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Wednesday, 01 December 2010 13:02

The Role of India in Agricultural Development in Ethiopia

Dr. Suresh Kumar

Introduction

India is a developing country and focuses on area of human resource development and capacity building. Ethiopia’s main aim is to achieve fast economic growth and self-reliance. India became self-sufficient in food in the late 70s. By the time India introduces reform in 1991, it had a huge pool of human resources. It is necessary to have the human resources then one will be able to manage technology, agricultural machines, scientific applications etc. Even the use of foreign aid needs human resources. India is a good model and there is a lot to learn from it.


India was agriculturally backward on the eve of independence. The first five-year plan (1951-1956) of India was more focused on agriculture and power projects. The second five-year plan (1956-1961) laid great emphasis on industrialization. India wanted to be self-reliant, wanted rapid economic growth, and dispense social and economic justice to the people. Ethiopia, during the Emperor's time, was a feudal society followed by twenty years of the Dergue regime with its controlled economy. Ethiopia adopted the economic reform in1992 and adopted market economy. Table 1 shows the fact that Ethiopia has the large population below international poverty line. It was estimated that the level of poverty in rural Ethiopia has increased as compare to India.

Table 1. Ethiopia’s Poverty and Inequality Indicators in Relation to Selected Countries

 

International Poverty lines (1991-1997)

Official Development Assistance ($/ capita)

Population below $1 a day (%)

Population Below $2 a day (%)

Gini  Index(%)

1990

1998

Ethiopia

31.3

76.4

40

20

11

India

44.2

86.2

37.8

2

2



Source:  World development Indicators 1998/99 and 2000/2001

The vast potentials of the agriculture sector in Ethiopia require infrastructure development, agro-industry and the food security system including buffer stock. Building of buffer stocks helps to protect unnecessary consumption and to ensure that the food is well distributed at the time of emergency among the poor section of the society in the country. India has public distribution system, which involves procurement at minimum support price from farmers and distribution systems. The public distribution system provides food grains at minimum support price. In fact, the system of fair price shop in India involves trading one-third in food grains. The public distribution system also includes 'food for work' program. In this way, we are able to cover 80 million people. India today produces about 210 million tons of food grains and it has 50 million tons of buffer stocks.

India is a country, which faces natural calamities such as droughts and floods. There are many challenges; for example 70% of India’s and nearly same in Ethiopian land is dry land, which one need to focus on. But that doesn't mean that one neglect industries also.  Ethiopia has so much potential in minimal resources that can be exploited. Ethiopia is on the right track and has expressed very important areas of reforms. Concentration on those areas of good competence is very important to overcome problems like poverty and drought.

Trade Relations between India and Ethiopia

Ethiopians (85%) and Indian (70%) population are related to agriculture and there is a need to re-focus on agriculture. Both the countries have rich resources, good climate, water resources and Ethiopia is naturally known as the water tower of Africa. The concentration on agriculture along with industries requires a sustainable policy in Ethiopia. Mrs. Jordana Diengdoh-Pavel, the current Indian Ambassador to Ethiopia said, “Agriculture is very important for developing countries. In this country 85% of the people depend on agriculture and is the backbone of the economy. Agriculture was focused through five-year plan in India. Naturally, the state has to play an important role to protect industries from foreign competitions. We started from that and we came to this level”1.

Today, the private sector is the backbone of the Indian economy and accounts for 70% of the GDP. Agriculture, horticulture, floriculture, sea food industries, agro industries, agro-based industries and food industries are in the private sector that includes small and large scale industries. India has almost 3.57 million units in the small-scale sector. They employ about 20 million people and contribute 165 billion USD to the Indian economy. The role of private sector is substantial in the growth of sustainable economic development.

The trade relation between India and Ethiopia is growing gradually. In 1992, it was only about 12 million USD. In 2000/2001, for the first time, the trade relation between the two countries crossed the hundred million mark, 108 million USD out of which the Indian share was around 90.4 million and Ethiopian was around 18.4 million and in 2002/03, out of 72 million USD, the Indian share was over 60 million and the Ethiopian was 10 million.2 So, more or less the balance is in India's favour. There is a lot of emphasis on the promotion of trade relations recognizes the potential of both countries. There is presently more action in the business community. Ethiopia staged an Indian exhibition in 2002, which is the first in its types in the Horn of Africa. About 50 companies participated and exchanged their profiles to Ethiopian business community. They also got opportunities to interact with members of the Indian (Ethiopia-Indies) business community. India is participating regularly in the Addis Ababa trade fare focuses on mostly iron and steel products, machineries, drugs, pharmaceuticals, plastics, leather, cotton, and pulses. Our industries are keen to invest more in the field of electronics, food processing, business, agro industries and agro-based industries, etc

