Principles of responsible large-scale agricultural investment require transparency in negotiation, protection of land rights, (are considered in the previous chapter), adherence to Ethiopian laws and policy, benefit sharing and environmental sustainability.
267 International Fund for Agricultural Development (IFAD), Responding to ‘land grabbing’ and promoting
responsible investment in agriculture 8. The ‘seven tenets’ that is the principles of responsible agricultural investment include: a) land and resource rights; b) food security; c) transparency, good governance and the enabling environment; d) consultation and participation; e) economic sustainability and responsible agro-enterprise investing; f) social sustainability; and g) environmental sustainability. OECD ‘Freedom of investment process: Responsible investment in agriculture’ (2010) 5; Government of Japan ‘Promoting responsible international investment in agriculture’ 2.
268 ‘Responsible agricultural investment aims to act as a reference point for international investment contracts
and corporate social responsibility.’ Brief What are the principles for responsible agricultural investment (RAI) and
why do they matter? (2011) 2.
269 Dejene Aredo Agricultural development: Theory, policy and practice (2011) 172.
270 As above. The principles are aimed at mitigating negative impact of large-scale agricultural investment
through policy measures. OECD (n 267 above) 3.
271
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4.9.1 Adherence to Ethiopian laws
Large-scale agricultural investors are required to comply with the Ethiopian laws in general. This is incorporated in the bilateral investment treaties. For instance, Ethiopia is empowered to promote investment in the country according to its laws and Chinese investors are obliged to comply with the Ethiopian laws.272
The investment law of Ethiopia also requires every foreign investor to comply with the Ethiopian laws. Before issuing investment permit, the Ethiopian Investment Commission (EIC) is responsible to ensure that the investors observe the relevant laws of the country.273 This indicates that the large-scale agricultural investors should undertake the duty to comply with relevant laws of Ethiopia. The Commission is duty bound to monitor that investors undertaking their investment according to the Ethiopian laws and the terms and condition of the investment permit.274 Furthermore, the large-scale agricultural investors are under obligation to observe the laws of the country in carrying out their investment activities.275
4.9.2 Benefit sharing
The benefits of large-scale agricultural investment to the local people should be clearly provided in the law. This could be made in the agreement. However, the purpose of large-scale agricultural investment is not clearly put.276
Putting some performance requirements on large-scale agricultural investors can promote the development policy of the host state and ensure benefits to the local people. Thus, Ethiopia should impose performance requirements to promote domestic development benefits from large- scale agricultural investments.277 Such performance requirements can include imposing an obligation on large-scale agricultural investor to export only certain percentage of its products and to sale certain percentage of its products on local or domestic market.278 It is also essential to oblige foreign large-scale investor to purchase goods or services from persons or farmers in the
272 Ethio-China Investment Treaty (n 257 above) Art. 2. See also Ethio-German Investment Treaty (n 252
above) Art. 2(1).
273 FDRE Investment Proclamation No. 769/2012 (n 8 above). 274 Above, Art. 28(11).
275 Above, Art. 38. The provision gives attention to environment by specifically obliging the large-scale
agricultural investor to give due regard to environmental protection laws of Ethiopia. Above.
276 Interview made with Mr Abebe Mulatu, a legal expert conducted in 2013 (Addis Ababa).
277 See International Institute for Sustainable Development (IISD) Model international agreement on investment
for sustainable development (2005) Art. 26(B).
