Foreign aid to Ethiopia

After World War II, Ethiopia began to receive economic development aid from the more affluent Western countries. Originally the United Kingdom was the primary source of this aid, but they withdrew in 1952, to be replaced by the United States. [Edmond J. Keller, "Revolutionary Ethiopia: From Empire to People's Republic" (Bloomington: Indiana University Press, 1991), p. 79] Between 1950 and 1970, one source estimated that Ethiopia received almost US$600 million in aid, $211.9 million from the US, $100 million from the Soviet Union and $121 million from the World Bank. [Keller, "Revolutionary Ethiopia", pp. 284-5n] The contributions of such countries like Sweden which included training the Imperial Bodyguard, and India which at one point contributed the majority of foreign-born schoolteachers in the Ethiopian educational system, should not be overlooked. [Keller, "Revolutionary Ethiopia", p. 78]

This aid dried up under the military regime that followed the Ethiopian revolution, except for food aid during the mid-1980s. Large aid inflows began in the early 1990s aimed at reconstruction and political stabilization but declined during the war with Eritrea. The post-2000 period, however, has seen a resumption of large disbursements of grants and loans from the United States, individual European nations, and Japan, and from the World Bank, the European Union, and the African Development Bank. These funds totaled US$1.6 billion in 2001.

In 2001 Ethiopia qualified for the World Bank-International Monetary Fund-sponsored highly indebted poor countries (HIPC) debt reduction program, which is designed to reduce or eliminate repayment of bilateral loans from wealthy countries and international lenders such as the World Bank. In Ethiopia’s case, the program aims to help stabilize the country’s balance of payments and to free up funds for economic development. A noteworthy advance toward these goals came in 1999, when the successor states to the former Soviet Union, including Russia, cancelled US$5 billion in debt contracted by the Derg, a step that cut Ethiopia’s external debt in half. HIPC relief is expected to total almost US$2 billion.

In November 2007 the magazine "The Economist" reported that there is tangible evidence that the foreign aid given to Ethiopia reaches the people it is meant to, based on a visit to the South of the country. Roads, schools and water systems are being built and "there are few complaints about corruption, a fact that continues to make Ethiopia popular with foreign donors". However, the article also notes that, despite almost a decade of well-intentioned development policies, Ethiopians remain mired in the most wretched poverty. [ "The Economist", November 3, 2007, "Briefing Ethiopia," p. 32 ]

Notes