ETHIOPIA - The UK Development Programme in Ethiopia

Last updated: January 2004

DFID's development role in Ethiopia is managed by the Africa Great Lakes and Conflict Department. Information about DFID's involvement can be found in the current edition of Statistics on International Development and in the current DFID Departmental Report To read the DFID October 2001 country programme briefing, go here. To read the DFID 2003 Country Assistance Plan (CAP), go here. To read the 2003 Memorandum of Understanding between the UK and Ethiopia, go here. DFID Information Note on the Humanitarian Situation in Ethiopia - January 2004 The Foreign & Commonwealth Office website here holds detailed information in its Country Profiles section. The 'World Factbook', accessible here, covers the following issues: Geography, Population, Government, Economy, Communications, Transportation, Military, and Transnational Issues. Detailed statistical information, including indicators of social and economic development over the past thirty years, gender, health, nutrition and population statistics, is available from the World Bank Group at www.worldbank.org/data/countrydata/countrydata.html For further information about DFID's development priorities and activity, contact: DFID Field Office (Addis Ababa) Email: enquiry@dfid.gov.uk

UK ASSISTANCE TO ETHIOPIA

Summary

Ethiopia is one of the poorest countries of the world, as indicated by income (GNP per capita of $100), with a large proportion of the population living on less than a $1 a day. The country faces considerable problems with its indicators on social development being among the lowest in the world. The life expectancy at birth of 43.4 years, the adult literacy rate of 36.3%, the combined education enrolment ratio of 26% and GNP per capita all score considerably lower than the average of least developed countries in the world. The Ethiopian Government has, however, been making steady progress on economic reform since the mid 1990’s. 

Following the end of the war with Eritrea, we have been reviewing our development relationship with Ethiopia. The development of our relationship will be guided by determining how best we can support the Ethiopian Government’s efforts to reduce poverty and achieve the International Development Targets. We currently work with multilateral organisations and non-governmental organisations, as well as directly with the Federal Government of Ethiopia. There is also the possibility of working with regional governments. Our plans for our development support include supporting the Ethiopian Government through the development and implementation of its Poverty Reduction Strategy Paper (PRSP), promoting food security and other areas of assistance outlined below. We also stand ready to provide humanitarian support when necessary.

The Bilateral Development Programme

Since the signature by Ethiopia and Eritrea of the Cessation of Hostilities Agreement in June 2000, we have been reviewing our development relationship with Ethiopia. As part of this process we held a seminar to discuss papers commissioned from academia and civil society to help update our understanding of current politics, governance and civil society; the economy; poverty; and food security.

In November 2000 the Secretary of State for International Development met the Ethiopian Prime Minister in Ethiopia and agreed with him that our intended focus should be on food security as a first priority, and undertook to consider whether we could contribute to the development of the private sector in Ethiopia. Since that meeting work has progressed on the development of the programme in several areas and on current plans we expect to invest up to £30 million over the next three years. These figures are indicative and subject to adjustment in the light of developments.

Peace Process and Regional Conflict Reduction

Support has been agreed to the UN Mission to Ethiopia and Eritrea (UNMEE) for an emergency survey of mines and unexploded ordnance. In addition support is being provided to the UN Trust Fund for the delimitation and demarcation of the border areas. We are also considering support for the Nile Basin Initiative (NBI), which will seek to provide technical assistance in capacity building plus technical support for mainstreaming conflict reduction through NBI programming. 

Poverty Reduction Strategy Paper (PRSP) Process

Poverty Reduction Strategy Papers (PRSPs) are intended as national statements of overall plans to reduce poverty. PRSPs embody a set of principles, such as meaningful participation and broad ownership, which DFID fully endorses. The PRSP process also builds on existing national strategies and policies. The Ethiopian Government, largely through a focused process of consultation, will develop the PRSP. The World Bank/IMF and other donors need to subordinate their documentation to the PRSP.

