Ethiopia’s parliament has introduced a new tax to counterbalance the financial shortfall caused by the recent suspension of USAID funding.
The tax will apply to employees in both the public and private sectors, with additional mandatory contributions from industries such as banking and hospitality.
Revenue will be directed to the Ethiopian Disaster Risk Response Fund, which aims to sustain projects previously supported by USAID, the country’s largest development and humanitarian partner.
Ethiopia, home to over 125 million people, had been the top recipient of U.S. aid in sub-Saharan Africa, receiving $1.8 billion in 2023.
The funding covered essential programs, including food aid, healthcare, education, and job creation, as well as support for one million refugees.
The funding freeze has severely impacted these services, halting food distribution, HIV treatment, vaccination campaigns, and literacy initiatives.
USAID staff overseeing these projects have been placed on administrative leave, with uncertainty looming over their future.
Ethiopia continues to grapple with instability in regions such as Tigray, Amhara, and Oromia, where conflict has displaced millions and deepened the need for humanitarian assistance.
The new tax bill has been sent to a parliamentary committee, which will determine contribution percentages in the coming weeks.
The government’s move signals a pressing attempt to fill the growing financial void, but questions remain about whether domestic revenue can fully replace the lost international support.
