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Financing for solutions to displacement: Ethiopia country study - Executive summary, March 2021

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Evaluation and Lessons Learned
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EXECUTIVE SUMMARY

Ethiopia faces substantial refugee and internal displacement challenges. In 2020, the country hosted 792,030 refugees across 26 refugee camps. Since 2017, Ethiopia has also experienced a dramatic increase in internal displacement. In mid-2020, there were 1.8 million internally displaced persons (IDPs), including 1.2 million conflict-related displacements. Displacement situations in Ethiopia are highly specific to geographic regions and population groups. Moreover, these are overlaid onto the development challenges, an ambitious development agenda, frequent climate induced shocks, and internal conflict in the country. For the foreseeable future, Ethiopia will continue to face a range of long-standing, new, and dynamic displacement situations across many regions of the country.

The Ethiopian approach to managing displacement has changed substantially in recent years. In 2016, the Government of Ethiopia signalled strong political support for a new approach to hosting refugees, as co-host of the Leaders’ Summit on Refugees and as an early adopter of the Comprehensive Refugee Response Framework (CRRF). In 2019, the government passed new legislation on the rights and entitlements of refugees, with a new Refugee Proclamation (Proclamation No. 1110/2019).

In February 2020, Ethiopia also ratified the Kampala Convention for the Protection and Assistance of Internally Displaced Persons in Africa and is now reviewing a national IDP law. In late 2019, a Durable Solutions Initiative (DSI) and Durable Solutions Working Group were launched by the government to support policy and legislative reforms. The government is also integrating durable solutions into the national development plan, and into national and sub-national urban and spatial development plans.

International actors have provided important targeted technical support and advocacy to both refugee displacement solutions and IDP durable solutions reform processes. This includes providing financial support to coordination structures and key technical work; for example, the drafting of legislation. Despite this support, funding for durable solutions programming in the Ethiopian IDP context remains extremely limited.

Financing played a pivotal role in the passing of the Refugee Proclamation. In return for the nine pledges the Ethiopian government made at the Global Refugee Forum (signalling a major reform agenda), the World Bank, European Union (EU), and United Kingdom (UK) pledged USD 550 million in investment into new industrial parks, which is a key priority of the Ethiopian industrialisation agenda.
In the Ethiopia Jobs Compact agreement, financing is contingent on meeting specific concessions, including improvements in the refugee regulatory framework.
Political alignment and commitment among key donors, backed with substantial additional financing through the World Bank IDA18 regional refugee sub-window were critical to the brokering of this deal. Substantial additional development funding has also been made available from a range of donors to support aspects of the transformation of the Ethiopian refugee-hosting model.

In contrast to the high-level political engagement of major donors in brokering the Jobs Compact, donors have taken a relatively cautious approach to engaging the government on more politically sensitive aspects of durable solutions for IDPs. Critically, no additional financing has yet been put on the table to influence government policies towards IDPs or to enable dedicated programming. This illustrates a structural challenge in the international financing system, whereby there is reluctance among some donors to mobilise additional funding to support durable solutions because doing so may risk reducing incentives for governments to take on this responsibility.

Since the achievement of these high-level commitments and legislative changes, the translation of these commitments into action – through new legislation, policy, coordination structures, plans, and programmes – has slowed. Ethiopian experience provides a useful lesson for international partners: supporting long-term reform and implementation requires sustained commitment to political dialogue, as well as technical and financial support to translate high-level commitments into reality. Notably, the domestic political appetite for reform has shifted over time as Ethiopia has undergone a major political transition towards democratic governance since early 2018. The reform of the Ethiopian refugee-hosting model has taken a backseat during this period of transition and crisis management.

The Ethiopian government National Comprehensive Refugee Response Strategy (NCRRS) remains in draft form, leaving a gap in planning and prioritisation behind which international investments and programmes could align. The practical implementation of the Refugee Proclamation has also faltered and proved domestically unpopular among the public in some areas. The secondary legislation and guidance required to enable key provisions of the Refugee Proclamation signal a more cautious and limited interpretation of refugee integration and inclusion.
Coordination of the CRRF has also stalled at the federal level. The steering committee has not met since May 2018, leaving a gap in strategic direction and coordination.

