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EU- Ethiopia: A strong and successful partnership at 40

Habiba Ahmed  10/07/15

The European Union may be a new actor in the global political, economic, and security cooperation. Nonetheless, it has become a very important partner of Ethiopia's socio-economic stride, with a total volume of almost 1.6 billion euro in 2011.

Indeed, the EU remains by far the most important trade partner of Ethiopia. Ethiopia's exports to the EU represented 43% of its worldwide exports in 2011. In comparison, the share of China was (13%), while Saudi Arabia, USA and Sudan received (7%), (5%) and (5%), respectively, of Ethiopia's exports. Similarly, 21% of Ethiopia's imports came from the EU in 2011. Which is big compared to other important trade partners; Saudi Arabia (16%), China (16%), USA (12%) and India (7%).

The European Union is one of the major donor partners of Ethiopia that contributes for about 230 million Euros a year, representing 10% of the total annual Official Development Aid received by Ethiopia. Jointly with the EU Member States support, the European Union makes available around 34% of the total aid assistance, which makes on the average 800 million Euros, to Ethiopia. Moreover, EU represents all together about 17% of the resources of the Promotion of Basic Services and 31% of the Productive Safety Net Program of the country, two flagship programs well known worldwide and delivering impressive results.

The partnership between EU and Ethiopia was formally forged a very long time ago when Ethiopia signed the Lomé Convention in 1975 and the European Commission opened its Delegation in Ethiopia. Cooperation  between  the  European Economic Commission  and  Ethiopia began  as  far  back  as  1973,  when  the  EEC  financed  a  food  aid  program  designed  to  help  cope  with the  serious  drought  which  was  affecting  the  country  at the  time. Subsequently, the  Imperial  government entered  into negotiations  with the  EEC  for  the  First  Lome  Convention (which the first framework of multilateral co-operation that governed relations between EEC and African Caribbean and Pacific (ACP) states until 2000).

The  delegation  of the  EEC  in  Addis  Ababa  was  established  in  the  beginning  of  1976,  and  the  Ethiopian  Permanent  Mission  to  the  EEC  was  opened  in  Brussels in  1979. The then European Commissioner  for  Development visited  Ethiopia in  1977,  1978,  1979  and  in  December 1980. Similar visits were conducted by Ethiopian officials.

There had been significant relations outside the framework of the convention. Mainly, in the humanitarian sector. The  value  of food  aid  provided direct  to  Ethiopia since  1975-1980s  was 55  m  Euro. In  addition,  indirect  contributions via  non-governmental  and  inter-national  organizations amounted  to  some  9  m  Euro. In  1979/80, the  EEC  increased  its  food  aid  program  to  Ethiopia substantially  in  relation  to  the  previous  year,  to  help the  country  cope  with the  emergency  situation.

Aid  was increased  from  9.3  m  Euro in  1978/79  to  21.4 m  Euro in  1979/80. The  1981  program  earmarked  20.000  tons  of  cereals  <1980- 15,000  tons),  2,000  tons  of skimmed  milk  powder  (1980- 2,700  tons)  and  1,000  tons  of butter oil (1980- 1,000 tons. Under  the  1982  food  aid  program,  20,000  tons  of  cereals,  2,000  tons  of  skimmed  milk powder  and  1,000  tons  of butter oil were made  available  for  Ethiopia. Ethiopia had also been  allocated  special  food  aid  of 17,722 tons  of  cereals under the  European  Commission's  special  action plan  to  combat  hunger in  the  world.

Indeed, the cooperation between the two parties have grown from protocol to protocol in scope and coverage enabling the country to implement tremendous programs and projects which contributed to the improvement of the lives of significant number of our people.

However, the opportunities for Ethiopia had been undermined by the lack of robust foreign policy. There was no policy document and the foreign relation approaches were not aimed at improving the lives of the people but at serving personalities and dominated by ideological considerations.

The foreign relation activities were not subject to accountability. It was directed at achieving military supply and priority was given to the military needs of the government, both for internal and foreign wars. Economic and commercial relations were ignored, except for purchase of armaments and luxury goods to the king and nobles.

Indeed, the military regime foreign relations approach was characterized by high priority on getting arms and military diplomacy without paying attention to economic diplomacy. It also exhibited extreme ideological dependency on the east, emphasizing on maintaining good relations with the socialist world and promoting socialist principles on international forums. Economic development of the state was disregarded and there was no peace with the neighboring states.

It was after 1991 that the foreign policy orientation of Ethiopia shifted dramatically. The gist of Ethiopia's Foreign and National Security has become characterized by the determination to improve [citizens] lives by deploying everything for economic development and democratization free from arrogance and adventurism.

The Foreign and National Security Policy document clearly pointed out the shortcomings that

One main concern regarding our relationship with Europe has to do with our failure to make maximum use of the opportunities that the region offers. Admittedly, we have not done enough in terms of exploring sources of credit and aid to finance our development plans and ensuring that the money thus obtained is properly used.

More importantly, there has been some failure to gear our relations with the EU toward expanding trade and investment in the country. The main reason for this is our poor image in Europe. Ethiopia is perceived as a country wracked by protracted war and poverty rather than a potential destination for investment and trade, and the efforts deployed to correct the image have not been adequate.......

