Ethiopia

More and more Ethiopian children and young people have enrolled in school in recent years; many school leavers go on to attend universities or complete vocational training. Technical experts and engineers, in particular, are urgently needed. The problem: to date, Ethiopia's universities and vocational training facilities have only been able to partially fulfil their role. Practical relevance and links with industry are often lacking. Companies themselves cannot afford to train new employees internally or hire expensive foreign specialists. This slows down technological development and innovation.

As a result, KfW Development Bank supports reforms to the Ethiopian vocational training system, such as development and implementation of the new vocational training strategy ESHI. The aim is to provide better training for young people, including many women and refugees, especially in technical and agricultural professions. In over 50 vocational schools, KfW has already helped to equip workshops and provide additional teacher training, giving graduates better employment prospects.

KfW is also promoting stronger links between the vocational schools and the private sector. This can be achieved, for example, by basing vocational schools near industrial estates and offering modern training courses such as industrial and medical engineering.

Due to its topographical location and its varying climate zones, Ethiopia is home to many unique species of animals and plants, and is believed to be the country where coffee originated. This gives it an unusually high level of genetic diversity and it is one of eight “gene centres” around the world.

However, the biodiversity of the country is under threat: the widespread poverty and high population growth rate mean that an increasing amount of land is used for arable farming, pasture farming or industrial agriculture, and the last remaining forests are cleared. Barely any consideration is given to the natural resources, meaning that biodiversity continues to decrease. At the start of the twentieth century, around 40% of the country was still covered in timber forest. Today, only around 3% is left. Numerous plant and animal species are critically endangered, including the popular and particularly economically significant Arabica coffee, which grows wild in the mountain rainforests.

KfW Development Bank is supporting its partners in Ethiopia in maintaining important conservation areas. This primarily involves professionalising park management, financing the high levels of investment in park infrastructure for the long term and securing local people’s acceptance of the conservation areas. Furthermore, KfW Development Bank finances afforestation measures on communal land, in order to contribute to both biodiversity and better water availability and, ultimately, to improved income generation prospects for village residents.

With their sheer vastness and the traditional expertise of the semi-nomadic cattle herds (pastoralism), the Ethiopian lowlands make a major contribution to Ethiopia’s cattle production. The traditional system of husbandry is adapted to suit the harsh climatic conditions. For years now, however, it has been under increasing pressure. Ever more frequent droughts are one of the main factors. Another factor is the invasive shrub “Prosopis Juliflora”. Furthermore, in the past, access to important water and land resources was made more difficult. In this situation, the population’s capacity to withstand droughts weakens considerably.

To counteract these developments, the projects supported by KfW help to strengthen local people’s resilience to drought. In consultation with the population, measures are being developed in fields such as water supply, rural infrastructure and cattle and pasture farming, as well as alternative income generation opportunities and basic services. This puts people in a position to manage the natural basis for their livelihood sustainably, even with changing climatic conditions. On the one hand, the measures support the traditional economic system of pastoralism, and on the other, additional sources of income are tapped into.

For many years, Ethiopia has been a destination for refugees from the surrounding countries. Most refugees live in camps along Ethiopia’s borders with Sudan and Somalia and many have been there for over 20 years. The Ethiopian government delegates administration of the camps and the provision of basic supplies for refugees to the refugee charity UNHCR. The system of basic supplies for refugees that is not integrated into the systems of government is very expensive and not sustainable. Furthermore, in the outlying regions where the camps are found, resources are mostly scarce and there is conflict with the local population about how they are distributed.

The Global Compact on Refugees (GCR), agreed by the United Nations in 2018, introduced an about-turn from looking after refugees in isolation, moving towards a policy of integration. The signatory countries undertook, among other things, to accept refugees into their national systems for the provision of basic services.

Ethiopia is among the trailblazers in implementation of the GCR and since 2018 it has adopted a liberal and integrated policy towards refugees. In line with the GCR principles, an integrated, sustainable water supply system was introduced, with KfW’s assistance, in a camp for primarily South Sudanese refugees in Gambella. A water distribution network was built, operated and maintained by a state-owned water company. This significantly reduced the costs of supply. Previously, the water had to be transported to the camp in lorries, which cost around EUR 6 per cubic metre. Now the water only costs the equivalent of EUR 1 per cubic metre.

Due to their fertile soil and mild climate, the Ethiopian Highlands are an important crop-growing area for farmers. To end negative trends and secure people’s livelihoods, KfW has been supporting the “Sustainable Land Management” project since 2011. It combines medium-term measures to conserve soil with a long-term increase in agricultural production. To reduce the loss of fertile soil, work is underway to restore the water catchment areas for agricultural land. In addition, KfW is financing the expansion of communal infrastructure that makes it easier to trade in agricultural products and provide supplies to people locally. Furthermore, the intention is to increase agricultural productivity by simplifying access to agricultural machinery through measures such as offering the opportunity to lease equipment. This allows people in Ethiopia to make a better living from their agricultural output, with the prospect of being able to sell their excess produce at markets and improve their living situation significantly.

From an economic policy perspective, Ethiopia is still heavily influenced by the developing country model in which the state administers and manages economic activity centrally. Both the economic policy direction and the economic structure are currently undergoing radical changes. The government under Prime Minister Dr Abiy Ahmed has announced economic policy reforms and has already begun to implement them. Among other things, these should lead to improved conditions for the private sector and therefore to more economic growth and increased employment. They include plans to gradually open up the economy and introduce more competition, especially in sectors that have been dominated by state-owned enterprises (including logistics and telecommunications). This process of economic policy reform is being supported by the German Federal Government through KfW Development Bank, working jointly with the World Bank and the French organisation Agence Française de Développement. The partners agree reform measures with the Ethiopian government and support these by providing financial assistance and advice. This improves the conditions for economic development and encourages the creation of more higher quality jobs. KfW also contributes to the development of the financial sector by helping the Ethiopian development bank to provide loans, particularly to small and medium-sized enterprises. Furthermore, as part of the special initiative for Training and Employment, KfW is promoting the creation of new jobs.

Ensuring food security and rural development

The majority of Ethiopians live in rural areas, with their livelihood based on an agricultural sector characterised by smallholdings. This entails heavy reliance on biogeographical and climatic conditions. Frequent and long-lasting droughts followed by extraordinary precipitation events and plagues of locusts, combined with increasing utilisation pressure and unsustainable management, lead to degradation and loss of soil and water. This causes the destruction of important areas of arable land. Due to climate change and strong population growth, this trend has got worse and worse in the past 20 years, endangering many families’ livelihoods. Given the low yields, most of them do not manage to produce sufficient excess to support themselves. There are repeated food shortages and instances of undernourishment and malnutrition which, if no preventive steps are taken, can worsen into famine and underdevelopment of undernourished children.

This affects both the farmers in the Ethiopian Highlands and the pastoral population of the arid and semi-arid regions of the lowlands. KfW Development Bank meets the various challenges in these regions with measures to improve sustainable land management, development-oriented food aid and measures to strengthen drought resilience.