Ethiopia’s parliament introduced a new tax on Thursday for all workers to help address the financial shortfall caused by the suspension of USAID funding.
The funds raised will be directed into a new Ethiopian Disaster Risk Response Fund, which will finance projects that were previously supported by USAID, the country’s largest development and humanitarian partner.
Ongoing conflicts in regions like Tigray, which is recovering from a two-year war, as well as Amhara and Oromia, have left millions in need of food assistance and medical care.
The tax will be imposed on both private and public sector employees, with additional mandatory contributions from businesses in industries such as banking and hospitality. The bill has been sent to a parliamentary committee to determine the specific tax rates.
Ethiopia, home to over 125 million people, was the largest recipient of U.S. aid in sub-Saharan Africa, receiving $1.8 billion in the 2023 financial year.
This aid supported crucial programs, including life-saving food assistance, HIV treatments, vaccines, literacy initiatives, job creation, and services for the 1 million refugees hosted by Ethiopia.
However, most of these programs have now been halted. USAID staff who managed these efforts have been placed on administrative leave and instructed not to work, facing the possibility of termination.
