USAID's Ethiopia Country Development Cooperation Strategy (CDCS) builds on the progress in Ethiopia since the last country strategy.

The USAID/Ethiopia CountryDevelopment Cooperation Strategy (CDCS) builds on the progress in Ethiopia since the last country strategy. Seven years ago, the Mission began implementing its last development strategy: “Breaking the Cycle of Famine” which, in the aftermath of the major drought emergency in 2003 that took the lives of tens of thousands of Ethiopian children, was directed at tackling the underlying causes of vulnerability. Much has changed since 2004, and the efforts made to reduce vulnerability have yielded substantial results. The threat of famine has not been completely removed, but enough progress has beenmade so that USAID can now focusmore on helping Ethiopia transform its economy and society toward middle income status, and by coordinating its efforts more closely with the Government of Ethiopia (GOE), other donors and civil society.

So – what’s different? Ethiopia has made tremendous progress against the UNDP Human Development Index (top mover worldwide) and has obtained nearly 9% GDP growth (highest in Africa (IMF figures). Despite the regular cycle of droughts in parts of the country, the number of emergency beneficiaries has dropped from 15 million in 2003 to a maximum of 5.6 million since, with many vulnerable people assisted by the USAID-supported, GOE-managed long term Productive Safety Net Program (PSNP). Emergency preparedness and response have improved substantially with the assistance of USAID, although there is still room for improvement. The private sector has boomed, with the number of businesses increasing to over 45,000 from almost none at the end of the Marxist Derg regime in 1991. Almost 95% of children now enter primary school, and health service has expanded enormously through 38,000 health extension workers.

The GOE’s new five year Growth and Transformation Plan (GTP) sets very ambitious targets for growth in all sectors, and allocates significant resources to promote development. These ambitious but achievable goals (if the right policies are put into practice), reflect this government’s sincere efforts to provide health, education and economic growth opportunities to its people. USAID’s new five year CDCS builds on the GTP with a concerted investment strategy that not only aims to help Ethiopia achieve its development goals, but furthers U.S. trade and investment aims with the most strategically important partner in the region.

Real development challenges still remain, however. Ten percent of its citizens are chronically food insecure, rising to over 15% during frequent drought years. Eighty two percent of the population remains dependent on subsistence agriculture, and Ethiopia has one of Africa’s highest rural and overall population growth rates. The repressive aftermath of the 2005 elections reversed democratic progress in Ethiopia, while the 2010 national elections did not meet international standards. The ruling party remains thoroughly entrenched in all government institutions; opposition parties have effectively collapsed; and new laws restrict media freedom, civil society, and legal rights. Furthermore, inter-communal tensions continue due, in part, to increased resettlement schemes, regional border conflicts, and the ongoing counter insurgency campaign in the Somali Region. The private sector has made progress, but remains hobbled by red tape and arbitrary rules, in an economy still largely dominated by state and ruling party enterprises.

Furthermore, Ethiopia’s physical location suggests an emerging challenge. As its neighbors, Somalia, Kenya, Eritrea, and Sudan, struggle with internal conflict – some of them with violent extremism in the mix – the risk of violent extremist influences affecting Ethiopia may grow. Ethiopia’s involvement in peacekeeping and its large ethnic Somali population are additional factors that could make it an increasingly attractive target for terrorists and for terrorist recruiters. Any significant increase in violent extremism would likely exacerbate the development challenges already present. In 2010 alone, Ethiopia experienced three terrorist attacks, and the Government of Ethiopia has expressed concern about terrorist activities in neighboring states. Given the increasing capabilities and strength of al-Shabaab and other terrorist organizations in the sub-region, it is important that development activities be structured flexibly enough to address the factors that may render youth susceptible to the lure of violent extremism.

