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Publications, 3/1/2002

Evaluation of the Bilateral Development Co-operation between Ethiopia and Finland

JP Development Oy

Evaluation Report 2002:3
Ministry for Foreign Affairs, Department of International Development
ISBN 951-724-370-7
ISSN 1235-7618


Purpose And Scope

This evaluation was to study the policy relevance, effectiveness, efficiency and sustainability of the Finnish development cooperation programme with Ethiopia and its administration. The evaluation was also to assess the degree to which Ethiopia fulfils the general and specific criteria for cooperation, namely need for external assistance, development will, preconditions for development, Finland's resources, potential trade opportunities and other possible justifications for aid. The criteria also included the basic principles and objectives of Finnish assistance: reduction of poverty, promotion of democracy, social and gender equality and human rights, good governance and protection of the environment. The evaluation was charged to give recommendations for future orientations of the Finnish cooperation with Ethiopia.

The evaluation focused on the main sectors of the Finnish-Ethiopian cooperation during the 1990s. These were the agriculture, education, and water and sanitation. In addition, NGO activities and the Local Cooperation Fund activities were assessed. One completely non-mainstreamed project was also included in the evaluation (Lalibela). The selection was agreed upon with the MFA Steering Committee established to guide the work of the evaluation team.

The Programme

Ethiopia was one of the first development partner countries to Finland; development cooperation dates back to 1967. An Agreement on Technical Cooperation between the Ethiopian and the Finnish Government was signed in 1968. The volume of Finnish grant aid was low, between zero and FIM 2 million annually in the 1970s. An Agreement of General Terms and Procedures of Development Cooperation between the two countries was signed in 1975. The only development credit was extended to Ethiopia in the same year.

In 1982 Ethiopia was granted the status of a programme country. The volume of assistance grew significantly, reaching FIM 66 million in 1985. During the second half of the 1980s, Finnish assistance varied from FIM 42.5 million to FIM 70.6 million annually. The framework agreement with Ethiopia was renewed in 1989. The civil war interrupted many activities and the programming was suspended to be resumed only in 1994. During those years, project implementation continued on a low level, and many projects were suspended or postponed. No new projects were prepared.

A Country Strategy for Ethiopia was drafted by MFA in 1994. Cooperation developed in three main sectors: agriculture, education, and water and sanitation. These three sectors accounted for 50.5% of the total project allocations to Ethiopia between 1988 and 2001. In addition, some energy, roads, health, governance and civil society, and multisectoral projects have been financed through bilateral project funds. Total number of projects in the portfolio between 1989 and 2001 was 16. Annual disbursement during the 1990s varied between FIM 7.5 and 81 million. The share of humanitarian aid was very high in the early 1990s. The NGO cooperation has throughout the decade been significant. Total disbursements to Ethiopia between 1970 and 2000 amount to FIM 745.1 million

The border conflict between Ethiopia and Eritrea erupted into a full-scale war in 1998 and Finland froze all new assistance to Ethiopia. Since 1998, no bilateral consultations on development cooperation has been convened. Currently only one bilateral project on water and sanitation is on-going. The Local Cooperation Fund (LCF) has, on the contrary, gained an important role in the programme.
Main Conclusions


The Finnish-Ethiopian development cooperation programme in the 1990s was volatile due to Ethiopia's internal problems and regional security issues, which caused cancellations and postponements of projects. The actual active cooperation years in the 1990s were limited to only five from 1994 until 1998, rest was overshadowed by the crises.

The programme was not explicitly based on a mutually designed strategy. Nevertheless, it evolved towards a long-term cooperation in the agriculture, education and water sectors and thereby manifested a certain strategic approach by both parties. The country strategy drafted in 1994 seemed to have been rather a Finnish exercise.

From mid-1990s, the sector wide approach became a theme also in the Finnish-Ethiopian programme. Finland allocated ear-marked support to the education sector development programme. The cross cutting issues of gender, environment and human rights started receiving more attention in the programme only towards the end of the decade.

Policy Relevance

The cooperation between Finland and Ethiopia has been relevant. The Finnish-Ethiopian programme in the late 1980s and early 1990s reflected the Ethiopian priorities set by the Derg, which were geared towards industrial and infrastructural development and growth. After the fall of the Derg, the new government adopted poverty focused policies. As a reflection of this and of the newly adopted Finnish development goals, the focus of the programme was shifted from economic infrastructure to social sectors, with a clearer orientation towards poverty alleviation.

The Ethiopian Government's development strategy (ADLI) emphasises the role of agriculture as key to poverty reduction and in the long-term, to industrialisation of the country. The ADLI interlinks the strategies with the development of the private sector. The strategy also pinpoints the need for export-orientation. The Finnish programme has responded well to this call in the agriculture sector development. In the area of industrialisation, Finland has not been active at all, nor in the area of export capacity development.


