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Ethiopia: Research Terms of Reference – Supply chain analysis and Route mapping ETH2101 (February 2022, V1) – Ethiopia

2. Rationale

2.1 Background

Ongoing conflict, crisis-level food insecurity, flooding, drought, locust infestation and COVID-19 are some of the multiple and often overlapping crises that continue to strain the lives and livelihoods of an estimated 12.8 million people across multiple regions in Ethiopia, most notably in Amhara, Afar, Benishangul-Gumuz, Oromia, Somali, SNNP and Tigray regions. Nearly 3.95 million people are currently displaced across Ethiopia11. Issues of security and humanitarian access are preventing access to basic services, including telecommunications, fuel, electricity and banking services.

The poor macroeconomic conditions are driving a high annual inflation rate and depreciation in the Ethiopian Birr (ETB) in the whole country. According to the Central Statistical Agency of Ethiopia (CSAE), the national inflation rate increased to 24.5 percent in June from 19.7 percent in May12. The June inflation rate is the highest year-on-year inflation rate reported in at least five years. The inflation rate has been increasing reaching 33 percent in November 2021 (CSAE). Price spikes together with significant population displacements, lost harvests, depletion of food stocks, and market dysfunctions threaten significantly the food security in the country.

Furthermore, conflict in Tigray region as of June 2021 has seen large-scale displacement contributing an approximate 1.8 million additional people needing assistance in Amhara, Afar and Tigray regions13. 5.5 million people in this area face high levels of acute food insecurity. Among them, between May and June 2021, 350,000 people are in Catastrophe (IPC Phase 5), 2.1 million in Emergency (IPC Phase 4) and 3.1 million in Crisis (IPC Phase 3). The main key drivers identified are conflicts, population displacements, movement restrictions, limited humanitarian access, loss of harvest and livelihood assets, and dysfunctional or non-existent markets.

Since 2020, REACH has been working in close collaboration with the Ethiopia Collaborative Cash Delivery (CCD) Network to launch and coordinate a Joint Market Monitoring Initiative (JMMI). However, there is currently no initiative undertaken to map supply chains and assess barriers and market integration throughout Ethiopia. Cash-based interventions require supply chains to function properly and to provide basic commodities continuously as any disruptions may affect the availability of basic goods, as well as commodity prices, thus negatively impacting households’ ability to access basic food and non-food items to support their livelihoods. These gaps impede the provision of an effective market-based response to vulnerable population groups by humanitarian actors.

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