Another challenge is Ethiopia’s sheer size and diversity. With over 80 million people, it is the secondmost populous country in Africa, and can be considered as three separate countries, each with its own economic opportunities and obstacles:

• 1. “Productive Ethiopia” (population 45 million) is characterized by good-sized landholdings, fertile soils and a predictable climate that help Ethiopia produce as much food as Kenya, Tanzania and Uganda combined.
• 2. “Hungry Ethiopia” (population 20 million) suffers from highly variable rainfall, degraded soils and landholdings of less than 1 hectare per family that make farming a risky enterprise.
• 3. “Pastoral Ethiopia” (population 15 million) comprises 60% of Ethiopia’s land, experiences very low rainfall and frequent droughts, and has large grazing areas that hold half of the nation’s livestock, which account for over 90% of meat and live animal exports.

Given these complexities, the Ethiopia development and humanitarian assistance portfolio has become one of the United States’ largest and most complex in Africa. Transforming this portfolio is already underway. TheMission is a focus for the three new Presidential Initiatives – Feed the Future, Global Health and Global Climate Change (FtF, GHI& GCC) – and maintains ongoing PEPFAR andMalaria Initiatives, all of which contribute to its over $500 million development budget, plus $350 million in emergency food aid and other humanitarian assistance, for FY 2010.

Recognizing that conditions in Ethiopia have changed, USAID undertook several analyses to tackle economic transformation under FtF, and the major problems of quality under GHI. Climate change is a major threat to Ethiopia, and analysis has begun on how to assist farmers and pastoralists to adapt to the changing conditions. A major impact assessment on the education sector led to a substantial revision in the education program. Democracy and Governance (DG) in Ethiopia is the one sector which has demonstrably deteriorated in Ethiopia, and two recent assessments underpin the dramatic changes in approach for DG and conflict resolution. These analyses, combined with assessments of completed and ongoing programs and projects, reveal several comparative advantages for USAID/Ethiopia:

• A long history of influential work in food security and emergency relief
• Pioneering support to agriculture and the private sector since 1991
• The largest, most influential donor in both health and conflict mitigation and prevention programs
• Leader in innovation in education sector – e.g. community-based basic primary education
• Strategic advantage in linking USAID on-the-ground partners to program budget support donors has created innovation and served as a reality check
• Use of evidence to leverage policy change – e.g. livestock emergency guidelines

Against the backdrop of strong GOE and donor commitment to development, significant challenges along with real opportunities, and alignment of donor and USAID programs with GOE priorities, USAID/Ethiopia will focus and concentrate resources where it has the greatest competitive and comparative advantage. The transformation of the current portfolio will include:

• Continued humanitarian support and capacity building program, now complemented by comparable response on agricultural growth and productivity
• Current small but nimble business, agriculture and trade program, will scale up with support through FtF and address the potential of “Productive Ethiopia” to be the engine of economic growth and food self-sufficiency
• Successful conflict mitigation and prevention program at the federal, state and local levels will continue and will be integrated across the entire USAID portfolio
• Large health portfolio well integrated with government and other donor priorities, with an overarching focus on maternal and child health
• Expansion of basic education has succeeded and been taken up by the GOE andWorld Bank; USAID’s education program will shift focus to quality – especially in primary reading, and on workforce development to assist youth employment
• Formal work on DG within the system has largely failed, so focus will shift to include governance as a cross cutting issue through improved public sector accountability, conflict sensitivity and support to civil society

Apart from monetary resources, USAID/Ethiopia will continue to influence policy change. Much of the success of policy efforts to-date has been based on time and effort rather than financial resources, and these efforts, on a multi-donor basis, will be increased. Policy priorities have expanded; however, from the previous focus on humanitarian assistance and social services access strategy, to a much greater emphasis on expanding the space for the private sector and civil society, and on quality of service delivery.

Knowledge and learning have also contributed to the evidence base, which have also influenced policy and improved program impact, in particular in the pastoralist programs where this has been tested. In line with the new USAIDMonitoring and Evaluation policy, impact assessments will be extended across the portfolio, focused on “a learning agenda,” testing a development hypothesis or new approach. Larger projects will be independently evaluated to ensure rigor and learning.

Overall Goal: Ethiopia’s Transformation to a Prosperous and Resilient Country Accelerated Development Objectives:

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