Acton Institute Powerblog

Bob Geldof: Trade Not Aid for Ethiopia

Good story in the Wall Street Journal today about rocker-activist Bob Geldof and how he’s spearheading a push by private-equity firms into Ethiopia to effect a “historic shift from aid to trade.” Investments are flowing into private sector projects such as a flower farm, a juice company, pipeline building and commodity exchanges.

A number of high-profile investors have recently shown up here. KKR & Co., the New York-based private-equity firm, last summer bought control of a rose farm, Afriflora, for about $200 million, its first investment in Africa. Blackstone Group plans to build a $1.35 billion pipeline to bring gasoline to the capital, Addis Ababa. Hedge-fund manager Paul Tudor Jones is backing a $2 billion geothermal power project.

The investors are following in the footsteps of Irish punk rock singer turned activist Bob Geldof, whose Live Aid concerts 30 years ago this summer raised about $145 million for the victims of a devastating Ethiopian famine. Mr. Geldof now chairs 8 Miles LLP, a London-based private-equity firm that invests in Ethiopia. 8 Miles raised a $200 million fund in 2012; Mr. Geldof put in a few hundred thousand dollars. “They don’t have to die in vast numbers before we pay attention,” Mr. Geldof said in an interview. “The potential rewards in Africa are far greater than anywhere else.”

Geldof has his detractors:

Investors in Ethiopia must strike a delicate balance between profits and pitfalls. Many of the country’s 94 million people still live in extreme poverty. Human-rights groups say the government of Hailemariam Desalegn has focused on expanding the economy at the expense of civil liberties and political freedom. Ethiopia has just one opposition member of parliament, and he doesn’t intend to stand at the general election in May.

“There is no space for free speech, for opposition,” said Yemi Hailemariam, whose partner, opposition leader Andargachew Tsege, a British citizen of Ethiopian origin, was detained in Yemen last year and is now held in an Ethiopian jail.

[ … ]

Still, some human-rights activists are critical. “How do you justify shipping out fancy roses when people are hungry?” said Anuradha Mittal, executive director of the Oakland Institute, a California-based nonprofit that has investigated Ethiopian land rights. “How do you justify using Ethiopia’s land and water resources to satisfy our rose needs? What’s so sweet about it?”

A recent report by the International Finance Corp., a World Bank unit that is considering a €90 million loan to the farm, listed criticisms including too much overtime, a lack of formal process for handling workers’ complaints and inadequate places to eat or areas for working mothers to breast-feed. The IFC noted that pregnancy testing before employment will be discontinued and verification that new hires are aged 18 or older has begun.

Read “Rock Star Bob Geldof Spearheads U.S. Private-Equity Push Into Ethiopia” by Simon Clark in the Wall Street Journal (may require subscription.)

John Couretas

is Editor-at-Large for the Acton Institute.