Owner of Saudi Star Agricultural Development Plc, the Ethiopian-born Saudi billionaire Sheikh Mohammed al- Amoudi, had been in Abobo Woreda, Gambella on February 11/2011. That is where the
Speaking to the media, on the occasion, Al-Amoudi dismissed those who are spreading ‘rumor that the ongoing development with land grabbing which disrupt the development of the region and the country the company is interested to develop more than 250,000 hectares of land with rice in Gambella State.’ He underlined that ‘the investment activities of the company would benefit the local people and would not take any advantages of the people’.
That was not what made the headlines. According to the report by the state-owned Ethiopian News agency:
Al-Amoudi said 40 percent the rice production would be for domestic consumption.
Three weeks later, on March 04/2011, A Week in the Horn, the weekly press release of the Ministry of Foreign Affairs, made the following remarks under the heading ‘Development or Exploitation? Foreign Investment in Ethiopia’s Agriculture’:
In a recent interview, the prominent investor Sheikh Mohamed Al-Amoudi who currently leases 10,000 hectares for a pilot project for rice production in Gambella Regional State, detailed the value the project will provide in terms of jobs, foreign currency and increased food production. Under the agreement his company will be allowed to export no more than 60% of its production; 40% will be for local consumption. He is currently looking to increase the investment to US $450 million and significantly expand the area to be cultivated.
It is not clear if the statement is simply reporting what Al-Amoudi said. But it sounded a confirmation given the official status of A Week in the Horn.
Then came Bloomberg’s report about Saudi Star Plc on March 23. Its correspondent in Addis, William Davison, who apparently read the above quoted statement, interviewed the Company’s CEO, Haile Assegide, on March 18, and reported::
Two-thirds of the food produced will be exported by Saudi Star, with Saudi Arabia likely to be a “very dominant” market, while the rest will be sold domestically, according to Haile. This month, the Ethiopian Foreign Ministry said the agreement with Saudi Star required the company to sell 40 percent domestically, while 60 percent could be shipped offshore.
“There is no government policy to my knowledge,” Haile said.
Though these reports indicate that both the investor and the government are taking the issue seriously, the discrepancies are discomforting for a concerned observer. How much of the production is Saudi Star going to sell at domestic markets, 40% or 33%? Is it based on a contractual obligation or part of Al-Amoudi’s philanthropic activities in Ethiopia?
But a subsequent news gave the impression that it is government policy and, perhaps, applies to other foreign firms as well.
Ambassador Berhanu Kebede claimed Karuturi Global, which has leased 100,000 Hectare land in Gambella region, is subject to similar marketing arrangement. Berhanu, who is Ethiopia’s Ambassador to UK said, in his article posted in Poverty Matters blog of the Guardian on Monday 4 April 2011:
The Indian company Karuturi Global informed us of the sort of food crops they wished to grow and we allocated land accordingly. The company will be selling some of their production in Ethiopia, helping to close the food shortage gap, and exporting the rest. Investors must ensure not only that the land they are allocated is efficiently managed, but that they will construct housing, roads, schools, clinics and other infrastructure such as a water supply, to fully support their workers.
However, the land lease agreements recently released by the Ministry of Agriculture has nothing to say on the matter. Not even a provision indicating such eventualities.
Of course, the contracts are made under Ethiopian law. Thus, they are subject to any export restriction regulations or directives the government may issue at a any time in the future.
But that is a talk about tomorrow. And, tomorrow has its own issues and surprises.
With a 50 years long contract that probably outlives both the government officials and the investors, the prudent thing to do is to put everything in black and white.
[This is the second post of the ‘Land grab’ deals review series that discusses the recently released Land lease agreements and, hopefully, will wind up with a list of recommendations for the amendment of the contracts.]
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