The potential of Ethiopia-EU cooperation was understood by the crafters of the policy. It was noted that we should strive to acquire from European states credits and grants for the development and technical assistance required by our initiatives, and work hard to ensure maximum and effective utilization of the resources secured and that the main focus should shift to trade and investment.

It was underlined that "based on detailed and continuing research, and study Ethiopia should, find markets for products and export those that are in demand in Europe. Work along these lines will also require us to establish and maintain close contact and cooperation with private investors, NGOs and states ready to contribute. Similarly, steps were taken to establish through research the parties that can help the efforts to attract the preferred type and amount of investment, and to work together in a coordinated fashion.

The limits of government-to-government relations were noted. The policy stated that:

"we cannot expect to get comprehensive benefits in the confines of state sectors. The greatest benefits come from trade and investment, and the key here is in the hands of the private business community. We therefore need to widen our focus to include the governments, the NGOs and the private sector. Our diplomacy in Europe should aim at involving and even coordinating all three sectors, based on detailed and continued research studies and analysis. Considering the EU as a union may be correct, but the role member states play are not the same. While we should work to maintain good ties with all EU members' states, we should focus on cultivating extensive ties with major countries, and those better disposed towards Ethiopia."

Moreover, differences that could arise with Europe with regard to different perspectives on development and democracy in Ethiopia were drawn carefully and on the basis of detailed study. Fundamental policy matters were defended but less critical ones were made subject to continued efforts to resolve differences in opinion by showing the significance and validity of the policy causing disagreement.

Indeed, these were feasible directions as the primary aim of Ethiopia’s development policies is the eradication of poverty in the context of sustainable development. These aims are shared by the EU as detailed by the European Consensus on Development, signed in 2005, under which EU member states and the EU Commission agreed upon a common vision of development. The EU partnership with Ethiopia was therefore in line with mutual aims of promoting respect for human rights, fundamental freedoms, peace, democracy, good governance, and gender equality, the rule of law, solidarity and justice.

As a result, the cooperation between Ethiopia and EU boosted across the board. Ethiopia has been a major beneficiary of EU support, receiving more than 2 billion Euros from the European Development Fund as well as additional aid from the general budget largely for food security and food aid. The EU shares Ethiopia’s objective to eradicate poverty through sustainable development, democracy, peace and security.

In this regard, the mutually agreed co-operation strategy, presented in the 10th European Development Fund's Country Strategy Paper for Ethiopia had been significant with  allocation of some 644 million euros for the country in areas such as transport, rural development, decentralized social services, trade, gender, and environmental conservation.

The European Investment Bank (EIB) has also lent important lines of credit to Ethiopia. The EIB provides loans directly to the private sector for commercially viable projects. Such loans to Ethiopia have supported projects in the fields of telecommunications, aviation, and energy. In addition, a global loan was provided to the Development Bank of Ethiopia (DBE) for onward lending to small and medium sized enterprises. The development cooperation has focused mainly on vital sectors such as agriculture, food security, infrastructure, health and education, making Ethiopia one of the major beneficiaries of the EU’s development assistance.

Indeed, the EU is one of Ethiopia’s major development partners in the social, economic and trade sectors. In the macro-economic sector the Protection of Basic Services (PBS) program; Public Sector Capacity Building Program (PSCAP); Public Expenditure and Financial Accountability (PEFA) mission; Monitoring & Evaluation (M&E) Pool Fund and Export Stabilization Fund (STABEX) are the main means of support. The Education Sector Development Program (ESDP); Polio Eradication Program; Mine Action and Social Rehabilitation Program; NGO Projects on Education, Health, Gender and Children’s Rights are the main means of support in the social sector.

Another important area of cooperation is infrastructure. The European Commission has since the early days of its cooperation with Ethiopia provided substantial support for the infrastructure sector. In 2006, it decided to provide budget support to this sector. The European Commission’s support to the road sector development programs has strong synergies with other sectors. For example: rural development and food security is supported by the development of rural roads and private sector development is supported by capacity building of the domestic construction industry.

The EU has also been financing a vast array of food aid, emergency, relief and rehabilitation operations, and long-term food security and rural development programs in Ethiopia. The financial cooperation was directed at two main objectives. The first one is meeting emergency needs with an emphasis on improving preparedness and planning capacity of the Government. The second one is supporting long-term development through the provision of supplementary income to targeted food insecure populations while building productive community assets.

Another important area is rural development and food security. The EC food security strategy for Ethiopia has two main objectives, which are meeting emergency needs with emphasis on improving preparedness and planning capacity of the government and, supporting long-term development through the provision of supplementary income to targeted food insecure populations while building productive community assets. The EC through its funding instruments has been financing a vast array of food aid, emergency, relief and rehabilitation operations, and long-term food security and rural development programs in Ethiopia.

Food insecurity in Ethiopia remains a multifaceted and complex problem in which quality, lack of access, as well as availability of food still play an essential role. Several factors should be taken into consideration including the weak purchasing power of the poor, weaknesses in the marketing system and transport bottlenecks.

