Most definitely, Ethiopia is one of the countries that own a fast growing economy. The country is also the second most populous nation in Africa after Nigeria. The country has been achieving major economic progresses despite various challenges. Overcoming all these hurdles, ups and downs, the government of Ethiopia is still striving hard to fight poverty and make the nation among the middle income countries. The country has also been working tremendously with different countries and international organizations to achieve its objectives.
The World Bank and Ethiopia have maintained a longstanding and productive relationship, collaborating on various development projects and initiatives to advance the country’s socio-economic progress. The World Bank Group has recently published up to date report regarding Ethiopia. The report entails that Ethiopia is one of the fastest-growing economies in the region, with an estimated 6.4% growth as of fiscal year 2021/22. The report further appreciates Ethiopia’s strong growth rate that builds on a longer-term record of growth over the past 15 years. The country’s economy grew at an average of nearly 10% per year, one of the highest rates in the world.
Due to a multiple shocks including COVID-19, the report revealed that Ethiopia’s real gross domestic product (GDP) growth slowed down from FY2019/20 to FY2021/22, with growth in industry and services easing to single digits. However, agriculture, where over 70% of the population is employed, was not significantly affected by the COVID-19 pandemic, and its contribution to growth slightly improved compared to previous years.
According to the data, the consistently high economic growth over the last decade resulted in positive trends in poverty reduction in both urban and rural areas of the country. The share of the population living below the national poverty line decreased from time to time and human development indicators improved as well. In order to achieve better economic growth, the government of Ethiopia has launched a 10- year Development Plan aligned with its 10 years Home-Grown Economic Reform Agenda which will be implemented from 2020/21 to 2029/30.
The objective of the aforementioned long term plans is to sustain the high growth registered under the Growth and Transformation Plans of the previous decade. Besides, it aims to give more rooms for private-sector-driven economy coupled with fostering efficiency and introduce competition in key growth-enabling sectors (energy, logistics, and telecom), improve the business climate, and address macroeconomic imbalances, the report stated.
The report has highlighted significant development challenges faced by the nation. It emphasizes that the nation is making significant effort in pursuing sustainable economic growth and poverty reduction. Additionally, the report stated the prominent challenges encountered by the nation. The internal conflict in the northern part of the country emerged as a major obstacle to the nation’s progress. However, there is some positive news as the cessation of hostilities agreement between the two parties, the Federal Government and TDF, has yielded better results.
According to the report, the other major challenge that the nation was fighting is the aftermath of the global pandemic, COVID-19. In fact, the pandemic hit the entire world hard and impose major social and economic problems, and Ethiopia was one of them. The report stated, “While exports and foreign direct investment rebounded in 2020/21 and jobs have been recovering, some lasting scars are likely to remain. Urban employment levels have not recovered fully, some households and firms continue to report income losses, and poverty is estimated to have increased.”
The other challenge was addressing food insecurity. It is the fact that the nation was encountering with adverse weather conditions, locust invasion, conflict and global situations that bring high food price inflation. In good truth, the report underlined that the 2022 drought observed in the country is the worst in forty years, and affects millions in southern and eastern part of the country.
The role of the private sector was also the other issue. As to the report, the private sector was unable to act as expected due to various constraints. These challenges made the sector not achieve its objective of creating jobs and put its mark on the nation’s growth. Such problems put their impact on the overall job creation that the nation plans to achieve.
The report also elucidated that the World Bank Group is working closely with the government of Ethiopia to accomplish better results in inclusive and sustainable growth path. The partnership is also extended to support the nation achieve its Home-Grown Economic Reform Agenda and the current 10-Year Development Plan. “The WBG supports a more spatially inclusive approach to development, one that leverages national programs to provide quality services to all areas of the country. The WBG is helping to promote structural and economic transformation through increased productivity in rural and urban areas by focusing on basic education, access to markets, and job opportunities for youth. It is also helping to build resilience and inclusiveness (including gender equality) by improving safety nets, investing in productive landscapes, and focusing on the Early Years Agenda,” the report elaborated.
In addition, the World Bank Group supports institutions in the country to work more on accountability and combating corruption by adding value on improving governance and social accountability. Explaining that the private sector is expected to be a key contributor to Ethiopia’s future development, the report further revealed that prominent roles are being played by the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) towards supporting private domestic firms and foreign investors.
“As of July 27, 2023, the World Bank’s portfolio in Ethiopia consists of 42 lending operations with 13.9 billion USD in commitments, complemented by 993 million USD in trust fund financing. The portfolio includes financing for conflict-afflicted communities and IDPs, national programs on agriculture, sustainable land management, basic service delivery (including health, education, and water and sanitation), as well as support in the energy, transportation, trade logistics, digital development, and financial sectors.”
Under the World Bank’s fund, the International Development Association (IDA) is the largest finance provider for Ethiopia. It is noted that the IDA has funded over 26 billion USD. This fund has addressed around 155 projects like COVID-19 Emergency Response Project, Rural and Urban Productive Safety Net Programs, Locust Emergency Response Project, Agriculture Growth and Food System Resilience Projects, Response–Recovery–Resilience for Conflict-Affected Communities Project in Ethiopia since 2000.
In collaboration with the World Bank, the government of Ethiopia has also registered better results in some sectors. One of the sectors that the nation made significant progress is water and sanitation. As to the report, over 57 million people in Ethiopia live within 1.5 kilometers of an improved drinking water source and open defecation rates fell by 63 %, which was the largest decrease observed in the world. Despite the progress has not address the entire nation, the World Bank designed and work on some projects to tackle the challenges. The current activities include One WaSH− National Program (OWNP)-Phase II (300 million USD), Second Urban Water Supply and Sanitation Project (445 million USD) and Ethiopia Horn of Africa Groundwater for Resilience Project ($210 million).
On top of that, transport related programs target on access and mobility improvement in rural and urban areas, enhance safety, and increase climate resilient. “IDA has invested more than 2 billion USD to support the government’s efforts over the past two decades of the Road Sector Development Program (RSDP).”
The last but not least is the COVID-19 emergency response. The IDA funded Ethiopia on its COVID-19 emergency response project. The IDA funded over 690 million USD for Ethiopia COVID-19 emergency preparedness and response.
The finance was to help the country “establish COVID-19 testing, screening points, and enhance risk communication community engagement. It supported training for health workers on COVID-19 vaccine deployment and conduct awareness raising campaigns. It supported the development of the national COVID-19 Vaccine deployment strategy. It financed the purchase of 45 million doses of COVID-19 vaccines and supported Ethiopia’s vaccine deployment strategy; so far 53.5 million doses of COVID-19 Vaccines have been administered.”
Overall, the partnership between the World Bank and Ethiopia has played a crucial role in driving sustainable development and addressing socio-economic challenges in the country. The substantial financial support provided by the World Bank in recent fiscal years demonstrates the organization’s commitment to Ethiopia’s development priorities and its confidence in the country’s potential for progress.
BY DANIEL ALEMAYEHU
THE ETHIOPIAN HERALD WEDNESDAY 9 AUGUST 2023
