84946 Ethiopia and the World Bank Over half a century of partnership towards sustainable development w w w. w o r l d b a n k . o r g / e t Ethiopia and the World Bank Over half a century of partnership towards sustainable development Acknowledgments Contact: The Book was prepared by the World Bank Ethiopia Communi- Production: content development, writing, editing, ADDIS ABABA cations Team lead by Gelila Woodeneh. The team would like to Gelila Woodeneh, Greg Toulmin and Berhanu Kassa +2511 (0) 11-5-176000 take this opportunity to express its appreciation to all those who Photos: World Bank Collection, Arne Hoel Africa Avenue, (Bole Road) contributed to this project. Research, Design and Layout: Impala Communication Addis Ababa, Ethiopia, email: gwoodeneh@worldbank.org and Gelila Woodeneh WASHINGTON +1-202-458-1747 1818 H Street NW Washington DC 20433, email: rtoulmin@worldbank.org Contents Preface by Minister of Finance and Economic Development 2 Increasing and Improving the Delivery of Infrastructure 25 Foreword - Country Director 4 Expanding and Improving Ethiopia’ roads network Helping to Improve Water Supply and Sanitation Overview 5 Historical /Economic Context Development Challenges Enhancing Regional Integration 33 The Growth and Transformation Plan- Key development goals: Nile Basin Initiative Supporting Integrated Water Resources Development The World Bank Group 7 Promoting Regional Connectivity ET/SU interconnector East Africa Power Pool International Development Association (IDA) International Finance Corporation (IFC) Helping Ethiopia to Enhance its resilience and Reduce its Vulnerability Multilateral Investment Guarantee Agency (MIGA) Improving the Delivery of Social Services 35 The World Bank Institute (WBI) The International Centre for Settlement of Investment Disputes (ICSID) Enhancing the quality of Education The World Bank in Ethiopia 8 Empowering Citizens, Increasing Accountability, and Improving Service Delivery 41 World Bank Country Partnership Strategy International Development Association (IDA) Promoting the Delivery of Basic Services International Finance Corporation (IFC) Ensuring Food Security and Livelihood Multilateral Investment Guarantee Agency (MIGA) Expanding Ethiopia’s Impressive Successes in Health Main Areas of Intervention and Key Results Supporting Comprehensive Social Protection and Risk Management 49 Supporting Ethiopia to Create a Stable Macroeconomic Environment 15 Reaching the underserved: Supporting the needs of Pastoral Communities Fostering Competitiveness and Employment Ensuring Sustainable Land Management Promoting Good Governance and State Building Increasing Competitiveness and Productivity 17 Transforming Cities, Creating Jobs, Improving Livelihoods Urban Local Government Development Project (UGDP) Supporting Agricultural Growth and Rural Development Aid harmonization and Partnership Increasing productivity through the Expansion of Irrigation and Drainage Promoting Private Sector Development Way Forward 61 Helping Women Entrepreneurs Unleash their Potential Ethiopia at a glance 63 Map of Projects 65 Preface Ethiopia’s efforts to accelerate growth and reduce The World Bank has been a key development part- poverty have been rewarded with impressive re- ner, supporting our development efforts in many Minister of Finance and Econmic Development sults. Ethiopia has registered a strong economic areas for more than six decades, while ensur- ing country ownership of development priorities. over the last decade. We have also succeeded in maintaining a strong and sustainable macroeco- - nomic framework. As indicated in our Growth and nership with the World Bank will remain strong Transformation Plan (GTP), we are committed to and we look forward to working together to reaching the Millennium Development Goals (MDGs) promote sustainable development and im- and becoming a middle-income country by 2025. prove the living standards of all Ethiopians. Minister of Finance and Econmic Development 2 Foreword Ethiopia is among the founding countries of the strategy (2011-2015), entitled the Growth and World Bank Group. Since it became a member Transformation Plan (GTP), aims to foster broad based development in a sustainable manner from the Bank for over 140 projects related to all to achieve the Millennium Development Goals. major sectors of the economy. The International This plan has been recognized by the Bank’s Development Association (IDA) is Ethiopia’s larg- Executive Directors as setting out similar priori- ties to the Bank’s own strategy for Africa’s Fu- Over the past 20 years, IDA has contributed over ture. It is also the anchor for the current World US$10 billion to more than 60 projects in Ethio- Bank Group Country Partnership Strategy. pia, through both credits and grants. The World Bank Group has also delivered a range of knowl- The World Bank Country Team strongly be- edge services and policy advice to Ethiopia, by lieves that the people of Ethiopia can over- undertaking analytical work, the preparation of come the development challenges they face. policy notes and sectoral studies. This partnership The World Bank will continue to provide assis- indicates the World Bank’s strong commitment - and desire to help Ethiopia in its efforts to reduce nancial assistance, to support the development poverty and improve the well-being of its citizens. Guang Zhe Chen, In recent years, Ethiopia has been one of the fast- We hope this book will help you to better under- Country Director for Ethiopia est growing economies in Africa. Over the past stand how the World Bank Group is supporting two decades, with support from development Ethiopia to reduce poverty and improve the living partners, the country has registered some impres- standards of its people. We would also like to en- sive results in key human development indicators: courage you to learn more about the World Bank primary school enrolments have quadrupled, child by visiting our website. We welcome your feed- mortality has been cut in half, and the number of back on how we can improve our services and people with access to clean water has more than deliver lasting results for the people of Ethiopia. doubled. At the same time the Government has em- barked on an ambitious program of public invest- Guang Zhe Chen, ment to remove constraints