The development by the Ethiopian Government of a PRSP is helping guide our approach. The PRSP process offers a key opportunity for fruitful dialogue between Government, civil society and donors on how best to approach poverty reduction in Ethiopia. We are therefore supporting the following activities in this area and others are under consideration:

• Active engagement in the process by DFID in-country and HQ staff.
• Providing financial support, as part of a multi-donor group, to the government-led consultative process.
• Promoting public discussion on poverty and the PRSP through funding the Ethiopian Economic Policy Research Institute (EEPRI) to train journalists and civil society institutions on these issues.
• Supporting the contribution of civil society to the PRSP process through – for example – providing assistance to the NGO PRSP Task Force (under the NGO umbrella group CRDA).
• Funding a national pastoralist conference and UNICEF/IDS project to enable pastoralist communities to engage with the PRSP process.
• Co-funding, with the EU and USAID, the processing and analysis of the Agricultural Census to be carried out by the Central Statistical Authority. The Census will provide information on the impact of some key aspects of the ADLI policy and, by providing highly disaggregated results, will also contribute to analyses of rural livelihoods.
• We are supporting the provision of a dedicated co-ordinator for the Christian Relief and Development Association’s (Ethiopia’s principle NGO umbrella organisation) PRSP task force. 

Food Security (including rural roads)

DFID is planning to deepen its involvement in addressing rural poverty, promoting sustainable improvement in the food security situation at household level, and reducing the vulnerability of the national economy to cyclical drought. 

There will always be specific situations when food aid is vital and must be given quickly and at appropriate levels. However, food aid is one of the least efficient ways of directly transferring resources to hungry people (as over half of the total cost goes on storage, transport and administration) and does nothing to address the root causes of food insecurity. By common consent, long-term improvements in food security cannot be achieved by the annual provision of massive amounts of food aid.

Food insecurity in Ethiopia results largely from chronic and severe rural poverty rather than drought and crop failure. Local government officials estimate that in those areas receiving the bulk of food aid, only 15 per cent of farming households are able to fulfill their basic needs from agricultural activities alone - even in the most favourable climatic conditions. Other sources of income are therefore needed to meet their household food requirements. At the same time, wider aspects of poverty, such as lack of access to affordable health care and poor sanitation, also contribute to malnutrition.

An integrated set of policies and interventions are needed. We are working with multilaterals (the World Bank and European Commission) and with regional governments, to improve the policy environment and to test out new approaches to community driven development and employment based safety nets for the chronically food insecure. We are also intending to support the improvement of rural transport as a way of removing physical and market constraints to food security. In all of these areas capacity building at local level will be crucial. The activities approved so far are:

• Recruitment of a Food Security Specialist for the EU Local Food Security Unit in Ethiopia; a Rural Roads Expert for the EU Delegation; and a Rural Livelihoods Specialist for the World Bank office in Ethiopia to strengthen the key multilaterals.
• Helping with the design and implementation of the World Bank’s innovative Food Security Project, which encapsulates much of the latest thinking on the subject, and will provide targeted support for implementation.

Work is also under preparation on the following related activities:

• Bilaterally we have begun a dialogue with some regional governments, relevant Ethiopian institutions, other donors and international NGO’s on policy issues considered key to improving food security, such as land tenure, voluntary resettlement, labour mobility and access to micro-finance, and are already funding preparatory work in some of these areas.
• We are exploring with federal and regional governments and with other development agencies how DFID could support rural road and transport development to reduce food insecurity, for instance in support of the Ethiopian Government’s Rural Travel and Transport Programme.
• Within a regional framework we are helping to shape the UN-instigated and now World Bank led “Horn of Africa Food Security Initiative” and to ensure coherence between plans developed at the regional level and those emerging in Ethiopia.

Roads

13. We have restarted the District Maintenance Organisations (DMOs) project, which was postponed when the conflict between Ethiopia and Eritrea broke out. The project will contribute to the first phase of the Government of Ethiopia’s ten year Road Sector Development Programme. Its purpose is to help the Ethiopian Roads Authority strengthen its ten DMOs, so that they can undertake cost effective road maintenance. The project is worth over £4 million over 5 years.

