In many parts of the world, International Financial Institutions (IFIs) play a major role in the social and economic development programs of nations with developing or transitional economies. This role includes advising on development projects, funding them and assisting in their implementation.
International finance is an important tool to find the exchange rates, compare inflation rates, get an idea about investing in international debt securities, ascertain the economic status of other countries and judge the foreign markets.
Though, Ethiopia has been among the fastest growing countries in the world (at an average of 10 percent per year), it has been one of the receiver of financial support from the IFIs for a number of reasons.
It seems essential to point out two or three cases that drive the demanding of the financial support in the case of Ethiopia. Almost everyone knows that a reform wind was blowing in Ethiopia turning new way policy and systems to put in place. The reforms were welcomed by the international community and confirmed to supply financial support but due to Covid-19 pandemic and the TPLF induced war in northern part of the country and the famine have exposed the nation to a number of challenges.
But, when we look at the recent day’s activities in relation to the international financial support confirmation, The World Bank has approved 300 million USD grant for the Response-Recovery-Resilience for Conflict-Affected Communities in Ethiopia Project.
In its press release, the Bank said the International Development Association (IDA) grant has a national geographic scope that initially prioritizes support to the Afar, Amhara, Benishangul-Gumuz, Oromia, and Tigray regions that have been highly impacted by the war and host large numbers of Internally Displaced Peoples (IDPs).
According to the press release, the project will also support efforts to address the emergency needs of communities, rehabilitate/recover infrastructure destroyed by conflict, and increase community resilience to the impacts of conflict in a sustainable manner.
Specifically, the project will help to improve access to basic services and rebuild climate-resilient infrastructure prioritized by communities.
To ensure rapid and efficient support that is adapted to local contexts, it will be implemented by federal, regional, and community-based organizations. It will also be implemented by independent third-party entities, particularly in high-risk areas with ongoing conflict, it was learned.
While the project’s main focus is providing quick support to meet the urgent need of conflict-affected communities, it will also support Ethiopia to advance towards a sustainable recovery pathway by investing in institutions, communities, and policies. This will help build an inclusive and resilient future for conflict-affected communities in Ethiopia, the press release stated.
According to the press release, the World Bank’s International Development Association (IDA) helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 74 poorest countries, of which 39 are in Africa.
In a similar effort, the International Finance Corporation (IFC) reaffirmed the commitment of IFC to continue supporting priority sectors such as energy supply, health, housing development and finance in the country for its support of enhancing private sector development in Ethiopia.
According to Ministry of Finance, the Minister, Ahmed Shide, commended IFC while he was receiving the IFC’s Regional Director for Eastern Africa, Jumoke Jagun–Dokunmu at his office.
The corporation is conducting technical and economic feasibility studies for projects that have laid the foundation for the private sector in Ethiopia, Ahmed added.
The Minister urged the IFC to further support the efforts of Ethiopian Government in privatizing other sectors as it has done to the privatization of the telecommunication sector.
IFC’s Regional Director for Eastern Africa, Jumoke Jagun–Dokunmu, on her part, said the institution has strong partnership with Ethiopia and it has been supporting private sector investment in the country.
Besides to supporting private sector development in Ethiopia to scale up the economy, IFC will also support efforts of Ethiopian government in the process of opening up the banking sector to foreign financial institutions, the director pointed out.
On April 14, 2022 UN allocated 100 million USD for six nations including Yemen and out of the allocated financial support Ethiopia will receive 12 million USD that could use in addressing the demand of internal displaced peoples for sanitation, food and health water among others.
As per various reports confirm, developing countries are suffering from the brutal economic effects of COVID-19 disproportionately and require more comprehensive financing assistance in the wake of the pandemic, and the national and man-made disasters.
BY MENGISTEAB TESHOME
