DfID-Ethiopia Partnership

Ethiopia has enjoyed relative political stability and rapid economic growth, averaging 7 percent of GDP over the past decade. During this period, three million people have been elevated out of poverty and the country has recorded significant advancements in health, education and social protection. The U.K. Department for International Development sees some evidence that its presence and contributions have helped foster this progress, so the agency is committed to increasing its engagement with Ethiopia. Despite socio-economic achievements, the country remains among the poorest countries in the world with over 25 million of its 80 million people living in extreme poverty. While political decentralization has contributed to stability and development, questions remain over the sustainability of the political system and the lack of civil and political rights. In addition, Ethiopia is susceptible to external shocks and conflict spilling over from war-torn neighbors – including Somalia and Sudan. High poverty and instability in the Horn of Africa are fertile breeding grounds for fundamentalism. Countering these trends by contributing to a stable and prosperous Ethiopia is crucial to UK interests in the region. Funding levels For the period 2011–2015, DfID has allocated a total of £1,341,401,000 ($2,105,991,000) in aid to Ethiopia. On average, the agency spends approximately 270 million pounds per fiscal year. DfID plans to channel its aid resources through a combination of different aid instruments including budget support, partnering with multilateral programs, and providing grants to non-governmental organizations and the private sector. Funding priorities (Fiscal years 2010/11-2014/15) DfID’s main objectives in Ethiopia include bolstering resilience against food crises, enabling sustainable growth and development, alleviating the effects of climate change, and contributing to stability and peace. DfID will fulfill these objectives, which are fully aligned with the agency’s Structural Reform Plans, by prioritizing the timely response of humanitarian efforts, improving basic services delivery, contributing to private sector development and economic liberalization, and advancing the empowerment of Ethiopian women and girls. The three largest DfID projects in Ethiopia focus on the provision of basic services and include the Support for the Ethiopian Health Sector Development Program (275,000,000 pounds), the Protection of Basic Services Program - Phase 2 (270,185,000 pounds), and the Productive Safety Nets Phase 2 (213,150,000 pounds). The majority of DfID funds will be channeled directly though the relevant government ministries in the form of budget support. Devex analysis High population growth is expected to add another 40 million people to Ethiopia’s population by 2030 fueling food insecurity, environmental degradation and further urbanization. Despite high economic growth rates, the country’s private sector lacks diversity. The government has responded to these challenges and adopted an aspiring Growth and Transformation Plan, focusing particularly on agriculture – the country’s key economic backbone. Yet, ethnic nationalism and poverty contribute to conflict in Ethiopia’s border regions, holding potential to disrupt economic growth and development. In addition, external shocks such as climate change and fluctuating food prices, are a constant threat to the vulnerable economic and social environment, as evident from reoccurring humanitarian crisis. DfID is Ethiopia’s third largest donor after the World Bank and the United States. The country is also DfID’s largest aid recipient since 2011, and funding has increased from a mere trickle in 2000, to over $400 million by 2010. U.K. aid is seen by London to have contributed fundamentally to Ethiopia’s recent development success. With the theme ‘value for money’ front and center in DfID’s development campaign and constant pressure to show that British aid works, the U.K. is expected to continue its robust engagement in Ethiopia well beyond 2015. Although, support to civil societies and multidonor funds are increasingly becoming important to DfID, direct budget support to the government of Ethiopia is likely to remain the organization’s chief aid distribution channel. From support to Ethiopia’s health sector to general education improvement, DfID concludes that the highest impact and best ‘value for money’ can be achieved by channeling British aid directly through Ethiopia’s federal ministries. Contact: DfID Ethiopiac/o British EmbassyComoros StreetP.O. Box 858 Addis AbabaTel.: (251-11) 618-0601Fax: (251-11) 618-0635