Public Finance

Better management of public expenditure will make poverty reduction spending more effective and strengthen the case for development assistance and debt relief. To this end we have been supporting a consultancy to assist the World Bank led Public Expenditure Review in 2001. We are also considering consultancy support for the World Bank’s Country Financial Accountability Assessment (CFAA), which should help Government and other donors to evaluate financial systems and identify areas for reform.

Strengthening of Governance and Civil Society

A range of opportunities exists for working in partnership with government and NGOs/civil society to improve their capacity to deliver public services and to improve the understanding between them. Previous work in this area has been reviewed and as a result a Partnership Fund has been established, which aims to provide support in these areas and test the ground for larger projects. The Fund makes relatively small grants to a range of organisations, including government at all levels, often working closely with other donors. Examples of projects supported are a pastoralists’ forum, training local NGOs in project planning techniques and funding training for social court judges in Tigray. 

Private Sector

Rapid economic growth will be required to reduce poverty but at present private sector development is hindered by many constraints. We supported a workshop in Addis Ababa in May 2001, which looked at constraints to private sector investment. We are planning to hold another session to involve Ethiopian Government policy makers. 

We are also planning to assist the World Bank’s work with the Ethiopian Government to survey current private sector performance, to assess the prospects for key exports, and to identify bottlenecks to export and private sector development. We are also considering opportunities for support to micro-finance.

HIV/AIDS

HIV/AIDS threatens to undermine poverty reduction efforts. To achieve the international development targets Ethiopia will therefore need to contain the spread of HIV infection if infant and maternal mortality rates are to be reduced. To this end DFID is providing £5 million to Ethiopia under the International Partnership Against AIDS in Africa (IPAA), which comprises of £4 million for support to the Ethiopian Multisectoral AIDS Programme (EMSAP) and £1 million for social marketing. Additionally DFID will spend a further £1 million on social marketing through DKT over the next 24 months. We are also considering further support and are exploring how DFID could most effectively play its part in support of national plans. 

Education

We will consider possible ways of responding to the ongoing development of the education sector, both bilaterally and through the European Union, by for example contributing to a fund for capacity building. Any support that we consider providing will be in the light of the Government of Ethiopia’s Education Sector Development Programme.

Rural Water and Sanitation

We are keeping open the possibility of participating in the Water Sector Development Programme (WSDP) that is under preparation by the Ethiopian Government.

The Humanitarian Situation 

Past 12 Months

Despite the overall harvest in 2000 being above average, the three proceeding years of poor rainfall patterns compounded by political, economic and environmental factors had left people in many parts of the country with less ability to cope with any climatic shock. In the areas most affected by drought government, international agencies and NGOs responded with emergency relief. 

According to Catherine Bertini, Executive Director of the World Food Programme (WFP) and the UN Secretary General’s Special Envoy on Drought in the Horn of Africa, the 2000 Emergency Appeal was a success. Donors provided US$287m; a total of 1.3m metric tonnes (MT) of food was delivered; she claimed that famine was averted and hundreds of thousands of lives saved. 

Current Situation

The Ethiopian Government's 2001 Annual Disaster Prevention and Preparedness Commission (DPPC) Appeal, launched in January, sought a total of 639,246 MT of food assistance (including cereal, oil and supplementary foods) for the period February - December. With stocks carried over from 2000 (some 168,587MT) being taken into consideration, the net requirement for 2001 was estimated at 470,658MT for 6,242,300 beneficiaries.

By the end of July, donor contributions totalled 402,394MT. The USA was the largest donor, with a total contribution of some 250,000MT, and the EU will provide 110,000MT of locally purchased food aid. 

The Outlook

In 2001, there have been fair to good rains in most parts of the country. Catherine Bertini held a video-conference in September with representatives of the international humanitarian community in Ethiopia. There appeared to be a general consensus that we were “over the hump” with regard to drought. But the situation in Somali region remains uncertain; the humanitarian community are considering needs and appropriate responses.

