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