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Saudi Star Offers Jobs to Overcome Criticism of Ethiopia Project

May 30, 2012
Business Week


Saudi Star Agricultural Development Plc, owned by Saudi billionaire Mohamed al-Amoudi, said it plans to overcome local opposition to its Ethiopian rice project by offering jobs and training, a month after five people working on it were shot dead.

Criticism by residents may subside when the 10,000-hectare (24,711-acre) plot is developed and 5,000 jobs are created on the farm in the southwestern Gambella region in about two years, Saudi Star Chief Executive Officer Fikru Desalegn said in an interview yesterday in Addis Ababa, Ethiopia’s capital.

Ethiopia is leasing 4 million hectares of land to foreign investors in regions including Gambella as part of a commercial- farming drive. Advocacy groups such as the U.S.-based Oakland Institute have said the program has resulted in rights violations and forced the relocation of more than a million people. The government says resettlement has been voluntary and unrelated to the investment program.

Providing employment for residents of the Gambella will “definitely teach the public it is very useful for them,” Fikru said. Other benefits for the 13,000 residents of the area will include investment in infrastructure such as roads and vocational education by the company, he said.

Two Pakistanis and three Ethiopians employed by Ghulam Rasool & Co., a closely held Pakistani engineering company, died last month after being shot by unidentified gunmen while building an irrigation canal for the project.

19 Killed

The attack occurred a month after opponents of the farming plan shot and killed 19 students on a bus 20 kilometers (12 miles) from Gambella town on March 12, state-owned Ethiopian News Agency reported. There is “suspicion” the same group attacked the GRC workers, Federal Affairs Minister Shiferaw Teklemariam said last month.

Work has resumed on the Saudi Star project and the federal police are guarding the area, Fikru said.

“All the culprits were caught,” Fikru said. “Things are normalized. All our contractors are back to work.”

Saudi Star will start growing rice on 3,000 hectares of land in January, a month later than planned because of the attack. The company has a 10,000-hectare plot it leased in 2008 from the government for 138 Ethiopian birr ($7.78) a hectare annually, Fikru said.

Rice is now being grown on 350 hectares and the company expects to cultivate the whole area by mid-2014, he said.

Saudi Star’s lease may yield 4.5 metric tons of rice a hectare and produce two harvests a year, said Fikru, formerly a minister in Ethiopia’s federal government. As much as 45 percent will be exported, mainly to Saudi Arabia, he said.

Land Earmarked

About half of the land in Gambella has been earmarked for investment, while nationwide, about a 10th of the total 4 million hectares set aside by the state has been leased, according to the government.

Saudi Star, part of Ethiopia’s Derba Group, plans to lease another 290,000 hectares in the Dima area of southern Gambella, Fikru said. The projects may annually generate 17.3 billion birr, Derba said in February.

The Oakland Institute says that as many as 70,000 indigenous Anuak and Nuer people have been evicted for investors in Gambella and that the farms will increase local hunger.

“There was nobody in the 10,000 hectares,” Fikru said. “We have not paid any compensation.”

A May 2011 environmental and social impact assessment of the project by the National Engineering Services Pakistan and Lahore-based Country Services Mapping Service Ltd. shown to Bloomberg by Fikru said there were “no resettlement issues” and that the project would improve local livelihoods.