278
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locality.279 Moreover, other measures like constructing roads, electricity providing and pure water for the local residents should be imposed as obligations on large-scale agricultural investors to promote domestic development in the locality.280 Large-scale agricultural investment contracts should provide the rights and obligations of all parties to ensure benefit sharing and it should be formulated in specific and enforceable terms.281 In Ethiopia, activities such as constructing roads and educational institutions are crafted in the form of the rights of the large- scale agricultural investor instead of being made obligations.282 Thus, this contract cannot ensure
benefit sharing to the local community.283
Export requirement is a development strategy of earning income through the export of goods.284 This development model aims at earning foreign exchange through exporting products that are manufactured in host states.285 According to this development model, foreign investors are duty bound to export certain percentage and such requirement could be made as an entry requirement under the host state investment law. However, performing this requirement may be difficult for investors and became a point of dispute.286
Neither the BITs nor the investment proclamation of Ethiopia does provide this requirement.287 The basic reason for that seems to be the fact that the foreign countries do not want such a requirement to be imposed on their investors (citizens). Thus, Karuturi promised to produce maize, rice, palm oil and sugar for the global market, while Saudi Star will produce rice
279 Above, Art. 26 (C) (iv). 280 See Above, Art. 26 (C ) (vii).
281 African Union et al Guiding principles on large scale land based investments in Africa (2014) 10. 282
See for instance, Verdanta Land Rent Contractual Agreement (n 258 above) Art. 3.2. According to this provision, the lessee has the right to build infrastructure like dams, powerhouses, irrigation system, roads, bridges, office, power supply stations for the purpose of the investment, not for the local residents. Similarly, the investor has the right to build infrastructures for the purpose of the investment itself. Gambella People’s National Regional State Regulations to Determine Rural Land Investment Lease Cost Regulations No. 2/1999, Gambella Negarit Gazeta, Art. 16 (hereinafter Gambella Rural Land Regulations No. 2/1999).
283 In developing countries, large-scale agricultural investment contracts, in most cases, are negotiated between
foreign contractors who are advised by experienced lawyers, and the host government who is having less incapable personnel. Public policy should ensure that foreign investment and domestic commercial interests are of beneficial to the host country at large. CD Phiri ‘Agricultural investment and agriculture, rural development and food security’ (2011) 5. In Ethiopia, the large-scale agricultural investment agreements are designed by non-lawyers, and this perhaps is one of the reasons for poor drafting.
284 Singapore, Hong-Kong, Taiwan and South Korea have succeeded in bringing a spectacular growth for their
economies through this development model. M Sornarajah The international law on foreign investment (2010) 109.
285
As above.
286 Above, 109-110.
287 Karuturi is investing in Gambella to cultivate cereals and pulses, among others, but the contract does not
include a requirement of certain percentages of the products to be sold in Ethiopia. See Karuturi Agreement (n 223 above) Art. 3. See Saudi Star Agreement (n 222 above) Arts. 1 and 3.
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to sell on global market.288 However, Karuturi has abandoned working after causing severe destruction on the environment.
4.9.3 Environmental sustainability
The principle for sustainable large-scale agricultural investment requires the investment to be environmentally sustainable.289 The principle requires large-scale agricultural investors to use natural resources, like land, energy and water in the most sustainable and efficient ways, according to the existing knowledge, technologies and capacity. Investors are also required to sustain ecosystems.290
Participants in a workshop organised by Green Forum to discuss on environmental sustainability in Ethiopia argued that economic growth, i.e. large-scale agricultural development and environmental sustainability are interdependent. The participants emphasised the need to have and implement appropriate policies so as to promote the large-scale agriculture and protect the environment.291 Ethiopia enacted various laws to ensure environmental sustainability in carrying out large-scale agricultural investment.292 In addition, the Ministry of Agriculture and Natural Resources has developed social and environmental code of practice for agricultural investment.293 Regarding the implementation of the Code, training is given to inspectors working
288 GRAIN Land grabbing and the global food crisis (2011) 23.
Our agreement with government is purely commercial. Government is charging us a rent… what we choose to do on the land for our own commercial intent is our own business. There are (sic) no governance, no constraints, no contracts, none of that. Foreign investor in Gambella Region, cited by Okland Institute (n 107 above) 30.
289
Committee on World Food Security (CFS) ‘Background document on principles for agricultural investments (rai) in the context of food security and nutrition (Zero Draft)’ Principle 2. It is believed that the interest of development and environmental protection can be balanced by employing sustainable development. See RN Stavins ‘Environmental Protection and Economic Well-being: How does (and how should) government balance these two important values?’ (2003).
