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Briefing on the 2007 Annual Ministerial
Review of the Economic and Social Council
(ECOSOC) of the UN
on
Emerging Ethiopia: Strengthening Efforts to
Eradicate Poverty and Hunger, including through
the Global Partnership for Development
Mekonnen Manyazewal
State Minister
Ministry of Finance and Economic Development (MOFED)
Federal Democratic Republic of Ethiopia
July 3, 2007
Outline
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The National Development Policy Framework (NDPF);
Integrating MDGs in to the NDPF;
The Medium-term Plan (PASDEP) & the Ethiopian MDGs;
The Pillar Strategies of the PASDEP;
The Framework for Financing the PASDEP;
Overview of Progress in Implementation of the PASDEP;
• Macroeconomic Performance;
• Highlights of Key outcomes for poverty-oriented Sectors by
the end of 2005/06;
The M&E System of the PASDEP and hence MDGs;
Challenges and Opportunities in Implementing the PASDEP and
hence Ethiopia’s MDGs Plan;
The Key Messages;
The National Development Policy Framework (NDPF)
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From the outset, Ethiopia's overriding development policy agenda is
to fight and eradicate poverty;
Medium term Plans/Programs such as the SDPRP and PASDEP are
primary vehicles for overall socio-economic transformation and
achieving the MDGs;
The SDPRP launched in 2002 following wide-ranging public
consultations in 2001 was built on Agriculture, rural development &
food security (Agriculture Development Led Industrialization-ADLI),
decentralization and empowerment, capacity building in the public
and private sector, reforms in both the justice system and the civil
service;
The PASDEP is a five-year (2005/06-2009/10) strategic
framework that builds on the directions pursued under SDPRP
The PASDEP also embodies some bold new directions including
a major focus on growth with particular emphasis on
commercialisation of agriculture, private sector development,
and the scaling up of resources to achieve the MDGs.
Integrating MDGs in to the NDPF
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The need to depart from proceeding with business-as-usual so as to be
able to seize the opportunity to move up to a different development
pattern was recognized immediately following the launching of
Ethiopia’s first generation PRSP (SDPRP);
The poverty reduction effort of the Government of Ethiopia has taken
a longer-term view with the MDGs in perspective;
The PASDEP as a continuation of the SDPRP has been aligned to the
MDGs through the conduct of a comprehensive MDGs Sectoral
Needs Assessment which culminated with Ethiopia’s Ten Years
MDGs Indicative Plan(2005/06-2014/15);
The PASDEP is the First Five Year Phase of Ethiopia’s Ten-Years
MDGs Plan(2005/06-2009/10);
The Draft PASDEP widely discussed at all levels of Government as
well as with non-state actors and finally endorsed by the House of
Peoples Representatives (Ethiopian Parliament) in May 2006;
This set the stage for implementation of the PASDEP which is now in
its second year of implementation
The Pillar Strategies of the PASDEP: Road Out of
Poverty
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Building Capacity(with particularly with focus at sub-national
levels(to create capable state & private sector actors);
Massive Push to Accelerate Growth & create jobs (Private Sector
Development and Commercialization of Agriculture, Industry &
Exports, Urban Development)
Addressing the Population Challenge;
Unleashing the Potentials of Ethiopian Women;
Strengthen the Infrastructure Backbone of the Country;
Improve Human Development;
Managing Risks;
These Pillars re-enforce each other and help us to
optimize synergy-hence strong outcome
The Framework for Financing the PASDEP
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The Total Cost Requirement for the PASDEP period
projected at 332 Billion ETB with the public component
including projected at 232 Billion ETB;On average 46.4
Billion ETB per annum or an equivalent of about $5 Billion
USD per annum;
On the basis of business as usual assumption external grant
budgeted at 7221 Million ETB & loans (external, net)
budgeted at 2083 Million ETB. Altogether, 9304 Million
ETB or about $1 Billion USD or an equivalent of 8% of
GDP in ODA budgeted;
Fiscal Deficit including grants budgeted at about 6 % of
GDP;
Domestic Borrowing budgeted at 4782 Million ETB(4.1 %
of GDP)
The outturn [see below on overall fiscal performance]
Progress on PASDEP Implementation
A: Supply Side: Real GDP Growth (% Change)
Sector
2005/06
PASDEP
Target
2006/07
Outturn
PASDEP
Target
Pre. Estimate
Agriculture & Allied 6.4
Activities
9.6
6.3
10.9
Industry
12.3
7.4
11.9
10.9
Services
6.9
9.2
6.9
9.6
GDP
7.4
9.6
7.3
11.7
General Inflation
8.6
12.3
8.2
17.3 (End May
2007)
