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A fresh opportunity

2017-04-26

By leasing a three hundred hectare fruit plantation in Ethiopia, Lutz Hartmann has realised a long-cherished dream: to run his own business in Africa. Now he has a personal interest in the issue of Africa’s development.

Ich bin ein Alternativtext — Lutz Hartmann at a panel discussion with young African entrepeneurs. (c) Simon Veith

By Lutz Hartmann

Lutz Hartmann studied law in Jura in Mainz, Freiburg and Paris. He is a founding partner of Belmont / Legal and admitted to the bar in both Frankfurt and Paris.

All contributions

German-African Business Association

Mr Hartmann, you have leased some land in Ethiopia. Is that land grabbing?

Hartmann: It’s not the first time I’ve been accused of that. My answer is that before I acquired it, this plantation had not been managed for five years. The previous owner couldn’t make it pay. I bought up his mortgage with the bank and now I have taken on a hundred people who had never had a steady job before. In Ethiopia – and in many parts of Africa – there is more unused than ‘grabbed’ land.

Why is that?

For instance, the right of inheritance provides for the division of land: in a family with ten children the estate is divided into ten equal parts. However, most parcels of land are only a hectare or less in any case, so what is inherited is so small that no one can make a living from it. Many of the heirs have to move to the town to look for work, so a lot of land is left unfarmed. However, the brothers and sisters in the town don’t sign their share over to the siblings still at home. There is no provision for that in their culture.

Lutz Hartmann fumbles in his jacket pocket for his mobile phone and shows me aerial photos of whole hectares of fallow land in a prime location around a lake.

See this, this is what it looks like in many parts of Ethiopia. The community won’t be able to escape a debate on how land can be subdivided differently. That’s normal. In Germany there was land consolidation, too. The micro-parcels won’t survive.

So small-scale farmers have to sell out to large landowners?

I’m not talking about selling generally. Land can be combined to use profitably. Or you can work together. My plantation acts as a hub for the farmers round it. At the local market they only get the equivalent of fifteen cents for a kilo of papaya. At the regional market further away they get eighty cents, but they need cold stores and lorries to sell there. They haven’t got those, because farmers with less than a hectare of land can’t raise the necessary finance. So they can use my infrastructure: I sell their papaya, they pay me for the service, and they still get more than they did before.

So investors from China, Europe, the Arab countries and the USA buying up land is okay?

There are definitely problematic forms of land grabbing. And it’s only possible because governments sell these enormous estates. A private individual doesn’t have anything like so much land to distribute. Unfortunately the temptation of a fast buck is often too great.

Africa has huge potential and needs investment to the tune of billions.

African governments sell land to foreigners because someone makes a profit on the side?

I haven’t any proof. But I don’t have proof it’s not happening, either. In the end what is important is a sustainable mix of farmers who can use local, regional and international markets. The Ethiopian market is definitely attractive. So far I have only sold tomatoes, chillies, cabbage and courgettes in the country itself. Exporting, and the duty, transport and lost time that it involves is still too complicated for me, but it will happen sooner or later, if only to spread the risk.

Investment in African farming is worthwhile, then?

Absolutely! Otherwise I wouldn’t have risked it. Africa has huge potential and needs investment to the tune of billions – in agriculture as well as energy and water supplies, roads, airports. Countries like Kenya, Senegal, Nigeria, and Côte d’Ivoire are very dynamic economies as well.

But German business is holding back from investing in agriculture and other sectors. What factors are preventing more commitment?

In African countries there are often people in government who don’t really understand the needs of investors. They are unfamiliar with quite a lot of the practices of the business world. For instance, sometimes the authorities in Addis Ababa ask Oliver Langert, my partner and co-director, to hand in a document in person the following day. That’s 450 kilometres on bad roads, 450 there and 450 back, and two days when the plantation has to get by without a manager, because the authorities in Addis want the manager himself, rather than some representative, to hand over the document. Our Ethiopian workers have also got a different way of dealing with problems than we are used to in Germany: when our accountant ran out of ink, he didn’t sign any invoices for three weeks – instead of asking me to buy another fifty cents’ worth of ink. During that time he would rather take my criticism about the slow book-keeping than admit the real reason and ask me to provide my staff with the necessary equipment.

