A Saudi ministerial delegation, which visited Ethiopia to explore the prospects of investing in agriculture, is impressed by the country’s huge potential and as a follow up sending a team of experts to conduct specialized studies, said Zenawi who spoke in this exclusive interview with Arab News on a variety of economic issues ranging from rising oil prices and inflation to his country’s bilateral trade relations with Saudi Arabia.
Following are excerpts:
Saudi Arabia is engaged in providing food security. A Saudi ministerial delegation has visited your country in this connection. Could you throw light on this?
Saudi Arabia has evinced interest in investing in agriculture, particularly in production of cereals, and has been looking at various options. One of the countries they are looking at is Ethiopia, which has a lot of unutilized land, particularly in the lowland areas of the country where all sorts of agricultural products can be grown. The Saudi delegation studied the prospects of investing in agriculture in this country. We told them we would be very eager to provide hundreds of thousands of hectares of agricultural land for investment, particularly for cereal production. There is a broad agreement and understanding and this will be followed by visits by Saudi experts to conduct specific studies for investment.
What are the existing Saudi investments in Ethiopia?
Most of the Saudi investments have been in manufacturing and hospitality sectors. This has been the focus so far, but we expect a sizeable increase in the Kingdom’s investment in agriculture as a result of its decision to invest in cereals.
What are the other potential areas available for Saudi investment?
The manufacturing sector is promising, especially textiles, leather, leather products and iron bars. In fact, all sectors of manufacturing are open. Investment in infrastructure is also something we are looking for. Real estate development and particularly the hospitality sector including hotels and tourist places, as well as agriculture and agro processing industries are among the other potential areas.
What is the existing level of trade and investment between the two countries?
Saudi Arabia is one of our top three trading partners. Our trade volume is $1 billion, although much of the trade balance is in favor of the Kingdom. The trade gap is about half a billion dollars. We mostly import oil and petroleum products and export coffee, meat and other agricultural products. About 240 Saudi companies have been given the investment license. These companies including those who are operational are expected to invest $2.5 billion. Saudi Arabia is our very important investment partner. Economically, we have solid and fast growing relations.
What has been the impact of rising oil prices?
The dramatic increase in oil prices has hit Ethiopia very hard. Our oil import bill over the past three years has increased by over a billion dollars. This amounts to 3 percent of our GDP. That has upset our balance of payment very significantly. It has created a huge pressure on our balance of payment and complicated the inflationary issue. We are trying to tackle this problem by increasing our exports so that we can pay for our increased import bill, and improving agricultural production so that we can dampen our food prices. We are importing some food from abroad to check the rising trend of our agricultural prices. We are importing wheat. We are no doubt growing wheat but due to an inflationary pressure we are bringing more wheat from abroad to flood the market so that the rising trend of prices in the country can be checked.
How high-level exchange of business visits has benefited your country?
We have had frequent exchanges by leaders at high levels. My assessment is that these high level visits have contributed a lot to the fast growing economic partnership and contributed a lot to the political understanding that we currently enjoy. I expect such exchanges to continue. We are expecting a high level ministerial delegation to visit us in October. I would expect a similar high-level visit from Ethiopia to Saudi Arabia.
