Top aid donors to Ethiopia

Buoyed by solid economic growth, Ethiopia has recorded marked development progress over the past two decades. The East African country has reduced child mortality by two-thirds since 1990 — achieving the fourth Millennium Development Goal. Called an MDG “success story” by the Overseas Development Institute, Ethiopia is also on track to meet an additional five of the eight MDGs. “We have really been doing well for quite some time. The economy has been growing significantly [by] double digits. We managed to reduce poverty by 50 percent,” Sufian Ahmed, Ethiopia’s minister of finance and economic development, stressed in an interview with Devex late last year. The single-largest recipient of official development assistance in sub-Saharan Africa, Ethiopia has managed to achieve and sustain these development gains in no small part due to the billions in aid money that flows to the country each year. In 2012, ODA to Ethiopia accounted for 7.6 percent of the country’s gross national income, slightly below Senegal and Uganda. Despite its development strides, Ethiopia still has one of the worst health and poverty indicators in the world. The August 2012 death of Ethiopia’s longtime strongman Meles Zenawi, who was regarded as a dependable partner by Western governments, prompted speculation that the donor community might re-evaluate the size and scope of their assistance to the East African country. For years, human rights groups have made the case to donor governments that Ethiopia’s foreign aid largesse provides little incentive for the authoritarian regime in Addis Ababa to embrace political reform. Since Zenawi’s death, Prime Minister Hailemariam Desalegn has been at the helm of that regime. Two years into Desalegn’s government, however, Ethiopia’s foreign aid donors have largely stayed the course in their robust aid engagement with the country — even as they publicly express concern over its poor democracy and human rights record. “The Government of Ethiopia (GoE) is capable and committed to growth and development, and is a proven partner in making rapid progress towards the Millennium Development Goals (MDGs). But its approach to political governance presents both substantive challenges to sustainable development and reputational risks to partners,” reads the U.K. Department for International Development’s current operational plan for Ethiopia. Since the transition to Desalegn, the Obama administration has named Ethiopia one of six focus countries for its Power Africa initiative, while the Harper government in Canada reselected the East African nation as a focus country for its development assistance program. Just last month, the European Commission revealed to Devex that Ethiopia would receive the largest funding envelope from its 2014-2020 European Development Fund. Previously, Ethiopia had surpassed India as the largest DfID country program and has remained in that spot since. It is worth noting, however, that the Obama administration is substantially cutting back U.S. ODA to the country. Until recently, the United States had been Ethiopia’s largest bilateral donor. In Washington, at least, Ethiopia may no longer be the donor darling that it was under the Zenawi regime. Below, Devex ranks the top aid donors to Ethiopia for 2014 and examines their programs and priorities. We found that democracy and governance programming does not figure prominently in any of these donors’ portfolios in the East African country, which some human rights groups claim is a result of pressure from Addis Ababa. World Bank Ethiopia’s largest aid donor by far, the World Bank has programmed $1.6 billion in lending for the country in 2014, 48 percent above last year’s levels. The bank’s 2013-2016 country partnership strategy for Ethiopia has two main areas of focus: fostering competitiveness and employment, and enhancing resilience and reducing vulnerabilities. Last month, World Bank President Jim Yong Kim announced $5 billion in new financial and technical support for energy projects in the six focus countries for the U.S. Power Africa initiative, which includes Ethiopia. Currently, the World Bank’s largest active projects in Ethiopia are the $600 million Promoting Basic Services Program Phase III Project and the $480 million Productive Safety Net APL III Project. The bank is currently accepting bids to support its Water Supply, Sanitation and Hygiene Project and its General Education Quality Improvement Project Phase Two (GEQIP-II) Project, both of which are in Ethiopia. United Kingdom Only recently edging out the United States as Ethiopia’s biggest bilateral donor, the United Kingdom has set aside 340.7 million pounds ($555.4 million) in DfID program spending for the country in financial year 2013-14. That figure is 30 percent above the previous year’s levels. The vast majority of DfID’s anticipated program spending in Ethiopia between 2010 and 2015 has been allocated to health (32 percent) and education (27 percent). Citing other donors’ support for infrastructure and HIV and AIDS programming in Ethiopia, DfID has been scaling back its funding for these two sectors. DfID’s largest active projects in Ethiopia are the 388.5 million pound Protection of Basic Services Program Phase III and the 275 million pound Support for the Ethiopian Health Sector Development Program. DfID is currently soliciting proposals for its Tax, Audit and Transparency Program in Ethiopia. With funding from the Nike Foundation, DfID Ethiopia