The Ethiopia Agriculture and Need of Sustainable Development

Ethiopian peasants normally collect their main harvest known as the Meher. Paradoxical as it may appear, a major long-standing challenge for the survival and livelihood of the Ethiopian peasantry has surfaced not only in years of drought and famine but also in years of bumper harvest or relatively above average volume of production. Ethiopia, currently, not only in times of poor harvest, but also in periods of bumper harvest, markets are seen penalizing poor peasants repeatedly. Surprisingly enough, no intervention is being exerted on the part of the government or the responsible federal and regional government authorities to correct the widespread domestic agricultural market imperfections. As a result, the widespread poverty amongst the Ethiopian peasantry increase and the consequent erosion of the asset base of farm households observed. The majority of  (urban and rural) Ethiopian due to lack of alternative livelihood options, periods of poor agricultural harvest or drought faces malnutrition and hunger. In poor economies like Ethiopia, one major critical problem of the dysfunctional nature of agricultural markets is the lack of physical infrastructure facilities, storage facilities and major and feeder roads. Another problem is the lack of marketing information infrastructure on local and global markets, including the training and management expertise and dissemination mechanisms among the various actors, i.e., peasants and buyers, in the market. Thus, major impetus need to be given like:

·        Building the major roads of the country and also feeder roads in producing regions,

·        Develop the human capital,

·        Develop marketing information tools from village to regional places,

·        Build up central markets to enable better and quicker local and international market information analysis and dissemination,

·        Integrate local market with global market penetration for better results.

Efforts for Sustainable Development

The government should lay a clear agricultural marketing policy and the associated intervention mechanisms, including the designation of a public organization (sort of a grain board) that could play the economically and socially desirable task of absorbing, storing and properly utilizing the available surplus production. There is a need to safeguard the poor peasants from facing drastic falls in their producer prices. The government should study and reform its business licensing procedures, controls unhealthy regulations and provide basic requirements and contribute to better and highly efficient marketing channels in local and international marketing operations. The local and international partners of development should be committed to poverty reduction, food security and development of Ethiopia. They should play a key role in supporting the development of a properly functioning national integrated agricultural production and marketing system. Their coordinated effort in this regard is quite invaluable as it significantly contributes towards meeting the challenging tasks of food self-sufficiency and food security in the country and relieves donors of their continued humanitarian responsibility of providing food aid to Ethiopia.   Apart from the current practice, Ethiopian peasant requirements to be given the necessary support and advice to produce crops suitable to those geographical areas and generate demand for the produce in the local or export market.

Thus, the concerned government bodies, in cooperation with the local and international partners of development, should demonstrate high commitment and practical deeds by working towards enhancing the crucial role of well functioning agricultural markets. It will act as an incentive to a sustainable increase in agricultural production and making its traditional roles in facilitating national economic development.It is, therefore, mandatory to point out and stress areas where the government and the other partners of development should focus upon in building a dynamic agricultural marketing system. Table-1 shows that 52 percent were wholly foreign, while the remaining were joint venture projects. Joint venture projects were found to be relatively bettered implemented compared to wholly foreign owned projects. This might be attributable to the fact that while foreign investors strive to follow the delivery of equipment and machinery, their domestic counterparts follow the construction and other assignments in the country. According to a diagnostic trade integration study of 2003, more sectors in the country are now open to foreign investors. However, those currently reserved for domestic private investors and the government is still numerous. Trade is still excluded from foreign direct investment (FDI).

India Offer to Ethiopia in Agriculture Sector

With a view to significantly enhance India’s trade with Africa, the Govt. of India launched an integrated programme “Focus Africa” from the year 2002-03. The main objective of the programme is to increase interactions between the two regions by identifying the areas of bilateral trade and investment. The “Focus Africa” programme emphasized on seven major trading partners of the region, namely Ethiopia, Nigeria, South Africa, Mauritius, Kenya, Tanzania and Ghana, which together account for around 69% of india’s total bilateral trade with the sub-Saharan Africa region.3 CII Africa Committee has the mandate to further business

Table-1

Approved FDI by Sector -Investment in Million Birr

Sector

Approved Projects Operational Projects % Share
Projects Investment Projects Investment Projects Investment
Manufacturing 128 5496 32 774 25 14.1
Agriculture 31 2711 4 1243 12.9 45.8
Real Estate 10 2519 0 0 0 0
Hotel and Tourism 8 236 1 1162 12.5 492.4
Education Services 14 410 1 6 7.1 1.5
Health Services 12 263 0 0 0 0
Construction 32 1400 5 83 15.6 5.9
Trade 7 230 0 0 0 0
Mining and Quarrying 2 60 1 3 50 5.7
Others 32 590 7 13 21.9 2.2
Total 276 13914 51 3285 18.5 23.6


Source: - Ethiopia: Trade and Transformation Challenges Study, 2004.

