Mounting violence in Ethiopia has seen many killed, as protests against the government’s economic and human rights policies continues. The tensions at the heart of the crisis are systemic ones, yet what makes the violence particularly worrisome is that foreign investors have become prominent targets. Foreign businesses are being systematically attacked in protest of the government’s development-centric approach, with protesters citing land grabs and unfair competition as key issues.
Foreign investor confidence in Ethiopia has been shaken following nearly a year of unrest, with the country’s government now admitting that many people have died as a result of police crackdowns and a deadly stampede in the country’s Oromia region.
Government estimates claim that around 40,000 workers at foreign companies have been affected by the disruptions; as cement, textile, flower, and agribusiness firms have been attacked. Popular sentiments that the benefits of growth are not being felt by all, combined with worries about foreign goods undercutting local producers has made Ethiopia a very dangerous investment locale.
Prime Minister Hailemariam Desalegn declared a six-month state of emergency in an attempt to quell the protests by ethnic Oromo and Amhara communities over a land dispute and political marginalisation. The unrest has caused millions of dollars worth of damage to foreign-owned businesses, including flower farms and other agribusinesses. The anti-government protests have dented the view that Ethiopia is a stable partner for investment, according to Emma Gordon, a senior analyst with research firm Verisk Maplecroft. “[Foreign] investors are very concerned with the situation in the country, with some already pulling out,” she said. “They were willing to look past the human rights [abuses] perpetrated by the security services, but it’s difficult to ignore them now.”
Foreign-Owned Businesses Cease Production
A US-based company has pulled out of Ethiopia after anti-government protesters attacked its flower farm causing 10 million euros in damage, and triggering job losses in the country and The Netherlands, a spokesman said. Flower growers and exporters, Esmeralda Farms began operations in the northern Amhara region of Ethiopia some three years ago, said Juan Carlos Vallejo, a board member for the company.
Headquartered in Miami, with a base also in Ecuador, the company had employed some 550 Ethiopians growing flowers for export mainly to Europe and Russia via its subsidiary in The Netherlands, said Vallejo. But the farm’s premises were attacked and burnt to the ground earlier this month by protesters who also set fire to neighbouring farms belonging to Italian, Indian and Belgian companies, Vallejo told AFP.
A “large group” of people invaded Esmeralda Farms Inc.’s farm 13 kilometers (8 miles) south of Bahir Dar city in the Amhara region on Aug. 29, causing about 7 million euros ($7.8 million) of damage, country manager Haile Seifu said by phone. Flower farms in the area owned by Israeli, Italian, Indian and Belgian companies were among nine commercial properties damaged in the protests, which continued on Aug. 30, he said.
“They were so aggressive, there were also soldiers who couldn’t control them, so we just ran away, as it’s life or death,” he said from the capital, Addis Ababa. “They came actually at once through our compound, through our fence, through our main gate, so everybody left.” “It was crazy. They burnt all of our facilities, the dining rooms, everything was set on fire,” he said, adding that 35 acres of the 160-acre farm had been under production, mostly growing spring roses and gypsophila. “Protestors destroyed tractors, trucks, containers, and the packaging hall, along with irrigation pumps and the company’s greenhouses. Everything is gone,” according to Director Loui Hooijman, who travelled to the country 24 times last year to set up operations. During those trips, he found Ethiopia to be “one of the most peaceful countries in Africa,” he wrote in a statement.
A bore hole the company had also sunk to provide water – which was also supplying the local population – was also damaged. Although there were no casualties, the damage was so great “we definitely cannot go on the farm any more, our facilities are completely destroyed.”
Esmeralda had sent everyone home and was still “trying to understand what happened,” Vallejo said, adding until then the company had only good experiences in Ethiopia. He said he believed the events may be linked to months of protests by the Omoro people who had feared their farmland would be seized for a government plan to expand the capital Addis Ababa. Esmeralda had “to stop our operation there, and we also had to stop our operations in The Netherlands” in the central town of Aalsmeer with the loss of 25 jobs.
European export operations are now being handled from Ecuador, he added. Dutch growers’ cooperative Royal Floral Holland had earlier said that “at least four nurseries in the vicinity of Bahir Dar in Ethiopia have been damaged by arson and vandalism.”
Demonstrations in Ethiopia began popping up in November 2015 in the Oromia region, which surrounds the capital, over government plans to expand the boundaries of Addis Ababa. Although authorities dropped the urban enlargement project, brutally suppressing the protests, unrest has swept to other parts of Oromia, and more recently to the northern Amhara region.
Terribly Scared
When protesters torched a nearby Dutchrun farm in Ethiopia’s Oromia region, Marc Driessen watched anxiously as smoke billowed above the horizon, fearing his own business would meet the same fate. “I was really terribly scared because I saw AfricaJuice burning from our farm and we were getting noise from people that most likely our farm would be next,” he told AFP from his flower farm, Maranque, which boasts recently installed solar panels worth 600,000 euros ($650,000).
The farm, some 125 kilometres (77 miles) south of Addis Ababa, is at the heart of the restive Oromia region where antigovernment anger erupted into violence after at least 55 people died in a stampede at a religious festival on October 2. Not long after AfricaJuice, a Dutch fruit farm, went up in flames, hundreds of protesters brandishing sticks, rocks and a few guns gathered in front of Maranque.