to economic growth. Country Director for Ethiopia 4 Ethiopia Economic Overview the causes of poverty among its population. GoE is already devoting a very high share of its budget to pro-poor programs and in- Ethiopia is the second-most populous coun- vestments. Large-scale donor support will try in Sub-Saharan Africa with a population of continue to provide a vital contribution in the about 85 million (United Nations, 2011). One of the world’s oldest civilizations, Ethiopia is needed to meet these challenges. However, also one of the world’s poorest countries. even if donor support is increased, using aid The country’s per capita income of US$370 effectively will require Ethiopia to improve is substantially lower than the regional aver- governance, empower local authorities, and age of US$1,257 (Gross National Income, further develop government accountability to Atlas Method). The Government of Ethiopia its citizens. (GoE) aspires to reach middle income status (current threshold: US$1,025) over the next Over the past two decades, there has been decade. - ment indicators and Ethiopia is on track to The economy has experienced strong and meet many of the Millennium Development broad based growth over the past decade, Goals (MDGs): primary school enrolment has averaging 9.9 per cent per year between quadrupled, child mortality has been cut in 2004/05 - 2011/12 compared to the regional half, the number of people with access to average of 5.4 per cent. clean water has more than doubled, gen- der parity is being reached in education, and Economic growth brought with it positive there has been substantial progress on HIV/ trends in reducing poverty, in both urban and AIDS and malaria. Good progress has been rural areas. While 38.7 per cent of Ethiopi- made towards universal primary education, although this MDG target may not be met. years later this was reduced to 29.6 per cent Reduction of maternal mortality remains a as measured by the national poverty line key challenge. of US$0.6 per day. Under the Growth and Transformation Plan (GTP), the target is to These gains, together with more recent reduce this further to 22.2 per cent by 2014- 2015. and HIV/AIDS, paint a picture of improved wellbeing in Ethiopia. Notwithstanding the progress on these critical aspects of hu- Development Challenges man development, given the country’s low g starting point, Ethiopia needs considerable The main challenge for Ethiopia is to continue investment and continued policy reforms to and accelerate the progress made in recent achieve some of the Millennium Development years towards the MDGs and to address Goals by 2015. 5 This GTP is the anchor for the World Bank’s new Country Partnership Strategy The Growth and Transformation Plan geared towards fostering broad-based development in a sustainable manner to achieve the MDGs. The GTP envi- sions a major leap in terms of not only economic structure and income levels but also the level of social indicators. Key Development Goals: Rapid economic growth, targeted for 11 per cent per year at worst and, at best, to double the size of the economy by 2015, with GDP per capita expected to reach US$698 by 2015; An increased contribution from the industrial sector particularly focused on increased production in sugar, textiles, leather products and cement; each year; The road network should increase from 49,000 kilometers to 64,500 kilometers by 2015; Power generation capacity will increase from the current 2,000 MW to 8,000 MW, and the number of customers from the current two million to four million by 2015; Construction of 2,395 kilometers of railway line; and, Achievement of all Millennium Development Goals (MDGs). The plan also aims to reduce the maternal mortality rate by more than half from 590 per 100,000 to 267 per 100,000. 6 The World Bank Group Since its inception in 1944, the World Bank has expanded from a single institution to a closely associated group Development (IBRD) as facilitator of post-war reconstruction and development to the present-day twin goals of ending extreme poverty and promoting shared prosperity The International Bank for Reconstruction and Development (IBRD) lends to govern- ments of middle-income and creditworthy low-income countries. The International Development Association (IDA) provides interest-free loans called cred- its and grants to governments of the poorest countries. The International Finance Corporation (IFC) is the largest global development institu- organizations: tion focused exclusively on supporting the private sector and helps developing countries - nancial markets, and providing advisory services to businesses and governments. The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to promote foreign direct investment into developing countries to support economic growth, reduce - ance guarantees to investors and lenders. The International Centre for Settlement of Investment Disputes (ICSID) provides interna- tional facilities for conciliation and arbitration of investment disputes. 7 1945 The World Bank in Ethiopia Ethiopia became a founding member of the International Bank for ROAD IN ETHIOPIA IN NEED OF REPAIR (1950) credit for the rehabilitation and maintenance of roads, and Bank Ethiopia Joined HEAVY EQUIPMENT LEVELS A ROAD NEAR ADOLLA WHILE YOUNG ETHIOPIANS WATCH (1950) The International Development Association (IDA) in 1960 The Multilateral Investment Guarantee Agency (MIGA) in 1990 Ethiopia has also signed the convention establishing ICSID ROADS AND BRIDGES WERE REPAIRED AS PART OF THE WORLD BANK’S LOAN TO ETHIOPIA (1950) 8 World Bank Partnership with Ethiopia The World Banks’ engagement with Ethiopia is guided by a Country Partnership Strategy, which covers the period from July 2012 to June 2016 (CPS). The CPS builds on the pro- gress achieved by Ethiopia during the previous going challenges and assist in the implementa- tion of the GTP. The CPS is a results-based strategy developed after intensive consultations with a wide range of stakeholders in order to gain a broad-based perspective on the World Bank’s performance and development priorities. It sets out three ar- eas of focus: fostering competitiveness & em- ployment; enhancing resilience and reducing vulnerability; and good governance and state forms of engagement which are partnership with GoE, other