Pro-poor development: Ethiopia and partners' co-operation

International institutions, including the United Nations, the World Bank, the African Development Bank and IMF, have strongly encouraged countries to develop Poverty Reduction Strategy Papers (PRSP).Indeed, these are now widely considered a precondition for the provision of sustained financial support for development whether in the form of loans or grants. The institutions have also underlined the need for PRSPs to include annual progress reports on a country’s macroeconomic, structural and social policies and programs, to promote broad-based growth and reduce poverty as well as detail associated financing needs and sources of financing. They strongly recommend that the PRSPs start with a summary of current knowledge and a detailed analysis of a country’s poverty situation. They are also expected to include descriptions of any existing poverty reduction strategy and lay out a framework for producing a fully developed PRSP in a participatory process involving domestic stakeholders as well as development partners.

Overall, international institutions emphasize that preparation and implementation of poverty reduction programs and plans should be country-led and that governments should assume full leadership of the process. Equally, this should involve endorsement of poverty reduction initiatives by the highest political authorities and the involvement of relevant ministries, parliaments, local government administrations and citizens. There should also be a role for international partners including financial institutions and civil society as this will help to fine-tune the content and implementation of poverty reduction strategies and to integrate initiatives with core processes for policy making and program implementation, including annual budget cycles and medium-term expenditure structures. In sum, poverty reduction programs should be based on as full an understanding of poverty trends and determinants as possible, carrying out adequate poverty diagnosis by region, social groups, and gender. Any such programs and initiatives should put in place relevant and prioritized targets and indicators, and appropriate proposals for monitoring and evaluation. They should clearly define targets, the ways of implementation and subsequent costs, as well as prioritize public actions that are likely to reduce poverty and should follow a path of pro-poor growth that ensures social inclusion and equity and improves governance and public sector management.

Ethiopia has been implementing a series of pro-poor Poverty Reduction Strategy Papers (PRSP) taking into consideration these suggestions and possibilities proposed by international institutions since 1991. This was when the country began its broad spectrum of reform measures by simultaneously addressing the immediate need of economic recovery and reconstruction and the long-term structural problems of
underdevelopment.As a result, the last two decades have witnessed a tremendous growth in infrastructure development in Ethiopia. The adoption of the new constitution formed the basis for rapid and sustainable socio-economic growth, coupled with environmental protection, and it also addressed poverty reduction. National preparations and activities have been undertaken through an
institutional framework guided by a National Steering Group in consultations with relevant partners, such as the United Nations, the World Bank, the IMF and different INGOs and NGOs.

The country finalized a National Conservation Strategy (CSE) and adopted a Population Policy in 1993. This was followed by the adoption of a Program of Action in 1994, the same year in which an Environment Protection Authority was established. A full Environment Policy was devised in 1997 with the objective, among other things, to ensure that population, environmental and poverty eradication factors were integrated into sustainable development policies and programs. Subsequently, a series of medium to long-term plans and focused policies and strategies have been implemented. These include the Agriculture Development-Led Industrialization (ADLI) Strategy and various Poverty Reduction Strategy Papers of which the first was the Sustainable Development and Poverty Reduction Program (SDPRP) covering 2002/03-2004/05. This was followed by the Plan for Accelerated and Sustainable Development to End Poverty (PASDEP), implemented between the years 2005/6 – 2009/10. A Climate Resilient Green Economy strategy (CRGE), projecting a reduction in agriculture from 42% to 29%, was also developed in 2011.

The implementation of this series of poverty reduction programs has produced consistent and encouraging results. Impressive social developments and economic performances were achieved with the implementation of successful policies and programs together with appropriate institutional arrangements. On health, the total fertility rate declined to 4.8 in 2011 from 6.7 children per woman of
reproductive age a decade earlier; the number of women, aged 15-49, who received antenatal services increased from 17 to 34 percent, 2000-2011. Infant mortality fell from 97 deaths per 1,000 live births in 2000 to 59 per 1000 in 2011. Under-five mortality decreased from 166 deaths in 2000 to 88 deaths per 1,000 in 2011. Gender equality and empowerment of women also showed substantial progress. Life expectancy at birth has improved from 46.4 years in 1991 to 59.3 in 2011.

