Ethiopia's economy enjoyed robust growth from 2004 to 2011, averaging 11.3% GDP growth per year. Initially led by agriculture, growth subsequently became more broad-based, with a rising contribution from the mining, services and manufacturing sectors.
Ethiopia has also improved considerably on basic service delivery indicators in recent years. The focus on decentralized basic service delivery coupled with rapid growth has led to a decline in the population living below the poverty line from 38.7% in 2004 to 29.6% in 2010.
Despite this, Ethiopia still faces serious challenges, and the Government remains committed to improving social indicators, with a particular emphasis on increasing access to and quality of basic services.
The African Development Bank's Promoting Basic Services Programme (PBS III) provides resources to safeguard and scale up expenditures on basic services for the poor and to help maintain macroeconomic stability by easing pressure on domestic borrowing. It aims to help the Ethiopian Government expand access and improve the quality of decentralized basic services in education, health, agriculture, water, sanitation and rural roads through contributions and block grants. And it contributes to the strengthening of public financial management and citizens' engagement in a decentralized process.
PBS III's expected outputs include:
- An increase in the primary school completion rate;
- A reduction in maternal mortality;
- Higher agricultural productivity for major food crops;
- A reduction in the average time to the nearest all- weather roads;
- Increased access to potable water supply;
- The rollout of the Integrated Budget and Expenditure System;
- Increased external audit coverage at the woreda level; and
- The rollout in half of all woredas of procurement performance and compliance audits.
The African Development Fund Loan of US $255.3 million is being disbursed in three tranches: US $86 million in 2012; US $84 million in 2013; and US $84 million in 2014, with the Ministry of Finance and Economic Development serving as the implementing agency. The program was prepared in close coordination with other development partners, thus ensuring harmonization. All development partners involved in the PBS III use a common results framework from which the indicators of the Bank's operation have been drawn.
The other major development partners that support the PBS III through an investment project are the World Bank (US $610 million), the United Kingdom's Department for International Development (US $473 million), the European Union (US $63 million) and the Government of Italy (US $12 million).
PBS III reflects a shared vision by both government and development partners that improving access to and quality of basic services in Ethiopia is essential. To track progress on common objectives and commitments, PBS III is based on a set of interrelated core principles that guide its implementation. Progress in implementation is assessed through semi-annual Joint Review and Implementation Support and Joint Budget and Aid Review missions. These reviews serve as the principal benchmarks for triggering development partner disbursements.