parts of Ethiopian society and other international partners; knowledge devel- CPS Framework 10 Ethiopia is the International Development Association’s (IDA) The International Development Association is - ment assistance: to date, it has committed over US$10 billion for development projects, most notably for the protection of basic ser- vices, health, HIV/AIDS, productive safety nets, food security, energy infrastructure, and roads. As of June 2013, IDA’s portfolio in Ethiopia consists of 24 projects with net commit- ments of around US$5 billion. On average Ethiopia receives around US$1 billion an- nually in new IDA commitments. This large and well managed portfolio has also enabled the World Bank to establish itself as a capa- ble administrator, of a large portfolio of Trust Funds from over a dozen Donors worth in excess of US$ 1.5 billion. Social protection accounts for almost half of current commitments; this includes ba- sic services such as health, education, rural roads, safety nets, etc. 30 per cent of com- mitments are for infrastructure (mostly roads and electricity). The rest is dedicated to other sectors such as water, agriculture and irriga- tion. 11 International Finance Corporation (IFC) - advisory services to its clients. Derba Cement Factory invested US$55 million. for farmers. up to US$10 million Global Warehouse Financing Program. - Ethiopia Commodity Exchange (ECX). Multilateral Investment Guarantee Agency (MIGA) taxes and transferring skills and know-how. . In addition, local communities often receive - lar local investments and spur the growth of local businesses. In Ethiopia: guarantee of US$4.6 million to Africa Juice BV US$4 million covering an equity investment National Cement Share Com- pany of Ethiopia. guarantee of US$2.9 million to UniFruit Limited 12 Main Areas of Intervention and Key Results 14 Supporting Ethiopia to Create a Stable Macroeconomic Environment Fostering Competitiveness and Employment Economic Updates, Poverty Assessment, Poverty Mapping, Debt Sustainability Analysis Supporting Ethiopia to The World Bank engages in economic policy dialogue with Among the knowledge products the World Bank produces are: Create a Stable GoE on key issues, including ways to improve the invest- ment climate to help Ethiopia attract foreign investment. Semi-annual economic updates, Macroeconomic The World Bank is supporting Ethiopia to create a stable Poverty assessment, Debt sustainability analyses as well as others. Environment macroeconomic environment by undertaking several activi- ties mainly in the form of dialogue and knowledge sharing. 16 Increasing Competitiveness and Productivity Supporting Agricultural Growth and Rural Development Agriculture in Ethiopia is the largest contributor to overall eco- nomic growth and poverty reduction. 45 per cent of national GDP 90 per cent of the goods exported 84 per cent of the labor force Agriculture remains the economy’s most important sector. The livelihood of 85 per cent of the population is fully or partially dependent on agriculture. - tial because of its water resources, its fer- tile land areas, and its large labor pool, but Agriculture in Ethiopia is dominated by small-holder and largely subsistence farming with low productivity on often highly de- graded lands. Leading the sector to higher productivity and in- creased commercialization is fundamental to poverty reduction and food security. Increase agricultural productivity, The World Bank also works with small The World Bank brings much- Promote commercialization, holder farmers to increase agricultural needed attention to this critical productivity and household income by strengthening value chains to increase sector and is helping GoE to Address food security and increase Ethiopia’s resil- the value and volume of sales of key se- ience to climate variability. lected agricultural commodities. 19 Increasing Productivity through the Expansion of Irrigation and Drainage Lack of irrigation is a major constraint to agricultural development in Ethiopia. Addressing this challenge has become a key priority for GoE. In the GTP, “Maintaining agriculture as a major source of growth and development in the country. Expansion of small scale irrigation is also being given priority while due attention is given to medium and large scale irrigation to the extent possible”. The World Bank, through the Irrigation and Drainage project that it is funding, is helping Ethiopia to sustainably increase agricultural output and productivity by enhancing sustainable irrigation man- agement and achieving greater agricultural and market develop- ment. “ This project has the potential and the ambition to transform the 20,000 hectares of irrigation and agricultural practice in the Project Area from subsistence, low in- put low output type of farming to a more entrepreneurial type of related infrastructure (drainage and farming generating surpluses out of which the smallholder ben- access roads) are being developed ” ensuring long term sustainability. for sustainable irrigation manage- Francois Onimus, World Bank’s project task team leader. ment and agricultural market devel- opment. 20 Promoting Private Sector Development Ethiopia exhibits high potential for private sector-led growth and growing as fast as it should. It remains weak and underdeveloped due to multiple constraints. Despite Ethiopia’s potential low labor cost advantage, few Ethio- - fore not attracting foreign investment. Constraints such as high transport costs and low domestic demand contribute to the slow growth of the private sector. A dominant public sector and a lack of effective competition also present challenges to the sector. To address these challenges, the World Bank, is helping to build the capacity of the private sector by creating favorable conditions for increased productivity, growth and competitiveness. Through the upcoming competitiveness and job creation project, the World Bank will: tool for investment generation, accelerating growth, and job creation, by strengthening linkages with small and medium enterprises. 