290 CFS, above, 5. Clean air, fresh water, trees, forests, productive soil, and animal life together with other
renewable resources constitute ecosystem. Above, 5.
291 Green Forum (n 110 above) 110-11.
292 One of these laws is the lease agreement concluded between the Ethiopian government and each large-scale
agricultural investor. The agreement imposes obligation on investors to protect the environment. See Karuturi Agreement, (n 223 above) Art. 4(1), Saudi Star Agreement (n 222 above) Art. 4(1). It is possible to categorize the obligations imposed on investors as general and specific as provided under the lease agreement.
293 FDRE Social and Environmental Code (n 263 above). Agricultural investment code of conduct is aimed at
ensuring the safety of local community, sustainable use of natural resources, and the investment is friendly with the environment and the [products are suitable to human health. Ethiopian Agricultural Investment Land Administration Agency Establishment Council of ministers Regulations No. 283/2013, Federal Negarit Gazeta 19th Year No. 32
Addis Ababa 4th March 2013 Art. 2(5); See also Ethiopian Horticulture and Agricultural Investment Authority
Establishment Council of Ministers Regulations No. 396/2017 Federal Negarit Gazeta 23rd Year No. 13 Addis
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in regions so as to enable them to inspect that investors are working according to the code of conduct.294
Laws of protected areas
Several agreements have been made at the international level to establish and govern protected areas. The World Heritage Convention (WHC), is one that was concluded and adopted on November 16, 1972 at the Stockholm conference on the Human Environment.295 The Convention on Biological Diversity stipulates that parties should 'establish a system of protected areas or areas where special measures need to be taken to conserve biological diversity'.296 In Africa, several instruments are made and the 2003 African Convention is intended to provide protection only for properties of outstanding interest, importance or value.297 Ethiopia is a party to the CBD and the African Convention and has the obligation to establish protected areas.
Protected areas are parts of the environment, which include historic places, national parks, and forests. Numerous national parks have been established that recognised protected areas in Ethiopia.298 The Ethiopian protected area system also considers forest areas and wildlife conservation as a principal mechanism for protecting biodiversity and the ecosystem.299
The Ethiopian Wildlife Strategy and Policy identified that improper land use that ‘...includes habitat destruction due to illegal agricultural encroachment, rapid population growth, illegal settlement and poaching are main threats to the wildlife of Ethiopia.’300 Therefore, administering the wildlife-protected areas is paramount, and this requires delineating the boundaries and regulating them by law.301 Accordingly, the Ethiopian Government enacted a proclamation
having the following objectives:302
1) to ‘conserve, manage, develop and properly utilise the wildlife resources of Ethiopia;’
294 Interview conducted with Mr. Assefa Onani, 2012.
295 A Gillespie Protected Areas and international environmental law (2007) 10. 296 CBD (n 256 above) Art. 8.
297 See Gillespie (n 295 above) 11.
298 Federal Democratic Republic of Ethiopia United Nations Development Program Global Environment
Facility ‘Sustainable development of the protected area system of Ethiopia (SDPASE)- PIMS’ (Project Document) 9-10.
299
Global Environment Facility ‘Request for CEO environmental/approval’ (CEO Endorsement Template) 9.
300 Federal Democratic Republic of Ethiopia, Wildlife strategy and policy (2005) 1. 301 Above, 2.
302 Development, Conservation and Utilization of Wildlife Proclamation No. 541/2007, Federal Negarit Gazeta,
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2) To create conducive environment to discharge international treaty obligations; and
3) To promote wildlife tourism and private investment.
