Ethiopian Ministry of Agriculture disclosed 24 Land lease agreements, concluded with Ethiopians and Foreigners, Today. The Ministry had started posting a few of the Agreements last week.

According to the data released, the federal Government so far leased a total 350,099 Hectare land. Of which 285,012 is leased to Foreigners, while the rest to Ethiopians, including the Diaspora. [See the data concerning the type of Investment on the leased lands on the table at the bottom of this page.]

Out of the 24 lease contracts, 11 of them are at Birr 158/Hectare/per year rate, another 4 leases at Birr 111/Hectare/per year rate. Two Ethiopian firms top the list by paying about Birr 700/Hectare/per year rate, while Saudi-star and the Indian firm Karuturi are at the bottom of the list with a Birr 30 and Birr 20 per Hectare/per year rate.

THE FOREIGNERS

Let’s take a look at the Foreigner firms – as it is the one that concerns many, though the land use of local firms needs scrutiny.

Out of the 285,012 Hectare land so far transferred to foreign firms, 250012 Hectare belongs to eight Indian firms, 25,000 to a Chinese company and 10,000 to a Saudi company.

The type of Investment on the land is summarized in the graph below.

[The data in the graph is a summary of the summarized table on the website, rather than from the Contract documents]

The lease payment rate – per Hectare/per year is summarized in the table below.

[The column at the right end of the table above states ‘Karuturi Plc’, ‘Indian’, ’20’. I am unable to fix the width of the table.]

Why is the rate exceptionally lower for Karuturi and Saudi-star?

The website appears to blame some unnamed local officials at Gambella region, albeit implicitly.

An Amharic note at the top of the website indicates the two contracts were originally signed between the respective firm and the concerned Wereda of Gambela in Sept 2008 and July-Aug 2009. Thus, the Federal government had to keep the contracts as they are, when it took over the land leasing responsibility last year and re-signed the contracts as a lessor.

I didn’t find this convincing, however.

What does the contracts, with foreigners, say?

Pending a thorough review of the contracts, a few remarks are in order.

The land lease agreements are entered with firms – not countries.

They are governed by Ethiopian law.

There are environmental protection provisions – though there are a few of them, they are complemented by the Ethiopian laws concerning natural resource provisions and the Environmental Impact Assessment proclamation. Thus, it sounds safe.

However, the contracts I reviewed so far contain no word concerning the relationship of the firms with the local farmers/pastoralists. Not even concerning passage routes, water, and the like. Such arrangements are vital to the life of the pastoralists whose movement is likely to be hindered by the farms.(Note that, according to government sources, no rural community is displaced in connection with these investments so far).

With regard to price: The contracts with Karuturi and Saudi-star allow Ethiopia to increase the rate with no restrictions. However, at least three of the rest contracts stipulates, the lease rate can only be increased by 20% and that is after 10 years. It appears those officials in Gambella made a better deal.

The contracts give a wider room for Ethiopia to terminate the contracts, it seems.

Settlement of disputes: Disputes on the contract are to be settled by Ethiopian courts, in some of the contracts, including those with Karuturi, Saudi-star and the Chinese Huana. However, the contracts with the Indian firms Ruchi and Shmporji(S&P) make a reference to an international organ known as International Center for the Settlement of Investment Disputes.

There is nothing indicating the technology of farming, though I hope they submitted a business plan – as it is the case with other investments.

Though I intend to study the contracts further, my general impression is that I would have drafted for them a better contract for free. This is not an overstatement. Given our weak supervision institutional capacity, the least we can do is to refine the deal on paper, thereby limiting the room for maneuver and corruption.

A Complete list?

The website seems claims these are the lease contracts of the lands transferred so far by the Federal government.

However, there should be at least two more contracts if the following report on a 2010 US Embassy cable is correct. The cable claims:

• former president of Nigeria, Olusegun Obasanjo leased about five acres of land near Debrezeit, Oromia region
• current Djiboutian President Ismael Omar Guelleh leased 7,400 acres of farmland in 2009 in Bale, Oromia region and this farm has already harvested wheat and other cereals for export to Djibouti.

Perhaps, those contracts are inked by the regional government rather than by the Federal. Otherwise, the list would be incomplete.

[A thorough review of all the lease agreements with foreigners will be posted in this blog in the next two or three days.]

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Here is the land lease data taken from the Ministry of Agriculture website – (Link)