By Andualem Sisay Gessesse – In the face of political unrest the country went through, Ethiopia gets $228.6 million from flower export last Ethiopia fiscal year ended July 7, 2018 achieving 68% of its target.
The ministry of trade of the country, which is recently merged with ministry of industry, stated in its report that the reason the target was not achieved is because some companies have not been able to fully utilize their potential using all the land they have acquired.
The report has also mentioned the flooding around Debre Zeit and Koka Lake, which caused damage on some of the flower farms in the area at the time, as the main cause for the reduction of flower production of Ethiopia and revenue.
The other factor for not meeting the revenue target also includes, the unrest in the country at the time has also forced some daily laborers to stop work and flee from the area, according to the report.
Ethiopia’s income from flower export has been increasing steadily over the years. The country earned close to $131 million ten years ago.
Meanwhile, the ambition of the government set some two decades years ago when introducing flower farms, was to make the industry a billion dollars revenue generator by now.
Government reports show that currently there are a number of flowers producing companies in Ethiopia, including roses, gypsophilia, hypericum, limonium, carnations and chrysanthemum.
The Ethiopian Highlands provide near ideal growing conditions for roses, according to investment comission publication. Ethiopia’s rose industry grew from 40 hectares productive to 250 hectares productive between 2004 and 2006.
Incentives such as, a five-year tax holiday, duty-free imports of machinery and easy access to bank loans and land have attracted investors.
Incentives:
Ethiopia’s investment incentives has been giving also includes:
• A 100% exemption from the payment of import customs duties and other taxes levied on imports is granted to investors to cover the importation of investment capital goods such as plant machinery and equipment.
• Investment capital goods imported without the payment of import customs duties and other taxes levied on imports may be transferred to another investor enjoying similar privileges.
• Exemptions from customs duties or other taxes levied on imports are granted for raw materials necessary to produce export goods.
• Ethiopian products and services destined for export are exempted from paying any export tax and other taxes levied on exports.
• Any income derived from an approved new manufacturing and agro-industry investment or investment made in agriculture will be exempt from the payment of income tax for different periods of time, depending upon the area of investment selected, the volume of exports and the location in which the investment is undertaken.
• Any remittance made by a foreign investor from the proceeds of the sale or transfer of shares of assets upon liquidation or winding up of an enterprise is exempted from the payment of any tax.
• Business enterprises that suffer losses during the tax holiday period can carry forward such losses for half of the income tax exemption period, following the expiration of the exemption period.
Critics
Meanwhile, investment in the flower sector has also been subject to critics. They have been criticizing the goverment for not giving much attention to the damage the chemicals cause to the environemnt and the people working in the green houses.
While others blame the investors engaged in flower farm for cheating. According to a blog by Duncan Green, strategic adviser for Oxfam GB, 97% of the final value of the rose one buys in Europe shop never reaches Ethiopia.
“Does Ethiopia earn a fair proportion of the final price for its roses? No. Should we keep up pressure on the companies involved to improve wages, conditions and environmental management? Definitely,” he wrote.