co-operation that helps establish a symbiotic relationship between India and emerging African economies. The Committee through wide ranging activities,

·        Develop strategies to enhance economic, industrial & trade relations,

·        Identifies areas of mutual co-operation,

·        Highlights issues of concern and evolves suitable policy recommendations,

·        Frames guidelines & checklists for different forms of industrial co-operation, and

·        Represents industry sectors seeking greater mutual co-operation.4

CII has Institutional Agreements with 32 counterpart organizations in 18 African countries including Ethiopia with the objective of facilitating exchange of information and promoting business interests of Indian and African Industry. The Committee pursues a three point agenda

-         Focus on core issues to industry

-         Interaction with African Missions in India & Indian Missions in Africa

-         Partner and assist the Govt. of India in its specific Africa related initiatives5

A bi-monthly electronic newsletter widely circulated to Indian industry, CII’s MoU partners in Africa, Indian Missions in Africa, African Missions in India, key policy makers in India and Africa to update information on economic, industrial and political scenario in Africa, sectoral information for Industrial and trade Cooperation, Business opportunities for both African and Indian companies and Indo African trade and Investment data.   CII has developed an integrated strategy for promoting Indian exports into Africa, to supplement “Focus Africa” programme of the Ministry of Commerce & Industry, GOI that involves

·        Identifying focus markets in Africa

·        Identifying products with potential for export to focus markets

·        Seminars/ workshops o Export Opportunities

·        Trade delegations to focus countries

·        Participation in sector specific fairs in focus countries

·        Made in India/ Enterprise Shows.6

Export-Import Bank of India (EXIM India) operates a number of financing and support programmes to facilitate and promote India’s trade and Investment in the African region. The EXIM Bank operates a programme to support overseas investment by Indian promoter through joint ventures/ wholly owned subsidies. Such support includes finance in select cases, directs participation in equity along with Indian promoter, to set up such ventures overseas.7 With a view to enhancing competitiveness of India exporters, as also identifying Indian trade and investment potential, EXIM India periodically conducts research studies on countries/regions/sectors/ industry and on macro-economic issues relating to international trade and finance. EXIM India has also come out with a bilingual (English and French) magazine titled “Indo-African Business” which focuses on bilateral trade and investment between India and Africa. The magazine addresses the business information needs of companies who are interested in trade with the African region.  With a view to promoting and facilitating bilateral trade with countries in the Africa region, EXIM India works closely with Govt. of India. It has a representative office in Johannesburg, South Africa, which plays a role in facilitating economic cooperation with the African region, and is closely associated with several other Bank’s initiatives.     

Role of Indian in Ethiopia

Actually, India is assisting Ethiopia through scholarships and undertake via the general scholarship schemes and cultural exchange program. Good number of Ethiopian students studying in India for B.A., MA/MSc degrees. Miinistry of Education, Ethiopia is also hiring a number of professors, associate professors, and teachers from India to teach at the universities. It is observed that about 400 teachers are teaching at various colleges, universities and vocational training centers in Ethiopia. For example, there are around 95 Indian professors and assistant professors in the Addis Ababa University, about 35 professors in Defence University College, Arbaminch University, Mekele University, Gondar University, Alamaya University and others.8 One feels that this helps a lot in human resource development of Ethiopia. And, of course, many Indian teachers have been involved in Ethiopia since the 1960s. Indian teachers have educated many leaders here. The education sector of Ethiopia has an excellent relation. India has been focusing on human resource development since independence. That is one of the main strengths of India, which, one hope would be rubbed off to Ethiopia through this collaboration.

Senior Andhra Pradesh officials visited East Africa in 2004, where some governments are ready to welcome Indian farmers to till vacant fertile lands.  Kenya and Uganda have already expressed eagerness to receive Indian farmers. Tanzania is also likely to give a positive response. They know that Indian skilled and innovative farmers can contribute to the prosperity of those countries, and the Africans can learn and benefit from the skills of the Indians. The Andhra Pradesh government is enthusiastic about the project, which is expected to bring hope to the lives of more than half a million poverty-stricken farm families in the drought-prone west of the state. Our farmers have been suffering from drought while these African countries have excellent infrastructure and land, but do not have people to farm it. This is a business opportunity for Indian farmers, who are well versed in tropical and arid-area farming. Analysts say the rash of suicides is rooted in the state's neglect of the agriculture sector. V. Hanumantha Rao, an economist, said, “lack of irrigation facilities and institutional loans to farmers, and there consequent dependence on private moneylenders, has led to the worsening situation. Activists say neglect of the farm sector is nationwide, and this is why suicides by farmers have been reported from most of India's 25 states and seven union territories over the past five years. Most of the suicides were blamed on mounting debts and crop failure from drought.” 9  India would also provide technical support to the cooperative farms involved in Africa migration project. “Andhra Pradesh government would pay for the travel and cost of rehabilitation of the farmers in Africa. Farmers would be allowed to send their earnings to families in India without any hindrance," Mr. Reddy said.10
It is observed that the Indian community promotes goodwill and understanding among people in Ethiopia. They are the bridge that makes the two countries come close together. The contribution for the Indian community is very important. The Indian community living here contributes a lot to the economy of the country. Large number of Ethiopians is going to India for education, business, tourism etc. This contact between the two peoples is a great contribution for the enhancement of the relation between the two countries. India has managed to develop a modern agricultural sector within a short period of time. How can Ethiopians share our agricultural experiences in this regard is mentioned in the India’s offer.
Suggestion and Conclusion