22 Helping Women Entrepreneurs Unleash their Potential Female entrepreneurs in Ethiopia’s economy face major obstacles including limited access to vital Recognizing the substantial economic impact from promoting female entrepreneurship, the World Bank is supporting the Women Entrepreneurship Development Program (WEDP), which aims to address the two most severe constraints to women-owned Micro and Small Enterprises : lack of least 17 thousand of 20 thousand women entrepreneurs and provide them with larger loans, training and support in developing, running and growing a business. by female entrepreneurs, “ employment opportunities to contribute to the country’s economic growth. The World Bank is committed to help in creating equal access to the necessary ” resources for both female and male entrepreneurs in Ethiopia so that they can Guang Z. Chen, Country Director for Ethiopia. 24 Increasing and Improving the Delivery of Infrastructure Expanding and Improving Ethiopia’s roads network Ethiopia’s development has been held back by a large infrastructure gap—it has one of the lowest road densities in Africa. The World Bank has invested over US$2 billion since 1991 and has supported the formulation of Ethiopia’s road sector development program, (RSDP) which helped to establish a dedicated roads increased from 22 per cent in 1997 to 64 per cent in 2012, Bank continues to play a leading role in the development and improvement of the road network in Ethiopia. 1997 to 57 kilometers per 1000 sq. km in 2012, Working in partnership with other donors the World Bank has helped increase both the size and quality of Ethiopia’s highway network from under 20,000 kilometers of roads in 1991 to over 63,000 kilometers in 2012. 1997 to 8.7 kilometers in 2012. 28 Helping to Improve Water Supply and Sanitation Considerable progress has been made in improving access to safe water and hygiene and sanitation in Ethiopia. However, much more remains to be done and millions are yet to be reached. In 2010, out of a population of over 80 million, about 46 million people were without access to an improved water supply, and 36 million practiced open defecation. Provision of better access to safe water and sanitation facilities ensure the GTP’s key pillar of improving citizens’ living standards. The World Bank has helped GoE to improve access to safe wa- ter. 38.66 per cent (2005) to 65.80 per cent (2010), 82 per cent (2005) to 91.50 per cent (2010), from less than 20 per cent at the beginning of 2000 to 60 per cent in 2010, and 68 per cent in 2011, and forecast to have reached 76 per cent by 2012. 30 With the support from the World Bank and other De- velopment Partners collaborating under WASH (the Ethiopia Water Supply, Sanitation and Hygiene Move- - cess to improved water supply and over 9,000 rural water supply schemes have been constructed and Improving Energy Access, Network Reinforcement, Since 2005 electricity access in Ethiopia has been growing rap- idly. Despite this progress only 41 per cent of rural towns and villages are connected to the grid, which provides electricity to two million rural citizens. The population’s limited access to The World Bank electricity is a major barrier to economic development and to the provision of social services in rural areas. At the same time, the demand for electricity in the country has grown substantially. Expansion of the high voltage transmission 184 megawatt of electricity, transmission backbone for electricity distribution systems. Expanding access to electricity in rural communities will support 500,000 people) get access to electricity broad-based economic development and help alleviate poverty. between 2006 and 2013, The World Bank has committed close to under 7 projects to bring renewable energy potential to fruition. rural villages with electricity access from 648 in 2005 to 6,269 in 2012 by supporting GOE’s Universal Access Program. In remote rural areas, off grid solutions are implement- The World Bank has helped ed with World Bank support with the following results: - been distributed with an estimated reduction in the opportunity cost of fuel wood of ing the replacement of 9.6 US$270 million, million conventional light 370 rural schools and 545 health centers have been equipped with Solar Home Systems (SHS), - installation for rural households, through cooperatives, ducing Ethiopia’s demand for electricity by an estimat- development of stand-alone renewable energy programs providing additional ed 300 MW. household access to energy. 34 32 Enhancing Regional Integration Regional Cooperation Historically, there has been strong tension over water usage rights between up- The Eastern Electricity Highway Project (EEHP) stream Nile riparians, such as Ethiopia, which contributes 85 per cent of Nile wa- ters, and downstream countries, such as Egypt, for which the river is the lifeblood The World Bank funded Eastern Electricity Highway Project (EEHP) is an example of its economy. The World Bank supported the historic establishment of the Nile of what regional cooperation can achieve. It is a transformational initiative that will Basin Initiative (NBI) in 2001, which has fostered cooperation among the nations connect Ethiopia’s electrical grid with Kenya, create power-sharing between the through which the Nile runs - paving the way for potential investments in developing two countries, reduce energy costs, promote sustainable and renewable power water resources. generation, better protect the region’s environment, and pave the way for more dynamic regional cooperation between the countries of East Africa. This is indeed The underlying principle of the program is that integrated planning and the manage- a major phase in the establishment of the infrastructure platform, which will sup- ment of water and land resources when synergized with critical investments, institu- port the Eastern Africa power market under the Eastern Africa Power Pool (EAPP). tional development, environment management, and the facilitation of private sector development, can provide an effective framework to promote economic growth. Ethiopia has the potential to become the electricity generation hub of Eastern Af- The new line is bidirectional. This means Ethiopia will rica. The country is bestowed with abundant hydro-electric generation potential as well as several renewable energy sources such as geothermal, wind and solar. through access to Kenyan energy at times of peak Tana Beles Integrated Water Resources Development Projects from additional jobs created by construction and