The Bank Group's 2006-2009 Country Strategy Paper (CSP) for Ethiopia aligns with the country’s new Poverty Reduction Strategy Paper (PRSP) known as the Plan for Accelerated Progress and Sustained Development to End Poverty (PASDEP).

Drought in parts of the country has contributed to shortfalls in the food supply and the  surge in staple food prices. Most affected is the country’s Somali Region. The government has introduced wheat subsidies to ease the impact of inflation on the urban poor and the vulnerable rural population.

Major economic development challenges include weak infrastructure, low agricultural productivity, structural food insecurity, environmental degradation, and weak human and institutional capacity. Macro-economic challenges facing the country have opened up opportunities for the country's private sector to increase its involvement in financing Ethiopia’s growth, especially in the infrastructure sector. The AfDB is ready to serve as a catalyst in expanding the flow of financing to Ethiopia’s private sector.

Bank Group Strategy

The Bank Group’s strategy over the 2006-2009 period will aim at promoting growth. The focus will be on three PASDEP pillars, namely, infrastructure development, agricultural transformation and governance. In infrastructure, the Bank support will cover energy, water and sanitation, and roads. The priority within the agricultural transformation pillar will be small-scale irrigation and livestock development. The focus under the governance pillar will be to strengthen accountability and transparency in basic service delivery at  local government level.

The Bank will during the 2006-2009 period also promote regional integration involving Ethiopia and its neighbors within the NEPAD framework. Priorities here will include power inter-connection and road projects.

The Bank’s Ethiopia Country Office will play a major role in ensuring effective follow-up of projects and timely resolution of emerging issues.