This pretty Ethiopian horse is all dressed up for a parade or festival. The red pom-poms are a common feature of fancy Ethiopian adornment, as is the blue saddle cloth featuring a golden lion. The saddle cloth hangs over top of the saddle (there are slots front and back for the pommel and cantle to stick through) and is just decorative (although perhaps keeps the rider's leg from rubbing on the stirrup leathers - but it's not padded).
Photo: Niall Crotty on flickr. Used with permission.
I happen to have a similar saddle cloth, which a friend brought back from a trip there. You can see the detail of the popular lion motif in the second picture (taken by me). The lion, of course, is the "lion of Judah", royal symbol of Ethiopia. Because of that it has also been adopted as an important symbol by Rastafarians.