in- As part of the NBI, the World Bank funded Tana Beles project is developing enabling institutions and investments for integrated planning and management, to stallation activities. optimize social, environmental, and economic opportunities in the Tana and Beles Sub-basins, thereby accelerating sustainable growth. The East Africa Agriculture Productivity Project (EAAP), The World Bank is also supporting regional collaboration through the East Africa Agriculture Productivity Program (EAAP), which enhances regional specialization in agricultural research and facilitates increased sharing of agricultural technologies across national boundaries, by upgrading existing national agricultural research in- about 83,000 ha, stitutions in Ethiopia, Kenya, Tanzania and Uganda into Regional Centers of Excel- lence. and 745 hectares of gully lands treated with improved soil and water The Program is: conservation measures, training, community warning infrastructure and shelters developed Regional Energy. Helping Ethiopia to Enhance its Resilience and Reduce its Vulnerability - Improving the Delivery of Social Services Enhancing the Quality of Education The rapid expansion of Ethiopia’s education system has not yet been The World Bank’s support for the education sector—including through matched by equivalent improvements in the quality of education delivered the General Education Quality Improvement Program (GEQIP) and the in some educational sub-sectors. GoE’s vision for education develop- Protection of Basic Services program—has helped Ethiopia expand ac- ment therefore gives high priority to improving quality at all levels. To this cess to quality general primary education over the last few years. GE- QIP has been supplying better educational materials, providing teacher subsequent expansion in the sector. training, school improvement programs, school grants, and building the capacity of education management at all levels. 39 Results… The World Bank is supporting im- A reduction of the gender gap for schooling. The gender parity index, the ratio of girls to boys in primary enrolment rates, increased from 0.74 provements in teaching and learning per cent in 2001/02 to 0.95 per cent in 2001/12, conditions in primary and secondary 17 million in 2011/12. As a result, the primary net enrolment rate institutions, as well as management increased from 52.2 per cent to 85.4 per cent, planning and budget capacity of the reached 36.9 per cent in 2011/12 (double the level of 2001/02), Ministry of Education and Regional has increased from 42 and 18.7 per cent in 2001/02 to 73.8 and Education Bureaus. 52.1 per cent respectively in 2011/12, learning assessment has increased from 20 per cent to 29 per cent for Grade 1-4 and from 10 per cent to 18 per cent for Grade 5 to 8 between 2006/07 and 2010/11. “10-year-old Senait who lives in Sele Kebele in the Oromia region is - ject. she says with bright eyes. Going to school has become the highlight of her life. The ‘older’ classroom she studied in lacked proper light and ventilation. She was excited to start studying in her new class- room and was eagerly awaiting the completion of the facilities there. As a nation- wide program, PBS has helped improve the lives of more than 70 million rural Ethiopians: not least among them are children like Senait who now have access to services previously denied to them. 40 Since 2006, the PBS program has helped hire over Empowering Citizens, Increasing Accountability, and Improving Service Delivery The Promoting Basic Services Program EFFICIENCY TRANSPARENCY ACCOUNTABILITY 45 The Promoting Basic Services Program (formerly the Protection of Basic Services Program) is a na- tionwide program that contributes to: expanding nationwide access to quality basic services such as education, health, water supply, sanitation, rural roads and agricultural extension services. It funds block (district) level. - tions in implementing social accountability activities. The PBS has greatly strengthened Ethiopia’s deliv- ery of public services, by enabling Woreda’s to: Results… from 66:1 in 2005/05 to 51:1 in 2011/12 for primary education, 39.5 million in 2010 to nearly 46 million in 2011/12, under PBS, 46 Social Accountability Since 2006, under the PBS, the World Bank along with other development partners has been supporting GoE’s efforts to promote and increase social accountability to improve the delivery of services and make them relevant to peoples’ needs. The initiative has empowered ordinary citi- zens to assess the quality, adequacy and effectiveness of basic services and to voice their needs and preferences regarding the provision of these services. This has made it possible for citizens to hold policy-makers and service providers more accountable for their performance, transforming the lives of ordinary Ethiopians. center that serves the Debre Libanos woreda - consisting of about 50,000 people. On a very busy day, the in the services provided at the health center, the number of visitors has more than doubled from 200 cases per month two years ago to over 500 visitors currently 48 Ensuring Food Security and Improving Livelihoods Results… Chronic food insecurity has been a salient feature of rural Ethiopia for many years. The major causes of food insecurity in Ethiopia include land PSNP degradation, recurrent drought, limited capacity to manage for risks, population pressure, and subsistence agricultural practices dominated by rain-fed farming and characterized by low inputs and low outputs. government to manage the risks of recurrent drought. (The effects of the In 2005, GoE, the World Bank, and other development partners agreed 2011 drought crisis in the Horn of on the introduction of a predictable, long term and developmental Safety Africa were mitigated in Ethiopia to a Net, as an appropriate mechanism to address these challenges and great extent due to the presence break the cycle of annual emergency appeals. The Ethiopia Productive of the PSNP), Safety Net Program (PSNP) is currently the largest safety net program in Sub-Saharan Africa. PSNP provides support to over 8 million chronically food insecure rural citizens (about 10 per cent of the population) in 319 insecure people with regular and districts nationwide. predictable transfers, of 32 days for participating households, Emahoy