Agricultural Land Conversion around Gelan and ...

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Agriculture remains the backbone of Ethiopia's economy measured against the .... in the peri-urban areas of Dukem and Gelan town benefit from trickle-down.

Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta

The Impact of Industrialization on Land Use and Livelihoods in Ethiopia: Agricultural Land Conversion around Gelan and Dukem Town, Oromia Region Abstract This chapter presents findings of a study on agricultural land conversion and livelihood changes induced by industrialization in Ethiopia. Based on two study sites, namely Gelan and Dukem, Oromia Region, it displays massive land use change between 2005 and 2013. It also shows changing perceptions of local people towards the development of Industrial Zones and that the majority of the licensed investors did not develop their land in a stipulated time. Key words: Agricultural land conversion, industrialization, Dukem, Gelan

3.1 Introduction and Background to the Study Agriculture remains the backbone of Ethiopia’s economy measured against the number of employment opportunities it offers and its contribution to the GDP. The sector employs 85% of the country’s labor force and accounts for close to 45% of the national GDP. Nearly 95% of Ethiopian export earnings come from agricultural goods, such as coffee, livestock skins, and oil seeds (Gudeta, 2009; MoFED, 2012). However, the agricultural sector in Ethiopia is still dominated by smallholder production with low input-low output cycles and structural poverty. About 95% of all farmers in Ethiopia are smallholders with an average of less than one hectare of farmland (Headey et al., 2013; Kefyalew, 2013). Agriculture is predominantly rain-fed and highly affected by rainfall variabilities. Farmers’ use of “modern” agricultural technologies is generally low, and food crop production often remains insufficient to meet yearlong food security demands (Yesuf and Köhlin, 2008). Teff, wheat, maize, sorghum, and barley constitute the core of Ethiopia’s food crop production. These five crops together cover about 75% of the total area cultivated and account for 29% of the agricultural GDP in 2005/06 (Taffesse et al., 2012).

38 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta The Ethiopian industrial sector is, however, still in its infancy, contributing only a small share to the GDP. Realizing the need for economic growth, and promoting job creation as a priority agenda, the Ethiopian Ministry of Finance and Economic Development (MOFED) initiated the Sustainable Development and Poverty Reduction Program (SDPRP) in 2002 which envisions the overall development goal of reducing poverty (MoFED, 2002). The SDPRP and the subsequent development plans aimed at building a modern economy with a productive agricultural sector using enhanced technology. As well as modernizing the agricultural sector, the Ethiopian government gave due attention to providing better opportunities for domestic and foreign private-sector investments in the industrial sector. Despite the government’s efforts to increase the role of industry in achieving rapid economic development, the industrial sector has shown little growth in Ethiopia and still lags far behind the GDP contributions of the agricultural and service sectors. National sectoral economic reports show that the total contribution of industry to the GDP was about 10% in 2001, compared to about 13% in 2011 (MoFED, 2012). In 2002, the government adopted an Industrial Development Strategy as part of its efforts to vitalize the manufacturing sector. The strategy clearly identifies the priority areas of the manufacturing sub-sectors and suggested how to ensure the development of vibrant industries in the country. Ever since, in the last 12 years, the Ethiopian government has made numerous successive and proactive adjustments to the countries’ structural, institutional and financial systems in order to encourage domestic and foreign private investments. To encourage these investments and the inflow of foreign capital and technology into Ethiopia, numerous incentives have been put in place, such as exemption from import and export customs duties, income tax holidays of up to three years, withholding of profit tax, and access to credit services, as indicated in the investment proclamation No. 280/2002 (FDRE, 2002). Against this backdrop, in 2004 federal and regional state bodies identified and designated eight small towns in Oromia Regional State for the establishment of Industrial Development Corridors. Gelan and Dukem town were among those towns selected and designated for the establishment of Industrial Zones (IZs) for manufacturing industries within these corridors (IPS, 2004). Their selection was mainly reasoned by their proximity to Addis Ababa and Finfine – the Oromia Regional State capital – and their good accessibility at the highway that connects Addis Ababa and Djibuti – Ethiopia’s export and import mainline. Prior to the establishment of the IZs, the land surrounding Gelan and

