DKT is aware of the article, “DKT faces funding crisis, staff clash over unpaid commission,” published on July 29, 2023 in The Reporter which states that DKT Ethiopia did not pay money owed to suppliers, staff and employees in recent months due to a “drastic drop in donor funding over the past two years.” It is true that DKT Ethiopia has been through a reorganization of its business model that resulted in layoffs and changes to its incentive structure, but false that DKT has not honored its financial commitments to present and past employees or supply partners.
DKT Ethiopia revised its business model in 2021 and 2022 after a comprehensive and detailed evaluation in consultation with relevant stakeholders, including some donors. Once approved, the plan was endorsed by the board of directors of DKT International and implemented by senior management in Ethiopia.
The new business model improved DKT Ethiopia’s cost-structure and eliminated outdated and costly incentive schemes. These changes were business decisions made by DKT’s management to improve effectiveness in response to a changing donor landscape, as well as to close the family planning commodity gap in Ethiopia. A new incentive system was put in place starting Jan 01, 2022 and payouts according to performance are being made accordingly.
The changes made within DKT Ethiopia were made according to Ethiopian labor laws. DKT’s legal team, local management and the Washington DC-based management led the implementation of these changes in an effort to ensure a fair transition for employees and the organization. As part of that process, there were significant layoffs, but all employees who were terminated or opted to resign because of these changes – including higher management – were provided support, including severance as applicable per Ethiopian law.
Some employees were not happy with this decision and forty-one (41) employees challenged the organization’s changes in the labor department. Currently 38 of those employees are still pursuing the matter. All 38 of those employees pursuing recourse from the labor department continue to be employed by DKT Ethiopia. These employees received above market increments due to economic inflation, allowance adjustments and continue to enjoy a comfortable and a fair work environment. There has been no retaliation against any of these employees related to their involvement in the ongoing lawsuit.
We respect our employees’ right to approach labor and higher courts. The Labor department in Ethiopia has suggested DKT provide a partial payment to settle the matter and DKT is now litigating the matter in the high court awaiting a decision. Once the issue is decided by the court, DKT will abide by it accordingly. Because this issue is under judicial consideration, we are prohibited from further public discussion, or comment.
In 2023, DKT Ethiopia paid supply partners $6.8 million for commodity procurements, which supported programming for the people of Ethiopia, especially women, young adults and adolescents. There are no outstanding financial obligations to our supply partners. The suggestion by The Reporter that DKT has not paid out suppliers is false.
With regard to DKT’s financial standing and its current donor funding, DKT Ethiopia is annually audited by a reputable external auditor, and exhibits a strong financial position. Since the reorganization is early 2022, DKT Ethiopia has delivered more with less. The impact results for the year ended Dec 2022 were 3.47 million “Couples Year of Protection” (CYPs); which were 35% higher than 2021. DKT Ethiopia is on track to achieve its target goal of 3.9 million CYPs for FY2023. The organization has further met all its financial obligations, both internal and external, with performance against KPIs, showing an improved value for the contribution of donors.
It is true that global funding from donors for sexual and reproductive health was greatly reduced due to austerity measures taken by donors and conflicting global priorities in the recent past, but the funding landscape is recovering. DKT Ethiopia receives generous support from its donors and is proud to continue its long legacy of service to the people of Ethiopia for many more years to come.