Content
Ethiopia
Content
Situation and cooperation
Ethiopia is one of the poorest countries in the world. The Human Development Index (HDI 2009) ranks it 171st out of 182 countries. The legacy of the last war with Eritrea (1998-2000), droughts and the high world market prices for energy and food have forced the country even deeper into poverty. The food situation is critical. This is due to the recurrent droughts, the high rate of population growth, an extremely poor road network for transporting goods, low yields in agriculture, the destruction of forests and severe soil erosion on sloping arable land. The combination of persistent drought and rapidly rising food prices led to an acute emergency in summer 2008. In 2009, parts of Ethiopia again experienced late rainfalls or no rainfall at all. The German Development Ministry provided a total of 22.4 million euros in 2008 and 2009 to fight the famine in the southern and eastern parts of Ethiopia.
The defining features of Ethiopia’s economy are low public revenues, high inflation and foreign debt, and a balance of trade deficit – the country imports significantly more than it exports. The government thus depends on the inputs of international donors to finance investments and recurrent costs. Donor contributions account for about 30 per cent of the state budget.
Although some reforms have been implemented, the state still exerts a huge influence on the economy. Obstacles for the private sector are power shortages and the inadequate telecommunication system, amongst other things. Ethiopia is now the only country in the region not to have privatised and liberalised its telecommunications sector.
The country also faces problems because of a lack of foreign exchange reserves and the resulting import restrictions. Because its economy has very few links with the outside world, Ethiopia has largely been spared any direct impact from the global economic crisis. However, the crisis has had a noticeable effect on the demand for Ethiopian export goods – in particular coffee –, on remittances from Ethiopians living abroad and on the level of foreign investments.
Agriculture is the mainstay of the Ethiopian economy. It provides work for more than 80 per cent of the workforce and generates almost half of the country’s GDP. It is very much dependent on rainfall and limited to the fertile highlands. Since 2004, the liberalisation of the agricultural market and good rainfall have led to an increase in agricultural production. In the years up to and including 2008, Ethiopia experienced double-digit economic growth rates. The drought and failed harvests in 2009 caused growth rates to fall, although they still remained firmly in the positive range. Economic growth of 6.5 per cent is expected for 2010.
However, because the average rate of population growth is a high 2.5 per cent, this economic growth is not mirrored by similar growth in per capita income. By 2050, Ethiopia will be one of the ten most populous countries in the world.
It is estimated that every year between four and seven million people in Ethiopia are at risk of malnutrition.
Only about 40 per cent of all Ethiopians have access to safe drinking water, and the country’s health system is also underdeveloped. The level of education is extremely low too, with more than half the population unable to read or write. Ethiopia’s school enrolment rate is one of the lowest in the world.
After the end of the military dictatorship in 1991, the new government took the bold step of liberalising the economy and opening the country up in political terms. Since 1994, Ethiopia has been a democratic federal state. The borders of the individual federal states are drawn along ethnic lines. However, decentralisation has yet to lead to the hoped-for political integration of the country.
Human rights remain a problematic issue. There are regular reports of arbitrary arrests for example. The judicial system is overstretched and not sufficiently robust to guarantee legal security. This not only deters potential foreign investors, but also prevents numerous local entrepreneurs from realising their business ideas.
Despite a constitutional ban on discrimination, women’s rights in Ethiopia are not consistently upheld. In addition, press and civil society freedoms have recently been curtailed. For example, restrictive laws have been adopted with regard to the media and the work of non-governmental organisations. Obstacles placed in the way of opposition parties also suggest that the government is using every available means to shore up its hold on power.
There are frequent incidents of unrest in Ethiopia, caused by militant liberation movements which the government regards as terrorist organisations. One such movement is the rebel group Ogaden National Liberation Front (ONLF), whose members are seeking independence for the Somali Region; another is the Oromo Liberation Front (OLF), which is seeking to establish an independent state for the Oromo people in the Federal State of Oromiya.
Development potential
However, there is also evidence of development potential in Ethiopia: its society boasts strong self-help structures. There is potential for boosting agricultural productivity, and the country has untapped mineral reserves such as gold, platinum, nickel, tantalum ore, sodium carbonate and potash. Great hopes are being placed in the discovery of new gold and mineral oil deposits in the Ogaden Basin.
In addition, Ethiopia has environmentally-friendly energy sources such as hydropower and geothermal energy. It has a number of growth sectors, including energy supply, telecommunications, the manufacturing sector – in particular agroindustries – and mining. A new sector with growth potential is tourism, which will benefit from the improvements in infrastructure and power supply.
Priority areas of German cooperation with Ethiopia
During the war with Eritrea, Germany did not pledge any new investment in Ethiopia. But it did give the go-ahead for new funds to be pledged for Technical Cooperation, so as not to further increase the suffering of the poor. In 2001, after the peace agreement was signed and Ethiopia had undertaken to reduce its military spending, Germany normalised cooperation with Ethiopia.
At the last round of government negotiations in 2011, 102 million euros was pledged to Ethiopia for the period from 2012 to 2014.