While progress in rolling out both the CRRF and DSI has slowed at the national level, there are nonetheless opportunities in national-level programmes and sectors to advance refugee inclusion. This is also the case at sub-national level, where the developmental, political, and security challenges of displacement are more immediately felt by decision makers. Notably, the Somali Regional State government has shown significant leadership and initiative in domesticating the CRRF and DSI agendas, and in leading coordination. Consequently, Somali Regional State has become a major focus of Official Development Assistance (ODA) investment.

Notable progress has been made in the inclusion of refugees in the national education system and the urban social protection system. A World Bank programme to support inclusive education is now close to sign off. It uses grant financing under the IDA19 window for host communities and refugees (WHR), with additional contributions from bilateral donors. Importantly, the financing package is structured as a programme-for-results agreement that links disbursements to agreed indicators on inclusion and attainment of standards.

Donors have initiated efforts to include refugees in the urban safety nets programme in Ethiopia. Refugee inclusion will be piloted from 2021. The World Bank has also initiated research into the feasibility of incorporating IDPs into the urban safety net programme. This could provide a useful focus for dialogue between government and development partners, around which a wider plan for inclusion and financing could be developed.

Outside clearly defined national sectors and programmes, the inclusion of both refugees and IDPs is a more challenging proposition. Greater economic selfreliance for refugees has been a major focus of policy dialogue and investment in Ethiopia. Responsibilities lie across many ministries, federal and regional governments, the international humanitarian–development nexus, and the private sector. There is little clarity on an overall strategy at the national and regional levels.
Practices are divergent and there are incoherent approaches to programming and investment. Moreover, economic transformation is a long-term and extremely challenging prospect in what are often already economically marginal regions of the country.

Significant policy-level reform and structural investment are required to create enabling environments for private sector businesses. In addition to direct programming, this will require detailed analysis of market conditions and value chains, stakeholder mapping and partnership building, and sequencing of investments across a range of enabling conditions. This requires long-term funding commitments that enable analytic and design work, the formation of partnerships, investments in evidence gathering and information sharing, and flexibility to adapt to new information and learning.

It is also worth noting that refugee inclusion and durable solutions for IDPs in Ethiopia are currently approached through separate policy, planning, coordination, financing, and programming channels. At the local level, however, there are instances of refugee and IDP populations living alongside one another. Both groups would benefit from inclusion in area-based programming that targets them and the host population. Unfortunately, the current siloed structure of the international system strongly incentivises supporting these populations separately. More robust strategic direction and coordination at the regional level could help manage the risk of incoherent approaches and inefficiency

A lack of funding to support durable solutions programming is considered a major barrier to progress. The DSI has advocated for programming and funding to demonstrate proof of concept for durable solutions. The only clearly identifiable programme that targets durable solutions – a joint UN durable solutions programme – has yet to attract sufficient funding to start programming. The UN Resident Coordinator’s Office (RCO) has recently drafted Terms of Reference for a multi-donor fund, which is envisaged as a means to target funding activities that are prioritised in regional durable solutions plans. Given the many competing demands for ODA funding in Ethiopia (including crisis response, support to refugee responses and the CRRF, and government ambitions for the development agenda), earmarking dedicated funding for durable solutions will likely be critical to advance the durable solutions agenda from policy to programme implementation.

Ultimately, refugee and IDP-hosting regions throughout Ethiopia face a range of pre-existing structural developmental challenges. Durable solutions cannot progress at scale without addressing these. In short, durable solutions require integration of the needs of displacement-affected communities into wider regional and national development planning and investments. This is a long-term challenge that needs sustained engagement and support at multiple levels. It also necessitates acceptance that displacement is a politically challenging area subject to uneven progress and setbacks. Nonetheless, there are often opportunities to advance inclusion and durable solutions through technical sectors, programmes, and sub-national and area-based approaches, which can more readily navigate domestic political sensitivities. International actors can play an important role in these pockets of opportunity, creating packages of technical and financial support.