The relations between the EU and Ethiopia are founded on the Cotonou Agreement, its Articles 8 to 13 define the bilateral political dialogue between the two parties, as well as in a set of other conventions and political commitments. The EU and Ethiopia look back on 42 years of constructive bilateral relations in areas as diverse as development cooperation, trade and economic development, consolidation of democratic institutions, regional peace and security and migration. Ethiopia is one of the EU's important partners on the African continent, active in regional peace and security as well as on thematic international debates such as climate change.

Against this background, the EU and Ethiopia decided to enhance the level of the partnership. On 14 June 2016, H.E. Prime minister Hailemariam Desalegn of Ethiopia and H.E Jean-Claude Junker, European Commission President signed a Joint Declaration towards an EU-Ethiopia Strategic Engagement. This commits both sides to an annual Ministerial Meeting and six sectoral dialogues: Governance and Human Rights; Regional Peace and Security; Countering Terrorism and Violent Radicalisation; Migration; Social and Economic Development, Investment and Trade; and Climate Change and Environmental Cooperation.

In this engagement the two sides also affirm their commitment to the fundamental principles of sustainable development, democracy, human rights, good governance and the rule of law; regional cooperation and integration. Moreover, the two sides intend to enhance their cooperation to maintain the dynamic economic growth and the ambition of Ethiopia to join middle income countries on the basis of green and inclusive economic growth.

Joint programming

There are presently 21 EU Member States represented in Ethiopia, in addition to the EU and like-minded partners, such as Norway and Switzerland, constituting the EU+ group. In recent years, the EU+ group disbursed annually around € 1 billion of ODA, equivalent to roughly a quarter of total external aid to Ethiopia and can reach up to 10% of the country's annual federal budget in certain years. In this context, joint programming is not only about aid effectiveness, but most importantly, has a strong political dimension and is one of the instruments in support to the implementation of the wider EU-Ethiopia strategic engagement.

Ethiopia has been, since 2010, a pilot country for the fast-track initiative on division of labour and one of the aid effectiveness pilot countries since 2011. The EU institutions along with the 21 EU Member States then represented in Ethiopia and Norway (EU+) jointly analysed the national development plan of Ethiopia for the 2011-2015 period (the Growth and Transformation Plan) and signed in 2013 a EU+ Joint Cooperation Strategy for Ethiopia. A 3-year roadmap 2013-2015 was  formulated with the aim to complete the missing elements for a full joint programme includes the identification of several pilots in the sectors of resilience, nutrition, health, migration, gender, and the environment, for which joint strategic analyses, joint mapping and joint operations were prepared. In addition, the implementation of actions from EDF funds was delegated to EU Member States to increase the division of labour. The EU, its Member States are working on working towards concluding a Joint Cooperation Strategy EU+ - Ethiopia for the period 2017 to 2020.

Sustainable development is a prerequisite for poverty eradication, social development and the creation of an inclusive, strong and diversified economy. The EU and Ethiopia engage to support and reinforce mechanisms aimed to promote decent work and the economic and social integration of vulnerable populations, paying particular attention to situations of extreme poverty and social exclusion. The two sides also look at ways of maximising the social and economic impact of development cooperation while ensuring sustainability, including through improved alignment of EU donors with the Growth and Transformation Plan II and Ethiopia's Climate-Resilient Green Economy Strategy. The EU works with Ethiopia to exchange information and best practice on issues related to education, vocational education and training and capacity building.

The EU Delegation works to facilitate the participation of greater numbers of Ethiopian students, university staff and researchers through Erasmus+ and Marie Skłodowska-Curie Actions, and to continue to work on the mutual recognition of academic degrees. The EU and Ethiopia promote the importance of science and technology, research and development, information communication technology and the transfer of know-how as a basis for sustainable development. The EU works to help create a strong economy that rests on its functional and structural diversification, the improvement of productivity and competitiveness, the promotion of Micro, Small and Medium-sized enterprises (MSMEs), an enhanced qualification of the human capital and a well-trained labour force who has the skills that are required on the labour market. The EU and Ethiopia also work together on private sector development and the improvement of the business climate.

The EU and the Government of Ethiopia have identified two focal sectors in the National Indicative Programme 2014-2020 through which nutrition is integrated: Sustainable Agriculture & Food Security (€240 million) and Health (€200 million).

Read more about the European Union support to scaling up nutrition in Ethiopia

Ethiopia is a country of origin, transit and destination of migrants from the region and is situated at the centre of the regional migration corridor from Somalia and Eritrea to Sudan and/or Yemen. Ethiopia is a key partner for the stability and the management of migratory flows in the region, due to its role in hosting large numbers of refugees from neighbouring countries, its proactive policy of fighting traffickers and smugglers, and the interest of Ethiopians in migrating to neighbouring countries and regions in search of labour.