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Dukem town was intensively used for agricultural production, teff in particular, since centuries. Most of the farmland was used by smallholders. The land was administered in five rural kebeles before it was incorporated into Gelan (i.e. Tulu Guracha and Gelan kebele) and Dukem town (i.e. Koticha, Gogecha and Xadacha kebele). A large body of empirical evidence shows how industries play a catalytic role in the transformation of agrarian societies. The economies of some of today’s fastest growing industrialized countries in Asia, such as South Korea, PR China, and Malaysia, were once dominated by agriculture. In the 1950s for instance, the average contribution of agriculture to the GDP in these countries was close to 40%, while that of the industrial sector was less than 14%. Six decades later, industrial growth has profoundly changed the economies, land use and livelihoods in these countries. A UNIDO report reveals that in 2005, the agricultural sector in South Korea, PR China, and Malaysia contributed to 3–13% of the GDP, while the industrial sector contributed with about 25% (UNIDO, 2012). Likewise, Vietnam managed to undergo dramatic economic transformation and industrialization within two decades of the launching of the Doi Moi (renovation) policy in 1986. In Doi Moi, the Vietnamese government prioritized foreign direct investment in the manufacturing industries, considering it the best way to boost national economic growth. In the following decades, the manufacturing sector stimulated the economy and enabled an annual average per capita growth of 5.3% (UNIDO, 2012). The share of the agricultural sector of 40% of the GDP compared to the industrial sector with 23% in 1991 had reversed two decades later (UNIDO, 2012). In spite of the “catalytic” role that industries play in the processes of realizing rapid economic growth, the industrialization in agricultural societies and the process of industrial expansion into agricultural lands (Agricultural Land Conversions, ALC’s) involves major and irreversible socio-economic dynamics and land use changes. A study by Tran (2013) indicated that industrialization and urbanization consumed close to half a million hectares of arable land in the peri-urban areas of Vietnam between 1993 and 2008 alone (Tran, 2013). Likewise, Vietnam lost close to 73,000 hectares of fertile agricultural land each year between 2000 and 2005 directly due to industrialization and the accompanying urbanization and infrastructure provisions (Nguyen, 2011; Tran, 2013). Many studies conducted in Vietnam and PR China revealed the negative outcomes of ALCs on smallholder farmers’ livelihoods (Suu, 2009; Nguyen, 2011; Tran, 2013). Studies particularly show how ALCs increased landlessness and reduced employment opportunities in the agricultural sector (Nguyen, 2011, 2009; Suu

40 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta 2009; Chen 2009; Azadi, et al. 2011; Rudi et al. 2012). In PR China, 1.5 million farmers lost their farmlands due to urban encroachment and pressure from industrial expansion in the 2000s decade alone (Lu, et al., 2013). Several studies documented the effects of industrialization on the livelihoods of local farmers in PR China, Vietnam, Malaysia, Philippines, and India (Azadi, et al., 2011; Li Jiang et al., 2013; Tran 2013). Apart from land conversion due to industrialization, the construction of large infrastructure projects is another driver leading to a loss of agricultural land in many peri-urban areas of the Global South (Nguyen, 2011; Zhong, et al., 2011; Azadi, et al., 2011). In spite of the reported negative outcomes of ALCs, however, adequate empirical studies and appropriate planning prior to land conversion, and the implementation of plans with appropriate monitoring strategies would both benefit local communities and investing companies. According to studies made in Bangladesh, PR China, Vietnam, and sub-Saharan African countries by Suu (2009), Wu, et al. (2011), Rudi, et al. (2012) and Tran (2013), the establishment of IZs can actually create large development opportunities by diversifying potential income sources from off-farm and non-farm employment. This research attempts to identify the trends in and extents of ALCs in five kebeles surrounding Gelan and Dukem town. The study particularly attempts to document the effects of ALCs on local food crop production and market supply, as well as to show how far livelihoods of smallholder farmers in the peri-urban areas of Dukem and Gelan town benefit from trickle-down effects.

3.2 Materials and Methods 3.2.1 The Study Sites Gelan and Dukem town are located in Central Ethiopia, Oromia Regional State, 25 km and 37 km respectively south of Addis Ababa. They lie directly adjacent to each other along the highway between Addis Ababa and Djibouti. Gelan and Dukem are among the eight towns of the Finfine Surrounding Oromia Special Zone (FSOSZ). Geographically, the towns lie between 8o53’N – 8o445’N latitudes and 38o46”E – 38o56’E longitudes (Figure 1).

