African Development Fund approves $ 165 Million Grant to support emergency measures against Covid-19 in Ethiopia

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Its objective is to extend social protection to the most vulnerable, to strengthen the capacity to contain the epidemic, to correct macro-budgetary imbalances.

The Board of Directors of the African Development Fund approved, Friday, July 3 in Abidjan, the granting of a grant of 165.08 million dollars to Ethiopia to support the response measures deployed to deal with the health and economic consequences of the Covid-19 pandemic. The African Development Bank Group concessional loan window grant from ADF-15 resources is intended to help Ethiopia strengthen its National Coronavirus Emergency Response Plan (NERP). 

The NERP, also supported by several development institutions such as the World Bank, the International Monetary Fund and the Korean Import-Export Bank, defines a reliable multisectoral approach to fight the pandemic. Its aim is to extend social protection to the most vulnerable, to strengthen the capacity to contain the epidemic, to correct macro-budgetary imbalances and to mitigate the impact of the crisis on the private sector.

"This Bank grant will particularly help local businesses and vulnerable households in urban areas," said Abdul Kamara, director of the Bank's country office for Ethiopia. The aid will increase the number of Covid-19 screening test laboratories, train 45,000 health workers in intervention operations against Covid-19 and contribute to the implementation of a communication strategy. It will help increase community participation to raise awareness of the risks of transmission and the means of prevention. 

The Ethiopian health system remains fragile, with only three hospital beds available per 10,000 people. This grant will renovate 300 isolation centers, set up 34 treatment centers and 100 quarantine centers. It will also help the government offset unexpected spending to stabilize the economy. The grant will help ease fiscal pressures on the economy, and funds will be allocated to protect small businesses to save about 26,000 jobs. Ethiopia, like the rest of Africa, is suffering from the effects of the Covid-19 pandemic, which threatens recent economic gains. 

In addition to the already existing food security problems aggravated by Covid-19, the agricultural sector is facing complex and diverse shocks, including the invasion of locusts and the risks due to climate change, which threaten the productivity of farmers. 

On April 8, the Ethiopian Parliament declared a state of emergency in the country, and the national elections scheduled for August 29 were postponed. Economic growth in Ethiopia, which has averaged about 10% per year since 2004-2005, is expected to decline this year due to the Covid-19 pandemic. 

The forecast for GDP growth in 2020 has been revised downwards from 7.2% to a range between 2.6% and 3.1%. The pandemic will certainly have a negative impact on the private sector, particularly in construction, exports, tourism and travel. The tourism sector alone accounts for 9.4% of GDP and employs around 2.2 million people. 

The pandemic is expected to further reduce inflows to the territory, which will limit imports of raw materials. This operation is in line with the African Development Bank Group's ten-year strategy (2013-2022). 

It is aligned with the Bank's five priorities, "High 5", in particular that aiming to "improve the quality of life of people in Africa". It is consistent with the Ethiopia Country Strategy Document for 2016-2020. As of July 1, 2020, Ethiopia has registered almost 6,000 cases of Covid-19 infection, with 2,430 people recovered and 103 deaths.

Cassien Tribunal Aungane, Editor