Ethiopia’s ambitious water supply projects have incurred billions of birr in additional costs due to critical design deficiencies and poor planning, according to a recent report by the Office of the Federal Auditor General (AG). The findings were presented during the 39th regular session of the House of People’s Representatives, shedding light on significant inefficiencies in major drinking water initiatives.

The report focused on drinking water projects in Gidole, Mojo, and Dongora, which aimed to improve access to clean water for local communities. However, these projects were launched without comprehensive pre-feasibility and detailed feasibility studies, which should have included financial, economic, social, technical, and environmental impact assessments. The absence of such studies contributed to unexpected delays, cost overruns, and operational challenges.

The Gidole drinking water project alone experienced substantial cost escalations. Delays in pipeline supplies and welding material clearance at the port extended storage durations by 257 days, resulting in container and warehouse rental fees exceeding 11.49 million birr. Moreover, significant design improvements during construction created a 72% cost gap, adding more than 25.67 million birr and over $251,000 beyond the original budget.

The report also highlighted poor site selection for water reservoirs, which led to landslide risks and difficult access. Additionally, the main pressure line design failed to account for the region’s frequent landslides, jeopardizing infrastructure stability.

Similarly, the Mojo project suffered from an ineffective water source, rendering the investment futile. In Dongora, the original water source was contaminated and failed to meet drinking water standards set by the World Health Organization and Ethiopian Water Quality Authorities, resulting in unusable water and a loss of 16.90 million birr.

The Auditor General’s report also revealed that government institutions left approximately 14.49 billion birr unused in the 2023/24 fiscal year. This unspent budget, representing over 10% of allocated funds, was spread across 115 public institutions. The Ministry of Agriculture accounted for the largest share, with 7.81 billion birr unutilized, followed by the Customs Commission with over 573 million birr.

The Auditor General urged stricter oversight and improved budget planning to ensure efficient use of the country’s limited financial resources. The report recommended enhanced monitoring to identify unspent funds early and reallocate them to ministries facing budget shortfalls.

These findings align with broader research on water infrastructure challenges in Ethiopia. Studies show that design errors, inadequate feasibility assessments, and poor maintenance are major contributors to cost overruns and project delays in water and irrigation schemes nationwide. Experts emphasize the need for thorough planning, realistic budgeting, and sustainable maintenance strategies to improve project outcomes and ensure long-term water security.

The Federal Auditor General’s report underscores the urgent need for improved project design, rigorous feasibility studies, and effective budget management in Ethiopia’s water sector. Addressing these issues is critical to maximizing the impact of investments aimed at expanding access to clean and reliable water, a cornerstone for public health and economic development.

Ethiopia has experienced significant economic setbacks following the suspension of the African Growth and Opportunity Act (AGOA) in January 2022, with approximately 18 foreign companies exiting the country and industrial parks losing an estimated $45 million in revenue, according to the African Development Bank Group’s (AfDB) Country Focus Report 2025 Ethiopia released on June 23.

AGOA had previously allowed Ethiopia duty-free access to the U.S. market for a wide range of products, fostering export growth and job creation. However, the suspension disrupted established market linkages and supply chains, leading to a 24% decline in exports from Ethiopia’s industrial parks in 2023. The Hawassa Industrial Park, one of the country’s largest, alone saw over 1,000 jobs lost due to these disruptions.

The report highlights that the suspension has compounded broader geopolitical and economic challenges, adversely affecting Ethiopia’s annual budget and threatening critical public services. Key donor countries are also scaling back aid: Germany plans to reduce its aid budget by 1 billion euros in 2025, while the UK intends to cut aid spending through 2027. Furthermore, following a U.S. government “work stoppage” on foreign aid programs, Ethiopia’s Health Ministry was forced to lay off 5,000 health workers previously supported by USAID and the CDC.

Food aid delivery has also been hampered. The AfDB report notes that 34,880 metric tons of essential food supplies—enough for 2.1 million people for one month—remain stranded at the port of Djibouti due to insufficient funds for transportation to Ethiopia.