B: Demand Side GDP Components as a Ratio to GDP @ cmp
(%)
Item
2005/06
2006/07
PASDEP
Target
Outturn
PASDEP
Target
Estimate
Gross Domestic Capital
Formation
22.0
20.0
23.0
22.0
Consumption
Expenditure
93.8
94.8
93.0
92.0
Export of Goods & Non- 16.2
Factor Services
15.0
16.9
17.0
Import of Goods &
Non-Factor Services
32.1
33.0
32.9
35.0
Resource Gap
-15.9
-18.0
-16.0
-18.0
Domestic Saving
6.2
5.2
7.0
8.0
C:Trends in Spending on Pro-poor Sectors as %of Total
Public Spending(%)
Sector
2001/02 2002/03 22003/04
2004/05 2005/06
2006/07
(Estimate) (Budget)
Agriculture &
9.2
Rural
Development, Food
Security
8.1
13.4
16.3
16.8
16.4
Education
14.2
16.1
20.4
19.7
21.8
16.5
Health
5.9
4.9
4.3
4.8
4.6
6.1
Roads
10.7
9.9
9.6
11.3
14.8
12.7
Water & Sanitation
2.8
2.9
2.0
4.5
4.4
6.9
Total
43
42
50
57
62
60
D: The Outturn for the 2005/06 Resource Envelope
Item
Average
Growth Rate
(2003/042005/06)
Performance
Performance
Against PASDEP Against
Targets(%)
Budget(%)
Performance
Against
2004/05
Outturn(%)
Domestic
Revenue
21
87
90
125
Tax Revenue
20
88
91
114
Non Tax Revenue 26
85
85
169
External Grants
-5
52
52
82
Domestic
Revenue and
Grants
14
78
80
115
Total Expenditure
32.0
25.4
34.0
31.9
Poverty-oriented
Expenditure
20.0
16.0
24.5
19.1
E: External Sector(% of GDP)
Item
2005/06
2006/07
PASDEP
Target
Outturn
PASDEP
Target
Pre. Estimate
Merchandize Export
7.9
8.0
8.7
8.3
Merchandize Imports
30.1
34.0
30.9
33.9
Trade Balance
-22.2
-26.0
-22.2
-25.6
Growth Rates (% Change over previous year)
Item
2003/04
2004/05
2005/06
Average
Merchandize Export (Value in USD)
24.4
41.1
18.1
28.0
Merchandize Imports (Value in USD)
39.3
40.4
26.4
35.0
F: Highlights of Key Outcomes for poverty-oriented Sectors
Indicator
1999/00
2004/05
2005/06
PASDEP
Target
The Macro economy
Real GDP Growth Rate(%)
5.4
10.5
9.6
7.0
Per Capita Real GDP Growth Rate(%)
2.4
8.0
7.1
4.4
Overall Poverty Head Count Index(%)
44.2
38.7
35
29
Food Poverty Head Count Index(%)
42.0
37.8
35
28
Stunting (%)
57
47
45
35
Wasting(%)
10
8
6.5
5.4
Gross Enrollment Rate(%)
61.0
79.8
91.3
109.7
Grade 5 Completion Rate(%)
48.0
57
63.0
136.6
Grade 8 Completion Rate(%)
27.0
34
42
62.7
Girls/Boys Ratio
0.45
0.84
0.90
0.97
Agriculture, Rural Development &
Food Security
Education
----Highlights of key Outcomes for poverty-oriented Sectors
Indicator
1999/00
2004/05
Progress
To Date
(2005/06)
PASDEP
Target
DPT3 Vaccination (%)
50
61
79
80
Utilization of Health Facilities(%)
27
30
76.4
100
Polio Vaccination
46
55
57
70
Proportion of Households in Malaria-prone areas with
two bed nets(%)
-
1
43
100
Proportion of Mothers with access to family planning
services(%)
8
15
36
80
Health Extension Workers to Population
-
1:25000
1:7800
1:2500
24
35
47.3
84.5
Road Density(km/1000 sq.km)
29.0
33.2
36.0
54.1
Roads in Good Condition
48
64
68
84
Time Spent (hours) to reach an all weather roads
7
5
4.8
3.2
Health
Water
% of Population with access to clean water
Roads
G: Highlights of Required Rate of Change and Recent
Trends to Meet MDGs
Indicator
Past Trends
Recent Trends
2005/06-2006/07
Required Rate of
Change to reach
MDGs (% pa)
(1995-2000)
(% pa)
Recent Trends
(2000-2005 (% pa)
Real GDP Growth
Rate(%)
4.9
5.5
10.7
7.0
Per Capita Real GDP
Growth Rate(%)
1.9
2.6
7.0
4.4
Poverty Head Count
-0.73
-2.5
-3.9
-3.8
Food Poverty Head Count
-2.4
-3.4
-3.0
-3.2
Gross Primary Enrollment
12.4
5.0
9.0
3.8
Under 5 Child Mortality
-1.0
-5.0
-6.5
-7.0
Access to Clean Water
1.0
6.5
7.0
6.5
The M&E System of the PASDEP and hence MDGs
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The M&E System for the PASDEP and hence MDGs is built on
Existing Structures/systems;
The development of Statistics is guided by the Medium-term
National Statistical Program jointly formulated by the MOFED
and CSA and has been implemented since 1994;
The Welfare Monitoring System Program (WMSP) has been in
place since 1996;
The M&E Action Plan Jointly formulated by MOFED and CSA is
a continuation of the WMSP;
The M&E System has been guided by the M&E Action Plan
supported by the DAG since 2005;
The M&E System is forward looking taking the MDGs in
perspective;
The M&E Action Plan is complemented by Sectoral M&E
Systems;
‘What can not be Measured Can not be Done’
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The fact that Ethiopia has received an award for
best practices in establishing and institutionalizing a
well integrated, home grown and forward-looking
(with MDGs in perspective) M&E system at the
Third International Roundtable Conference on
Managing for Development Results (MfDR) held in
Hanoi, Vietnam, from February 5-8, 2007 is a
recognition of the country's advanced status in
integrating the MDGs in to the national
development planning processes.
Challenges, Opportunities & Key Messages
A: The Challenges
