Description

Social protection programmes in Ethiopia are heavily dependent on external financing. As it currently stands, two thirds of the social protection expenditure are secured from development partners (same proportion as the health system). Domestically, the tax-to-GDP ratio remains low at 10.3 per cent in 2017/18 and has been declining from year to year. It declined from 12.4 per cent in 2015/16 to 10.5 per cent in 2016/17 and further to 10.3 per cent in 2017/18. It is also much lower compared to the sub-Saharan average of 15.1 per cent in 2018^[1]. According to an IMF study, sub-Saharan Africa could mobilize up to 5 percent of GDP in additional tax revenue which is more than what it receives each year from international aid^[2]. As Ethiopia approaches and achieves middle-income country status donor support for social protection and other social sectors will decline. Thus, designing strategies for enhanced domestic financing is timely and necessary in terms of strategic development planning.