Belaynesh is one of the 8 million undertaken every year, has rehabilitated degraded land and created productive a grant under direct support since she cannot participate in public works. She feeder roads, and small-scale irrigation became a nun after her husbands’ death systems, and is raising her 3 children and one grandchild. With part of her grant, she bought seeds of several varieties of fruits nutrition levels of children less than and vegetables and planted them in her garden. Among other things, she grows lactating women, corn, yams, carrots, coffee, oranges, and passion-fruit. She is also involved in beekeeping. “When my husband died I kilometers new road, maintained 70,000 had no source of i - kilometers of road, and constructed over 15,000 springs and wells, - and 400 health posts were improved. Emahoy Belaynesh, 50 Expanding Ethiopia’s Impressive Successes in Health The World Bank is respond- ing to Ethiopia’s current health needs through a Pro- gram for Results (PforR) operation, which disburses funds upon the delivery of key results that are known to contribute to the achieve- ment of health MDGs. Over the past few years, Ethiopia has made good progress in the health sector and is on track to reach the Millennium De- velopment Goals for child health, HIV/AIDS and malaria. The Results… Key results against which PforR funds will be disbursed in- per 1,000 live births in 2005 to 88 in 2011. While the current clude: level of child mortality is still high, the rate of progress in the country has been encouragingly rapid. health workers, However, in order to achieve the remaining Health MDGs Ethiopia still has many challenges to overcome, including the high maternal mortality rate and improving access to quality vaccine-preventable diseases (diphtheria, tetanus, health care services for the majority of its citizens. whooping cough, hepatitis B and haemophilus The World Bank along with several development partners is supporting Ethiopia to strengthen its health system and ramp up the delivery of essential lifesaving health services. receiving antenatal care visits, Together, they are providing harmonized support to the cur- rent health sector development program which is estimated to cost about US$ 4.5 billion including a GoE contribution of reporting by health centers and more transparent US$ 1.5 billion. procurement. “ ” Ato Ahmed Shide, 52 Supporting Comprehensive Social Protection and Risk Management SUSTAINABLE LIVELIHOODS ENHANCEMENT Reaching the under-served: Supporting the Needs of Pastoral Communities As a community, pastoralists have been economically, socially and politi- The World Bank through the Pastoral Community Development project cally marginalized due to inadequate attention from policy makers in the which will soon be in its third phase has helped to empower pastoralist PASTORAL RISK MANAGEMENT communities to better manage local development in partnership with lo- last ten years, pastoralists remain under-served in terms of basic social cal governments. It promotes a community-driven process for expand- services. ing public services, builds grassroots institutions, and, has piloted com- munity-based pastoral risk management mechanisms. Among the key development challenges in these areas are: Results… processes, pastoral woredas, KNOWLEDGE MANAGEMENT AND PARTICIPATORY LEARNING “ poorly developed support services, and uneven pastoralists (70 per cent women) have become members of the 131 Pastoral Saving and Credit Cooperatives, PCDP represents a great opportunity for access to markets, - ” system and the responsiveness of disaster mitigation and ment in pastoral and agro-pastoral com- recurring droughts exacerbated by climate change, and contingency funds (weekly and monthly early warning reports munities in Ethiopia. increasing competition for natural resource use, and are being disseminating to all concerned stakeholders in pastoral and agro-pastoral woredas), Assaye Legesse, World Bank Task Team Leader for scale development schemes. PCDPII. processes and local development decision making. 56 Ensuring Sustainable Land Management Results… Ethiopia is one of the countries in Sub-Saharan Africa most seriously threatened by land degrada- successfully treated and managed, national strategies. Land degradation costs Ethiopia 2-3 per cent of its gross domestic product (GDP) each year—a run-off, major hit in a country where agriculture accounts for nearly 50 per cent of GDP, 90 per cent of ex- port revenue, and is a source of livelihood and revenue for more than 85 per cent of the country’s population. more than 500 kilometers of terraces, The World Bank is helping Ethiopia to address some of these challenges through several projects including the Sustainable Land Management Project. farmlands to stabilize bunds and gullies, homesteads, fertilizing about 53,000 ha, - seedlings by about 600 households, Great Rift Valley. parcels, per cent are female headed) providing strengthened land tenure security for smallholder farmers. 58 Promoting Good Governance and State Building Spanning nearly a decade, Ethiopia’s transformation agenda has in capacity have hampered the state’s ability to ensure effective poverty reduction and democratic development through respon- sive service delivery, citizen empowerment, and good govern- ance. Through the Public Sector Capacity Building Program, the World - ness of public service delivery at the federal, regional, and local level, as well as to empower citizens to participate more effectively in shaping their own development, by promoting good govern- ance and accountability. Results… The project has led to considerable improvement in government capabilities to: doubled in real terms, service delivery to districts has been scaled up from four regions to all 11, nation, in the preparation and execution of plans, service proclamation to ensure equal opportunities for women to enter the civil service. As a result, there was a 114 per cent increase in female recruitment between 2004 and 2010, compared to only 42 per cent between 1998 and 2004. 