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Ethiopia: World Bank Provides an Additional US$215 Million for Basic Services

December 20, 2007

WASHINGTON, December 20, 2007 – The World Bank's Board of Executive Directors today approved a US$215 million International Development Association (IDA) grant to the Government of Ethiopia to continue protecting and promoting the delivery of basic services by sub-national governments while deepening transparency and local accountability in service delivery. The current financing supplements the US$215 million already committed over the past 18 months of implementation of the Ethiopia Protection of Basic Services (PBS) Program, bringing the total IDA financing of the PBS project to US$430 million.

The project has the following components:

Component 1 – Basic-Services Program, comprises two sub-components:

Subcomponent 1(a)—Promoting the Delivery of Basic Services by Sub-national governments—will continue to support the delivery of basic services (in health, education, agriculture and natural resources, including water) provided by regional and local governments.

Subcomponent 1(b)—Pilot Local Investment Grant (LIG)—will support the scaling-up of the Program’s impact on local service delivery. This new subcomponent will support the introduction, on a pilot basis, of a Federal Specific Purpose Grant (SPG) to regions to be used exclusively for capital investment implemented by local governments in support of the delivery of basic services.

Component 2—Promoting the Health Millennium Development Goals—will continue the thrust of the PBS Project towards accelerating and sustaining malaria control, reducing infant mortality through vaccines, improving the delivery of primary health services, strengthening of family planning, as well as capacity building and strengthening the health system.

Component 3—Strengthening Governance Systems on Financial Transparency and Accountability—will continue to support activities at the Region/City Administrations, local government, and community levels to enhance transparency around public budget procedures and foster broad engagement of citizen representative groups and citizens more broadly on public budget processes and public service delivery. This component will also continue to support various institutional capacity building activities, support to improving the public financial management system, monitoring and evaluation activities, and an assessment of the technical quality of infrastructure for the new Pilot LIG Subcomponent.

Component 4—Social Accountability—supports capacity building for, and the piloting of, selected approaches to strengthen voice and client power of citizens in the context of decentralized service delivery, and to also build the capacity of citizens to engage in public budgeting processes. This component is financed by a Multi-Donor Trust Fund administered by the World Bank and provides direct financing to civil society organizations using a non-government Management entity.

The Additional Financing of US$215 million would address the financing gap largely associated with the completion of core activities under the existing Component 1 – Promoting the Delivery of Basic Services by Sub-national governments, and Component 2 – Promoting the Health Millennium Development Goal (MDG), of the Project.

In approving the additional financing, the World Bank’s Executive Board recognized and appreciated the impressive impact the PBS is having on the expansion of basic services in Ethiopia, the strong commitment that the Government has demonstrated in expanding pro-poor public services, and this being a good example of result-focused donor harmonization in an area that is so central to achievement of the MDGs.

“The PBS is pushing the frontier in terms of improving service delivery on a large-scale and making it more accountable to the people,” said Kenichi Ohashi, the World Bank’s Country Director for Ethiopia and Sudan. “The challenges are significant but these are the building blocks for true local empowerment. The international community looks forward to a sustained national effort to reach the MDGs and to do it in a way which taps into the potential of local communities in making decisions that affect the lives of themselves and their children.”

In earmarking local government grants for essential services in health, education, agriculture and water, the Protection of Basic Services Program requires strict reporting on how funds are allocated and spent. The plan applies four tests: fairness, to ensure that services are disbursed without partisan or political bias; sound fiduciary management, to guarantee that resources support the intended goals; “additionality,” to ensure that the Ethiopian government’s ongoing funding of basic services isn’t reduced; and accountability, so that citizens are fully informed and allowed to participate in decisions affecting their access to critical services. Disbursements under the PBS program can be halted if there are significant shortcomings in meeting the four tests.

The PBS project is supported by a broad coalition of development partners including the African Development Bank (AfDB), Canadian International Development Agency (CIDA), Britain’s Department for International Development (DFID), the European Commission (EC), Irish Aid, Germany’s KfW, the Netherlands, and the World Bank. The development partners have contributed over US$800 million thus far via the original PBS, with additional financing of approximately US$375 million expected of which the World Bank is providing US$215 million. The Government and the international community have agreed that these additional funds will be utilized for the next year, during which time preparations will be launched to develop a successor to the PBS in support of decentralized service delivery for the medium-term.

Media Contacts
In Washington
Timothy Carrrington
Tel : (202) 473 8133
In Addis Ababa
Gelila Woodeneh
Tel : (251-1) 517 60 00