Political & economic relations

The EU-Ethiopia development partnership formally started when Ethiopia signed the Lomé Convention in 1975. The European Commission opened its Delegation in Ethiopia in 1975 and has taken the lead in supporting Ethiopia’s economic development both financially and technically. The objective is to eradicate poverty through sustainable development, democracy, peace and security.

The EU provides funding to support Ethiopia through the European Development Funds (EDF). The latest allocation (10th EDF) of these funds provides some €644 million for the country in areas such as transport, rural development, decentralized social services, trade, gender, and environmental conservation. The European Commission manages the funds and jointly implements the projects. The European Development Funds budget for Ethiopia has been supplemented by direct support from European Commission budget lines (food aid and food security). 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. 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) programme; Public Sector Capacity Building Programme (PSCAP); Public Expenditure and Financial Accountability (PEFA) mission; Monitoring & Evaluation (M&E) Pool Fund and Export Stabilisation Fund (STABEX) are the main means of support. The Education Sector Development Programme (ESDP); Polio Eradication Programme; Mine Action and Social Rehabilitation Programme; NGO Projects on Education, Health, Gender and Children’s Rights are the main means of support in the social sector.

The EU is one of Ethiopia’s major trading partners both in terms of export and import. Trade Capacity Building (TCB) Programme; Micro-and Small Enterprise Development Programme (MSEDP); Economic Partnership Agreement (EPA) Impact Assessment Studies; World Trade Organization (WTO) Impact Assessment Project and NGO Projects on Micro-Financing are major means of partnership in the private sector development and trade sector.

The European Commission has since the early days of its cooperation with Ethiopia provided substantial support for the infrastructure sector. In 2006, it decides to provide budget support to this sector. The European Commission’s support to the road sector development programmes 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. Good Governance, Democracy and Human Rights, Empowerment of Civil Society, and Cooperation with Non State Actors are key priorities for the EU. Activities include dialogue and policy development, as well as programmes and projects, which are implemented with partner organisations throughout the country and contribute to the sustainable development process in Ethiopia.

The EU 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. The EU food security strategy for Ethiopia has 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.

The European Commission’s Humanitarian Aid Office (ECHO) has an office in Addis Abeba, which closely monitors the humanitarian situation, ensures coordination of relief efforts and monitors the use of relief funds.