View of Addis Ababa, the capital of Ethiopia

Ethiopia A country facing big challenges

Ethiopia is one of the world’s least developed countries. The large landlocked country in East Africa had been making good progress on sustainably improving the living conditions of its people. However, economic growth, which had been at a consistently high rate for a number of years, has dropped significantly as a result of the COVID-19 pandemic and due to violent conflict within the country. An additional problem is the increase in world market prices for food, agricultural inputs and energy caused by Russia's war of aggression against Ukraine.

The country is also facing huge political and economic challenges due to recurrent droughts and floods in some parts of the country, poor infrastructure and a very high inflation rate.

Since November 2020, development cooperation with Ethiopia has been overshadowed by the conflict between the Ethiopian government and the Tigray People’s Liberation Front (TPLF). An agreement signed in November 2022 for a permanent cessation of hostilities brings hopes of stabilisation and a sustainable political resolution of the conflict. In February 2023, the government presented a comprehensive plan for reconstruction for the next five years.

The conflict in the Tigray region in northern Ethiopia is having a severe impact on the country's budget and the macroeconomic situation. The humanitarian situation has deteriorated dramatically. According to UN estimates, more than 28 million people in Ethiopia are dependent on humanitarian aid. Despite UNHCR reports that 2.6 million internally displaced persons have now returned to their home communities, there are still more than 2.7 million people who are displaced within Ethiopia. Moreover, there are almost 900,000 refugees from other countries who are registered in Ethiopia, especially refugees from South Sudan, Somalia and Eritrea. In some parts of the country, the level of food insecurity is dramatically high.

On the current Human Development Index (HDI), Ethiopia ranks 176th out of 193 countries.

German development cooperation with Ethiopia

In order to lend effective support to Ethiopia's planned reforms, the German government concluded a reform partnership with Ethiopia in November 2019, but this is currently on hold due to the conflict in the Tigray region. Disbursement of the funding committed for this partnership has been stopped and will only be resumed if certain political demands are met, for instance taking steps towards finding a political solution to the Tigray conflict and investigating human rights violations that have been committed.

Currently, all development projects in Tigray have been suspended due to the conflict, and activities in the neighbouring Afar and Amhara regions are held up.

In other parts of the country, in view of the acute challenges, development cooperation activities are still being continued. The Federal Ministry for Economic Cooperation and Development (BMZ) coordinates its activities closely with those of other donors, acting in line with the EU. Measures to strengthen food security, resilience and social protection, which all directly benefit the population, are being scaled up in particular. Improving the living conditions and economic prospects for refugees and host communities (food security, healthcare, water and sanitation and vocational training) also remains a priority.

Ethiopian-German cooperation focuses on the following core areas:

Sustainable economic development, training and employment
Transformation of agricultural and food systems
Peaceful and inclusive societies

Other areas of cooperation

Beyond the core areas mentioned above, Germany is also active in Ethiopia in the field of environmental protection and the sustainable use of natural resources.

To help fight the COVID-19 pandemic, the BMZ is assisting the Ethiopian government in implementing its COVID-19 response plan and is supporting measures in cooperation with the World Health Organization (WHO). One aim is to mitigate the impacts of the pandemic on the economy, for instance through support for the textile sector.