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The assessment of performance to date clearly shows
substantive progress being made by Ethiopia. However,
we believe that we still need to enhance progress as there
is different level of performance among Ethiopia’s
regional states;
There is issue of capacity to implement particularly at
sub-national levels;
Ethiopia’s Private Sector Capacity is also limited;
Finance is also a constraint on implementation at a scale
that is required;
Ethiopia is also exposed to risks-weather induced and
trade related;
These are broadly our challenges
B: Opportunities
Despite the above cited challenges, there are a number of
developments that could result in more progress being made than is
currently expected. They consist of both encouraging developments in
the recent past, and possible new developments that could eventuate in
the next few years.These include the following:
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Implementation of the-ongoing National Capacity Building Program;
Existence of successful on-going sector development programs;
The success of the domestic resource mobilization effort which is currently
underway;
The momentum effects of past investments on human development and physical
infrastructure;
The opening up of the environment for private investment and business activity;
Global initiatives for scaling up aid to LDCs and debt relief ;
The Development potential of the country in terms of natural resource endowments,
the large untapped domestic market and labor force all of which are under exploited;
The potential impact of agricultural transformation agenda and on-going food
security programs which have already started to pay-off ;
Key Messages
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Development interventions will only be effective if they are guided
by long and medium-term home grown development strategies and
plans internalizing the MDGs;
To eradicate poverty and end hunger, high and sustained growth is
critical for Ethiopia. We know there is no room for complacency &
Ethiopia has to sustain the recent high growth rate for attaining the
MDGs and lasting impact on poverty;
We believe that this growth should be broad-based.Hence the
continued focus on rural growth re-enforced by strong rural-urban
linkages. Our rural growth agenda do also pay particular attention to
environment and natural resource management;
For a long time, macroeconomic stability has been a positive feature
of the Ethiopian economy. We still intend to have this stance, but in a
way that provide sufficient space for public investment particularly in
human development and infrastructure;
----Key Messages
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Medium-term programs such as the SDPRP and its successor plan (the PASDEP)
are important vehicles towards reaching the MDGs. Taking note of the good
performance to date and given the ambitious and still well thought out programs
being implemented in the areas of food security and rural development, Health
Extension Package (HEP), Urban Housing Programs, Universal Access Program
for Water Supply, rural roads, electricity, telecommunication, women and youth
packages, and MSE development; the Government believes that Ethiopia’s
development effort is well grounded and has a good chance of meeting the MDGs
during the remaining years. What is needed is a big push;
Given the size, topography, diversity of the country; infrastructure investment
expansion needs to be seen from the standpoint of enhancing and sustaining propoor growth, which is a necessary condition for poverty reduction and its ultimate
eradication. Given also that Ethiopia is required to diversify exports, the need for
being competitive in the international market calls for infrastructure expansion to
reduce per unit transport and delivery costs of export commodities. Accordingly,
investment expansion in those areas (human development and infrastructure
expansion) is seen as a top priority given that the country’s human and physical
capital has not yet reached its critical minimum. The Government believes that
the current growth momentum could not be maintained with out enhancing our
human and physical capital;
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----Key Messages
Enhancing trade particularly expanding and diversifying exports is also
critical.We are taking necessary actions to make use of opportunities
offered to us through market access such as EBA through EU and
AGOA through USA ,China, etc;
Enhanced use and management of our water resources is another critical
area of emphasis given that our economy is susceptible to weather risks
given that the bulk of our agriculture is rain-fed.Utmost use of our water
resource potential through water harvesting, small scale irrigation ,and