Taking the volatile political situation in the country and in the region, the objectives of individual projects have been achieved to an acceptable level. Effectiveness in the agricultural sector projects was concluded fair; good in the education sector; and good in the water sector. The effectiveness of the Lalibela project was assessed fair, mainly for the reasons related to the confusing early stages of the decentralisation process in the country.


Efficiency in project planning and implementation suffered significantly for the civil war and the Ethiopian-Eritrean war. Another reason decreasing the efficiency was the confusion related to the devolution process in the mid-1990s. However, the efficiency in the agriculture sector cooperation was assessed relatively good. That of the water project was found good/fair, and of the education sector cooperation good. The efficiency in the Lalibela project was judged fair/poor.


Sustainability suffered from the very same reasons as the effectiveness and efficiency. Another and important reason was the lack of a clear phasing-out plans of projects. In addition, the programme suffered from government policies not supporting the sustainability of the activities. One example was the land tenure issue, affecting particularly agriculture. Another one was special education, which was not prioritised by the government. The slow implementation of government policies has also left some projects quite unsustainable, e.g. the Lalibela project.

The sustainability regarding the local managerial capacity is questionable. Institutional sustainability has suffered from reshuffling of individuals in the administration particularly in mid 1990s, as well as of deaths (partly of AIDS). In the absence of local finance some projects failed to bring forward expected results.

Coherence And Consistency

Policy dialogue between the two governments has been modest. A linkage between aid and political reform, or wider foreign policy aims, has not been made. Regarding global security issues, the instability in the African Horn has over the years been a problem for the international community. Finland has acknowledged Ethiopia's important role in the stabilisation of the region, but has done little in real terms to solidify the stability.

Relations between the two countries are dominated by development cooperation; there is very little beside it. Trade and other commercial relations are negligible and both countries have done next to nothing to improve them.

Finland's share of the total ODA to Ethiopia was 0.96%. With this, Finland was number 20. Among the group of the bilateral donors, Finland ranked thirteenth with a share of 1.73% of the bilateral aid to Ethiopia. Of the Nordic countries, only Denmark disbursed less than Finland. Among the EU member states, Austria, Belgium, Portugal, Spain, Luxembourg, Greece were smaller than Finland.

Development Towards Strategic Goals

The Finnish programme in Ethiopia has not addressed the issues of promotion of global security and regional cooperation as such. It has reacted to the security problems in the region by withdrawing some activities. Addressing regional security issues has been limited to the official statements in the bilateral consultations and to the dialogue with the regional organizations in Addis Ababa.

The Finnish-Ethiopian cooperation has by and large addressed the common goal of poverty reduction. The assessment how well it actually managed to do so is impossible and irrelevant in the country-wide context. In some tiny pockets this may have happened. All projects reviewed had an in-built poverty reduction objective, either directly or indirectly.

Recently, when the human rights violations have become more demonstrated and the need for improving the governance and democratisation process clear in Ethiopia, the LCF money has been mainly programmed for promoting human rights, democracy, good governance and gender equity. No bilateral gender-focused projects were implemented. The consideration over gender issues and mainstreaming gender in projects has, however, improved in the 1990s.

No purely environment-focused projects as such have been implemented in the Finnish bilateral cooperation programme. However, in a number of projects the environmental dimension was inbuilt as a component.

The Finnish-Ethiopian bilateral development cooperation programme has not addressed the issue of economic integration.

Main Recommendations


Ethiopia is among the poorest countries in the world. Poverty-related justifications for assistance cannot be challenged. The Government of Ethiopia is committed to poverty reduction in its development plans.

Internal and regional vulnerability are the key impediments for development in Ethiopia, apart from the deep-rooted poverty. There is no real hope for improved sustainability of any assistance unless these fundamental issues are settled. Otherwise a long-term engagement in meaningful development assistance will be rendered futile. It is therefore recommended that:

Ø Finland continues monitoring the political risks in Ethiopia carefully and progresses with further assistance with caution.

The future of the Finnish development cooperation with Ethiopia faces several challenges, including: fragile regional stability; vulnerable internal stability; human rights situation; gender inequality; explosion of HIV/AIDS; and private sector empowerment. In view of this, it is recommended that:

Ø Any assistance to Ethiopia will be planned to address one or several of these challenges listed above as the guiding principle; and

Ø Conditionalities linked to these challenges should be considered for future assistance.