Parks that do have national and international representative ecological zones and biodiversity and sanctuaries inhibited by the Ethiopia’s endemic and endangered species, among others, shall be designated and administered by the Federal Government.303
The Ministry of Agriculture and Natural Resources is empowered to ensure the conservation of wildlife as per the international standards304 and to control illegal activities regarding wildlife;305 and to ensure the implementation of treaties to which Ethiopia is a party.306 Regions are also empowered to perform similar duties regarding the wildlife areas under their jurisdictions.307 Any person who violates the provisions of the proclamation is punishable.308 One of the rationales to enact Forest Development, Conservation and Utilization Proclamation is to ensure sustainable utilization of the Ethiopia’s forest resources309 while protecting the environment.310
Major forest resources must be designated as state forests, their boundaries must be demarcated with the participation of the local community, and shall be registered as protected and productive forests so as to properly conserve, develop and utilize the forest resources of the country.311 Moreover, state forests must be utilized sustainably without disturbing wildlife, and conserving the ecosystem and the biodiversity.312 This proclamation allows undertaking of large- scale agricultural investment in consultation with and getting the approval of the Ministry of
303 Above, Art. 4(1)(a )(b). 304 Above, Art. 13(5).
305 Above, Art. 13(2). The provision reads:
13. Powers and duties of the Ministry
The Ministry shall, in addition to those given to it under other provisions of this Proclamation, have the powers and duties to:
…
2/ develop and administer wildlife conservation areas established in accordance with Article 4 of this Proclamation and control illegal activities to be committed in relation thereto
306 Above, Art. 13(7). 307 Above, Art. 14. 308 Above, Art. 16. 309
Forest Development, Conservation and Utilization Proclamation No. 542/2007, Federal Negarit Gazeta, 2nd paragraph of the Preamble (hereinafter FDRE Forest Proclamation No. 542/2007).
310 Above, 3rd para. of the Preamble. 311 Above, Art. 8.
312
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Agriculture or the appropriate regional body.313 The Amharic version makes it clear that such activity can be made in state forests, which indicates protected and productive state forests can be given for large-scale agricultural investment. Protected forests should not be given to large- scale agricultural investment. This contradicts with the basic rational of the proclamation itself- to sustainably utilize the forest with protecting sanctuaries, wildlife and the biodiversity. It also contradicts with the environmental law of the country.
On the other hand, it is prohibited to undertake agricultural activities or preparing land in protected areas for cultivation.314 In Ethiopia, national parks,315 wildlife reserves,316 wildlife sanctuaries,317 controlled hunting areas,318 community wildlife development, protection and utilisation areas are protected areas. The government is duty bound to delineate or re-delineate their boundaries so as to improve their management.319
The Ministry of Agriculture and Natural Resources is responsible for the implementation of this proclamation, and for issuance of regulations and directives to implement the proclamation by coordinating relevant federal and regional bodies, and by providing technical support to them.320 Any person who violates the provisions of this proclamation, and destroys forest by any means is punishable by law.321
313 Above, Art. 14(5).
314 Wildlife Development, Conservation and Utilization Council of Ministers Regulations No. 163/2008,
Federal Negarit Gazeta, Art. 5(1)(e) (hereinafter FDRE Wildlife Regulations No. 163/2008).
315
National park is defined as ‘an area designated to conserve wildlife and associated natural resources to preserve the scenic and scientific value of the area which may include lakes and other aquatic areas.’ Proclamation No. 541/2007 (n 302 above) Art. 2(8).
316 Wildlife reserve is ‘an area designated to conserve wildlife where indigenous local communities are allowed
to live together with and conserve the wildlife.’ Wildlife Proclamation No. 541/2007 (n 302 above) Art. 2(10).
317 Wildlife sanctuary is ‘an area designated to conserve one or more species of wildlife that require high
conservation priority.’ Above, Art. 2(9).
318 Wildlife controlled hunting area is ‘an area designated to conserve wildlife and to carryout legal and
controlled hunting.’ Above, Art. 2(11).
