World Bank Interim Country Strategy for Ethiopia - Consultation with Leaders of Minority Parties in Parliament

The World Bank Country Office in Ethiopia organized a consultation on the Interim Country Strategy (ICAS) with the leaders of the minority parties in Parliament – Ato Bulcha Demeksa (OFDM), Ato Temesgen Zewdie (CUD), Dr. Negasso Gidada, Prof. Beyene Petros and Dr. Merera Gudina (UEDF) on February 15, 2006. The meeting was chaired by Mr. Ishac Diwan, World Bank Country Director for Ethiopia and Sudan.

Objective of the consultation
The objective of the consultation was to seek the views of the participants on the draft ICAS, particularly in the following areas: (a) relevance and appropriateness of the priorities outlined; (b) potential role of non-state in implementation; and (c) safeguards to ensure transparency, accountability, and results.
Mr. Diwan stressed the importance the Bank attaches to consultation with diverse stakeholder groups to ensure broad support and confirmation that its assistance would benefit the people of Ethiopia. The participants welcomed the initiative by the Bank to reach out to them and other stakeholder groups.

Interim Strategy Note
Mr. Diwan made a PowerPoint presentation on the 15-month ICAS, which replaces a regular Country Assistance Strategy (CAS) during this period of declining political governance since the May 2005 elections. He noted that a new three-year CAS would be prepared following the successful implementation of the ICAS.
Mr. Diwan outlined the following main elements of the ICAS: (a) deepen support for “core” governance; (b) protect and support the provision of basic public services in a fair and accountable way; (c) improve urban governance and service delivery; (d) enhance the investment climate and support private sector development; (e) promote rural development; and (f) support the expansion of infrastructure (particularly roads and electricity) that underpin economic growth, including along growth corridors (e.g. Tana growth corridor). Mr. Diwan also shared with the participants the Bank’s pipeline of projects for FY 2006 and 2007. Below is a summary of the discussion that followed after the presentation.

Relevance and appropriateness of the ICAS priorities
There was general agreement that the priorities outlined in the ICAS were appropriate for the present political and economic context of Ethiopia. The participants highlighted the need for greater focus on development of an equity market and markets for agricultural inputs and output; irrigation; microfinance, and housing finance. They also called for an expansion of the growth corridor concept beyond the Tana Basin area to one pilot per region.

Financing instruments
The participants welcomed the shift from Direct Budget Support (DBS) to an investment instrument such as the one being used for the Protection of Basic Services Project. The participants noted that they have had reservations about DBS from the outset because of concerns about fair and equitable allocation of resources by the Government.

The participants welcomed the Bank’s increased focus on governance. They noted that although the Bank is an apolitical organization, it should have greater recognition of the strong link between political governance and economic growth and poverty alleviation, including its implications for the investment climate and service delivery. They noted that since the Bank’s mandate and comparative advantage was economic management, it was appropriate that it plans to address governance within a multi-donor program, allowing other development partners such as the bi-laterals to take the lead on political governance.

Status of Ethiopia’s economy
The participants noted that despite major economic progress during the last three years, most Ethiopians continue to face hardships- unemployment, especially in urban areas is high and food prices, especially cereals prices have been increasing, prompting the Government to place a ban on the export of cereals. It was also indicated that although exports have risen significantly, so have imports and this could have adverse impacts of the country’s balance of payment.

Conditions for accelerated economic growth
The participants stressed the need to create the right conditions for accelerated economic growth, particularly with respect to: (a) the political climate; and (b) fairness, transparency, and accountability in the allocation and use of resources.
  • Political climate: According to the participants, there are several issues that need to be addressed in order for the political atmosphere to be conducive to economic growth and poverty reduction The following actions were highlighted as necessary to improve the political climate:
    -Ensure constitutional order and rule of law, including respect for the provisions of the constitution and laws at all levels of government.
    -Respect for civil liberties, democracy, and human rights as provided for in the constitution, including freedom of the press, right of assembly, and freedom of association.
    -Create a culture of political tolerance and compromise.
    -Involve all political parties in efforts to improve the economic and social well-being of the people of Ethiopia.
    -Internationally-sponsored all party conference and dialogue.
  • Fairness, transparency, and accountability: The participants suggested the following actions to improve fairness, transparency, and accountability in the allocation and use of government and donor resources:
    -Separation of party and state. The civil service at all levels needs to be depoliticized to prevent the misuse of power and resources.
    -Promote horizontal accountability through the separation of powers and balance of power among the Executive, Legislature, and Judiciary.
    -Establish mechanisms to ensure fair and equitable allocation of resources. Such mechanisms should not stop at the woreda level, but should reach the kebele level and below.
    -Civil Society Organizations (CSOs), including Parent Teacher Associations and Idirs, can play an important role on the demand side of accountability, but the participants cautioned that CSOs are under-developed in Ethiopia; most NGOs are based in Addis Ababa. It was also noted that some CSOs are not free of political influence.
    -Development partners need to build the capacity of CSOs and Parliament and to help improve access to information to enable local actors to effectively carry out oversight functions.
    -Regular surveys such as the Bank-sponsored Woreda Benchmark Survey can help to monitor the impact of resource allocation and service delivery at the local level

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