Ethiopia’s parliament enacted a new tax on all workers Thursday, aiming to offset the financial void left by a paused USAID funding stream.
The collected funds will establish the Ethiopian Disaster Risk Response Fund, supporting projects previously financed by the U.S. agency.
This move comes as Ethiopia grapples with recurring conflicts in Tigray, Amhara, and Oromia, exacerbating humanitarian needs.
The tax will apply to both public and private sector employees, with mandatory contributions also levied on businesses across various sectors.
The bill, now in committee, will determine the specific contribution percentages.
This financial measure seeks to mitigate the impact of the USAID funding pause, which previously supported vital programs.
Ethiopia, with over 125 million people, was the largest recipient of U.S. aid in sub-Saharan Africa, receiving $1.8 billion in 2023.
The funding supported crucial initiatives, including food aid, HIV medication, vaccines, literacy programs, and refugee services.
The abrupt funding halt has led to the cessation of these programs and administrative leave for USAID staff.