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Figure 1: The study sites Gelan and Dukem

According to the official statistics, Gelan town had 32,689 inhabitants and Dukem town had 24,000 inhabitants in 2012 (DAO, 2013). According to the Oromia Proclamation No. 65/2003, Article 6 (1), towns and cities in Oromia are categorized into four levels based on their population numbers. Cities with more than 90,000 inhabitants are categorized as 1st level. Cities and towns with between 45,000 and 89,000, 10,000 and 44,999 and 2,000 and 9,999 residents are categorized as 2nd, 3rd and 4th level respectively. Based on this classification, Gelan and Dukem town fall within the 3rd category. The study area is situated in the Ethiopian central highlands at an altitude between 1,800 – 2,300 masl. It has an average temperature of 190 C and an annual precipitation of 861 mm (NMS, 2013). The area experiences uni-modal rainfall patterns, generally from mid-June to mid-September. Mixed agriculture – in the form of farming of annual crops on small and fragmented areas of land – is the dominant land use scheme. Agriculture is the principal source of employment and household income for the majority of the people living around Gelan and Dukem town. The dominant crops are teff, wheat, chickpea and grass pea (DAO, 2013).

3.2.2 Data Collection and Analysis This study is based on both quantitative and qualitative data. Data was collected between October and December 2013 from primary and secondary sources. Both

42 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta probability and non-probability sampling methods were employed in determining the sample size for the study. Probability sampling was used to determine samples for household surveys using Kothari’s (2004) simplified formula. After the number of respondents per sample were determined, respondents were selected from five kebeles – three in Dukem (Koticha, Gogecha and Xadacha) and two in Gelan (Tulu Guracha and Gelan) – using systematic sampling methods. The samples were proportionally distributed in relation to the total number of households living in each study kebele. Accordingly, 118 household samples were drawn out of a total of 369 in Gelan, and 144 household samples out of a total of 452 in Dukem. Concurrently, samples were again distributed in proportion to each kebele of the respective study towns based on the numbers of households living in their respective kebele. Furthermore, data on the total land area cultivated under different crops and the total yields harvested between 2004/5 and 2011/12 was collected from the woreda Agricultural Offices, the responsibly authorities. Quantitative data on the areas of land used for investments in industry, residences, infrastructure expansion, on the total sizes and types of industries, and on the total population living within the urbanized boundaries was obtained from the Investment Office and Population Affairs Office in Dukem and Gelan town respectively. Besides, information on the location of industrial complexes and their development status as well as the origin of investors, was collected in the field with GPS assistance between February and March 2013. Land cover and land use change (LCLUC) maps to analyze and visualize the data were produced by using SPSS V.20, MS-Excel, Land SatTM/ETM and Arc-GIS. Qualitative data was generated from Focus Group Discussions (FGDs) at two stages of the research. The selection of participants was deliberately made based on age and number of years living in the area. The FGDs covered topics such as the expectations from the IZs, the comparison of livelihoods and income before and after the establishment of IZs and questions about local participation and consultation in the land use planning process. Furthermore, expert interviews with representatives from the Investment, Land and Environmental Protection Unit (LEPU) were conducted in each study area.

3.3 Results and Discussions 3.3.1 Socio-economic Characteristics of Respondents In total, 223 HHs were interviewed. Out of these, 79.4% were male and 18.4% were female, while 2.2% of the respondents did not classify their sex. 84% of the respondents were ethnic Oromo while 13% were ethnic Amhara.1 71% of the respondents 1

The remaining respondents belonged to other ethnic groups.

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lived in a house with mud walls and thatched grass roofs, while close to 29% of the respondents lived in a house with a roof covered with corrugated iron sheets. About 82% of the respondents were in the age group between 16–64 years, while 8% were aged 64 years or older. About 30% had no formal school education. 39% of the interviewees had attended primarily junior school (grade 1 to 8). Only 18% of the respondents had attended school between grade 9 and 12, and only 4% completed high school. 56% of the respondents were working on their own farmland, while 22% reported that they were working as sharecroppers on other peoples’ lands. In conclusion, one can say that livelihoods in the study region heavily depend on smallholder agriculture. Formal education of the majority of people is very low, which disqualifies most of them from becoming employees of companies in the newly established IZs in Gelan and Dukem.