60 Transforming Cities, Creating Jobs, Improving Livelihoods through the Urban Local Government Development Project (ULGDP) Ethiopia’s urban areas are among the fastest growing in Africa, with populations rising at about 4 per cent per year. By 2020, cities are projected to be home to 30 per cent of Ethiopia’s population. Results … Through its Urban Local Government Development Project (UL- GDP) the World Bank helps to strengthen the capacity of urban local governments to plan, deliver, operate and maintain priority es, representing some 42 per cent of Ethiopia’s urban municipal infrastructure and services. residents, Citizens appreciate the cob- achieved 75 per cent of their annual revenue targets and blestone roads, bridges, and doubled the number of citizens’ groups participating in planning forums since the start of the project, drainage systems so much, public on city functions, including the budget, planned that they are now contributing etc, their own funds to construct more. women, youth and people with disabilities.. The project has helped various cities to better plan and deliver pri- City governments now have meaningful consultations with citizens about their needs and plan for them accordingly. Previously cities did not systematically consult with citizens. “ said an Adigrat citizen. “We needed better roads and drainage, our - 61 ” By the end of 2011, some 95,000 people were Creating jobs for local residents engaged in cobblestone and other infrastruc- cities. 62 Aid harmonization and Partnership The World Bank has taken the lead in DFID to Ethiopia has been increasing steadily since 2000. A large number of donors are active in Ethiopia, with ex- developing a set of multi-donor pro- ternal aid averaging more than US$3.8billion per year grams to: between 2008 and 2011. Both GoE and the majority of international partners are keen to deepen the harmoniza- tion process in the spirit of the Paris Declaration (2005) Accra Agenda for Action (2008), and the Busan Partner- ship for Effective Development Co-operation (2011). Ethi- opia is a pilot country for the Organization for Economic Co-operation and Development (OECD), Development Assistance Committee (DAC) harmonization agenda, and for the European Union’s initiative on donor division of Denmark Embassy labor. The World Bank, with the United Nations Development Programme (UNDP) and African Development Bank, is These instruments allow for large-scale leveraging of In- one of the rotating co-chairs of the Development Assis- ternational Development Association (IDA) support. Such tance Group (DAG), the main forum for donor coordina- approaches are used in key interventions. tion in Ethiopia. A bilateral donor is the other co-chair. Through the DAG, efforts are under way to make strong For more traditional projects, such as roads, action plans progress on the implementation of commitments made are being implemented to harmonize implementation n in Paris, Accra and Busan, including joint economic and procedures (e.g., common environmental assessment operatio sector work. A procedures). CID Co pment African Development Bank D CI AE Develo European Commission Austria AusAid UNFPA l gium Embassy of Finland Be f yo ass Japan International Cooperation Agency (JICA) Emb oope ration ta li a n C I USAID SIDA Embassy of France Irish Aid German Embassy-German Development Cooperation Netherlands Embassy as sy Turkish Int Embassy of Norway /NORAD mb ernational C nE ooperation a Agency (T Indi ICA) ary Fund ILO International Monet e (UNDP) t Programm UN Developmen Way Forward The World Bank will continue to address the deep and complex issues of supporting bottom-up initiatives that: Foster Economic Growth; Reduce Vulnerability; Foster Improved Governance; Improve Access to and 69 65 66 Life expectancy at birth (years) 59 55 59 Infant mortality (per 1,000 live births) 52 69 63 Child malnutrition (% of children under 5) 29 21 23 Access to improved water source Access to an improved water source (% of population) 44 61 65 Literacy (% of population age 15+) 39 63 63 Gross primary enrollment (% of school-age population) 106 100 105 Ethiopia Low-income group Male 111 103 108 Ethiopia at a Glance... Female 101 96 103 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1991 2001 2010 2011 Economic ratios* . GDP (US$ billions) 13.4 8.0 26.6 30.2 Gross capital formation/GDP 11.1 21.5 24.7 25.5 Trade Exports of goods and services/GDP 4.1 12.0 13.6 16.8 Gross domestic savings/GDP 6.0 9.7 5.3 10.6 Gross national savings/GDP 9.1 18.7 19.1 24.3 Ethiopia at a glance 3/17/13 Current account balance/GDP Interest payments/GDP Total debt/GDP -2.0 0.3 68.4 -2.9 0.8 71.5 -11.7 0.2 27.6 -7.5 0.3 28.4 Domestic savings Capital Sub- Total debt service/exports 25.2 18.2 5.1 8.2 POVERTY and SOCIAL Saharan Low- Present value of debt/GDP .. .. .. 14.7 Development diamond* Present value of debt/exports .. .. .. 102.6 Ethiopia Africa income Indebtedness 2011 1991-01 2001-11 2010 2011 2011-15 Population, mid-year (millions) 84.7 875 817 Life expectancy (average annual growth) GNI per capita (Atlas method, US$) 370 1,258 571 GDP 4.8 9.3 9.9 7.3 .. GNI (Atlas method, US$ billions) 31.0 1,101 466 Ethiopia Low-income group GDP per capita 1.7 6.8 7.6 5.0 .. Average annual growth, 2005-11 Exports of goods and services 9.6 7.6 0.3 2.7 .. Population (%) 2.2 2.5 2.1 GNI Gross Labor force (%) 3.1 2.8 2.6 per primary STRUCTURE of the ECONOMY Most recent estimate (latest year available, 2005-11) capita enrollment 1991 2001 2010 2011 Growth of capital and GDP (%) Poverty (% of population below national poverty line) 30 .. .. (% of GDP) 40 Urban population (% of total population) 17 36 28 Agriculture 64.1 47.7 46.7 46.4 30 Life expectancy at birth (years) 59 55 59 Industry 8.7 13.0 10.3 10.5 20 Infant mortality (per 1,000 live births) 52 69 63 Manufacturing 3.0 5.7 3.9 3.6 10 Child malnutrition (% of children under 5) 29 21 23 Services 27.3 39.3 43.0 43.1 0 Access to improved water source -10 06 07 08 09 10 11 Access to an improved water source (% of population) 44 61 65 Household final consumption expenditure 83.0 75.6 86.1 81.4 Literacy (% of population age 15+) 39 63 63 General gov't final consumption expenditure 11.0 14.6 8.6 8.1 GCF GDP Gross primary enrollment (% of school-age population) 106 100 105 Imports of goods and services 9.2 23.7 33.0 31.8 Ethiopia Low-income group Male 111 103 108 Female 101 96 103 1991-01 2001-11 2010 2011 Growth of exports and imports (%) KEY ECONOMIC RATIOS and LONG-TERM TRENDS (average annual growth) 40 Agriculture 2.8 7.5 5.1 5.2 1991 2001 2010 2011 Economic ratios* 30 Industry 6.0 9.6 8.1 11.0 20 GDP (US$ billions) 13.4 8.0 26.6 30.2 Manufacturing 6.8 8.4 9.0 8.2 10 Gross capital formation/GDP 11.1 21.5 24.7 25.5 Services 6.8 11.5 10.8 8.6 Trade 0 Exports of goods and services/GDP 4.1 12.0 13.6 16.8 Household final consumption expenditure 2.7 12.1 8.3 4.0 -10 06 07 08 09 10 11 Gross domestic savings/GDP 6.0 9.7 5.3 10.6 General gov't final consumption expenditure 13.5 2.3 19.6 -0.8 Gross national savings/GDP 9.1 18.7 19.1 24.3 Gross capital formation 8.4 12.2 5.4 5.1 Exports Imports Current account balance/GDP -2.0 -2.9 -11.7 -7.5 Imports of goods and services 6.2 15.7 1.9 -5.5 Domestic Capital Interest payments/GDP 0.3 0.8 0.2 0.3 savings Total debt/GDP 68.4 71.5 27.6 28.4 Note: 2011 data are preliminary estimates. Total debt service/exports 25.2 18.2 5.1 8.2 This table was produced from the Development Economics LDB database. Present value of debt/GDP .. .. .. 