invest 
--------------------------------------------- ------ 
 
¶3. (U) Another foreign VIP seen around town and looking for land was 
the former president of Nigeria, Olusegun Obasanjo.  Obasanjo 
recently leased about five acres of land near Debrezeit, Oromia 
region (about 50 kilometers east of Addis Ababa) to develop a hotel 
and tourist destination.  In addition, current Djiboutian President 
Ismael Omar Guelleh recently acquired the right to develop about 2.5 
acres of lakeside land in Debrezeit to build a hotel.  This 
acquisition added to the 7,400 acres of farmland Guelleh leased last 
year in Bale, Oromia region.  According to post's conversations with 
local agricultural business investors and press reports, this farm 
has already harvested wheat and other cereals for export to 
Djibouti. 
 
Private Equity Fund Invests in Fruit Juice Farm 
--------------------------------------------- -- 
 
 
ADDIS ABAB 00000247  002.2 OF 002 
 
 
¶4. (U) South African private equity fund Agri-Vie has also chosen to 
invest in Ethiopia's agricultural sector.  The fund invested USD 3.5 
million in africaJUICE, a company already in the process of 
establishing fruit production and processing operations when Econoff 
visited its 3,000 acre operation last year.  The Dutch and British 
company representatives reported to Econoff that it plans to target 
the juice markets in Europe and the Middle East.  The company 
purchased this farm (not the land) from the GoE and converted it to 
produce yellow passion fruit, mango, and papaya. 
 
Critics Concerned About Rural Population 
---------------------------------------- 
 
¶5. (U) As more reports of foreign land leases in Ethiopia surface, 
the GoE continues to insist local farmers will not be adversely 
affected by its land deals.  Regarding agricultural investment, the 
GoE views foreign investor involvement as key to the country's move 
from subsistence to commercial farming (reftel).  On top of any 
potential damage to local farmers, international and political 
opposition party critics cite concerns over exporting food from a 
country that relies so heavily on imported food aid and the 
perceived low wages that foreign investors pay its employees. 
Merara Gudina, Chairman of the Ethiopian Federal Democratic Unity 
Forum (a coalition of political opposition parties), accused the GoE 
of using its land "giveaway" policy to hold on to power and to buy 
diplomatic support.  U.S.-based GoE opposition movement Ginbot 7 
stated in a January editorial that the GoE needs to change its 
communist land policy and empower local farmers, who have the 
potential to produce a marketable surplus.  The editorial further 
noted that any land deal that has not been agreed to by the 
Ethiopian people will not be honored by future elected governments. 
 
 
Comment 
------- 
 
¶6. (SBU) The GoE clearly needed to shift its agricultural policy in 
order to make effective use of its vast amounts of fertile land, and 
the agricultural policy mix being implemented is viewed by most 
experts as a step in the right direction.  However, that evolving 
policy is a long way from proving its worth as a vehicle for 
achieving the GoE's stated goals of modernizing the sector, 
generating foreign exchange reserves, and increasing the domestic 
food supply. End Comment. 
 
YATES