Saudi investors leave Ethiopia
Al-Monitor | 9 December 2013
An Ethiopian worker argues with a member of the Saudi security forces as he waits with his countrymen to be repatriated in Manfouha, southern Riyadh, Nov. 11, 2013. (Photo: REUTERS/Faisal Al Nasser)
Saudi investors leave Ethiopia
by Saad al-Asmari
A Saudi agricultural investor has warned about the failure of Saudi agricultural investments in Ethiopia and the liquidation of businesses due to the conditions set by the [Saudi] Agricultural Development Fund (ADF) to support and lend to investors in Ethiopia.
This is not to mention the negative impact of such conditions on the process of correcting the situation of foreign workers in Saudi Arabia, including many Ethiopians. He revealed that some Saudi investors in Ethiopia have begun to sell their investments due to the impossible conditions set by the ADF for loans, in addition to the lack of facilities to export their produce to Saudi Arabia.
The head of the Saudi Agriculture Investors Association in Ethiopia, Mohammed bin Abdul Rahman Al Shahri, told Al-Hayat that Saudi investors in Ethiopia have filed complaints to the Saudi king about the ADF conditions, which are in direct conflict with King Abdullah's Initiative for Agricultural Investment Abroad.
He also said that there are more than 400 Saudi businessmen in Ethiopia investing in the cultivation of a variety of crops, namely wheat, rice and barley. He added that the association was established to introduce investors … and show them the best places for agriculture, where water is abundant. The association also provides translation services, investment management and communicates with the competent authorities in Ethiopia. When it was first established, the association had 10 members, whose number increased to reach 60 agricultural investors.
Shahri also said that Saudi investors in Ethiopia began work in 2008, following the king’s Initiative for Agricultural Investment Abroad. The size of Saudi investments in the agricultural sector in Ethiopia is currently estimated at 13 billion riyals [$3.47 billion].
Moreover, he stated that the investment environment inside Ethiopia differs from one place to another, as some areas are very weak in terms of infrastructure. In certain places, investors contributed to building roads, transportation means and bridges for farmers, since the country is riddled with rivers. He confirmed that investing in Ethiopia helped the Ethiopian people, as it created job opportunities. Ethiopian workers in some small farms number more than 1,500 for a season. Ethiopians have also received training to use modern equipment, machinery and techniques relating to the agricultural sector.
He confirmed that Saudi Arabia is one of the largest investors in Ethiopia, especially in terms of the number of workers. He said that Saudis face competition from Pakistan, India and China.
Shahri stressed that the ADF has not supported Saudi projects from the beginning according to the king’s initiative. “We are still waiting for support, as per the mechanism set forth in the initiative. However, two weeks ago we were surprised by the ADF conditions, which are impossible to meet on the part of large agricultural companies, let alone small investors,” he said. He pointed out that investors have sought over the past few years to move the initiative from the Commerce Ministry to the Agriculture Ministry.
“The ADF commissioned a local consultancy office to study the support provided for agricultural investors abroad, which unfortunately resulted in these conditions,” he said. He added that the ADF conditions cannot be met by states, as the fund requested investors to provide guarantees of the political security in the country where they invest. “How can this be done?” he asked.
He said that investors were looking forward to ADF support during the meeting that was held in Riyadh between overseas investors and ADF representatives. “Unfortunately, the ADF informed us of its impossible conditions, which it made without consulting any of the investors. This violates the foundations of the initiative, leading to its failure,” he said.
He revealed that a number of Saudi companies investing in Ethiopia have begun to sell and liquidate their farms and said, “A number of Saudi investors asserted that they were intending to sell their investments especially since they had waited more than five years without receiving any support or achieving the terms of King Abdullah’s Initiative for Agricultural Investment Abroad.”
Shahri continued, “Adjusting the situation of the Ethiopian labor force in Saudi Arabia has doubled the despair of many investors, fearing for their investments in Ethiopia. We, as investors, were surprised with the adjustment process. Many Ethiopians in Saudi Arabia were deported.”
“We should admit that mistakes have been committed by both sides. The illegal entrance of Ethiopians is unacceptable. In addition, the Ministry of Labor has dealt with them without knowing their exact number and the way to deport them,” said Shahri, affirming that “what is happening with Ethiopians in Saudi Arabia will affect our investments in their country on the popular level.”
In regard to the stance of the Ethiopian government toward Saudi projects, Shahri said, “The government of Addis Ababa has not announced anything. It preserves Saudi investors, and we are following up the situation from Saudi Arabia. Many investors preferred to stay in Saudi Arabia until the dust settles there, even though it is the harvest season.”
Shahri called on the governments of both countries to settle the issue as soon as possible, especially with opposition tabloids in Ethiopia taking advantage of the situation. He noted that investors are not facing particular problems since the Ethiopian government is keen to protect Saudi investors as well as investments.
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