The critical need for moving agriculture forward in Ethiopia is underlined by the need to increase food supply to feed a rapidly growing population, to provide employment, income growth to reduce absolute poverty and food insecurity for a predominantly rural-based population. Since Ethiopia has a large pool of unskilled labor, agricultural development can relieve the growing unemployment problem on the one hand and increase in agricultural income on the other hand. A ‘poverty focused’ economic development policy has best chance of success if it is agricultural-led, or if it is based on increasing agricultural productivity that result in food security and the reduction in absolute poverty.

Since food security contains both supply (production) and demand (income) dimensions, there is a need to focus on food production. In this regard, a key policy research identifies the combination of technologies and institutions, which will aspire availability and access to food by local communities and regions in Ethiopia. The prime movers of agricultural development (public and private investment) need to involve in agricultural production and supply to ensure food availability. it includes Indo-Ethiopia investments on:

1. New technology and agricultural research,
2. Human capital and managerial skills produced by investments in schools, training, and on-the-job experience,
3. Physical capital investments in rural infrastructure such as irrigation, dams and roads,
4. Farmer support institutions such as marketing, credit, and extension services.

Ethiopia adopted an agriculture and rural-centered development strategy known as Agricultural Development-Led Industrialization (ADLI).  ADLI focuses on the development of smallholder farm productivity and the expansion of commercial farms. One suggests the structure of cooperative farming like West & South India and Kenya may be implemented in Ethiopia. If successfully implemented, it has the potential to reduce food insecurity, absolute poverty and environmental degradation. Conceptually, an agricultural and employment based economic growth strategy has three basic elements like

1.Agricultural growth requires an appropriate land-saving technology in the form of biological and chemical technologies.

2. The growth in food demand occurs through accelerated growth in rural employment (or increased demand for labor), made possible through scientific agriculture and

3. Increase demand for goods and services produce.

It is important to transform (like India agriculture) subsistence agriculture to science-based intensive agriculture by adopting promising indigenous practices combined with selective use of improved technologies such as inorganic fertilizer, better equipment, improved seeds, and improved soil conservation and agro forestry practices. Improved technologies and use of farm capital is the most promising path to achieve the goals of greater productivity, food security, and sustainability in most agro-climate zones. The capacity of farmers in Ethiopia to purse alternative technologies requires Indo-Ethiopia investments in rural infrastructure, input and output market improvements, land markets, credit policy and promotion of non-farm enterprises such as agro-industry. The challenge is to develop innovative, cost-effective public, private and public institutions (including NGO’s) that support agriculture under a favorable and macroeconomic and institutional environment.

In conclusion, the challenge for eradicating absolute poverty in Ethiopia is best achieved by pursuing an economic growth strategy that transforms the currently low productivity agricultural sector. This challenge can be met by developing Indo-Ethiopia institutions that promote the four prime movers of agricultural development identified earlier in this paper like:

1.      Production of appropriate technologies- produce through public and private investments in agricultural research;

2.      Human capital investments and vocational skills of poor people by investment in private and public schools, training programs, on-the-job experience and health;

3.      Investment in infrastructure like dams, irrigation facilities, telecommunications and roads; and

4.      Investments in farmer support institutions such as marketing, credit, fertilizer, and seed distribution systems.  Each of the above movers is important and complementary. The analysis of this paper underscores the critical need to develop agro-ecology, specific technologies to raise crop productivity, investment in infrastructure and in agricultural support institutions, marketing and credit in order to overcome problems of productivity and remove weak linkages within the rural economy. The paper also implies that success in transforming agriculture along these lines can reduce natural resource degradation, and thereby enable Ethiopia to break out of the absolute poverty-environmental degradation-food insecurity trap on the one hand and strengthen the agricultural policy reforms in India on the other hand.


References

1. Media and Communication Center, Ethiopia, 2004.
2. Ibid.
3. CII India-Africa Project Partnership 2005, Background paper, Delhi, p.26.
4. Ibid, p.11.
5. Ibid,p.25
6. Ibid, p.26
7. Ibid.
8. Media and Communication Center, Ethiopia, 2004.
9. The Washington Post November 13, 2004.
10. Ibid