3.3.2 Investment Inflow and its Effects on Agricultural Activities in the Outskirts of Gelan and Dukem Town, 2005–2012 Before the establishment of the first large-scale industries in Gelan and Dukem in 2004, a few small-scale industries, such as agro-processing, manufacture of food and beverages, textile production and knitting, already existed in these towns. Figure 2 shows the trend in granting of land plots to establish manufacturing industries in Gelan town, over the course of 14 years between 1998 and 2012. Figure 2: Land plots granted to establish manufacturing industries in Gelan town, 1998–2012

Source: compiled from data obtained from the Gelan town investment office, 2014.

44 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta As indicated in Figure 2, already at the end of the 1990s, land was granted for manufacturing industries in Gelan town. However, the number of new investment-based land applicants increased significantly from 2006 onwards, following the formal designation as an Industrial Development Corridor. In the face of rapid expansion of the industrial sector and high rural-urban in-migration, one of the major problems encountered by the municipal administration was the exhaustion of lands within the old urban administrative boundaries. The sporadic incursion of urban sprawls into agricultural lands resulted in the integration of rural kebeles under municipal town administrations. With their integration of the kebeles Gogecha, Koticha and Xadacha into the Dukem municipal town administration, the official total area of Dukem increased from 6.5 sq. km to over 35 sq. km in the first structural plan prepared for the town in 2008. Similarly three rural kebeles – namely Tulu Guracha, Caffee-Tuma and Moreno – were incorporated into the Gelan municipal town administration, increasing its size to more than 60 sq. km. Both towns allocated most of their land to three dominant types of land use in the revised and re-developed land use plan as shown in Table 1 and Table 2. Table 1: Land use types in Dukem town in 2008 and in 2012

Category Residence Commerce Services Administration Industry and Storage Recreation Reserved Forest & Buffer Urban agriculture Transport & Roads Total

According to land use plan from 2008 Total area (ha) (%) 148.8 22.9 30.3 4.7 21.7 3.3 3.6 0.6 86.2 13.3 3.7 0.6 260.5 40.1 40.1 6.2 0 0 53.9 8.3 648.8 100

Source: Oromia Land Administration Bureau, (2013).

According to land use plan from 2012 Total area (ha) (%) 1308 36.5 215 6.0 63 1.75 11 0.3 658 18.34 100 2.78 201 5.6 428 12.0 60 1.7 542 15.1 3586 100

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Table 2: Land use types in Gelan town in 2012 Category Residence Commerce Services Administration Industry and Storage Mixed use Park Forest & Buffer Solid waste disposal site Transport & roads Not included in the plan Total

Proposed land use (in the redeveloped land use map) in 2012 Total area (ha) (%) 1375.5 18.3 232.4 3.1 54.3 0.64 4.9 0.06 2323.8 31 940.3 12.5 372.3 5 702.3 9.3 0.36 0.001 423.2 5.6 1086.7 14.5 7516 100

The above Tables show that in 2008 Dukem town allocated 13.3% of its total area to the land use category ‘industry and storage’ while this figure increased to 18.34% in the 2012 land use plan. In Gelan town, the proportion of land allocated for ‘industry and storage’ was much higher, with 31% of the total land area under this category in 2012. Between 2005 and early 2013, close to 1,000 investment projects were licensed in Gelan and Dukem town. Investments included manufacturing industries, hotel and tourism, trade and transport, as well as real estate. Combined, investors proposed to invest more than US$ 1.4 billion in both areas and to create employment opportunities for more than 95,000 people – 35,000 in Gelan and 60,000 in Dukem. In terms of the industrial sector, between 2005 and early 2013, 350 ha of land was granted to 279 licensed investors to establish industries in Gelan town, while 450 ha of land was granted to 350 licensed investors for the same purpose in Dukem town. In Dukem town, the Chinese-operated ‘Eastern Industrial Zone’ (EIZ) alone was granted close to 250 ha of fertile agricultural land. One problem observed in relation to the administration and allocation of land for investments was the ambiguity and part wise inconsistency of investment rules. According to Proclamation No.147/2009, the responsibility for urban land administration is vested in the Oromia Land Administration Bureau (OLAB). However, Directive No. 03/2011 gives investors the full mandate to propose the location and size of the plot he/ she demands. Article 9 of the Oromia Land Use

