---

---

The Reporter (Addis Ababa)

Ethiopia: Social Services Expand

8 December 2007

---

There has been a major expansion in social services, evident for example in the quadrupling of total school enrolment rates in grades 1-12 between the early 1990s and the early 2000s.

The primary gross enrolment rate rose from 20 percent in 1993 to 79 percent in 2005. As with any major expansion, there are concerns over quality, class size, and bottlenecks in teaching. As an indicator of the challenges of expansion, levels of primary completion remain low-at below 50 percent of the age group - and below most other African countries of particular concern is that one in four primary students drop out of school after grade 2 and almost half by grade 5.

Growth effects of schooling expansion come only in the future, as newly-educated cohorts enter the workforce - indeed in the short run, sending children to school can be a cost for poor families, if this involves withdrawing children from income-generating work (however intrinsically desirable this withdrawal is). And reaping income gains from schooling depends crucially on complementary action to generate demand for semi-skilled and skilled labour. However, given a favourable policy and institutional environment, the current investments in education should allow Ethiopia to reap substantial gains in economic growth in the medium term.

There has also been progress on health, with steady declines in infant and child mortality from high levels. There remain significant variations in health status by socio-economic status and location: for example, regional infant mortality rates range from 81 per 1,000 live births in Addis Ababa to 123 per 1,000 live births in Gambella. Poor health status is associated with malnutrition, low access to safe drinking water (35 percent of the population in rural areas) and sanitation (13 percent overall), and specific disease exposures. Malaria is a major problem in the lowlands, and HIV/AIDS incidence is growing (from a relatively low level compared to some sub-Saharan neighbors).

Infrastructure advances are particularly evident for roads. In the decade from 1993 the length of roads in the country increased from 19,000 to 34,000 km. Access to telecommunications has also improved - teledensity (the number of telephone lines per 100 people) doubled between 2002 and 2006. A more general index of infrastructure quality also shows a marked improvement over the period.

Mixed gains on growth. There have been positive effects of the policy transition on growth and investment. There was a major turnaround relative to the declines experienced under the Derg. However, growth in per capita income has averaged about 2 percent per annum, income levels are only just back to previous estimated peaks of 25 years ago, and the agriculture-induced volatility has persisted. More recently, growth seems to have taken off, with double digit rates recorded in each of the last three years, driven by improvements in all sectors, and by fast growing agricultural exports.

Growth between 1992 and 2001 was entirely due to improvements in "total factor productivity" - or influences not explained by capital accumulation, and about half was associated with recovery from the effects of the civil war. This is consistent with highly inefficient capital spending during the Dergera, and gains from better use of existing resources with the policy reforms and the general improvements in stability (with a setback associated with the war with Eritrea). Private investment increased steadily from the early 1990s to the early 2000s, which is a positive sign of investors' assessment of profitable opportunities and security - though this also includes investment by party-affiliated enterprises that would be expected to have a different dynamic. It appears that private investment as a share of GDP may have levelled off since 2001, though it ticked upward again in 2004/05. Registered plans for foreign direct investment also increased from a low base, in the wake of streamlining of procedures in 2001/02, more than doubling from around US$250 million in 2002 to almost US$550 million in 2004. But implementation has been very low. In certain sectors (including retail and wholesale trade, with some exceptions), investment is limited to domestic actors, potentially dampening FDI flows.

The available evidence for the period 1999/00 to 2004/05 shows a decline of over 5 percentage points in the national headcount index, from 45.5 to 38.7 percent, mostly due to a decrease in rural poverty. The rate of improvement appeared to quicken in the period after 2000. From the mid-1990s to the late 1990s, there was a slight improvement in rural, and worsening, in urban poverty. Broadly, the poverty headcount in the 1990s fluctuated with agricultural output.

The challenge of combating deep-seated poverty is compounded by the fact that the poverty line, while reflective of consumption patterns of Ethiopian households, is by no means generous. Most Ethiopians would be considered poor by the standards of a middle-income country, let alone a rich one. And with a relatively equal income distribution, a considerable proportion of people live close to the poverty line with significant risks of falling into poverty. About 30 percent of woredas in the four largest regions (Amhara, Oromia, Tigray, and SNNPR) are classified as food insecure. Finally, although the urban poverty headcount index is lower than the rural, the gap is narrowing - and as the share of the population living in urban areas increases, so will the importance of sustained improvements in income and employment outcomes for urban dwellers.

Compiled by Kaleyesus Bekele

Be the first to Write a Comment!

---