medium and large scale irrigation is a way out to insulate our agriculture
from weather related risks(rain failures);
Building partnership with research and higher education institutions
and think-tanks is of paramount importance to utilize local expertise
(build national capacity) and thereby strengthening in-house analytical
capacity of government institutions
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Ethiopia has made significant improvement in
business and investment climate to create a dynamic
private sector and contribute to economic
transformation. The recent vibrancy in the private
sector (both domestic and foreign) including
increasing trade, investment, employment and
income growth clearly shows that the private sector
is making its contribution to Ethiopia's development.
PASDEP intends to deepen the business and
investment environment for accelerating and
sustaining private sector led growth in Ethiopia;
----Key Messages
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Ensuring gender equity is also another critical issue that is
being addressed in order that Ethiopia accelerate growth
to achieve the MDGs and eradicate poverty. Since the
1990’s, Ethiopia has moved firmly to promote and protect
the rights of women to participate in the political,
economic and social processes of the country- from the
constitution to passing and revision of various laws,
proclamation of rural development, education, health etc.
Further, advances are still required in implementing the
various gender equity initiatives particularly the National
Action Plan for Gender equity;
In the Ethiopian context, designing and implementing the
economic transformation agenda in synergy with state
transformation agenda through devolution and
empowerment and civil service reform is central for
peace, democracy and development, hence eradicating
poverty;
----Key Messages
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The on-going implementation of public sector capacity building
program including civil service reform, district level decentralization
programme is intended to build a capable, accountable, and effective
state. The priority focus is to empower and build-up the capacities of
the lowest echelons of regional governments- woredas and kebeles by
building effective democratic and public institutions. This will
enhance democratic participation, governance and hence improve the
delivery of services and contribute to poverty eradication;
The Government has recognized that financing is a critical challenge
in implementing the PASDEP and attain MDGs.Realizing that
enhancing development is our responsibility, Ethiopia is making
positive progress in domestic resource mobilization first;
implementation of the comprehensive tax reform program, second;
mobilizing private savings and investment as well as social
mobilization and civil society resources;
----Key Messages
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Partnership for development through external finance is also
complementing our effort. We have benefited from debt relief.
However, as has been witnessed during the first two years of
implementing the PASDEP (2005/06 and 2006/07), external finance
(ODA) that passes through the budget has been levelling off even
compared to the trend (business as usual) as projected in the PASDEP;
By way of enhancing development partnership, the Government has
set up a Dialogue Architecture-at policy level-the High Level
Forum(HLF) and various sectoral forums. We have also established
Joint Government-Partners Harmonization Task Force to take forward
the Paris Declaration. A number of multi-lateral partners(World Bank,
EU, and AfDB) and bilateral (UK, Ireland, Canada) have moved to
supporting budgets and sector programs using public finance system.
The UN Country Team are also harmonizing and aligning with
PASDEP, a good example being the current United Nation
Development Assistance Framework (UNDAF II), spanning the period,
2007-2011;
----Key Messages
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As Ethiopia enters in to the third year of implementing the
PASDEP (2007/08), there is an urgent need to scale up ODA
towards full-scale implementation of the PASDEP and
hence MDGs consistent with Monterrey, Gleneagles, and
Blair’s Commission Report;
On a per capita basis Ethiopia’s ODA is half of that of the
SSA average. We expect doubling of our Per Capita ODA to
help us accelerate progress towards the attainment of
MDGs;
In conclusion, can Ethiopia pull off? Yes, It can. Progress to
date, and opportunities for a big push. More importantly, the
Ethiopian people has spoken. They want and are determined
to make poverty history. This “I can do” attitude is the
greatest asset and value to attain the MDGs and ultimately
to eradicate poverty;
Thank You