Despite Ethiopia’s strong economic growth since 2005, pockets of poverty and destitution persist. Ethiopia’s urban population has grown fast from a relatively low base. While poverty reduction in urban areas is increasing, and is likely to grow, poverty remains relatively high in small towns and in the capital, Addis Ababa, where one fifth of Ethiopia’s urban dwellers are located.
Continuing the strong record of poverty reduction in urban centers is central to poverty reduction in the whole country. However, until 2016 there were no social protection systems targeting the urban poor. One of the major causes of poverty in urban areas is the limited access to labor markets for the poor and less educated groups. Women face an even tougher challenge. Their participation in the labor market was 13 percentage points lower than their male counterparts in 2015 and 2016, due to domestic responsibilities and low educational attainment.
The Urban Productive Safety Net Project (UPSNP) is the first social protection project addressing the binding constraints faced by Ethiopia’s urban poor and one of the few in Sub-Saharan Africa. The project boosts financial inclusion, encourages savings, provides skills and a substantial grant to beneficiaries. As the first step toward a truly national urban safety net, UPSNP is a large-scale operation covering 11 cities. The program has put in place the following activities:
- A robust randomized evaluation providing empirical evidence on the impact of the project.
- Gender-sensitive programming through a results-based approach. For instance, public works are accompanied by mobile childcare and early learning facilities to encourage women’s participation in the project.
- Key behavioral change interventions, such as goal-setting tools and prompts for better and earlier business planning, to complement the overall project.
- A pilot program focusing on youth employment to leverage the potential of young people.
- Extensive analytical work on the role safety nets in supporting displaced populations.
As the first urban safety net in Ethiopia, UPSNP has made progress towards ensuring inclusive development outcomes for the country’s urban poor. As of September 2020, the project made progress in the following areas:
- Reached 600,000+ beneficiaries of whom 60 percent are women.
- Enabled the opening of bank accounts for all beneficiaries for the first time through a state-owned bank (Commercial Bank of Ethiopia). More than $11.3 million is saved in beneficiary bank accounts.
- Payed livelihood grants to up to 51,000 beneficiaries to start small businesses after completing skills and financial literacy training and supporting self-employment, which is one of the main pathways out of poverty.
- Linked more than 60,000 people to social services such as health insurance, education- and housing support.
- Contracted more than 45 non-governmental organizations to provide services for the economic and social integration of people living in street situations.
- Improved neighborhood quality through public works focusing on: enhancing urban greenery and tree planting; solid waste collection and removal; and promotion of urban agriculture.
- Developed the first management information system capturing data related to both urban and rural poor, which will serve as the overall monitoring system for safety nets in the country.
- Provided economic benefits such as better income, increased savings and improved mental well-being to beneficiaries and their families.
- Set up “COVID-adapted” delivery systems.
World Bank Group Contribution
International Development Association (IDA) provided $300 million of the total project cost of $450 million. The government of Ethiopia contributed the remaining $150 million. In addition, the Global Program on Forced Displacement Trust Fund contributed $300,000 while the Early Learning Partnership Trust Fund contributed $223,000. More recently, the Danish government contributed $1.5 million and have agreed to contribute additional $3 million to the multi-donor trust fund put in place to support COVID-19-related adaptations in the UPSNP.
The World Bank has established a strong partnership with the Ethiopian Federal Urban Job Creation and Food Security Agency, the Ministry of Urban Development and Construction, Ministry of Labor and Social Affairs, and the Agency for Refugee and Returnee Affairs. It engages with government counterparts through technical assistance and capacity building support to ensure the effective implementation of the project. Through the World Bank’s mediation and donor co-ordination, the United Nations Children’s Fund has helped operationalize the urban destitute component and supported a massive soap distribution and awareness-raising exercise among UPSNP beneficiaries in the wake of COVID-19.
Building on the success of UPSNP, the new Urban Productive Safety Net and Jobs project (UPSNJP) will expand the support by an additional $400 million in IDA financing, focusing on youth employment and the inclusion of host and refugee communities.
The UPSNJP provides a valuable platform for strengthening the linkages between the productive safety net and labor markets and constitutes the next generation of social protection and jobs policies. The project is the first, and possibly the only, safety net program designed to address multiple social and economic challenges in one program in Ethiopia.
Suleiman lives in the Gulele neighborhood of Addis Ababa. As part of the public works activities under the Urban Productive Safety Net Project, he was involved in cleaning up an area of a rubbish dump and preparing it as an urban vegetable garden. Although daily laborers like Suleiman have been hit hard by COVID-19, he can rely on the monthly safety net cash transfers from the project, while working as a repairman. But, household expenses and rent have increased during the pandemic. Therefore, he feels grateful for the vegetable garden, which provides an essential lifeline for him to feed his wife and three children.