established in 2011 a branch of DfID’s women and girls’ empowerment platform called Girl Hub — one of the U.K. aid agency’s most prominent private sector partnerships. United States For fiscal 2014, the Obama administration has requested $418 million in U.S. foreign aid to Ethiopia, a drop of 33 percent from actual levels the year before. While Ethiopia remains one of the biggest recipients of U.S. foreign aid in sub-Saharan Africa, U.S. aid flows to the East African country have fallen precipitously over the course of the Obama administration. According to U.S. aid officials, the budget slashes are in part intended to redirect funding from the U.S. President’s Emergency Plan for AIDS Relief to countries with higher HIV prevalence. While PEPFAR accounts for the bulk of the U.S. aid portfolio in Ethiopia, the Obama administration has also named Ethiopia a focus country for each of its marquee development initiatives: the Global Health Initiative, Feed the Future, the Global Climate Change Initiative and Power Africa. The first Power Africa transaction, in September 2013, was for the construction of the $4 billion Corbetti Caldera geothermal plant in Ethiopia. Once completed over the next decade, the plant is expected to become the largest such facility in Africa. The U.S. Agency for International Development currently has an open solicitation for the $2 million Innovation Fund for Improving Food Security in Ethiopia. African Development Bank The African Development Bank Group has programmed $220.1 million in lending for Ethiopia in 2014, more than double its indicative program for the country last year. Under its current country strategy paper, which runs through 2015, the bank has two overarching priorities in Ethiopia: better access to infrastructure, and decentralization and economic governance. AfDB has a heavily diversified portfolio in Ethiopia; as of last year, multisector programming accounted for 28 percent of its cumulative commitments, followed by transport (22 percent) and power (21.6 percent). AfDB’s largest investment in Ethiopia this year is a $108.5 million public sector loan for the second phase of the Rural Water Supply and Sanitation Program. The largest investment from the bank’s private sector arm this year is $51.2 million in financing for a mining project in the Dallol potash mine in the Afar Regional State. AfDB is currently accepting bids for the supply and installation of solar-powered water pumps in four regions of Ethiopia. European Union In 2014, the European Union anticipates that it will disburse $160 million in assistance to Ethiopia, which is a fifth below average levels in recent years. The vast majority of this amount will likely be disbursed through the European Development Fund, the EU’s principal aid funding stream for Africa, Caribbean and the Pacific. Recently, the European Commission and the Ethiopian government mutually agreed on the following sector priorities for the EDF in Ethiopia through 2020: health, agriculture, food security, nutrition, infrastructure and energy. EuropeAid, the European Commission’s development arm, is currently soliciting bids for a technical assistance contract to support EU-Ethiopia cooperation. Canada Based on Devex projections, Canadian foreign aid to Ethiopia in 2014 will reach or exceed the previous year’s level of 145 million Canadian dollars ($132.3 million). First in 2009 and then earlier this year, the Harper government has named Ethiopia a focus country for Canada’s foreign aid program. Currently, Ethiopia is one of only nine sub-Saharan focus countries for Canadian aid. Food security, agriculture and sustainable economic growth are thematic priorities for Canadian foreign aid to the African country. Ottawa’s largest bilateral aid programs in Ethiopia are in food security and agriculture, including a 12.5 million Canadian dollar food self-sufficiency project for farmers. GAVI Alliance The GAVI Alliance expects to disburse $123.4 million in health support for Ethiopia in 2014. That figure is 16 percent above last year’s anticipated levels. As of July 31, 2014, the GAVI Alliance had disbursed 44 percent of its Ethiopia support this year for health systems strengthening, 25 percent for meningitis vaccination and 17 percent for rotavirus vaccination. Ethiopia has been the second-largest recipient of support from the GAVI Alliance since the public-private global health partnership was founded in 2000. In April of this year, Ethiopian President Mulatu Teshome announced that he would become an immunization advocate on behalf of the GAVI Alliance. Global Fund Based on Devex projections, the Global Fund to Fight AIDS, Tuberculosis and Malaria’s disbursements for Ethiopia in 2014 will reach or exceed the previous year’s level of $90.9 million. Back in 2012, the Global Fund and the Ethiopian government had signed two grant agreements worth $424 million with the objective of achieving universal coverage of HIV treatment and eliminating malaria deaths in Ethiopia by 2015. Ethiopia has been the single largest recipient of funding from the Global Fund since it was founded in 2002. HIV and AIDS programming has accounted for the vast majority of the Global Fund’s financing for Ethiopia at 62 percent; followed by malaria at 28 percent and tuberculosis at 9 percent. Check out more practical business and development advice online, and subscribe to Money Matters to receive the latest contract award and shortlist announcements, and procurement and fundraising news.