46 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta Contractual Agreement (OLUCA) says that “the lessee has the right to transfer the use right of the land leased to any other third party who has the capacity to develop the land” (Art. 9, OLUCA). Although Article 9 of the OLUCA is intended to give maximum rights and flexibilities to investors, given the realities on the ground, it offers opportunities for speculative brokers to acquire land without investing on it.

3.3.3 The Effects of Industrialization on Agricultural Activities 3.3.3.1 Effects on the Cultivated Land Area and Crop Production In the following section, we quantify the total area of agricultural land in the Akaki woreda (to which all kebeles on the outskirts of Gelan and Dukem belong) and explain the effects of land conversion on the sizes of cultivated land, crop production and household farm size. The figure below shows the total area of aggregated cultivated land and the proportions of the area covered by various important crops between 2005 and 2013. The trend lines in Figure 3 indicate a general reduction of agricultural land in the case study area. The cultivated land under wheat and teff shrank from 23,082 ha and 13,477 ha respectively in 2005 to 11,974 ha and 11,406 ha respectively in 2013. Equally, total cultivated land areas under pulses dropped in a similar manner over the years recorded. This clearly shows the swift decline of croplands over time. Figure 3: Cultivated land sizes (in ha) in all kebeles of Gelan and Dukem, 2005–2013

Source: survey data, 2014.

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The reduction of farmland in Gelan and Dukem also goes along with a reduction of food crop production. In 2005, a total of 1,280 tonnes of food crops was produced on the 44,560 ha of farmland in Gelan and Dukem. Nine years later in 2013, however, food crop production has dropped to 1,090 tonnes – a reduction of nearly 15%. As indicated earlier, agriculture in the area is rain-fed and carried out with traditional and mostly non-mechanized production tools. Therefore, it is possible that the reduction in crop production was due to various factors, such as variations in the amounts of rainfall, and/ or the quality of land preparation. According to information obtained from local Development Agents, however, the decline in food crop production in the study areas was mainly due to the reduction in cultivated land area.

3.3.3.2 Effects on the Total Area of Farmland Owned at the Household Level In line with the general conversion of agricultural land into other land uses, the farmland size per household decreased in the case study area. Figure 4 shows this trend. As presented in Figure 4, the mean farmland area owned by households who lived within the five re-integrated case study kebeles showes a significant decline. In 2004/5, in the early years of industrial development, the mean area of farmland used by households was 2.15 ha. Four years later, the figure decreased to around 1.8 ha, and shrank further to 1.54 ha in 2011/12. The comparison of the trend in both case study areas shows the following picture (Figures 4 and 5). Figure 4: Mean area of farmland (ha) of households in Gelan and Dukem, 2004/05–2011/12

Source: survey data, 2014.

48 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta Figure 5: Mean farmland area (ha) of households in Gelan in 2004/05–2011/12

Source: survey data, 2014.

Figure 6: Mean farmland area (ha) of households in Dukem in 2004/05–2011/12

Source: survey data, 2014.

Figures 5 and 6 show a similar declining trend in the mean area of farmers’ landholdings in both study areas. The reduction of the mean farmland size, however, seems to be more significant in Gelan than in Dukem. In 2004/05, farmers in Gelan had a higher mean farmsize (2.31 ha) than farmers in Dukem (1.99 ha). However, land conversion rates were higher in Gelan than in Dukem. It took

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only 4 years that the mean farming size per household in Gelan lessened to 1.53 ha, with the result that it became less than in Dukem with 1,83 ha in 2008/09. From the explanations given in the earlier section, this development is accompanied by a reduction in total yield.

