Cablegate: Ethiopia Becomes Fourth African Country

DE RUEHDS #2346/01 2740632
R 010632Z OCT 09




E.O. 12958: N/A
SUBJECT: Ethiopia Becomes Fourth African Country
to Sign a Comprehensive Africa Agriculture
Development Program Compact


ADDIS ABAB 00002346 001.2 OF 004


1. (U) As part of the USG's food security initiative implementation
plan development, USAID Ethiopia continues to produce information
sharing cables to highlight progress and plans in key areas. This
Comprehensive Africa Agriculture Development Program (CAADP) cable
is a continuation of this series. Also refer to cables on food
security and livestock programs (Refs A and B). In the coming
weeks, USAID Ethiopia will send an additional cable summarizing the
details of the food security initiative implementation plan. The
cable will also give an overview of agriculture development
coordination between government and development partners.

2. (U) With the August 27 signing of Ethiopia's CAADP Compact, the
Government of Ethiopia (GOE) has reconfirmed strong commitment to
agriculture development. During the CAADP Ethiopia process,
existing agriculture development policies were evaluated and
recommendations were provided to further accelerate Ethiopia's
agriculture growth. All recommendations were accepted by the GOE
and included harmonizing Ethiopia's seed policy with regional
countries, accelerating the land registration process and placing
more focus on the livestock sector. To support the CAADP Ethiopia
compact, the GOE and development partners are collaborating through
the Rural Economic Development and Food Security (REDFS) Working
Group. Under REDFS, the three focus programs are Food Security,
Agriculture Growth and Sustainable Land Management. These programs,
which are aligned with the CAADP Ethiopia framework, are currently
being designed jointly by the donor community and the GOE. In the
coming months, a Policy Investment Framework (PIF) will be developed
using the CAADP Ethiopia compact as a basis of investment for both
development partners and the GOE. END SUMMARY.

CAADP Background

3. (U) In 2002, the Comprehensive African Agriculture Development
Program (CAADP) was initiated. This program aims to fundamentally
shift the way African leadership looks at agriculture and its
potential contribution to end poverty and hunger. To achieve these
goals, African governments have pledged to devote 10% of public
expenditures to the agriculture sector, while striving for at least
6% annual agriculture growth. Under CAADP, four key pillars have
been agreed upon: Extending the area under sustainable land
management, Improving rural infrastructure and trade related
capacities for market access, Increasing food supply and reducing
hunger, and Agriculture research, technology dissemination and

4. (U) CAADP is managed by the African Union's New Economic
Partnership for Africa's Development (NEPAD). Currently, Prime
Minister Meles Zenawi of Ethiopia is the Chair of NEPAD. After some
hesitation to embrace CAADP, Ethiopia has enthusiastically adopted
the CAADP process.

CAADP Ethiopia Process

5. (U) Unlike many other African countries, Ethiopia has surpassed
the CAADP targets of 6% agriculture sector growth and devoted more
than 10% of public expenditures to agriculture for successive years
before starting the CAADP process. In recent years, the official
growth rate in the agriculture sector has been around 13%, while
budget allocations have been at 15%. This level of investment is
crucial for Ethiopia's development, as roughly 85% of the population
is engaged in agriculture and 46% of Gross Domestic Product (GDP) is
derived from the agriculture sector. With the main CAADP benchmarks
already achieved, the Ethiopia process and compact design has been
slightly different compared to other countries.

ADDIS ABAB 00002346 002.2 OF 004

6. (U) In Ethiopia, the CAADP planning process started in September
2008 with a launching ceremony. After the launching ceremony, a
national consultant team was formed to complete the CAADP
stocktaking document. This group included a team leader with an
agriculture economics background, a livestock/pastoral expert and an
agronomist. Following discussions with the GOE and stakeholders,
the consultant team identified a gap in knowledge regarding natural
resource issues. With support from the Common Market for Eastern
and Southern Africa(COMESA), a fourth national consultant was hired
who had strong expertise in natural resource management.

