Contacts
In Washington: Rachel McColgan-Arnold
(202) 458-5299
rmccolgan@worldbank.org
In Addis Ababa: Gelila Woodeneh
(251-1) 662 77 00
gwoodeneh@worldbank.org Washington DC, November 24, 2008 – The World Bank’s Board of Directors today approved IDA credits and grants in the amount of $275 million to the Government of Ethiopia under the Global Food Crisis Response Program (GFRP). Ethiopia’s current crisis is broader, deeper and more complex than the food crisis in most other countries. The inflation rate in Ethiopia is among the highest in the world, and food price inflation, at 81.1 percent in the 12 months ending September 2008, has far exceeded overall inflation (37.2 percent). The food price inflation was exacerbated by the failure of the ‘Belg’ rain in early 2008, which led to severe food shortages in parts of the country. Of the 7.3 million chronically food insecure people receiving regular support from the Productive Safety Net Program (PSNP), 4.4 million have required supplementary food or cash assistance; another estimated 6.4 million people have been pushed into food insecurity and are now dependent on emergency food assistance; the urban population has also been severely affected by the high inflation. The acute shortage of foreign exchange has compounded the problem, as Ethiopia could not readily import additional food from the international market to ease the price hike. The Food Crisis Response Program is part of the broader Government efforts and in line with the Bank’s and other Development Partners’ support strategy to meet Ethiopia’s immediate food needs and ensure its food security in the longer term. The program consists of two Projects. First, the PSNP Additional Financing Project (about US$25 million) aims to fill the PSNP financing gap that has emerged as a result of the food price inflation and drought in 2008. The Project would help finance cash and in-kind transfers to food insecure households in 2009. The PSNP has an established track record of providing transfers on a timely basis to food insecure households, through a labor-intensive public works program for households with able-bodied members and as direct support grants to households that are unable to offer surplus labor. The public works program aims to create productive community assets, with a focus on soil and water conservation. Second, the Fertilizer Support Project (about US$250 million) assists the Government’s efforts to ensure availability of adequate supplies of fertilizers for the 2009 crop season. This will raise the likelihood of adequate agricultural production next year, leading to increased food security, reduced malnutrition, and lower food prices. Relying largely on Ethiopia’s national tender procedures, foreign exchange will be allocated under this project to the domestic importer for procuring fertilizer from the qualified foreign suppliers with the lowest price offer. The local currency submitted by the domestic importer to obtain the foreign exchange will be retained by the Government. This will help to reduce the Government’s domestic borrowing, thus also contributing to moderation in inflationary pressures. Fertilizer distribution will be through commercial entities, in particulars farmer cooperatives and their unions. A monitoring and evaluation (M&E) component under the Project will track the various steps along the input distribution system, and assess the impact of the operation on farmers. “Government and development partners have already made substantial efforts to respond to the serious food crisis and Ethiopia’s difficult macroeconomic situation, but still more needs to be done. The Food Crisis Response Program fills two of the critical gaps that, if unaddressed, would extend or even worsen the crisis next year and beyond,” said Achim Fock, World Bank Task Team Leader for the Program.
The project will be implemented by the Ministry of Agriculture and Rural Development in close collaboration with other agencies and donors.
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