ADDIS ABABA, Ethiopia — In a bid to mitigate the financial burden after a significant pause in USAID funding, Ethiopia’s parliament has proposed a new taxation measure for all working individuals. This initiative aims to address the shortfall from the reduced aid and maintain essential projects.
The newly collected revenue is set to be directed into a specialized Ethiopian Disaster Risk Response Fund. This fund is intended to cover the projects that were traditionally supported by USAID, which has been Ethiopia’s largest contributor for both developmental and humanitarian programs.
Ethiopia is currently experiencing persistent conflicts in several regions, such as Tigray—which is in the process of recovering from a two-year-long conflict—as well as Amhara and Oromia. These ongoing conflicts have led to a substantial need for food assistance and medical services, impacting millions.
The proposed tax will be levied on workers across both the public and private sectors. Additionally, industries including banking and hospitality will also need to make compulsory contributions. The legislation is now with a parliamentary committee, which will further evaluate and determine the exact percentages required for contributions.
Ethiopia, home to over 125 million people, was previously recognized as the largest recipient of U.S. aid in sub-Saharan Africa, having received $1.8 billion in the 2023 fiscal year. This support funded various critical measures—from life-saving food assistance to healthcare provisions, including HIV medications and vaccinations. It also contributed to literacy programs, job creation initiatives, and services for approximately 1 million refugees residing in the country.
Following the suspension of USAID activities, many of these crucial programs have ceased. Furthermore, USAID personnel, who were managing these projects, have been placed on administrative leave, facing potential job termination threats.
