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Ecuador

Situation and cooperation

The inactive volcano Chimborazo, with 6267 metres the highest mountain in Ecuador

The Ecuadorian government under President Rafael Correa has set itself ambitious development goals. The government's reform policies have achieved some initial successes. For example, the World Bank reports that the proportion of people living below the national poverty line dropped between 2007 and 2014 from 36.7 per cent to 22.5 per cent, and the proportion of those living in extreme poverty decreased from 10.1 per cent to 4.4 per cent by 2013. The average annual income per capita rose from 3,330 US dollars in 2007 to 6,090 US dollars in 2014. The Human Development Index (HDI 2015) ranks Ecuador 89th out of the 188 countries assessed. And the country has reached most of the Millennium Development Goals.

Severe poverty still persists in the rural areas of Ecuador, where it affects especially indigenous and Afro-Ecuadorian groups and children. Although social inequality has been reduced, the gap between rich and poor remains wide and is far from being closed. Furthermore, progress is still also lagging behind on access to safe drinking water and sanitation. In towns and cities, the number of poor people has risen considerably over the past 10 years.

Serious weaknesses in Ecuador's development are essentially the result of the political instability that was a feature of the country over many years. Economic and political power is centred round the country's two large cities, Quito and Guayaquil. Over many years, structures evolved there which favoured corruption and cronyism. Public administration has been slow to modernise. As a consequence, people still have little trust in the country's political institutions.

Government’s reform agenda

School class in Ecuador

The guiding vision of the Correa government is the concept of the "inclusive economy". Poverty reduction, social justice and state reform are all central issues of the reform programme. The "Plan Nacional para el Buen Vivir" (national plan for a good life) sets out the government's development plans. The current phase runs until 2017.

The government is aiming for a decentrally organised, efficient, transparent, responsive state which will also adopt a higher profile in the field of economic policy. Its ambitious social policy sets out to combat the worst poverty, bring about equality of opportunity for disadvantaged groups in the population, improve the education and health systems, reduce unemployment and improve conditions for the local economy and production.

In the environmental sector, the government aims to achieve ecologically sustainable economic development. In practice, however, greater priority has been given so far to the extraction of natural resources, in particular crude oil, than to environmental protection. The fact that farmland and forests are being used in a manner that is largely unsustainable, and in part illegal, is destroying important natural and economic foundations of life in Ecuador.

The indigenous population, in particular, has strong reservations regarding an expansion of the country's oil production and new mining projects. They fear that these will lead to new social conflicts and negative impacts on the environment of the areas in which they live.

In 2015, protest marches were held in various cities against the government and the legislation it was planning. People objected not only to the extraction of resources but also to land reform plans and a proposed rise in taxes as well as to a planned constitutional amendment which would allow Correa to be re-elected.


Economic development

Drilling for oil in the Yasuní National Park

Ecuador is heavily dependent on exports. By far the most important export is oil; further export commodities are bananas, coffee and cocoa, fish and shrimps. Alongside the oil sector, the wholesale and retail sectors as well as the industrial sector are also important for the country's economy.

Because Ecuador is largely dependent for its earnings on oil, state revenues fluctuate in accordance with world market prices. High oil revenues over several years meant that Ecuador's economy grew year after year. Thus, the government was able to significantly increase its social and infrastructure spending. The subsequent fall in oil prices had a correspondingly negative impact. In 2015, Ecuador slid into recession and the government had to introduce far-reaching austerity programmes.

About one third of the population lives in rural areas. Given this figure, the share of the agricultural and forestry sector in gross domestic product, at only nine per cent, is rather small. Low education levels and uneconomical property holdings, with farms that are too small, are the main reasons for low levels of productivity in the agricultural sector.

In January 2016, the Ecuadorian parliament adopted a bill that is to guarantee more equitable land distribution, help improve food security and prevent real estate speculation. One of the government plans under this legislation is to grant land that is not already being used for agricultural production to smallholder farmers and cooperatives to work. It also wants to restrict land acquisition by foreigners. Parts of the indigenous population had protested against the bill since, in their view, the government had not gone far enough in its efforts to regulate land distribution.


Ecuador became the focus of international attention when, in 2007, President Correa launched the Yasuní-ITT Initiative. This initiative was named after the Yasuní Biosphere Reserve and National Park, and the Ishpingo, Tambococha and Tiputini oil fields discovered there. Ecuador offered the international community a deal whereby it would forgo plans to exploit the oil fields if the international community agreed to compensate Ecuador for lost earnings by paying 50 per cent of the expected oil revenues (3.6 billion US dollars) into a trust fund administered by the United Nations. However, the international community did not enter into this bargain, and a citizen's environmental alliance failed to push through a referendum on how the oil reserves should be used. In 2014, a licence for oil production in Yasuní National Park was granted. Drilling began in September 2016.