Locals Intervention
It was a group of elders from the nearby village who rushed to the farm on their scooters, who saved the day. “We put ourselves in front of the protesters and we told them ‘Maranque is our property, do not burn it. Burning this farm will not change the government. You’ll kill us rather than destroying this farm’. And our youngsters backed away,” said community elder Shumi Telila.
More than 800 residents of the village of Alaga Dore work at the farm. “It was like a war,” said Abraham Negussie, an employee at AfricaJuice, describing an attack by thousands of men, some armed with Kalashnikov rifles, according to witnesses. “Protesters say we don’t want to hurt the people, only to destroy this property completely,” he added. The attack left a trail of destruction with warehouses destroyed and vehicles and equipment burned.
It will affect investors
The violence in Ethiopia poses a threat to its reputation as an oasis of relative political stability and its double-digit growth, which make it a magnet for foreign investment. Driessen, who has been in Ethiopia for 12 years, is convinced that carefully nurtured ties to the local community helped protect his farm, where chrysanthemums, dahlias and lavender grow in greenhouses. “We built a water line in the village, we put a cement floor in the school, we fixed their electricity generator… we need to do what we can to help the people surrounding us,” he told AFP.
Driessen said he was drawn to the Horn of Africa nation by its low production costs and the ideal climate of the Rift Valley. His company has invested 10 million euros in Ethiopia. “It will affect new investors dramatically,” he said of the recent violence.
Opinions 
Experts, however, warn the unrest is far from over. “The moment the troops leave, there will be new attacks,” says Mohammed, who believes the best thing foreign companies can do is reach out to local elders and negotiate a deal for protection in exchange for land.
Others believe foreign agri-business should leave Ethiopia altogether. “If they truly want to help the country, foreign companies should leave and show the government that abusing its citizens will not attract foreign investment,” says Anuradha Mittal, executive director of the Oakland Institute. Anuradha Mittal, sums up the state of affairs in Ethiopia: “If I am a foreign investor, I look for opportunities. I understand that there are risks but in the face of this growing unrest where foreign companies have been targets, given all that has happened in terms of displacement of people and their lands given away to foreign investors, it would be astute to not go into a country like that.”
Government response hurts investor confidence
Alongside the unrest, the government’s response has only further unsettled foreign investors. The country’s state-run internet service was shut off for two days in August to disrupt protests. This move only further damaged investor confidence, and mainly hurt businesses, not protesters. In a country where a third of the population lives on less than $1.90 per day, most protesters do not have internet access, as support for the movement is largely located in rural areas. Shutting off the internet only further compromised the position of foreign companies in Ethiopia.
Job Creations
Dutch firms insist their main goal is to help Ethiopia’s development. According to their government, Dutch companies alone provide 70,000 jobs in the country. “We have a great relationship with the local community,” says Bas Rensen, director of FV SeleQt. His company had only been exporting beans for a couple weeks when their farm was attacked, but was already supporting a local school. AfricaJUICE is a Fairtrade certified business and ran a free health clinic for its workers.
Still, both companies have ties to Ethiopia’s regime. The Ethiopian government owns approximately 10% of africaJUICE, while FV SeleQt’s supplying farm, says Rensen, is run by “someone very close to the government”. Both firms, however, say they were not aware of any land-rights issues where they operate and believe their political connections were not the reason behind the attacks. “It was purely bad luck,” says Rensen.
There is still some Hope
Despite the shock, some investors believe that Ethiopia’s economy remains solid due to the country’s strong institutions and infrastructure, according to Ibi Idoniboye, Africa analyst at market research company Integer Research. “It’s true that we are experiencing a short-term dip in investor confidence, but the long-term view of the economies in East Africa, especially Kenya and Ethiopia, is still positive and we expect to see solid growth this year,” he said. But in the short-term, the anti-government protests will markedly slow down foreign investment, especially in the agribusiness sector, which has bore the brunt of the violence, said Gordon. “The instability will continue until there is political reform in the country and the concerns of the protestors are addressed,” she added.
Moreover, Angela Merkel in Ethiopia to discuss issues of trade and migration, expressed concerns about German interests in the country, as Germany constitutes Ethiopia’s largest export destinations. Specifically, Germany consumes 30% of Ethiopia coffee production – a major cash crop and source of foreign currency. These exports could be threatened as unrest in agricultural areas continues, and protesting farmers continue to hinder the movement of goods to the capital.
German Chancellor Angela Merkel called on the Ethiopian government to be more inclusive and warned against using heavyhanded tactics against protesters. The government has denied accusations that the police have used excessive force but has acknowledged the need for political reform.
Conclusion
The country is now the second-largest flower exporter in Africa, with nearly a 100 flower growers on 1,700 hectares. The flower production started south of the capital Addis Ababa. Part of the country side is situated at 2.000 meter above sea level. North of the capital of Amhara, Bahir Dar, the flower production can be realized at an elevation of 2,840 metres above sea level. The Ethiopian Horticulture Producers Exporters Association expects that the area for floriculture will grow to 3,000 hectares in the coming five years and the revenue is projected to increase to $550 million, already by the end of 2016. However, the recent political problems in the country could interrupt the steady growth in foreign.