Ethiopians are incredibly creative. They’ll tinker with the car until it goes.

What can be done about that?

Education, education, education. But as I said, not just formal education. It is a question of understanding business practices. You learn that best on the job.

Is the potential there?

Definitely – Ethiopians are incredibly creative. In Germany, if I can’t get the exact genuine part when my car breaks down, I might as well scrap it. In Ethiopia they’ll tinker with the car until it goes – with whatever parts are available.

The German development ministry’s Marshall Plan with Africa envisages joint efforts from government and the private sector to inject economic dynamism into Africa. Dual training would be a good area in which to implement it, wouldn’t it?

The idea for the Marshall Plan is a good one – because it puts the private sector centre stage, something that was not popular in development policy in the past. Then cooperation with the private sector was frowned upon. I am convinced that sustainable development is only possible through the growth of the private sector in Africa, and that is exactly what development policy should start with. However, the German-African Business Association thinks that the Marshall Plan is still too vague. Where are the funds to implement these things? Will the departments at the ministry carry out the minister’s instructions? Will the business world go along with it? There are still a lot of unanswered questions.

And? Will the business world go along with it?

Look: Africa is a difficult market. The conditions for sponsorship stipulated by the ministry don’t make things any easier. I have to abandon my core competency as an entrepreneur to get an investment funded, for instance if in addition to the investment transaction I also sponsor certain politically defined groups, that is, say, I will be training women. That is a good thing in itself. But when hail has just ruined my crop I need to concentrate all my energy on my core business. That is why I’m not sure whether the private sector will go along with it, if too many conditions are attached to a grant.

What might an interesting proposal look like?

The ministry could for instance sponsor companies and apprentices and support them with their administration/training, when a company opens a regional factory where apprentices can be trained. That has more practical relevance and goes further towards meeting a specific need than provision of training in schools or colleges.

Have you got examples in your own company of employees’ development via practical work?

Our first service assistant was a very shy person when we took her on. She is now our finance officer. She learned quickly, gained our trust and through her new post has also made great strides in her personal development. She appears much more confident. An amazing transformation. I’m encouraged by people like that.

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Read more “They said: You can do it”

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The fight against illegal fishing

A Report

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A contribution by James Wanzala

Kenya is a large importer of vetable oils mainly from Indonesia and Malaysia - amongst them sunflower oil. Due to the Russian war of aggression against Ukraine, there were supply bottlenecks and food shortages, leading to less affordable vegetable oils in Kenya. As a response to the lack of supply, the Sanga'alo Institute of Science and Technology, took that impulse, teamed up with the GIZ and established regional cultivation and refinement of sunflowers.

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A contribution by Jan Rübel

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A Contribution by GIZ

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A Contribution by Niladri Sekhar Bagchi

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The Principle of Sharing

A contribution by gebana

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A Contribution by WWF

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From Coexistence to Collaboration

A Contribution by Initiative für nachhaltige Agrarlieferketten (INA)

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A Conversation with Sally Roach

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From the perennial to the catwalk – banana silk as an alternative

A Contribution by Paul Kadjo

The textile industry contributes significantly to environmental pollution as it produces over 100 billion garments every year, resulting in huge CO2 emissions and water consumption. Fashion designer Paul Kadjo uses banana silk as an environmentally friendly alternative to make textile production more environmentally conscious and socially just.

The Idea of Coffee entirely made by Women

A Conversation with Allan Mubiru

Allan Mubiru was standing in front of a shelf in Kigali, Rwanda, and discovered a local type of coffee. He took it, tasted it and was thrilled. A story about a grocery shopping trip that became the beginning of a successful business idea.

How a Tea adds to Forest Conservation and Food Security

A Contribution by Wallace Gichunge

The Nyayo Tea Zones Development Corporation is committed to the preservation of forests in Kenya: The establishment of so-called buffer zones counteracts deforestation by planting trees and tea. In addition to the production of environmentally friendly tea, the project benefits the resources of the forests and the livelihoods of the communities living near the forests, says project manager Wallace Gichunge.

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A fresh opportunity

By Lutz Hartmann

German-African Business Association

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