7. (U) Through the CAADP Ethiopia process, technical assistance was
provided to further define the GOE's agriculture development
strategy and accelerate recent development progress. Also, the
CAADP study allowed for development challenges to be further
examined. To support the CAADP Ethiopia process, USAID provided
funding to COMESA to fund workshops and hire national consultants,
through the Regional Enhanced Livelihood Program in Pastoral Areas

8. (U) The CAADP team quickly agreed that agriculture is the prime
sector for Ethiopia's long-term development. The consultancy
started with a review of existing national development strategies,
which included Rural Development Policies (RDPS), Plan for
Accelerated and Sustained Development (PASDEP) and the Agriculture
Led Industrialization Strategy. Afterwards, consultations were held
with key stakeholders, including donors, federal and regional
government representatives, civil society and the private sector.
Also, the team assessed the current capacity of government

9. (U) Following this review, the CAADP team was able to undertake a
gap analysis of existing programs. The group determined that
further work is needed regarding the harmonization of seed policy
with East and Central African countries. Also, more focus is needed
for livestock and pastoralist programs in the coming years. Another
major gap identified was the capacity level at the Ministry of
Agriculture and Rural Development (MOARD). Low capacity and
frequent changes in staff was observed at both the Federal and
Regional level, which constrained long-term development

10. (U) During the study, the CAADP pillars were "indigenized" to
the Ethiopian context to include the following four pillars: Improve
Natural Resource Management and Utilization, Improve Rural
Infrastructure, market access and trade capabilities, Enhance food
security and improve disaster risk management and Improve the
agriculture research and extension system. Through the CAADP
stocktaking phase, 46 national agriculture policy positions were
organized into the four CAADP Ethiopia pillars. With the Plan for
Accelerated and Sustained Development to End Poverty (PASDEP) soon
to expire, the CAADP study has informed and influenced the
preparation of the next phase of PASDEP.

11. (U) The CAADP stocktaking document also included the Ethiopian
General Equilibrium Model, which was completed by the International
Food Policy Research Institute (IFPRI). Major findings of the model
concluded that Ethiopia can sustain 6% agriculture growth in the
medium term. In addition, most rural households will directly
benefit from this agriculture growth. Some households located in
high rainfall areas and situated near urban centers stand to achieve
higher economic benefits. The study also concluded that growth
driven by cereal crop production generally will have larger impacts
on poverty reduction.

12. (U) In the final stocktaking document, the CAADP consultant team
concluded that agriculture will remain crucial for Ethiopia's
economic development. The substantial investments of the GOE have
contributed to the recent growth in the agriculture sector. At the
same time, much more work and resources are required to achieve
Millennium Development Goal I of halving hunger and poverty by 2015.
The team also provided 25 specific recommendations to the GOE.
Most importantly, the team recommended that all future proposed
programs fall under the CAADP Ethiopia framework, as this framework

ADDIS ABAB 00002346 003.2 OF 004

uses past GOE strategies as a base and takes into account current
program and policy gaps. Other specific recommendations include
improvement of coverage and focus in the livestock and pastoralist
sector, review of the seed policy and strategy in line with the
emerging regional interests, institutionalization and promotion of
land administration, a review of the warehouse receipt and credit
program of the Ethiopia's Commodity Exchange and enhanced capacity
development interventions.

13. (U) Throughout the CAADP stocktaking process, the national
consultants communicated frequently with the State Minister for
Agriculture Research and Extension and also with the GOE's CAADP
Focal Point, the Director of the Extension Directorate.
Additionally, the consultant team worked with the Rural Economic
Development and Food Security (RED&FS) Donor Working Group. In
June, a joint planning workshop was held with the Agriculture Growth
Program of the RED&FS group. This meeting was attended by several
USAID representatives.

14. (U) In July, the CAADP stocktaking document was formally
completed and presented to both MOARD and the Ministry of Finance
and Economic Development (MOFED). This document was subsequently
endorsed by the GOE. Afterwards, the GOE moved quickly to plan the
CAADP roundtable and Compact Signing ceremony.