It is of vital importance that Ethiopia is willing and able to work for the sustained peace in the region. Among the best ways to reach this is increased economic, political, environmental and infrastructural cooperation with the countries in the region. It is therefore recommended that:

Ø Finland will put major emphasis on supporting efforts aimed at reducing risks to regional stability and enhancing regional cooperation and integration.


The low status of the Head of Mission has proven a problem in dialogue with the various international organisations in Addis Ababa. Upgrading the representation to ambassadorial level would not incur any significant incremental cost. Therefore it is recommended that:

Ø Regardless of the size of the Finnish bilateral development programme with Ethiopia, the status of the Embassy of Finland should be upgraded.

Themes and Sectors

It is deemed more important that the future cooperation will address the above challenges than the actual sector selection. The recommendations regarding sectors are intended to give ideas on how the cooperation in the evaluated sectors could be focused if selected by the two governments as focus sectors.


Flexible, short-term interventions, focusing on:
Ø projects with a clear regional stability enhancing focus;
Ø the livestock sector support;
Ø interventions that promote private sector development in agriculture (land ownership and tenure, product development, marketing and export promotion); and
Ø support through international organisations to agricultural research, training and extension services utilizing Finnish expertise (secondments).


Support to the Education Sector Development Programme (ESDP) on:
Ø capacity building in educational administration;
Ø extending special needs education in pre-service teacher training;
Ø developing special needs education in the teacher training for TVET;
Ø extending the concept of special needs to include different kinds of learning difficulties and their counselling.
Ø entrepreneurship education and training in formal and non-formal education; and
Ø generating training and work for the young.


Consolidating the results of the current project and the prepared Phase III, and coordinating and shifting the cooperation towards regional initiatives by:

Ø introducing a one-year consolidation and bridging phase before the Phase III;
Ø designing a clear and detailed strategy for gradual phasing out for the Finnish bilateral support;
Ø securing Finnish funding for the Nile Basin Initiative and thereby supporting regional security building;
Ø redrafting the Phase III to a completely new project rather than a continuation of the Phase II; and
Ø funding the ENTRO unit in Ethiopia for which the Nile Secretariat is preparing a request.

NGOs and LCF:

Focusing the support on:
Ø NGOs promoting income generating activities and self-esteem of local communities;
Ø Encouragement of NGOs to amend their approaches towards more integrated development approach;
Ø NGOs that are promoting human rights and democratic development;
Ø NGO participation in the PRSP consultation process;
Ø the work of the National Committee of Harmful Traditional Practices; and
Ø improving communication, cooperation and coordination between the Finnish NGO projects, and with the bilateral Finnish-funded projects, as well as with INGOs.


Policy Dialogue
Policy dialogue should be one of the main instruments and its use should be actively intensified at all levels and in all relevant fora.

Bilateral Cooperation
It is recommended that if Finland re-enters the education sector cooperation it should be within the SWAP-framework, with ear-marked programmes.

With the limited resources, Finland should find a "competitive edge" from some nichés where visible and meaningful impact is achievable with modest level of funding, and from the speed of the intervention. The latter means using a quick instrument with short identification and preparation periods.

No long-term interventions should be planned in Ethiopia at the current stage, and projects should be designed with enough flexibility allowing for changes reflecting the fluid environment. All projects should have a detailed, binding, and mutually agreed handing-over plan.

The LCF is a highly commendable instrument in Ethiopia. The focus of the instrument responds to the critical challenges of the Ethiopian society in the current moment. The LCF is a quick instrument and with the recently strengthened resources at the embassy, efficiently managed. With the local presence, the interventions can be targeted precisely. The decision making of the LCF should be fully mandated to the embassy (all embassies). This obviously needs rethinking of legal responsibilities at the MFA.

Multilateral Cooperation:
Cooperation within the framework of relevant multilateral organisations and initiatives should be pursued to full extent. The main objective of this should be the improved regional stability. These organisations include African-based organisations as well as international agencies.

NGO Cooperation
NGO Cooperation is recommended as one of the instruments used in Ethiopia.

Trade and Commercial Cooperation
The current instruments of EIT, concessional credits, and Finnfund are rather irrelevant in the Ethiopian context at the moment, except for the first one. Ethiopia is considered by FINNVERA a non-cover country ineligible for guarantees. With the current investment climate in Ethiopia, Finnfund would certainly avoid pushing any projects there. Also, the demand for EIT-funding has been low as a result of low interest among Finnish companies.

For the above reasons, it would be vital to assist Ethiopia to develop its institutional and regulatory environment more conducive also for foreign investments and more balanced trade development. Unless the environment for business to operate is made more predictable, stable and friendly, there is little hope for increased cooperation between Finland and Ethiopia. To foster the change, both bilateral and multilateral initiatives should be sought and supported.

This document

Updated 7/20/2006

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