Ethiopian Review

By Groum Abate

Even after the Development Bank of Ethiopia (DBE) changed its strategy of auctioning big flower farms after it failed to find interested parties, its new strategy has again failed to attract buyers.
The bank has altered its strategy to attempting to sell farms by negotiating with interested parties and providing loans to interested buyers.
Recently, for the third time, DBE put up for sale the flower farm owned by Hassan Abusalim, who is an Israeli investor. It was tabled for negotiations with an initial floor price of 16 million birr.
The farm that lies on a 10.5 hectare plot is located in Ad’a Woreda, Oromia Regional State.
DBE contemplated giving out the farms to negotiators after they secured 30 per cent of the price. The remaining 70 per cent would be given out as a loan. DBE is using the 70/30 lending scheme to boost the horticulture industry.
According to information obtained from DBE, so far two big flower farms have been put up for auction in the last couple of months, but failed to attract buyers.
Lucy Ethiopia Floriculture Plc and RSL Vegetable and Floriculture Plc, both owned by Israeli investors, were put up for auction in recently after failing to repay a bank loan.
Another two flower farms will be put up for negotiations in a month’s time, taking the number of auctioned flower farms to five since the Government started supporting the sector to boost production and income.
Ethiopia has identified 400,000 hectares of land as being suitable for the development of fruits and vegetables and over 200 companies have now invested in the sector in the Rift Valley region.
Prime Minister Meles Zenawi recently held discussions with flower farm owners, who desperately appealed for extension of loan repayment periods that are threatening to force them to close their operations.
During the discussions, some flower growers who began operations by taking loans from private banks, appealed to DBE to take over their projects after settling the loan, which the bank accepted.
According to DBE’s credit policy, the bank could buyout performing loans found in other Government and private banks. According to the bank’s lending policy, investments in all agricultural products, excluding oilseeds, pulses and gums, all manufactured industry products, excluding hides and skins, agro-processed products and manufactured goods are considered as priority areas.
From the 1.5 billion dollars Ethiopia generated from exports in the 2007/08 budget year, fruits and vegetables fetched 121 million dollars.

(Capital)