The suspension has particularly hit Ethiopia’s textile, leather, and apparel sectors, which relied heavily on AGOA’s preferential access. The National Bank of Ethiopia reported that the suspension put approximately 11,500 jobs at risk across industrial parks, with Hawassa, Mekelle, and Bole Lemi among the hardest hit. Major investors, including PVH (parent company of Calvin Klein and Tommy Hilfiger), withdrew operations, causing supply chain disruptions and leaving many industrial park facilities idle.

The report stresses the urgent need for Ethiopia to diversify its export markets to reduce vulnerability to such shocks. While some companies have shifted focus to domestic markets, the loss of AGOA privileges has exposed the fragility of Ethiopia’s export-oriented manufacturing base.

The AfDB report also draws attention to illicit financial flows (IFF) as a significant challenge to Ethiopia’s economy. Mis-invoicing in trade documents—such as import over-invoicing and export under-invoicing—is estimated to account for between 55% and 80% of illicit money leaving the country, representing 6% to 23% of Ethiopia’s total business value. The International Monetary Fund (IMF) estimates that these illicit flows could reduce Ethiopia’s average annual GDP growth by 2.2% and cause a loss of 10% to 30% of government revenues.

While the Ethiopian government has enacted legislation to combat money laundering and terrorism financing, including the Prevention and Control of Money Laundering and Terrorism Financing Proclamation No. 780/2013, the report notes difficulties in effective enforcement.

The suspension of AGOA has had far-reaching consequences for Ethiopia’s economy, from job losses and declining exports to strained public services and aid delivery. Coupled with challenges such as illicit financial flows and reduced foreign aid, the country faces a complex landscape requiring strategic reforms. The AfDB report underscores the need for market diversification, enhanced governance, and stronger international cooperation to restore economic stability and growth.

By Eyasu Zekarias

Young innovators across Africa are driving transformative change in the agricultural sector by developing new technologies aimed at closing critical gaps and enhancing food security. Recent competitions organized by Heifer International have spotlighted and funded promising agritech solutions proposed by Africa’s youth, highlighting their vital role in shaping the continent’s agricultural future.

At the AYuTe NextGen 2025 competition held in Kampala, Uganda, four young agritech innovators from different African countries were recognized for their innovative approaches to addressing pressing challenges in the continent’s food system. The event, themed “Agricultural Technology Generation is on the Rise,” gathered leaders, investors, policymakers, and development partners to discuss major issues such as climate change, limited market access, and financing shortages for smallholder farmers.

Out of more than 100 applicants from 10 African countries, 11 finalists presented their innovations to an expert jury. Among the winners, Kenya’s Carolyn Mwangi was honored for developing climate change-resistant seedlings, while Ghana’s Nana Opoku received recognition for creating a digital platform that connects farmers with investors to secure funding.

The agricultural market in Africa, currently valued at $280 billion, is projected to grow to $1 trillion by 2030, with youth involvement playing a critical role in job creation and sector growth. Adesuwa Ifedi, Senior Vice President of Africa Programs at Heifer International, emphasized the impact of young entrepreneurs: “There are over 2,000 agricultural technology start-up companies operating on the continent, most of which are led by African youth. These young agricultural entrepreneurs are creating opportunities at all levels in the farming value chain. They are changing the way we produce food, exchange information, and solve climate problems.”

Parallel to the NextGen event, the AYuTe Ethiopia 2025 awards program recently took place, focusing specifically on young Ethiopian agritech innovators. The competition awarded cash prizes ranging from $7,500 to $15,000 to the top five innovators, who will also receive support to implement their ideas. The challenge aims to tackle obstacles faced by smallholder farmers in Ethiopia, encouraging technologies that boost productivity, income, financing access, and resilience.

Despite Africa’s vast agricultural potential—boasting 60% of the world’s uncultivated fertile land—the sector remains technologically underdeveloped. Experts attribute this lag to inadequate policy support, poor infrastructure, and limited funding for agritech startups, which have hindered progress.

By empowering youth-led innovation, initiatives like Heifer International’s AYuTe competitions are fostering sustainable solutions that promise to transform agriculture across Africa, improving livelihoods and strengthening food security for millions.