Ethiopia: A socio-economic success story

10/10/2013
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One of the success stories of Africa today is the socio-economic turnaround of a number of countries over the past decade, including Ethiopia, according to a recent African Development Bank publication entitled “AfDB and Ethiopia - Partnering for Inclusive Growth”. At an average annual growth rate of 11%, Ethiopia has made a tremendous progress to become one of the fastest-growing economies in the world, poised to become the largest in East Africa. Investing in projects and programs across various sectors of the Ethiopian economy, the African Development Bank is decisively emerging as the country’s development partner of choice. For an economy that is largely based on agriculture, AfDB’s pro-poor support is crucial in sustaining an inclusive growth and enhancing economic integration with its neighbours. With almost 50% of population under the age of 18, inclusive growth is geared to job creation, better distribution of incomes so as to eradicate poverty. In this respect, the Bank has been visibly present.

The right policy orientations must be there. The Bank’s partnership with Ethiopia has effectively been marked by such orientations based on frank dialogue, strategic selectivity and a strong focus on results. In this regard, Ethiopia has done well. A series of reforms are contributing not only to accelerate growth but to improve the overall delivery of basic services, enhancing the country’s enviable ability to achieve a number of Millennium Development Goals (MDGs). Among notable reforms include the privatization of state enterprises and the rationalization of government regulations which have begun to attract the much-needed foreign investment.

As at the end of December 2012, the Bank Group operations in Ethiopia amounted to a cumulative of UA 2.5 billion or about US $3.8 billion for some 119 loans and grants. This level of commitments made Ethiopia the sixth largest beneficiary of Bank Group lending after Morocco, Tunisia, Egypt, South Africa and Nigeria. It is by far the largest in East Africa, ahead of Tanzania (approx. US $3 billion), Uganda (approx.US $2.6 billion) and Kenya (approx. US $2 billion).

Commitments from the ADF concessionary resources accounted for about 85% of the cumulative commitments, as Ethiopia is currently classified as a lower income country along with 36 other category A countries of the Bank.

According to AfDB President Donald Kaberuka,“the Bank will sustain its partnership to realize Ethiopia’s ambition to reach middle income status by 2025 and achieving greater integration in the sub-region.” To achieve this objective, in accordance with its principle of selectivity, the Bank is currently shifting the focus towards fewer but larger projects with average project size of US $80 million that will have higher development impacts.

The Bank is also playing greater aid coordination role to attract additional resources. Clearly, the continued effectiveness of the Ethiopia Field Office, re-established in 2001 will be crucial in promoting Bank Group operations and transformation agenda in Ethiopia.