14.7 * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will Present value of debt/exports .. .. .. 102.6 Indebtedness be incomplete. 1991-01 2001-11 2010 2011 2011-15 (average annual growth) GDP 4.8 9.3 9.9 7.3 .. Ethiopia Low-income group GDP per capita 1.7 6.8 7.6 5.0 .. Exports of goods and services 9.6 7.6 0.3 2.7 .. STRUCTURE of the ECONOMY 1991 2001 2010 2011 Growth of capital and GDP (%) (% of GDP) 40 Agriculture 64.1 47.7 46.7 46.4 30 Industry 8.7 13.0 10.3 10.5 20 Manufacturing 3.0 5.7 3.9 3.6 10 Services 27.3 39.3 43.0 43.1 0 -10 06 07 08 09 10 11 Household final consumption expenditure 83.0 75.6 86.1 81.4 General gov't final consumption expenditure 11.0 14.6 8.6 8.1 GCF GDP Imports of goods and services 9.2 23.7 33.0 31.8 1991-01 2001-11 2010 2011 Growth of exports and imports (%) (average annual growth) 40 Agriculture 2.8 7.5 5.1 5.2 67 Industry 6.0 9.6 8.1 11.0 30 20 Manufacturing 6.8 8.4 9.0 8.2 10 Services 6.8 11.5 10.8 8.6 0 Total exports (fob) 276 463 85 87 10,000 Coffee 130 182 428 453 8,000 Pulses and oil seeds 9 41 435 450 Manufactures 66 86 143 173 6,000 Total imports (cif) 1,029 1,555 8,632 8,750 4,000 Food 152 110 495 250 2,000 Fuel and energy 102 292 1,444 1,665 Capital goods 475 487 3,683 3,503 0 05 06 07 08 09 10 11 Export price index (2000=100) 114 95 142 140 Import price index (2000=100) 83 98 135 139 Exports Imports Terms of trade (2000=100) 137 97 105 100 BALANCE of PAYMENTS 1991 2001 2010 2011 Current account balance to GDP (%) (US$ millions) Exports of goods and services 543 979 3,598 4,293 5 Imports of goods and services 1,226 1,934 10,240 10,594 Ethiopia Resource balance -683 -955 -6,642 -6,301 0 05 06 07 08 09 10 11 Net income -73 -51 -212 -190 -5 PRICES and GOVERNMENT FINANCE Net current transfers 495 775 3,754 4,217 1991 2001 2010 2011 Inflation (%) Current account balance -261 -232 -3,099 -2,274 -10 Domestic prices 40 (% change) Financing items (net) 346 210 3,070 2,628 -15 Consumer prices 20.9 -5.2 2.8 18.1 30 Changes in net reserves -85 22 30 -354 Implicit GDP deflator 19.1 -5.8 3.9 24.4 20 Memo: Government finance 10 Reserves including gold (US$ millions) 106 337 1,850 2,266 (% of GDP, includes current grants) 0 Conversion rate (DEC, local/US$) 2.1 8.5 14.4 16.9 Current revenue 10.9 18.7 15.0 13.5 06 07 08 09 10 11 Current budget balance -2.5 1.7 6.2 5.7 GDP deflator CPI EXTERNAL DEBT and RESOURCE FLOWS Overall surplus/deficit -6.9 -5.1 0.0 0.0 1991 2001 2010 2011 Composition of 2011 debt (US$ mill.) (US$ millions) TRADE Total debt outstanding and disbursed 9,134 5,752 7,347 8,597 1991 2001 2010 2011 Export and import levels (US$ mill.) IBRD 20 0 0 0 G: 175 (US$ millions) IDA 883 2,150 1,804 2,208 Total exports (fob) 276 463 85 87 10,000 B: 2,208 Coffee 130 182 428 453 Total debt service 138 183 184 353 F: 2,259 8,000 Pulses and oil seeds 9 41 435 450 IBRD 9 0 0 0 Manufactures 66 86 143 173 6,000 IDA 11 36 15 23 Total imports (cif) 1,029 1,555 8,632 8,750 4,000 Composition of net resource flows Food 152 110 495 250 Fuel and energy 102 292 1,444 1,665 2,000 Official grants 782 449 2,628 .. C: 484 Capital goods 475 487 3,683 3,503 0 Official creditors 145 434 983 1,069 05 06 07 08 09 10 11 Private creditors 212 -10 647 358 Export price index (2000=100) 114 95 142 140 Foreign direct investment (net inflows) .. 349 288 627 D: 1,198 Import price index (2000=100) 83 98 135 139 Exports Imports Portfolio equity (net inflows) 0 0 0 0 E: 2,273 Terms of trade (2000=100) 137 97 105 100 World Bank program Commitments 0 201 518 383 BALANCE of PAYMENTS A - IBRD E - Bilateral 1991 2001 2010 2011 Disbursements 58 455 389 430 B - IDA D - Other multilateral F - Private Current account balance to GDP (%) Principal repayments 12 22 4 8 (US$ millions) C - IMF G - Short-term Exports of goods and services 543 979 3,598 4,293 5 Net flows 46 433 385 422 Imports of goods and services 1,226 1,934 10,240 10,594 Interest payments 8 14 11 15 Resource balance -683 -955 -6,642 -6,301 0 Net transfers 38 419 373 406 05 06 07 08 09 10 11 Net income -73 -51 -212 -190 -5 Net current transfers 495 775 3,754 4,217 Note: This table was produced from the Development Economics LDB database. 3/17/13 Current account balance -261 -232 -3,099 -2,274 -10 Financing items (net) 346 210 3,070 2,628 -15 Changes in net reserves -85 22 30 -354 Memo: Reserves including gold (US$ millions) 106 337 1,850 2,266 Conversion rate (DEC, local/US$) 2.1 8.5 14.4 16.9 EXTERNAL DEBT and RESOURCE FLOWS 1991 2001 2010 2011 Composition of 2011 debt (US$ mill.) (US$ millions) Total debt outstanding and disbursed 9,134 5,752 7,347 8,597 IBRD 20 0 0 0 G: 175 IDA 883 2,150 1,804 2,208 B: 2,208 Total debt service 138 183 184 353 F: 2,259 IBRD 9 0 0 0 IDA 11 36 15 23 Composition of net resource flows Official grants 782 449 2,628 .. C: 484 Official creditors 145 434 983 1,069 Private creditors 212 -10 647 358 Foreign direct investment (net inflows) .. 349 288 627 D: 1,198 Portfolio equity (net inflows) 0 0 0 0 E: 2,273 World Bank program Commitments 0 201 518 383 A - IBRD E - Bilateral Disbursements 58 455 389 430 B - IDA D - Other multilateral F - Private Principal repayments 12 22 4 8 C - IMF G - Short-term Net flows 46 433 385 422 68 Interest payments 8 14 11 15 Net transfers 38 419 373 406 Map of Projects 69 Reducing Poverty Empowering Citizens Improving Livelihoods Increasing Competitiveness w w w. w o r l d b a n k . o r g / e t