The EU and its Member States pursue an open dialogue on migration with Ethiopia through the Common Agenda for Migration and Mobility (CAMM) and, within the framework of the Strategic Engagement, the sectoral dialogue on migration. The EU aims at implementing the five priority domains of the Valletta Action Plan,: (1) Development benefits of migration and addressing root causes of irregular migration and forced displacement; (2) Legal migration and mobility; (3) Protection and asylum (including support to the large refugee population in the country and the host communities); (4) Prevention of and fight against irregular migration, migrant smuggling and trafficking in human beings; and (5) Return, readmission and reintegration. Finally, Ethiopia is one of the five priority countries identified in the Communication on establishing a New Partnership Framework with third countries under the European Agenda on Migration.

Through the EU Trust Fund for Africa, EU actions address the root causes of irregular migration in the most migrant-prone regions of the country, promoting economic and employment opportunities, particularly for vulnerable people, through vocational training, access to micro-finance or by creating industrial parks. Actions also aim to strengthen resilience and combat drivers of instability, to improve the long-term development and protection needs of refugees and their host communities, and to better manage migration at regional level, including the sustainable reintegration of migrants.

Read more about the EU Trust Fund for Africa

Scientific predictions show that Ethiopia is and will be affected by climate change through: droughts, floods, strong winds, heat waves, frosts, pests and diseases affecting livelihoods and health of the people, livestock and the natural ecological systems. Climate change is exacerbated, among other things, by demographic pressure, poverty, natural resources degradation and lack of infrastructure. The impact of climate change is already being felt in Ethiopia.  Droughts and floods are common phenomena in Ethiopia, occurring with a frequency of every 3 to 5 years. Since the 1980s, Ethiopia has witnessed 8 national and various regional droughts and more than 40 floods. In many regions of the country, the frequency of these events has increased. Particularly the Northern part of Ethiopia has seen increasing temperatures and declining rainfalls.

Agriculture is the backbone of Ethiopia's economy on which most of the country's livelihood depends. It is also a source of raw materials for the industry sector. Yet the agriculture sector is most vulnerable to climate change since it is rain fed agriculture, relying entirely on traditional technologies.  The agriculture sector is also highly affected by land degradation resulting from human and livestock pressure and improper management practices, etc.

The Growth and Transformation Plan (GTP II) envisages a rapid economic growth to bring Ethiopia to the level of middle income countries by 2025 with a net zero GHG emissions. Improving agricultural productivity via agricultural diversification and intensification, and gradually moving into agro-industrial development path way is the general direction.  This ambitious economic growth in the country is in the short to medium term challenged by chronic vulnerability to climate and environment shocks, which make joint action between Europe and Ethiopia even more important. In this regard, implementing the country's Climate Resilient Green Economy Strategy, which aims at addressing the climate change challenges while pursuing sustainable economic growth, is a key priority for the government and the European Union.

The EU supports the Government on these sectors through different programs related to sustainable land management, conservation of natural resources, biodiversity, participatory forest management, climate change, etc. 

The European Investment Bank (EIB) is the European Union's bank. We are the only bank owned by and representing the interests of the European Union Member States. We work closely with other EU institutions to implement EU policy. As the largest multilateral borrower and lender by volume, we provide finance and expertise for sound and sustainable investment projects which contribute to furthering EU policy objectives. More than 90% of our activity is focused on Europe but we also support the EU's external and development policies. The opening of a new office in Addis Ababa in June 2016 illustrates the importance of both Ethiopia and the African Union for the EIB.

Our current modalities are:

Lending: The vast majority of our financing is through loans, but we also offer guarantees, microfinance, equity investment, etc.

Blending: Our support helps us unlock financing from other sources, particularly from the EU budget. This is blended together to form the full financing package.

Advising: Lack of finance is often only one barrier to investment. We can help with administrative and project management capacity which facilitates investment implementation.

We support projects that make a significant contribution to growth and employment in Europe. As part of our counter-cyclical approach, our activities focus on four priority areas:

• Innovation and skills
• Access to finance for smaller businesses
• Environment and climate
• Infrastructure

We raise the bulk of our lending resources on the international capital markets through bond issues. Our excellent rating allows us to borrow at advantageous rates. We thus are able to offer good terms to our clients. We generally finance one-third of each project but it can be as much as 50. This long term, supportive financing often encourages private and public sector actors to make investment which might not otherwise be made. All the projects we finance must not only be bankable but also comply with strict economic, technical, environmental and social standards. Our corps of 300 engineers and economists screens every project, before, during and after we lend. We work hard to be accountable to EU citizens.