CAADP Roundtable and Compact Signing

15. (U) On August 25-26, the CAADP Roundtable discussion was
organized, which was attended by several USAID technical officers.
USAID Ethiopia's Mission Director participated in the CAADP Ethiopia
Compact signing on August 27th. At the ceremony, the Canadian
International Development Agency (CIDA) signed the CAADP Compact, as
the representative of the Development Assistance Group (DAG). With
the signing, Ethiopia becomes the fourth African nation to sign its
CAADP Compact, after Rwanda, Togo and Burundi.

16. (U) With the CAADP Compact signed, USAID Ethiopia has earmarked
additional resources to provide technical assistance to the GOE for
development of a CAADP implementation and investment plan, which
will accelerate agriculture development and move Ethiopia toward
long-term food security.

Opportunities and Challenges

17. (U) In the past, some observers have felt that government policy
has constrained agriculture development. Through the CAADP policy
review, the national consultant team concluded that existing
government polices provide adequate direction on key issues
including support of commercial agriculture, development of a
private sector input supply system and promotion of the land
certification process. Unfortunately, the implementation of policies
often lags behind official positions. While constraints certainly
exist, the policy environment is improving in some areas. For
example, much progress has occurred in land certification.
Recently, the GOE has pledged to complete second level land
certification throughout the country. This will insure that all
landholders will receive surveys. Although land still cannot be
used as collateral or be sold, research has shown that certified
land plots have increased in value by 9%. The GOE is strongly
committed to the land certification process, which is illustrated by
MOARD's recent establishment of a national land administration
taskforce. In the future, USAID Ethiopia will continue to advocate
for policy improvements. Focus areas include improving the enabling
environment for the private sector, particularly in inputs such as
seeds, reduction of transaction costs in market and transport and an
overhaul of the agriculture and research systems.

The Way Forward

ADDIS ABAB 00002346 004.2 OF 004

18. (U) Under the USG's new food security response, country led
strategies have been emphasized as a critical requirement for future
funding commitments, while also being crucial for the long-term
sustainability of the initiative. During the development of the new
USG food security initiative implementation plan, USAID Ethiopia has
employed the lead national consultant for the CAADP Stocktaking
document. This has ensured that USAID Ethiopia's food security plans
are closely aligned with the CAADP Ethiopia framework. In addition,
the Mission has collaborated closely with both Federal and Regional
officials regarding the USG's new food security response framework
and potential focus areas.

19. (U) Complementing the CAADP process, the GOE and donors have
worked closely to prioritize future investments through the Rural
Economic Development and Food Security (RED FS) Donor Working Group.
This working group is part of the larger DAG, which includes all
major donors to Ethiopia. Within RED&FS, there are four sub
programs: Agriculture Growth, Food Security, Sustainable Land
Management and Private Sector Development. Thus far, the Food
Security Program (FSP) and Sustainable Land Management planning have
progressed farther than the other programs. USAID's leadership in
the design of the second phase of the FSP serves as a model for
future multilateral food security response activities.

20. (U) In the coming months, the Agriculture Growth Program's
pre-appraisal Mission will start. With agriculture productivity
being a major focus of the new food security response, USAID
Ethiopia believes that a portion of funding can be allocated with
this multi-lateral mechanism.


21. (U) In recent months, USAID Ethiopia has worked closely with
MOARD to encourage movement toward completion of the CAADP process.
USAID Ethiopia is pleased that the GOE has shown strong commitment
to the CAADP process. The successful completion of the CAADP process
has institutionalized CAADP as the country's agriculture development
strategy and framework for future investments. While the CAADP
benchmarks of 6% annual agriculture growth and 10% of public
investments devoted for the agriculture sector have been met for
successive years, the GOE realizes that additional resources and
attention are needed to tackle poverty and food security challenges.
Additionally, policy reforms are needed to encourage more
agriculture led growth. USAID Ethiopia believes that the recent
work completed through the CAADP Ethiopia and RED&FS processes
create a strong framework to effectively utilize increased food
security funding in the coming years. End Comment.


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