On poverty reduction, Ethiopia expects to achieve the Millennium Development Goals (MDGs) of halving extreme poverty and hunger by 2014/15. The country has maintained high consecutive growth rates for virtually all of the last decade. In 2012, the Ethiopian economy was estimated to be the third fastest growing economy in the world, and the fastest in Africa. Reports from the Ministry of Finance and Economic Development this year show that GDP has nearly tripled since 1992, with a corresponding reduction in per capita poverty from 56 percent in 1992 to 29.5 percent last year. Foreign investment has increased from less than US$820 million in 2007/08 to more than US$2 billion in the first half of the 2010/11 fiscal year. Ethiopia has also witnessed very encouraging improvements in terms of environmental development, provision of water, increase in forests, response to climate change, and biodiversity management.

In 2010, Ethiopia embarked up on its third Poverty Reduction Strategy Paper, the Growth and Transformation Plan (GTP) for the period 2010/11–2014/15. As might be expected, this has eradication of poverty and transformation at the center of its focus, and it is the most ambitious yet in incorporating sustainable development principles and objectives.The GTP’s objectives are identified as: (i) Attaining high growth within a stable macroeconomic framework; (ii) Achieving the MDGs in the social sector; and (iii) Establishing a stable democratic and developmental state. To accomplish these objectives, the GTP defined a number of strategic pillars. These are: to sustain rapid growth; emphasize agriculture; promote industrialization; invest in infrastructure; enhance social development; strengthen governance; and empower youth and women.

The GTP was prepared by government authorities in broad consultation with stakeholders and development partners, including officials from the United Nations, the World Bank and the IMF. The GTP was officially circulated to donors in the spring of 2011, and submitted to the International Development Association (IDA) and the International Monetary Fund (IMF). As the document indicates, consultations were led by senior officials and held country-wide, at the federal, regional and local levels over several months. Consultative meetings also took place with private sector participants, higher education institutions, civil society organization (including professional, religious, women, and youth associations), and development partners. The aim is that implementation will provide the fundamental basis for Ethiopia’s ambition to lift its per capita GDP from US$378 in 2010 (its now US$420) to US$ 1271 in 2025.

The GTP document explicitly states that “building a ‘Green Economy’ and ongoing implementation of environmental laws are among the key strategic directions to be pursued during the plan period”, and the economy strategy focuses on four initiatives for fast-track
implementation. These are: Exploitation of Ethiopia’s vast hydro-power potential; Large-scale promotion of advanced rural cooking
technologies; Efficiency improvements to the livestock value chain; and Reducing Emissions from Deforestation and Forest Degradation (REDD). Ethiopia, in fact, is undertaking a series of grand renewable energy projects that are in harmony with the UN Secretary General’s global initiative of “sustainable energy for all”. The Government believes that sustained political will, leadership and commitment by all stakeholders, are required to realize the 5-year GTP. It recognizes that sustainable development in Ethiopia can only be achieved if development is pursued in the social, economic and environmental sectors in a balanced manner and if the benefits accrued are equitably shared among all citizens of the country.

This exemplary initiative of a pro-poor green economy agenda is based on a well-thought-out and carefully planned strategy. It is something that Ethiopia confidently expects the international community to support. The first two years of the GTP have, as expected, continued to show double digit growth. The progress has attracted international attention as an example of development arising from the implementation of successful policy, strategy and poverty reduction programs focusing on pro-poor expenditure. It is gaining recognition, both internally and externally, as an example of ‘best practice’ that others might emulate.

One result of this is that Ethiopia’s bilateral and multilateral partners have begun to harmonize their development cooperation programs with the GTP with a view to maximizing aid productivity and efficiency. Convinced that their aid is being effectively used for intended purposes, most donors are prepared to increase both the amount and effectiveness of their aid. Recent reports by the United Nations have revealed that Ethiopia is among a handful of nations identified as capable of meeting all eight MDG goals by 2015. Processes and structures have been put into place which will help millions of Ethiopia’s poor break free from the past
inter-generational cycle of poverty. Investment in education and health sectors has gone up and human development indicators improved.

The United Nations Development Assistance Framework (UNDAF) 2012-2015 paper on Ethiopia has recently described the GTP as the “anchor on which the United Nations Development Assistance Framework (2012-2015) to Ethiopia is based”. It noted that apart from reducing poverty, providing consistent double digit growth, improving human development indicators and an encouraging consolidation of democracy and good governance, Ethiopia presents a real opportunity for pulling its entire population out of poverty and “standing up as a lesson and model for other Least Developing Countries”. It said the country’s young democracy, having experienced consistent economic success over the past decade “is bolder and braver”, wanting to push all out for growth and prosperity through some very ambitious strategies and plans. It added that the UNDAF Ethiopia 2012-2015 is aligned and harmonized with the current new national development strategies, coming at a critical time for Ethiopia “as it undergoes a major strategic shift to embark on a transformational growth trajectory aimed at not only lifting the millions of poor people out of poverty but placing it strongly on the path to become a middle income country by 2025″. The convergence between Ethiopia, the UN and development partners around the MDGs and the GTP have provided the organizing principle for UNDAF (2012-2015).

