Fed Inks USD 1.5bln Health Cooperation Agreement With Washington

Ethiopia commits to 70bln Birr increase in health spending as part of MoU

Ethiopian authorities have signed a memorandum of understanding (MoU) for a USD 1.5 billion public health cooperation program with the US government, allaying deep concerns that have weighed on the health sector since Washington’s earlier decision to fold the US Agency for International Development (USAID).

The “co-investment plan” will see the US provide up to USD 1.01 billion to priority health programs over the next five years, while Mekdes Daba (MD) and Ahmed Shide, ministers of Health and Finance, respectively, have committed to a USD 450 million (approximately 70 billion Birr) increase in Ethiopia’s own health spending, according to a statement issued by the US embassy in Addis Ababa earlier today.

“This is a new dawn for Ethiopia’s leadership in shaping Ethiopia’s own health system to become more resilient, more responsive, and sustainable for today and for tomorrow,” it quotes US Ambassador Ervin Massinga as saying. “Today’s MOU opens a new five-year chapter, one defined by shared responsibility, transparency, and a clear expectation that Ethiopia will drive its own future by mobilizing resources and sustaining health gains for generations to come.”

The Health Minister has indicated the funding will be directed toward combating HIV/AIDS, tuberculosis, and malaria, and improving medicine supply, maternal and child health, and epidemic preparedness.

Although not legally binding, the MoU offers a sense of relief to health professionals and aid workers in Ethiopia who find themselves in a state of uncertainty and unease following the Trump administration’s decision to shut down USAID earlier this year.

The embassy’s statement cites the US has provided Ethiopia with more than USD five billion in aid over the past two decades, much of which came through USAID. The decision to fold the agency hit the health sector especially hard.

In February, the Health Ministry ordered regional and city administrations to suspend all operations and payments funded through financial support from the US Centers for Disease Control and Prevention (CDC) and USAID.

More than 5,000 people lost their jobs as a result, many of whom were involved in various HIV-response programs, according to a United Nations Programme on HIV/AIDS (UNAIDS) report which also cautioned that the funding cuts had the potential to undo years of progress in fighting diseases like HIV, malaria, and tuberculosis, as well as in improving maternal and child health.

In today’s statement, the Finance Minister highlighted Ethiopia’s commitment to raising its health spending by USD 450 million as an indicator of “intent to increase domestic financing and ensure the long-term sustainability of the health sector beyond external support.”

Ethiopia’s health spending has been on a decline over the past few years. In 2020/21, at the height of the COVID-19 pandemic, health and nutrition accounted for a little over 10 percent of the total federal spending budget. This year, the figure sits at 7.3 percent.

While the MoU signals an intent to reverse health spending cuts, US officials caution the volume of funding under the partnership will depend on performance.

“Performance incentives embedded in the agreement will drive results and accountability. If key health outcomes are not achieved, funding will decrease accordingly. This approach aligns resources with impact, ensuring that every dollar spent delivers measurable benefits for both countries,” reads the embassy’s statement.

Data and record-keeping are also an integral part of the agreement, which itself is part of the Trump administration’s ‘America First Global Health Strategy,’ according to the statement.

“The MOU’s focus on scaling up electronic health records and data systems will empower Ethiopia to track and respond to health threats with greater speed and precision,” it reads.