One result of high grain yields in parts of the country (e.g. central and west highlands) has been a dramatic depression of grain prices to the lowest levels recorded in seven years. The combination of bumper yields and ineffective markets in surplus areas has driven farmers to sell productive assets (such as oxen) in order to repay loans for farm inputs (such as fertiliser) and reduced their incentive to seek high yields in future years. The paradox is that such a surplus exists while external food aid is being delivered to other parts of the country. This highlights the importance of improving rural access and the functioning of food markets.

DFID Humanitarian Assistance

DFID was the second largest bilateral donor of food aid (through NGO partners) in 2000, having committed bilateral food and non-food assistance worth about £12.3 million (see the attached list), including some 40,000 MT of food. Over half of this was procured in local markets, which helps to support producer prices. In addition Britain contributes about 17% of the current EU provision. We also initiated a major multi-stakeholder review exercise of the situation in pastoral areas to enhance awareness of the need for more appropriate strategies. 

In the early part of this year we contributed £3 million to the ICRC’s Appeal for 2001 and we stand ready to provide further humanitarian assistance if required.

Background

In May 1998 hostilities commenced between the Governments of Ethiopia and Eritrea over a border dispute. The war, which was costly in terms of lives and money, was brought to an end on 12 December 2000 in Algiers, when both countries signed a Comprehensive Peace Agreement. The peace process has been moving forward gradually with the UN Mission to Ethiopia/Eritrea (UNMEE) announcing on 18 April 2001 the establishment of a buffer zone between the two sets of forces – the Temporary Security Zone, UNMEE have deployed a peacekeeping force in the zone, which will remain in place until the border is demarcated. The UN arms embargo on Ethiopia and Eritrea was lifted on 16 May 2001.

About 65 million people live in Ethiopia. They are among the poorest in the world with a large proportion of the population living on less than $1 a day. According to recent estimates 2.5 million people in Ethiopia can be considered as chronically food insecure. The economy is highly dependent on agriculture, which makes up more than 50% of GDP. 85% of the people depend on agriculture for a living. Rural Ethiopia is exceptionally poor. There are large income inequalities: the poorest fifth of the rural population (resource poor farmers; landless and land-poor; and pastoralists) has a consumption level of only one tenth of that of the richest fifth. Degradation of the environment and its productive potential is one of the underlying reasons for poverty, food insecurity and increased vulnerability to drought in rural Ethiopia. The average land holding is only 1.09 hectares and the population growth rate is creating increasing pressure on land and other natural resources.

The Government has recognised that in order to eliminate poverty and achieve the International Development Targets it has to significantly increase the productivity of its financial, human and natural resources. It has chosen to do this through a policy of Agricultural Development Led Industrialisation (ADLI). The main objective of ADLI is to achieve productivity growth in the peasant agriculture sector and thereby bringing about an improvement in the standard of living of the rural population.

The Economy

Since October 1996 Ethiopia has made good progress on economic reform and GDP growth has averaged around 5% between 1995/96 and 1999/2000. Following the end of the war the economic outlook for 2001-02 is promising with real GDP growth rates of 6.5% forecast in 2001 and 7% in 2002. In addition inflation has been brought under control, despite a large devaluation and domestic price liberation; and fiscal management has been improved. However, these improvements should be viewed against the considerable challenges that face the country, which currently ranks 171st out of 174 countries in the 2000 Human Development Index.

The IMF Board agreed that Ethiopia should reach its Enhanced Initiative for Heavily Indebted Countries (HIPC) Decision Point in November 2001. 

Ethiopia’s steady development progress since 1991 has resulted in and benefited from a high level of donor support. The UN, World Bank, EU and African Development Bank are the key multilateral donors. The main bilateral agencies are the US, Italy, Germany, Japan, Norway, Sweden, Finland, and the Netherlands. The UK has historically been a relatively small bilateral donor but now that the war with Eritrea is over we have decided to re-commence an aid programme in Ethiopia.

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