A Mission from the International Monetary Fund visited Addis Ababa (May 30th -June 13th) to conduct discussions for its 2012 evaluation. In a subsequent statement it said: “The Ethiopian economy continues to grow at a robust pace, poverty continues to fall, and inflation, while still high, has been declining. The expansion in economic activity has been supported by robust export growth and public enterprise investments. Tight monetary and fiscal policies have contributed to the deceleration of inflation….[and] increased domestic credit to public enterprises has been providing strong fiscal impulse”. The World Bank’s recent report on Ethiopia also noted that Ethiopia’s GTP “strategic goals are consistent with the Bank’s Strategy in Africa to promote competitiveness and employment; reduce vulnerability; and enhance governance and public sector capacity”.

In fact, international development support to the country has continued at an encouraging pace, and a case in point were the recent interest-free loan agreements worth of US$1.15 billion dollars (18.02 billion birr) signed between Ethiopian and the World Bank. Of this US$600 million (10.6 billion birr) will be used to finance projects providing for potable water, education and health facilities for low income-earning citizens. The remaining US$415 million (7.39 billion birr) will be allocated to finance five road projects underway in different parts of the country. The Finance and Economic Development State Minister, Ahmed Shide, said at the signing that the third round Public Basic Services (PBS) program would be instrumental to bringing success for the five year Growth and Transformation Plan and ensure economic benefits for the public through expansion of public services and roads. The PBS program which started 6 years ago has involved the training of more than 100,000 primary school teachers, 38,000 health extension workers and 45,000 agriculture extension workers at national level. World Bank Country Director for Ethiopia, Guang Z. Chen, World Bank Country Director for Ethiopia, noted that the “World Bank’s decision to give the loans takes into account Ethiopia’s impressive performance in effective utilization of loans in providing basic public services “.

The Bank released the credits on the basis of its recently approved Country Partnership Strategy for Ethiopia. This is targeted towards enhancing the access of services to poor people and to enhance the country’s infrastructural development plans. It is worth noting that the World Bank and other donors have been prepared to continue with these valuable and highly worthwhile policies despite suggestions by some self-appointed international advocacy groups and individuals that development assistance to Ethiopia should be stopped or seriously decreased. Human Rights Watch and others have criticized Ethiopia’s partners for cooperation on pro-poor strategy and developments, making highly dubious, ill-supported and frequently fabricated accusations of misuse of aid or human rights violations. They have even claimed that giving any form of support to Ethiopia amounts to supporting human rights abuses.

In fact, misuse of aid is virtually impossible as aid money is administered in such a way to ensure the full implementation of the targeted goals for pro-poor action jointly developed by donors and the Government of Ethiopia. Independent investigations have examined and dismissed these fraudulent accusations, suggesting that the real aim is politically motivated, in an attempt to blacken the image of Ethiopia and deprive the country of external development support. The purpose appears to have been an effort, orchestrated by external opposition forces, to block funding, hoping to use the possible impact for their own political aspirations.

Despite all such efforts, the Government of Ethiopia has made it very clear it will continue to work with the full and active participation of all stakeholders and peoples, and in collaboration with development partners, to demonstrate its commitments to achieve the GTP targets and MDG Goals. It will continue the present emphasis on development, and its active and positive role in working for regional security and stability. The Government has made it clear it will rely mainly on the resources of growing domestic savings to undertake its major projects, but it will also continue to look for increased external support for the expanding pro-poor development measures. It has a strong belief that any fabricated hostile accusations cannot and will not be used as an excuse by development partners to limit their growing support and engagement in Ethiopia’s pro-poor development, or to impose conditionality on assistance. Nor will it be used as a pretext for failure to fulfill pledges and commitments of development support. The consistent support of the World Bank and of other partners has proved to Ethiopia that development partners focus on the reality on the ground rather than on unsupported and fabricated allegations made from a distance.
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* Originally published on MFA.gov.et – on Oct. 2012 issue, titled “Misguided Pro-poor development: Ethiopia and partners’ co-operation”. Re-published here with a permission to do so.

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