The World Bank approved development financing to the tune of 1.35 billion dollars for Ethiopia last week.
The financing, approved on October 30, 2018, will support political and economic transformation, increase regional integration and improve technical training.
The larger part of the financing, 1.2 billion dollars, comes in the form of loans to replenish foreign currency starved government coffers. The fund will be used as financial support to gradually open up the economy.
Maximising financing for development, improving the investment climate and developing the financial sector and promoting transparency and accountability will be the main focuses, according to Nataliya Mylenko, the Bank's task team leader for this project.
This portion of the fund will be made available in three phases with evaluations in between to assess whether the financing is being appropriately utilised.
The funding will be used to create jobs, enhance the privatisation process and eliminate constraints the country faces in sustaining its economic growth, according to the recently appointed Finance Minister, Ahmed Shide.
A second funding portion provided by the bank is for 293 million dollars, which is part of the East Africa Skills for Transformation & Regional Integration Project that also spans into Kenya and Tanzania. Almost half of the financing, 150 million dollars, will go to Ethiopia. Half of it in loans, the financing was approved to scale up Technical & Vocational Education and Training (TVET) in the transport, energy, manufacturing and information technology industries.
The funding will support the Dire Dawa, Kombolcha, General Wingate, Federal, Hawassa and Holeta TVETs, polytechnic colleges and the Ethiopian Railway Academy. The project will be implemented in Ethiopia by the Science & Higher Education Ministry.
"Shortage of specialised TVETs, if not addressed, could seriously dampen the industrialisation and integration agenda in East Africa," Xiaoyan Lang, team leader of Project, said.
The financial support comes a little over two months after Prime Minister Abiy Ahmed (PhD) announced that the World Bank had agreed to inject budgetary assistance worth one billion dollars into Ethiopia. Given a tighter fiscal policy, this fiscal year's federal budget stood at 12.6 billion dollars, 5.3pc lower than that of the previous year.
"World Bank's pledge means that the country is now stable and inclusive," Abiy told members of the media last July.
The World Bank's support also comes at a time when exports have declined to 2.83 billion dollars during the last fiscal year, annual average inflation stands at 13pc. Foreign direct investment has declined and the nation is grappling with shortages of foreign currency and increased political instability.
The Bank has pledged 3.3 billion dollars to Ethiopia for 2018, which is over three times higher than the Bank's commitment during the previous fiscal year. The Bank's lending to Ethiopia in 2017 was 956 million dollars, the lowest in five years.
During the past fiscal year, the country sourced close to 555.4 million dollars of foreign aid and grants. Ethiopia also received 43.2 million dollars to implement various programs, which was 41pc higher than two years ago.
The Bank's five year Country Partnership Framework for Ethiopia is designed to support the country's second edition of the Growth & Transformation Plan (GTP II), to eliminate extreme poverty and boost shared prosperity, objectives outlined in the Sustainable Development Goals.