Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
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and direct Government supply of farm inputs, recognising that where commercial supplies are
not forthcoming Government has a role to play, but with the intention to withdraw as soon as
the private sector is ready to fill the gap.”109
Several policy instruments were enacted to spur growth in agricultural FDI. They include:
 Rural Land Administration and Use Proclamation No. 456/2005, establishing rules
relative to acquisition and use of rural land by peasant farmers or pastoralists, transfer
of rural land use rights, distribution of rural land, resolution of disputes, restrictions on
the use of rural land; and defining responsibilities of the Federal Ministry of Agriculture
and Rural Development and Regions.
 Expropriation of Land Holdings for the Public Proclamation No. 455/2005,
providing for the expropriation of land holdings for public purposes and delineating
payment of compensation.
In 2009, the Ethiopian government broadened its agricultural policy focus from increasing
smallholder productivity, to include encouragement of private foreign and domestic investment
in large-scale commercial farming. The Ministry of Agriculture created a new Agricultural
Investment Support Directorate, tasked with negotiating long-term leases on over 3 million
hectares of state-owned land, with the aim of raising productivity, employment, technology
transfer, and foreign exchange reserves by offering incentives to private investors. The
Government in 2011 also established the Agricultural Transformation Agency (ATA), with a
mandate to help streamline the process of agricultural investment and to improve the enabling
environment for both smallholder and commercial agricultural development.110
These measures have helped, to a large degree, overcome one of the principal constraints to FDI
in Ethiopia, namely, difficulty of access to land.
Figure 35: Top 10 Business Environment Constraints in Ethiopia
109 Ethiopian Ministry of Agriculture 2010, p. 22
110 U.S. State Department Ethiopia Investment Climate Statement 2013