3.3.3.3 Effects on Farm Gate Prices of Teff and Wheat In the following, we attempt to understand the implication of reduced production on the prices of the most important food crops teff and wheat. The trend in farm gate prices for teff and wheat between 2004 and 2013 is presented in Figure 7. As presented in the graph, the price of teff and wheat showed a sharp increase over the years considered in this study. The price of teff in the study area increased from around 300 birr per 100kg in 2004 to about 1700 birr per 100kg in 2013. The price of wheat jumped from less than 200 birr per 100kg in 2004 to about 800 birr per 100kg in 2013. Figure 7: Farm gate price of teff and wheat in the study area (in Ethiopian birr per 100 kg, 2004–2013)

Source: survey data, 2014.

3.3.4 Farmers’ Perceptions regarding Rapid Industrial Expansion and the Conversion of Agricultural Lands In the FGDs, people were asked about their perception regarding rapid industrial expansion and the conversion of agricultural lands in the study areas. It was consensus that most local people supported the industrialization program from the beginning. They expected to benefit from trickle-down effects of industrial development, including additional income opportunities and improved infrastructure (e.g. access to public water and electrical power supply). However,

50 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta in the FDGs it was also reported that after some years, local people started to complain that many of the expected benefits did not emerge, and the development still do not seem to be moving in favor of their expectations. Many grievances are associated with the unexpectedly slow industrial development on the converted lands. Informants complained that some of the buildings that were constructed on previously agricultural land are already dilapidated and abandoned and have become safe places where “criminals” hide during the daytime. Equally, some of the fenced lands reserved for industrial development attracted wild birds over the years, especially ducks that feed on teff seed when it matures on the nearby farmland. A father of 16 children who participated in the FGD said: “I am very much worried about the fate of my children as most of the converted lands are left undeveloped and the chance of getting employment in the operating industries has become slim because of surplus labor force.” (Interview No. 1; 20/01/2014)

When being asked how far local communities benefited from the expected trickle-down effects, the participants of the FGDs related different experiences in their respective kebeles. Those from Koticha and Xadacha kebele in Dukem had gained access to public water and electrical power supply. Those from Gogecha kebele in Dukem and Tulu Guracha and Gelan kebele in Gelan, however, still largely rely on groundwater for their water consumption. When asked about their general perception of large-scale industrialization in their neighborhoods, farmers’ reactions were mixed. Generally, the majority of the respondents were not against “industrial development” in their area. However, what they were seriously concerned about was the loss of their farmlands. This is exemplified by the words of one farmer from Xadecha kebele: “We were born in the middle of farmlands in rural areas, grew up tilling the land, gave birth to children while working on our inherited farmlands. Thus, for us loss of farmland is not only explained as a loss of food, but also as a loss of our identity.” (Interview No. 2; 20/01/2014)

Farmers also expressed their skepticism as to the availability of employment opportunities for them in the industrial sectors in the near future. They criticized the slow industrial development of the converted lands. In this regard, one farmer from Tulu Guracha kebele said: “Our hope fades, and we have lost trust even in the developed lands, as some of the operating industries have failed to meet their promises of creating the proposed job opportunities. The salary of US$25/ month set for those employed is not sufficient even to buy the food required by our households.” (Interview No. 15; 20/01/2014)

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The perceptions of the local people as expressed during the FGDs are in some ways mirrowed in official data. For instance, the largest investment project in Dukem, with an investment capital of US$ 350 million and a land size of 250 ha, started with the proposed aim of generating employment opportunities for 46,000 people. However, six years later, at the end of 2013, it had only provided employment opportunities for less than 10,000 people. Most of them do not originate in the study area as the majority of the local people are not adequatly formally educated and lack the skills necessary to qualify for newly created jobs in the industrial sector.

3.3.5 Land Use Changes between 2005 and 2013 After Gelan and Dukem were designated Industrial Development Corridors in 2004, land use pattern in both areas dramatically changed. The following maps (Maps 1, 2, 3 and 4) illustrate the dramatic land use changes that have been taken place in Gelan and Dukem between 2005 and 2013. Map 1: Land use in Gelan in 2005

Source: developed based on Land SatTM/ETM satellite images.

52 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta Map 2: Land use in Gelan in 2013

Source: developed based on Land SatTM/ETM satellite images.

Figure 8: Land use changes in Gelan, 2005–2013

The Impact of Industrialization on Land Use and Livelihoods Map 3: Land use in Dukem in 2005

Source: developed based on Land SatTM/ETM satellite images.

Map 4: Land use in Dukem in 2013.

