The International Development Association (IDA) is Ethiopia’s largest provider of official development assistance. The IDA has committed over $7 billion to more than 60 projects in Ethiopia since 1991, most notably for the protection of basic services, productive safety nets, and roads. The Bank has worked to promote economic growth and address systemic poverty challenges across many sectors.
IDA’s support for the education sector—including through the General Education Quality Improvement Program (GEQIP) and the Protection of Basic Services program—has helped Ethiopia expand access to quality primary education over the last nine years. Total primary enrollment went from 8.1 million students attending primary school in 2001-2002, to 17 million in 2011-2012. There has also been a considerable reduction of the gender gap for schooling. The ratio of girls to boys in primary school increased from 74% in 2001–2002, to 90% in 2011–2012 in grades 1-4, and 58% to 96% in grades 5-8. The gross enrollment rate for secondary school (grades 9–10) stood at 36.9% in 2011–2012, about double the level of 2001–2002. Educational quality, as measured by grade 5 completion rates, has also improved from 42% in 2001–2002 to 73.8% in 2011–2012, and remains a major focus for the government, IDA and their partners, through both teacher training and supply of educational materials.
The expansion of general education has occurred at the same time as a major expansion of both technical and vocational education and higher education sub-sectors, which showed an annual average increment of 8.7% and 17.1% respectively between 2007–2008 and 2011–2012.
The Protection of Basic Services operations (1 and 2) have helped improve the provision of basic health service delivery at local level, through increased financing to district (woredas), by and large, for recurrent expenditures. There are now more primary health extension workers in place and medical facilities are better equipped. As a result, the child immunization rate increased from 70% in 2005 to 82% in 2011–2012, the percentage of births attended by trained health personnel increased from 9% in 2005 to 18.4% in 2009, and the percentage of pregnant women receiving iron and folate supplementation increased from 10 in 2004–2005 to 19% as of August 2009. In addition, as of 2011–2012, over 45.7 million long-lasting insecticide-treated malaria nets were purchased and distributed between helping to reduce new malaria cases.
Water and Sanitation
A number of operations have supported access to safe water sources and sanitation services, and better management of water resources. As a result, the share of citizens with access to safe drinking water increased from 53% in 2007–2008 to 71% in 2009–2010. The proportion of malfunctioning rural water facilities were reduced from 25% in 2007–2008 to 20% in 2009–2010. The proportion of households (both rural and urban) using latrines increased from 39% in 2007–2008 to 63% in 2009–2010.
Ethiopia’s development has been held back by a large infrastructure gap—it has one of the lowest road densities in Africa. IDA has invested over $1.8 billion since 1991 to address that challenge. A road sector development project supports the formulation of Ethiopia’s 10-year roads program by helping to establish a dedicated road fund for financing maintenance work and build capacity at many levels. Working in partnership with other donors -- including the European Commission, Germany, Japan, Nordic countries and the United Kingdom—IDA helped increase both the size and quality of Ethiopia’s road network. The network increased from under 20,000 kilometers of roads in 1991 to over 63,000 km in 2012, and road density has increased from 29 kilometers per 1000 square kilometer in 2001 to 57 kilometers per 1000 square kilometer by 2012.
Decentralization, first to the regional level in the 1990s, and now to the district (woreda) and sub-district (kebele) levels, is the centerpiece of Ethiopia’s strategy to improve responsiveness and flexibility in service delivery, increase local participation, and democratize decision-making. IDA is providing capacity-building support and financial support to local governments that is enabling them to deliver better quality basic services (health, education, water supply, etc.) to more of their citizens. Total basic services spending by regions and woredas have almost doubled, from $505 million in 2004-2005 to $1.149 million in 2008-2009. Accountability and fiduciary systems are also being strengthened in parallel to increased funding: last year quarterly audits took place for 95% of local governments nationwide (730 out of 770), and all regions and 90% of woredas posted their budgets in places accessible to the public.
