Ethiopia, UK sign 115 million GBP deal to finance job creation and tax system reform in Ethiopia

The United Kingdom has signed a 115 million GBP grant to Ethiopia, in a bid to create 100,000 jobs and improve the country’s tax system.

The UK’s Secretary of State for International Development, Penny Mordaunt, and Ethiopian Minister of Finance and Economic Cooperation, Abraham Tekeste, inked the deal on 8 August 2018, promising closer ties to tackle economic challenges in Ethiopia.

Nearly 70 percent of the grant is said to be allocated to the Ethiopia Jobs Compact Programme, targeting both locals and refugees residing in the East African nation. It will aim to create 100,000 jobs, including 30,000 jobs for refugees. Ethiopia is currently the second largest host of refugees in Africa, with nearly 900,000 Eritreans, South Sudanese, Sudanese, Yemenis and Somalis within its borders. The remaining 35 million GBP will be invested in a programme to reform the tax system.

Despite a 5.85% average growth in its GDP since 1981, Ethiopia is still struggling with high unemployment rates. Nearly a quarter of its youth are out of work.

International Development Secretary Penny Mordaunt said the UK is committed to supporting the most vulnerable Ethiopians and refugees to seek employment and rebuild their lives.

In September 2016, Ethiopia made nine pledges at the Leaders’ Summit on Refugees in New York. Since then, the country has formally launched the Comprehensive Refugee Response Framework (CRRF), with an aim to implementing a set of policies that will help integrate and support refugees seeking asylum in Ethiopia.

The CRRF includes expanding the out-of-camp policy; providing work permits for refugees; increasing the enrolment in primary, secondary and tertiary education; providing access to irrigable land for crop cultivation; facilitating local integration in instances of protracted displacement; earmarking a percentage of jobs within industrial parks to refugees; and providing access to vital events documentation to facilitate increased access to basic and essential social services.

In return for implementing these pledges, loans from the European Investment Bank and grants from the UK and the World Bank, which amount to $500m (£385m), will be disbursed to cover the construction of two industrial parks in Ethiopia.

TMP – 20/08/2018

Photo source: Mesfen Solomon/The Reporter. Photo caption: Minister Abraham Tekeste and the UK’s Secretary of State for International Development signing the grant agreements in Addis Ababa, Ethiopia.