Source: developed based on Land SatTM/ETM satellite images.

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54 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta Figure 9: Land use changes in Dukem between 2005 and 2013

3.3.6 The Current Status of Industrial Investments in Gelan and Dukem Article 10 (1) of the land use contractual agreement states that an investor enters an agreement with an Investment Commission (IC) in which he/ she agrees to develop 25% of the land within the first six months of it being handed over. It is also expected that an investor will complete the development of the whole project (100%) within two years after the date of the handover. If the investor fails to comply with these parts of the agreement, he/ she will be mandated to return the land which can then be given to another investor (Article 17 (20)). In spite of this obligation, however, compiled data obtained from the field GPS survey (see Map 6) shows that only 28% in Gelan and 37% in Dukem of the licensed projects had entered operational phases by the end of 2013. No other licensed industrial projects in Gelan and Dukem town started operating during this time. The land reserved for these projects were either vacant or fenced and vacant, and/ or construction work was ceased. The prospects of most of these projects to actually start operation in near future remain slim. Interviews conducted at the Investment, Land and Environmental Protection Units in Gelan and Dukem indicated that, these parts of the agreements are legally not binding and that local governments are advised not to take legal measures that might discourage larger investors.

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Map 6: Current status of industrial investments on converted agricultural lands in Gelan and Dukem.

Source: drawn from GPS data, 2014.

3.4 Conclusions Ethiopia is one of the least-developed countries in the world. Its economy mainly depends on smallholder agriculture, often referred to as the “backbone” of the country’s economy. Agriculture absorbs the lion’s share of the labor force and produces close to 50% of the total GDP. Conversely, the industrial sector is in its infancy, employing less than 5% of the work force and contributing to less than 13% of the GDP (GTP, 2013). Since the framing of the Industrial Development Strategy in 2002 in general, and the establishment of Industrial Development Corridors in 2004 in particular, the Ethiopian government aims to promote economic growth through industrialization, facilitated through domestic and foreign investments. Many initiatives for industrial investments, along with a number of incentives and concessions, have been in place ever since.

56 Diriba Dadi, Till Stellmacher, Hossein Azadi, Ketema Abebe and Feyera Senbeta Gelan and Dukem town in Central Ethiopia, Oromia Regional State, 25 km and 37 km respectively south of Addis Ababa, were designated for the establishment of Industrial Zones (IZs) in 2004. Between 2005 and 2013, over 629 investors were granted more than 800 hectares of agricultural land for industrial investments in the outskirts of these towns. This chapter shows how the development of IZs in Gelan and Dukem changed land use patterns in both study areas. It also reveals the changing perception of local people towards the development of IZs. Informants reported that in the initial phase, local people expected to benefit from trickle-down effects, including additional income opportunities and improved infrastructure, however, started complaining after some years that many benefits did not arrive as expected. One dissatisfaction was that, although agricultural land was converted into IZs, many licensed investors did not develop the land, hence did not invest as initially proposed. This is confirmed by this study. It shows that the majority of the licensed investors (72% in Gelan and 63% in Dukem) did not develop their land in a stipulated time frame. In consequence, the substantial conversion of farmland into ‘industrial land’ negatively affects local people not only through the loss of their farmland but through the lack of promised employment opportunities and improved infrastructure that might have otherwise offset their losses in the agricultural sector. We therefore recommend that the responsible governmental bodies at woreda, regional and federal levels should re-examine the actual implementation of the legal investment procedures, and re-adjust them in a way that allows the development of IZs in a more efficient manner, and with a much lower consumption of land resources. This would also mean to give priority to developing already converted lands instead of looking for new farmlands, so as not to further affect the livelihoods of many more farming households. We would further suggest to the responsible governmental bodies to give special attention and assistance to those (ex-) farmers who had lost (parts or all of) their land due to industrialization, and to help them to develop abilities and capacities to cope with the new situation, e.g. to increase their productivity on the remaining fields. This should be of a high priority accompanying measure not only to guarantee long term local food and labour supply but in order to avoid eventual social conflict and the generation of peri-urban shanty towns.

References Azadi, H., Ho, P., Hasfiati, L. (2011): Agricultural land conversion drivers: A comparison between less developed, developing and developed countries. Land Degradation & Development 22, 596–604.

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