April 29, 2014

On a quiet early morning not too long ago, I had the pleasure of speaking with Yohannes Tilahun, a man who spent years on Wall Street and has left that all behind to focus on the effort to grow Ethiopia’s economy. He shared with me the investment situation in Ethiopia and some of the challenges to and opportunities for growth in the agricultural sector.  What follows is a summary of his story.

Ethiopia: the Opportunity

Since 2000, Ethiopia has been one of the fastest growing countries in the world. The nation’s population is more than 90 million, 85% of which are engaged in agriculture and 85% of these are smallholders with an average land size of 0.5 to 1.0 hectares. It’s no wonder the country gets 50% of GDP from agriculture. The country’s large proportion of smallholder farmers and stable government make it ripe for agricultural sector growth. Despite the attractiveness of high growth potential, large smallholder farmer populations and a stable government to investors in Africa, the agricultural sector faces challenges in production, processing and investment.

Turning Challenges into Investment Opportunities

The Ethiopian Agricultural Transformation Agency (ATA) is a results-driven organization within the Government of Ethiopia that reports to the Agricultural Transformation Council chaired by the Prime Minister.  The agency is tasked with catalyzing and supporting all key stakeholders to transform the country’s agricultural sector in order to help Ethiopia achieve its national target of reaching middle-income status by 2025. One role of the ATA is to support the Ethiopian Investment Agency to be efficient and conducive for investors to come here to Ethiopia and be able to invest.

The ATA works with investors and smallholders to address the challenges that the Ethiopian agricultural sector faces. Three of the biggest of these challenges, identified by Mr. Tilahun, are access to finance and seeds and smallholder fertilizer use practices. Farmers have a tendency to apply one kind of fertilizer everywhere without consideration of variations in needs by location. The ATA is working with farmers to help them look at and make application decisions based on localized soil conditions.  The Agency has a project called Ethiosis, which uses satellite mapping to find out what the content of the soil is in each place in the country. Once it determines that, it tries to get the right kind of fertilizer to the farmers. Ethiopia is one of the first countries to do something like this, demonstrating how seriously the nation is taking the task of making its farmers more productive.

Beyond addressing production challenges, adding value to the products is one of the most popular investments and the ATA has done a good job attracting investment in this endeavor. The ATA focuses on barley, sesame, chickpea, wheat, maize and tef, as well as on agriculture and agri-processing that is export oriented. Farmers are very interested in working with investors because if they can increase the value of their raw product, it results in more money for them, as well. So it’s a win-win situation for everybody.

What the future holds

Although the ATA is too young to know what the lasting results of its efforts will be, success, so far, has been the Agency’s biggest publicity. When investors consider investment in emerging markets, such as Africa, they often consider Ethiopia. It will be Mr. Tilahun and the ATA’s job to continue to convince them to invest. For his part, Mr. Tilahun is honored to have this task:

“Personally my proudest achievement is just how much the country, the government is trying to do to make the country more productive, to take us out of poverty.For the past 20 years, because of bad government, corruption, and things like that, the continent has gotten a bad wrap. In the last 5-10 years a lot of Ethiopian people abroad are starting to come back. Governments are starting to realize they cannot do business the old way. On the continent as a whole, the younger people, because of Facebook, Twitter, and the Internet, are becoming much sharper and aware.  So to me, my proudest moment anywhere is having been involved as part of this movement where Ethiopia has this goal of being a middle class country by 2025. Being part of this I consider a great honor, even if I fail, it’s a great honor to be part of it.”

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The complete interview with Yohannes Tulahun can be read in Volume 6 of the Global AgInvesting Quarterly. You can also learn more about Mr. Tilahun and investment in Africa at Global AgInvesting New York, April 28-May 1, 2014.

For more information about the Ethiopian Agricultural Transformation Agency please visit http://www.ata.gov.et/.

The opinions expressed in this editorial are the author's own and do not reflect the view of Global AgInvesting.