Commensurate to the EU policy, the EC-Delegation to Ethiopia believes that working with and through government institutions ensures aid effectiveness and sustainability. With this perspective, in partnership with appropriate Government institutions, it has been working towards achieving the intended sustainable reduction of vulnerability to food insecurity and poverty. Its activities cover cooperation in the areas of food security, crop and livestock and market development, and environmental protection.

The EU is supporting Ethiopia to ensure better access and improved quality of basic social service delivery. Under the 10th EDF, €168 million had been allocated for this purpose. The EU Delegation to Ethiopia is the main donor in the Protection of Basic Services Program (PBS).

A few years ago, the EU had funded the infrastructure that protects several of the Lalibela churches from erosion. More recently, the EU has designed a new €10 million program to use culture and the country’s heritage as a vector for socio-economic development. The Delegation is also working with  regions and cities to develop the enormous potential of these places that could host cultural events for the Ethiopian population and attract more tourists.

The EU is involved in the migration issue through two projects started in 2012, with a total budget of 2,850,000euro, one called “Development of a tripartite framework for the support and protection of Ethiopian and Somali women domestic migrant workers to the Gulf Cooperation Council States, Lebanon and Sudan”, implemented by the International Labor Organization (ILO), and another one called “Strengthening Criminal justice responses to trafficking in persons and smuggling of migrants in Ethiopia and Djibouti” implemented by the United Nations Office on Drugs and Crime (UNODC). The projects aim to promote safer labor migration and to protect the rights of the migrant domestic workers.

Demining activities are financed and implemented by the Ethiopian Mine Action Office (EMAO). The EU has brought 15 million euro to finance mine-clearing work, i.e. the elimination of all mines from Afar, Tigray, and Somali Regions. This program includes social aspects: awareness-raising about mines and social reintegration of mine victims in their community. It aims at facilitating the return of the populations that have been displaced because of the mines. It also aims at reducing tensions in the border area and at improving the food security in areas where there used to be mines. Ethiopia is expected to be mine-free by 2015.

Last but not least, the cooperation in the area of NGOs/CSOs is worth mention. In the first decade, the EC under its Food Security and Food Aid Program had funded 60 NGOs Food Security and Rural development projects for a total amount of € 58 million. In the second round, the 38 NGO Projects has been funded under the EC co-financing and environment budget lines with a total financial outlay of 40 million euro.

Civil society and, more generally, Non-State Actors, had benefited from capacity building activities. To this end, an ambitious multi-million dollars' worth program is being implemented. Support is provided through technical assistance and grants to civil society organizations with a view to enhance their capacity to engage in the development and democratization process of the country, to improve their dialogue with government and their constituencies and improve coordination and networking amongst themselves.

The Ethiopia-EU cooperation took a leap with the signing of the 11th EDF (European Union Development Fund) National Indicative Program (NIP) which covers 2014-2020. It provides an initial 745 million Euros for the period to 2020 to support government-led programs in Ethiopia and is aligned to the broad objective of Growth and Transformation Plan (GTP) and the Climate Resilient and Green Economy (CRGE) strategy and deals with the specific objectives of sector plans in the focal areas of cooperation.

It constitutes the response of the EU to Ethiopia's medium term development vision outlined in the GTP, and is aligned to its broad objectives and takes into account the long-term vision of Ethiopia and the continuity of its development policies.

Indeed, the 11th EDF EU’s assistance to Ethiopia will have a significant contribution towards the attainment of the GTP-2 and there by Ethiopia’s vision of becoming a middle income country in the medium-term.

Certainly, the cooperation between Ethiopia and the European Union had passed several milestones in the past fort years. The excellent working relationship between the parties is strengthened by steady improvement of the involvement of non-state actors and the private sector in the programming, implementation and evaluation of development projects and programs.

The quality of aid and joint management structure can be pin pointed as the two major positive characteristics of the EU development assistance. The latter, by enabling the country to fully own EU’s resources made available to Ethiopia, has contributed towards efficient and effective utilization of external resources.

The EU is Ethiopia’s major trading partner for both exports and imports and it has assisted in programs related to trade, among them the Micro-and Small-Enterprise Development Program; the Economic Partnership Agreement Impact Assessment Studies and the World Trade Organization Impact Assessment Project.

EU investments to Ethiopia over the last 20 years have amounted to almost 24 billion birr. In addition to the numbers, Ethiopian counterparts are often very appreciative of the particularly high quality of EU investments allowing for a transfer of technology in key sectors as well as employment generation. Number of jobs generated by the roughly 300 EU companies active in Ethiopia is estimated at over 100,000.

With around 1 billion USD per year, the EU, both Commission and the member states, provide around 1/3 of ODA to Ethiopia and is taking a lead in progressively using country systems and working towards aid effectiveness.

The forty years old EU and Ethiopia is destined to continue as Ethiopia emerges a stable, growing and key market of Africa. As one writer described it, Ethiopia-EU cooperation can be regarded as exemplary in the context of EU relations within the Africa-Caribbean-Pacific framework.

 


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