Development cooperation focuses on three priority areas, which have been agreed between the governments of the two countries:
-
Sustainable economic development
-
Sustainable land management
-
Urban development and decentralisation
In addition to these three priority areas, Germany is backing efforts to stamp out the practice of female genital mutilation, which remains very widespread despite having been made a criminal offence. To complement its bilateral projects in Ethiopia, Germany is also providing support for measures which help to disseminate energy-saving cookers and improve access to electricity. These efforts are part of the "Energising Development" energy partnership between Germany and the Netherlands, which is being managed by the BMZ and the Dutch Directorate General for International Cooperation (DGIS).
The budget support that was initially agreed with Ethiopia was suspended by the international community at the end of 2005 out of concern about the human rights situation. Germany has since participated with numerous other donors in a World Bank programme to safeguard basic social services in districts and municipalities (Protection of Basic Services, PBS). Support is being provided for basic services in the health, education, water and agriculture sectors, and for rural road construction.
Sustainable economic development
Germany is supporting the Ethiopian economic development programme (Engineering Capacity Building Program, ecbp). The programme involves a two-pronged approach: on the one hand, it is aimed at driving forward the country’s industrialisation and creating new jobs and income-earning opportunities for the fast-growing population. On the other hand, efforts are being made at the same time to improve education so as to ensure that the people of Ethiopia are in a better position to take advantage of these new opportunities.
One area in which Germany is providing development support is the needs-based expansion of the vocational education and training system. Technical training in vocational schools is being improved by matching it with the needs of the economy and job opportunities in the formal and informal sectors. The university training of engineers and vocational school teachers is also being improved.
In order to increase the demand for skilled workers and make Ethiopian industry more competitive in international terms, Germany is involved in strengthening the private sector, reducing bureaucracy, and introducing quality management and internationally recognised standards. The focus here is on businesses processing local raw materials. Support is also being provided for efforts to expand the system of microfinance, in order to give small and micro-enterprises access to credit.
Sustainable land management
The conservation and sustainable use of soil, forest and water resources will allow Ethiopia to boost the productivity of its agriculture in the long term, thus ensuring food security.
Germany’s efforts in this sector, which form part of a national programme for sustainable land management run by the Ethiopian government, are focused on the rural regions Oromiya, Tigray and Amhara.
Farmers are being helped to tap into unused potential by diversifying production. Measures include the dissemination of methods that will increase production whilst conserving soils, and efforts to promote the responsible use of water resources.
New plant varieties and improved seeds are being introduced, farmers are being taught methods of biological erosion control, and special farming methods tailored to Ethiopia’s soils are being developed. Currently, some 36,000 households and 150,000 people are benefiting from this programme.
A further field of activity is advising authorities on how best to improve the institutional and legal framework. In order to alleviate problems connected with the distribution and marketing of food within the country, efforts are under way to improve transport channels. Emergency aid is only provided in times of famine caused by severe drought.
Urban development and decentralisation
In this field, Germany is helping Ethiopia to build a federal structure. The aim is to stimulate participation and democratisation and to strengthen civil society.
The principles of federalism and local self-government have already been established in law in Ethiopia, but still need to be fully translated into practice. Rather than reducing conflicts, the policy of developing decentralised structures based on ethnicity has sometimes exacerbated them. Another problem is that local authorities want to work independently but lack the human and institutional capacities they need to assume their new responsibilities.
The shift of responsibilities from the national to the local level is a slow and complex process. Projects in this priority area concentrate on providing advice on restructuring local and state authorities, and shaping a legal and institutional framework that is conducive to development. In addition, staff from the relevant authorities and institutions are being given further training in selected areas, such as urban development, infrastructure and housing, as well as the management of local authority finances. An urban development fund is being supported as part of Financial Cooperation; the fund is aimed at improving local government services such as waste collection, sanitation and the development of roads and market places in selected communities.
Debt relief
In 2000, Ethiopia’s foreign debt totalled about 5.4 billion US dollars. To qualify for the Heavily Indebted Poor Countries debt relief initiative (HIPC II), it submitted its interim Poverty Reduction Strategy Paper (PRSP) to the World Bank and the IMF in November 2000 and the full PRSP at the end of 2002. The paper covers four priority areas: agricultural development led industrialisation (ADLI), reform of the civil service and the justice system, empowerment of women, and capacity building in public institutions and sectors. The Ethiopian PRSP has been further developed in the intervening period, culminating in the Plan for Accelerated and Sustained Development to End Poverty (PASDEP), which was adopted in September 2006.
In November 2001, Ethiopia reached the decision point of the HIPC II programme and in April 2004, the completion point was reached. Ethiopia is also benefiting from the enhanced Multilateral Debt Relief Initiative (MDRI) launched by the G8 states in June 2005, under which all debts owed to the World Bank, the IMF and the African Development Bank are cancelled. In total, Ethiopian debts with a nominal value of 6.5 billion US dollars have been cancelled.
Information
See also
- Press release 15.12.2011:
German government calls for improvement of human rights situation in Ethiopia - Press release 08.01.2011:
German Development Minister Dirk Niebel leaves for Yemen and Ethiopia - Issues: Food
- Issues: Human rights
- Issues: Good Governance
- Issues: Debt relief
- Issues: Combating female genital mutilation
External links
Publications
-
Decentralisation and local self-government
Leaflet
(PDF 372 KB, accessible) -
Technical and Vocational Education and Training and the Labour Market in Development Cooperation
Strategies 140
(PDF 841 KB) -
In partnership for a strong Africa: Cooperation in the field of sustainable economic development
Topics 167
(PDF 2.4 MB, accessible)