319 Forest Proclamation No. 542/2007 (n 309 above) Art. 3. ‘Lands demarcated for forest, wild life, and soil
conservation as well as for mining development and historical use shall be preserved sustainably with their general ecological content….’ The Benishangul Gumz Regional State Land Administration and Use Proclamation No. 85/2010, Art. 24(1) (hereinafter Benishangul Gumz Rural Land Administration and Use Proclamation No. 85/2010). The Regulations includes burial areas in addition to the lists included in the proclamation. See Regulations to implement Rural Land Administration and Use Proclamation, Regulations No. 44/2011, Art. 12(7). National parks, historical, religious places and areas for public use should not be used for investment. Gambella Rural Land Regulations No. 2/1999 (n 282 above) Art. 10(2).
320 Above, Art. 17(1)(a). 321
Above, Art. 20, and 21. The practice also shows the implementation of this and relevant laws. For instance, in Oromia Region, in Homosha Woreda, Shi Gu Gut, a person was charged because he caused damage to 15 ha forest by fire against Proc No. 542/2007, Art. 12(1). The Court has found him guilty. Homosha Woreda Court File No. 00592, 04/2/2003 EC (unpublished). In Benishangul Gumz, a person was charged for causing to 2 ha forest in
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The Ethiopian Wildlife Development and Conservation Authority is established322 with the objectives ‘... to ensure the development, conservation, and sustainable utilization of the country’s wildlife resource.’323 The Authority has the duty to control illegal activities committed on wildlife conservation areas.324 However, the law fails to provide controlling mechanisms and measures to be taken.
According to Wildlife Regulations No. 163/2008, ‘undertaking agricultural activities or preparing land for cultivation’325 in protected areas is prohibited. Therefore, no one, including
the government, is allowed to give a piece of land for agricultural activity from land reserved for national Parks, Wild life Sanctuaries and Wild life resources. Therefore, the act of giving some part of the land from any National Park is forbidden. In practice, parts of Omo and Mago National Parks have been given for sugar plantation, and Gambella National Park was affected by large-scale agricultural investment.326
As we have discussed, large-scale agriculture requires the clearance of land to undertake cultivation, which means that all vegetations, trees, bushes and so on shall be cleared to use the land for agriculture. However, some trees should be left to be used as a windbreaker and to conserve the soil. Therefore, the lease agreements provide that a lessee shall conserve trees that have been left after a land is cleared.327 This in fact could help to protect the trees that are in the
farm field so long as they do not disturb the agricultural activities. However, the agreement does
1039 Assossa Woreda Court, 29 Oct. 2003 EC (unpublished). In Gambella Region, Majang Zone, 19 individuals were charged for causing damage to state forest in Mengesh Woreda, Gubet Kebele. They cut trees and produce logs. Prosecutor File No. 62/2000 dated 30/11/2007 Numbered 295/መ /06/01 Majang Zone prosecution office (unpublished). The court passed a sentence each to pay 5,000 Birr or to be imprisoned for three years where failed to pay. Dated 14/9/2001 (unpublished).
322 Ethiopian Wildlife Development and Conservation Authority Establishment Proclamation No. 575/2008,
Federal Negarit Gazeta, Art. 3 (hereinafter FDRE Wildlife Authority Establishment Proclamation No. 575/2008).
323 Above, Art. 5. 324 Above, Art. 6(2).
325 Wildlife Regulations No. 163/2008 (n 314 above) Art. 5(1)(e). Entering the parks holding poisonous
substances and entering the parks with a snare or hunting weapon is prohibited. Gambella National Park Designation Council of Ministers Regulation No. 334/2014 Federal Negarit Gazette 21st Year No. 24 Addis Ababa 20January
2015. Arts. 9(1) and 9(3).
326 J Young Ethiopian Protected Areas: A ‘snapshot’ (March 2012). In Gambella, some investors interfere into
some part of the national park. Group discussion with Majack, Peter and Paul; The agricultural cultivation undertaken by Karuturi is threatening to the biodiversity that includes wetlands. Though the boundaries of Gambella National Park have never been demarcated, large-scale investors including Karuturi and Saudi Star cleared presumed part of the Park. The Okland Institute (n 107 above) 27; Dessalegn (n 94 above) 23. Recently, the Ethiopian Government has designated Gambella National Park covering an area of 4575 kilometre square. Gambella