World Bank Funds Ethiopia’s Public Sector Capacity Building Program

Washington DC, May 12, 2004 – The World Bank Board yesterday approved an International Development Association (IDA) credit* of US$100 million in support of improving the efficiency, and responsiveness of public service delivery at federal, regional and local levels in Ethiopia, by empowering citizens to participate more effectively in their own development and promoting good governance and accountability.

“The credit will scale up Ethiopia’s ongoing ‘state transformation’ process, launched in the mid-1990s, in order to achieve the triple aims of improved service delivery, empowerment, and accountability across the federal, regional, and local levels of government in Ethiopia.”, said Navin Girishankar, the World Bank’s Task Team Leader for the project.

The project is designed as an intergovernmental fiscal transfer for multisectoral capacity building and comprises a federal and regional component, each of which support six cross-cutting priority public sector reform subprograms.

The Civil Service Reform Subprogram will promote the development of an efficient, effective, transparent, accountable, ethical, and performance-oriented civil service. The Justice Systems Reform Subprogram is designed to promote the rule of law as part of Ethiopia’s broader democratization and private sector development processes.

The District Level Decentralization Subprogram will deepen the devolution of power to the lower tiers of regional government and institutionalize decision-making at grassroots level.

The Urban Management Capacity Building Subprogram aims to enhance the capacity of municipalities and other urban jurisdictions to fulfill their enhanced role in promoting social and economic development.

The Tax Systems Reform Subprogram aims to encourage capital investment and development, expand tax autonomy, increase tax revenue and ensure equity and fairness in the tax system.

The Information and Communication Technology (ICTs) Subprogram aims to harness ICTs for the development of human resources, democratization, service delivery and good governance.

Girishankar pointed out that “increased fiscal and administrative autonomy to Ethiopia’s  districts (woredas) and municipalities should enable them to respond more effectively to the local needs of their local communities”.

The scale and scope of Ethiopia’s public sector capacity building program, which this credit will fund, are unique—although not unprecedented—in Africa.  Similar approaches have been undertaken in Uganda and South Africa through their rapid decentralization and institutional transformation processes. The first phase of Ethiopia’s ‘state transformation’ was launched in 1995, and involved the creation of a federal state structure based on ethnically delineated regional states responsible for a broad range of the country’s political, economic, and social objectives. So far efforts to reform the public sector have had limited impact in relieving the institutional and capacity performance across Ethiopia in part due to a fragmented approach to implementation. 

The project, designed as part of a Sector Wide Approach, seeks to support Government’s efforts for holistic and nation-wide implementation.  The Bank is playing a catalytic role in encouraging donors – particularly those with intensive experience at the sub-national level and in areas such as justice systems and tax reform – to pool their support and harmonize around the Government of Ethiopia’s “single design solution” for state transformation.

Of a total value of US$397.8 million, the project is financed by a partnership of bilateral, multilateral and international development agencies. In addition to IDA ($100 million), these include the Canadian International Development Agency ($38.8 million), the Swedish International Development Agency ($8.6 million), several bilateral agencies ($112.9 million) and the Government of Ethiopia ($137.5 million).

* World Bank funding is provided on standard IDA terms, with a commitment fee of 0.5 percent, a service charge of 0.75 percent, and a maturity of 40 years, including a 10-year period of grace.

For more information on the World Bank’s work in sub-Saharan Africa visit:  http://www.worldbank.org/afr