India’s Development Cooperation with Ethiopia in Sugar Production

Abstract

Ethiopia is one of the few countries in Africa with whom India has enjoyed a long-standing partnership in development cooperation. In 2006, India provided a US$640 million Lines of Credit (LoC) to Ethiopia for the development of its sugar industry. The article analyzes the impact of India’s LoC (2007–2012) on the Ethiopian sugar industry. It is found that on completion of the ongoing projects, Ethiopia should be able to produce 1.6 million tonnes of sugar per year. This will lead Ethiopia towards self-reliance in sugar production. It is estimated that economic gain from sugar and ethanol production in Ethiopia would be close to US$961 million per year. Field visits explored several practical challenges to India’s endeavour like absence of appropriate mechanisms for monitoring and verification of the project. This leads to delays, information gaps and coordination failures in project implementation. Indian engagement in Ethiopia’s sugar sector signifies a major boost for the agriculture value chain in Ethiopia; and the ancillary support for railways track building is likely to play an important role in facilitating port connectivity and exports.