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Ethiopia

     In-depth analysis of investment cases
          Key financial and economic data
           Impact highlights (coming soon)

The investment plan for the country presents a set of five investment cases focused on agrifood systems sectors: mechanisation, animal feed, ranching, coffee rejuvenation and coffee processing. These investments are seen as fundamental enablers to address critical bottlenecks to agriculture transformation in the country.

Ethiopian agriculture heavily relies on smallholder traditional farming. It is mainly rain-fed and suffers from the variability of rainfall across the year and across the country, which often leads to water stress, crop and livestock failure. Developing a combined rain-fed and irrigated agricultural system that uses different irrigation technologies with night-water-storage facilities, rainwater harvesting techniques, and water lifting mechanisms from lower levels with smallholder drip systems and micro-sprinklers is part of the solution to these challenges.

The cattle population of Ethiopia in 2021/22 was 66,260,987 (CSA, 2021/22). The cattle feed in Ethiopia is primarily open grazing and crop residues. The high population of livestock with high dependence on meagre grazing and crop residue and the extremely low percentage use of improved feed highly requires strong action to secure the availability of animal feed.

Geospatial Typologies

Agro-informatics connects information technology with the management, analysis and application of agricultural data to indentify territories with untapped agrifood potential and design more accurate and targeted agrifood interventions. The use of new technologies and techniques in agriculture, such as satellite imagery, remote sensing, and geographic information systems, enable the transformation of data into actionable information.

POVERTY
POTENTIAL
EFFICIENCY
Poverty
Potential
Efficiency
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Investment cases in Ethiopia

Investment Cases and Interventions

Hand in Hand initiative

Mechanization

INVESTMENT
USD 350.8 M
INTERNAL RATE OF RETURN (%)
24%
NET PRESENT VALUE
USD 121.3 M
DIRECT BENEFICIARIES
6.7 Million
INDIRECT BENEFICIARIES
12.75 Million
INCOME INCREASE PER CAPITA
4,866 USD/person
EMISSION REDUTION (EXACT)
+30,173,841 tCO₂e

The investment proposal includes the development of the local manufacture of machinery and equipment that is accessible and affordable. The proposed type of machinery and equipment include walking tractors (10- 20hp), compact tractors (20-75hp), and low cost and small-scale household level irrigation equipment aiming at enhancing national crop production capacity of smallholder farmers. With the use of mechanization, both productivity of labour and productivity of land improve and smallholder farm income would increase. Increasing water availability with widespread and more efficient irrigation is essential. With the availability of irrigation facilities, crop production increases are planned for non-perennial crops; the yield of all crops improves; and greater agricultural land goes into cultivation, thereby increasing total output.

Total cost is USD 202.2 million, with IRR of 21%, NPV of16.3 million, and is expected to directly benefit 2.000 smallholders and indirectly to improve livelihoods of 9 million people. It is hoped to reach per capita income increase of USD 4.866 per direct beneficiary.
Hand in Hand initiative

Animal feed

INVESTMENT
USD 248.2 M
INTERNAL RATE OF RETURN (%)
20.8%
NET PRESENT VALUE
USD 95.5 M
DIRECT BENEFICIARIES
6,914
INDIRECT BENEFICIARIES
2.6 Million
INCOME INCREASE PER CAPITA
3,735 USD/person
EMISSION REDUTION (EXACT)
+10,951,452 tCO₂e

The second investment case to be presented aims to respond to the market need for a sufficient, quality animal feed. The investment proposal takes 3 types of manufactured feeds and the production of forage seed (alfalfa). The manufactured feeds are for cattle and poultry, which take the form of concentrate feed blocks and concentrate feed for cattle.

The total investment required is USD 330.6 Million, with IRR of 18% to 26% and NPV of USD 9.2 million. The expected benefits include some 6914 employees, and indirectly, 2.6 million livestock owners, with per capita income increase of USD 3.735 per direct beneficiary.
Hand in Hand initiative

Extensive rangeland 
management (Ranching)

INVESTMENT
USD 136.6 M
INTERNAL RATE OF RETURN (%)
25%
NET PRESENT VALUE
USD 91.7 M
DIRECT BENEFICIARIES
2,676
INDIRECT BENEFICIARIES
13,380 Household members
INCOME INCREASE PER CAPITA
2,648 USD/person
EMISSION REDUTION (EXACT)
 -56,620 tCO₂e

The livestock ranching is another investment case. The initiative is providing sites with agro-ecological suitability that fulfil the standards set for ranch development and availing suitable land or rangelands for natural and improved forage production for private investors that can secure replacement herds of suitable cattle breeds. The number of ranches assumed to satisfy the demand is 3 with a capacity of 71,414 annual demand per ranch.

The expected cost of the investment is 45.5 million per ranch and 136.5 million for all three ranches; The IRR is estimated to be 25% at an NPV of USD 30.5 million, with benefits for 2.649 persons and indirectly, for 13.380 consumers. The expected per capita income is USD 2.648 per direct beneficiary.
poultry Ethiopia

Grandparent poultry

INVESTMENT
USD 9M
INTERNAL RATE OF RETURN (%)
30%
NET PRESENT VALUE
USD 4.2M
DIRECT BENEFICIARIES
16,339 SMEs
INDIRECT BENEFICIARIES
406,320 SHFs
INCOME INCREASE PER CAPITA
60,000 USD/SME
EMISSION REDUTION (EXACT)
 +9,856 tCO₂e

Resources

FAO's Hand-in-Hand Initiative
21/12/2023

The Hand-in-Hand (HIH) Initiative supports the implementation of nationally led, ambitious programmes to accelerate agrifood systems transformations...

In the Media

Contacts

For more information, please contact the Hand-in-Hand team