Undercurrents of USAID Funding Freeze in Ethiopia

The Bogale Borena Organic Fertilizer Enterprise has not lost hope in future United States Agency for International Development (USAID) support for their budding business. Last year, the collective received financial support alongside 6 other semifinalists for their innovative operation that transforms coffee grounds and pulps into organic fertilizer. As part of the USAID-funded four-year CATALYZE Market Systems for Growth (MS4G) program, selected Ethiopian small businesses scaled their operations through grants. The Fertilizer for Food Challenge Competition helped many out-of-the-box innovative ideas come to life as part of a broader project backed by nearly 250 million dollars. 

Setegn Kifle, manager at the fertilizer enterprise, says they truly became a genuine functional business after receiving the first round of financial support. Eagerly awaiting access to the next round of financing, the Enterprise has finalized documenting its progress.

“We are praying the program does not shut down as we wait for the final disbursement,” Sitegn told Shega.

Finalists were able to access equipment and critical tools on top of the financial support provided under the Program co-organized by local startup accelerator Iceaddis. Many other small businesses and startups have indirectly benefitted from USAID funding over the past few years through partnerships with financial institutions. However, some businesses with promising products were able to secure the full amount early on, freeing them from the anxiety of a permanent freeze. 

Thur-Bio-Tech, a four-year-old startup working on biofertilizers, was the recipient of one of the largest grants as it unlocked nearly $172,000 in April. Samson Alemu, Co-founder and CEO of the company, says they have made significant strides after winning the grant. He referred to their expansion to remote rural areas of Ethiopia to highlight the reach of their product.

“Every penny has made a significant impact,” Samson told Shega.

The funds helped Thur-bio-tech scale from supporting around 8,000 farmers to around 19,000 within a single year. Samson says nearly 3,600 birr is required per farmer which quickly adds up to an amount unthinkable for an emerging startup like theirs. However, these stories might soon become tales of a bygone era, as America’s 47^th President cracks down on the Agency.

Donald Trump announced a 90-day freeze on aid funding as a government review spearheaded by the world’s richest man(Elon Musk) looks to bring about increased efficiency. The last time USAID halted its support for Ethiopia, the percentage of people who experienced severe hunger doubled to around 11% in the Tigray Regional State.

While recent USAID support has streamed into emerging sectors like fertilizers, the Agency had a long history of assisting Ethiopia over the past five decades. During the 1984–85 famine, it provided critical humanitarian aid, and after the fall of the Derg regime in 1991, it supported economic and governance reforms. In the decades that followed several emergency assistance programs were predominantly supported by the Agency. USAID was also the largest contributor to the Productive Safety Net Program(PSNP), which financially supports millions of Ethiopians, with annual contributions of around 110 million dollars for several years. 

Kefeta, a USAID-backed five-year initiative looking to support around 2 million Ethiopian youth has found itself in a precarious situation as its primary source of funding remains up in the air. An employee of Amref Health Africa, the implementing agency, said they are choosing “strategic silence” until a clear path is outlined as the fate of the project hangs in the balance. The integrated activity in its third year had plans to support youth across 18 Ethiopian cities in projects spanning several sectors. Senior management of the initiative declined to comment on the development of this story.

As speculation, tales of conspiracy, and some far-fetched stories proliferate about the actual impact and agenda behind USAID support, a hard and swift blow has been dealt to Ethiopia in a matter of weeks. Dereje Duguma, Ethiopia’s State Minister for Health, wrote a letter to health bureaus in 12 regional states and two city administrations that all payments for projects supported by USAID and the Center for Disease Control and Prevention (CDC) had been ceased as of January 24. The decision put an end to the livelihood of nearly 5,000 employees under contract through the projects while millions of beneficiaries could face even harsher impacts.

Ethiopia’s health sector has historically relied heavily on donor support to sustain the provision of critical medical supplies. The three-year health sector development and investment plan unveiled last year forecasted that nearly 50% of the 16.3 billion dollars needed would come from external support. The US provided nearly 74 billion dollars in support to international humanitarian assistance and development in 2023; by comparison, the UK spent £15.3 billion. Unsurprisingly the freeze on US funding has created a global shockwave resulting in nearly 3.8 million women having already lost access to contraceptive care (between January 20 and February 18, 2025. The concentration of previous funding in Sub-Saharan Africa further complicates the issue. While the wavier by U.S. Secretary of State Marco Rubio could signal hope, millions in Ethiopia are bracing for maximum impact.