The private sector in Ethiopia has remained small, largely informal, and concentrated in the service sector. One of the contributing factors to its small size is the fact that, despite some positive developments in industry and service sectors, Ethiopia has been a difficult place to do business, ranking 127th out of 185 economies according to Doing Business 2013. Access to finance and land have been identified as two critical constraints across sectors in Ethiopia according to the 2012 WB Enterprise Survey especially for small and medium size firms.
The Government of Ethiopia (GoE) has embarked on a series of reform programs to promote private sector development and with help from the Bank, has made some progress toward creating an enabling environment for private sector development.
The International Finance Corporation (IFC) supported the establishment of the Ethiopia Public-Private Consultative Forum which brings together representatives of the private sector in a structured dialogue with the government to improve the business environment. IDA-funded Private Sector Capacity Building Project provided support to many Ethiopian exporters to improve their competitiveness and productivity through the matching grant scheme under Ethiopia Competitiveness facility.
Recognizing the substantial economic impact of promoting female entrepreneurship, IDA provided ($50m) for the Women Entrepreneurship Development Program (WEDP), which aims to address the two most severe constraints to women-owned Medium and Small Enterprises (MSEs); lack of access to finance and of entrepreneurial and technical skills. Through provision of microfinance loans and other suitable financial instruments, WEDP aims to provide at least 17 thousand loans over five years. WEDP is expected to deliver entrepreneurship skills enhancement to 20 thousand women entrepreneurs providing them with training and support in most basic aspects of developing, running and growing a business.
The World Bank Group (WBG) is also actively supporting the implementation of the 2009 National Tourism Development Policy, through the Ethiopia Sustainable Tourism Development Program and policy dialogue supported by the recently published analysis “Ethiopia’s Tourism Sector: Strategic Paths to Competitiveness and Job Creation” (June 2012).
Still, more needs to be done to improve the investment climate and raise business confidence in Ethiopia. The Bank will continue supporting GoE to address the remaining challenges and enable the private sector to unleash its full potential.
Historically, there has been strong tension over water usage rights between upstream Nile riparian’s such as Ethiopia, which contributes 85% of Nile waters, and downstream countries such as Egypt, for which the river is the lifeblood of its economy. The Nile Basin Initiative (NBI) aims to foster cooperation among nations through which the Nile runs, and to find win-win opportunities for better management of the river. So far, the success of the NBI in building cooperation among Nile countries has opened the possibility for Ethiopia to draw on the waters of the Nile in new ways, and on a larger scale.
The Eastern Electricity Highway Project (EEHP) is an example of what regional cooperation can achieve. It is a transformational initiative that will connect Ethiopia’s electrical grid with Kenya, create power-sharing between the two countries, reduce energy costs, promote sustainable and renewable power generation, better protect the region’s environment, and pave the way for more dynamic regional cooperation between the countries of East Africa.
The project is financing construction of a cross-border power line, an interconnector, to be built according to strong social and environmental safeguards. Ethiopia will benefit through the sale of energy to Kenya, which faces severe power shortages, and is among the five African countries considered likely to achieve middle-income status in the next decade provided it can grow at 6% annually, significantly expand its electricity supply and improve its transport links. Both countries will benefit from additional jobs created by construction and installation activities.
Another example of World Bank support to regional collaboration is the East Africa Agriculture Productivity Project (EAAP), which enhances regional specialization in agricultural research and facilitates increased sharing of agricultural technologies across national boundaries, by upgrading existing national agricultural research institutions in Ethiopia, Kenya, Tanzania and Uganda into Regional Centers of Excellence.
Governance and Aid Effectiveness
After dialogue within the country and with development partners, including the World Bank, the government committed to a series of governance reforms in its current poverty reduction strategy. These reforms include: civil service and public sector capacity building; financial management; human rights and conflict prevention; democratic representation; access to information; the justice system; decentralization; and civil society participation. The Bank is supporting the government in implementing these reforms through programs that seek to protect basic services (PBS) and build capacity in the public sector, such as the Public Sector Capacity Building Program and the Urban Local Government Development Project. The Bank is taking a lead role in interventions to help strengthen key areas of economic governance—such as building institutional capacity for decentralization, supporting private sector growth, and improving transparency and accountability, including social accountability.
Last Updated: Apr 06, 2015