Controversial income tax clause scrapped
Parliament voted to establish the Ethiopian Disaster Risk Response Fund on Thursday, ratifying a bill that officials hope will help boost efforts to ease Ethiopia’s dependence on foreign aid in the event of manmade and natural disasters.
The bill, drafted a couple of years ago by experts at the Disaster Risk Management Commission, previously included a controversial provision that would allow the government to impose a new income tax to back the fund. The bill ratified by lawmakers this week does not include this provision.
Instead, the Fund will rely on mandatory contributions from the financial, telecoms, aviation, and public sectors, and, puzzlingly, donor agencies. Its drafters say it will provide sustainable financing for activities related to disaster risk reduction, emergency response and post-disaster recovery.
The development comes amid a global humanitarian funding crisis, which agencies warn will disproportionately impact countries like Ethiopia, where tens of millions of people have been affected by natural and man-made disasters including landslides, earthquakes, drought, conflict, and displacement.
The UN estimates it will require USD two billion in funding for its 2025 humanitarian operations in Ethiopia, a quarter of which remains unfulfilled.
The ratification follows Washington’s decision to slash foreign aid and gut the US Agency for International Development (USAID) under the second Trump administration, which observers warn is impacting food supply to millions of Ethiopians.
USAID-funded projects in the areas of education, health and capacity-building, as well as refugee support, have been scrapped or frozen, potentially affecting millions more. A month after the White House announced its new policy on foreign aid, an insider told The Reporter that up to 85 percent of civil society organizations (CSOs) in Ethiopia had halted operations.
In April, the World Food Programme announced that funding shortfalls were forcing it to suspend treatment for 650,000 malnourished women and children in Ethiopia.
The Disaster Response National Fund was endorsed unanimously.