Priority areas of German cooperation with Ecuador

Germany has been engaged in development cooperation with Ecuador since the 1950s, and is one of this Latin American country’s main bilateral donors. At government negotiations held in November 2014, Germany pledged to provide 40.5 million euros in funding for Financial and Technical Cooperation with Ecuador over a two-year period.

However, in December 2014, Ecuador's government terminated its collaboration with the German government in the environmental sector. In response, Germany provisionally suspended all bilateral development cooperation. In September 2015, cooperation between the two countries was resumed. German support focuses on two priorities:

  • Protecting the environment and natural resources
  • Public administration and economic reforms

In the years since its inception in 2012, the "Special programme to preserve and sustainably develop the Yasuní biosphere reserve" has taken on a supra-regional focus and is now known by a new project name, the "Programme for the protection of biodiversity, forests, and mitigation and adaptation to climate change (in the Northern Amazon region)".


Environmental protection and resource conservation

A marine iguana on a Galápagos island

Germany is helping Ecuador to preserve its natural resource base and extraordinary biodiversity. As part of a technical cooperation programme, the GIZ is helping decision-makers at the national, regional and local levels to develop and implement strategies for the sustainable use of the country's biodiversity. The programme comprises the following fields of action:

  • Sustainable production – Political guidelines on agrobiodiversity are to be formulated, and producer groups and indigenous communities will be given advice on which production methods are suitable for use in climate change conditions.
  • Incentive schemes – Financial incentives will be on offer to farmers and indigenous communities who undertake to conserve tropical forests, bogs and mangrove forests.
  • Supervision and Monitoring – Participatory systems of supervision will be introduced and campaigns launched to raise people's awareness of the consequences that a loss of biodiversity and illegal trade in plants and animals would have.
  • Reduction of greenhouse gas emissions and adaptation to climate change – Climate change will be taken into account in regional and local development planning; a legal framework will be developed to help mitigate greenhouse gases caused by the destruction of, or damage to, forests.

As part of its programme of financial cooperation, Germany is supporting the efforts of the Ecuadorian government to expand and bolster the national network of conservation areas. The KfW Development Bank has been mandated by the BMZ to help finance the conservation areas and related infrastructure, for example the construction of refuges. The KfW is also providing support for Ecuador's national "SocioBosque" programme. This programme operates in line with the REDD mechanism by providing incentive payments to – mostly indigenous – owners of forest land who are willing to place their land under conservation.


Public administration and economic reforms

View of Quito, the capital of Ecuador

In Ecuador, there have traditionally been disparities in political, cultural, economic and ecological terms between the country's four great regions, made up of the Amazon region, the highlands, the coast and the Galápagos Archipelago. Following years of political instability, the government under President Correa is pursuing an ambitious reform programme intended to balance out the disparities in the development of these four regions. The constitution adopted in 2008 provides the framework for ambitious plans to restructure territorial divisions and reform administrative structures whilst pushing ahead with decentralisation.

Germany, through its programme of technical cooperation, is helping regional and local authorities to deliver public services in a manner that is transparent and responsive to people's needs. Instruments and guidelines for participatory development planning are being developed with the National Secretariat for Planning and Development. These will be supported by corresponding budgetary and investment planning. At the same time, the administrative staff in local communities are receiving training on how to use public money efficiently and tailor services to the needs of the people.

One of the areas on which these activities are focused is the Macizo del Cajas biosphere reserve near Cuenca. The aim of the pilot project being implemented there is to introduce a management model that will serve to simplify planning of the reserve. The project will involve the four provinces, eleven municipalities and 64 districts concerned.

A new programme, due to commence in 2017, is to support the Ecuadorian government in its efforts to implement at decentralised level the New Urban Agenda adopted as a result of the third UN-HABITAT conference in Quito.

In a complementary measure, Germany is also helping to enhance municipal administration through its financial cooperation programme of support. For this purpose, the KfW Development Bank is providing credits to the state-owned development bank, Banco del Estado, which will be used to help selected medium-sized municipalities in Ecuador make infrastructure investments in their water supply and sanitation systems, waste management and urban mobility networks.

On top of that, Germany is also supporting the Ecuadorian government's efforts to expand the use of renewable energies on the Galápagos Islands. This will help to protect the unique ecosystem on the islands.


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