Ethiopia is a Rome Frontier Country and a harmonization pilot for the Strategic Partnership with Africa (SPA), Education For All-Fast Track Initiative (EFA-FTI), and the IMF. The scale of the country’s development challenge is almost unparalleled, with a population of approximately 73 million people and per capita income of roughly US$115 (as of July 2005). In addition, frequent droughts and limited agricultural productivity relative to population pressures have generated an overriding concern about food security. Poverty is pandemic and often linked to environment and natural resource degradation. National household surveys find 44 percent of the people living below the basic needs poverty line. In addition, in 1986, there were only two reported AIDS cases in Ethiopia; by mid-2003 there were 147,000. UNAIDS estimates that in April 2006, 1.5 million persons in the country are living with HIV and AIDS.

During 2000-01, the main ODA partners in Ethiopia were IDA, USA and the EC. In that period, the share of bilateral partners in gross ODA averaged about 42%. Approximately 30% of bilateral ODA was used in the social sectors, of which about 10% went to both the education and health sectors. Program assistance received around 12% of this aid and over 25% was used for emergency aid. The country’s Sustainable Development and Poverty Reduction Program (SDPRP) is its PRSP which provides a shared platform to achieve accelerated growth to overcome the pervasive poverty and food insecurity as well as to reach the Millennium Development Goals.

The Government significantly increased poverty-targeted expenditures, including transferring increasing levels of funds to local governments, which have responsibility for basic service delivery. Access to education has increased, the gross enrolment rate rose from 64.4 percent in 2002/03 to 79.2 percent in 2004/05. Access to clean water has risen from 34.1 percent in 2002/03 to 42.2 percent in 2004/05.

The Government of Ethiopia (GoE) launched its harmonization program in June 2002. In December 2002, at the first Consultative Group (CG) meeting since 1996 (and held in-country), GoE and partners agreed on the details of harmonization of development cooperation and improvement in aid modalities. They also agreed to review and monitor the results of their enhanced cooperation. The meeting was co-chaired by GoE and the World Bank.

The country has made significant progress on harmonization. The achievements consist of

• Comprehensive Donor-Government Dialogue Architecture—for improved coordination.
• A common framework toward budget support with common conditionalities and performance indicators, alignment of assistance with SDPRP (Ethiopia’s PRSP) reviews and budget cycle, and increased predictability and volume of donor flows through multi-year donor commitments.
• Institutionalization of the harmonization process through the creation of a Joint Task Force on Harmonization.
• A time bound Harmonization Action Plan (HAP) for harmonization work undertaken at the national, sectoral and project levels, with at each level, efforts (focused around donor cooperation, financial management and accountability, procurement, M&E, and environmental safeguards) involve integration of harmonized procedures as they are developed, reduced transaction costs through joint missions, shared assessments and analytic work, and common requirements and mechanisms.

The Government of Ethiopia (GoE) has prepared a policy matrix augmenting the policy measures to which it has committed, in the SDPRP. This facilitates harmonizing budget support assistance.

SDPRP first Annual Progress Report (APR) review meeting took place on December 1, 2003. Some delays experienced in, for example (i) approving and implementing the financial calendar; (ii) joint government-donor review of budget allocations; and (iii) clarifying an indicator matrix which includes political governance indicators. The second APR on the implementation of SDPRP from August 2003 to July 2004 was officially delivered (delayed) in July 2005.

A new PRSP (SDPRP II) covering the period 2005/06 to 2009/10, is in an advanced stage of preparation. It will aim to accelerate the progress achieved in the original SDPRP, and is expected to have an increased emphasis on infrastructure – especially roads, energy, and irrigation.

Ethiopia reached its Completion Point under the Enhanced HIPC Initiative on April 2, 2004. GoE has developed a debt management strategy with a forward looking set of aid and debt management policies. The country is eligible to benefit from the G8 Multilateral Debt Relief Initiative (MDRI) in which 100 percent cancellation of debt owed to IDA, IMF and AfDB is likely.

The HAP covering the period to 2006, focused on issues such as procurement, public financial management, monitoring and evaluation, and country analytical work.

AfDB, Canada, EC, Germany, Ireland, Sweden, UK, and WB have been providing assistance in the form of budget support. Development Partners (DPs) were preparing to scale up their assistance. For example, donors in the Development Assistance Group (DAG) agreed to a “Joint Declaration on Harmonization and Aid Effectiveness” which set out an accelerated schedule to meet the Paris targets. However, as a result of the post-election events in 2005, donors have undertaken a joint-assessment of political and economic conditions for development. Also, they have suspended direct budget support.

CIDA, DFID and the WB have developed a new approach of “promoting basic services” (PBS) as a solution to the prevailing conditions for development. Tightly monitored aid to more targeted programs (mainly at the regional and district level) is to be delivered in lieu of general budget support. GoE, these three donors and Development Corporation Ireland (DCI) are financing a two year operation.

WB (assisted by other DAG members) has prepared an interim CAS (ICAS) to cover FY06-07. Its overarching objective is to support implementation of a wide ranging program of governance reform and consensus-building efforts among citizens and policy makers.

OECD/DAC Working Party has developed indicators to monitor progress on harmonization and alignment. These indicators were field-tested in fourteen countries (including Ethiopia). This exercise coincided with the annual survey on Budget Support Alignment done by the Strategic Partnership with Africa (SPA). Six Sub-Saharan African countries (Ethiopia, Mozambique, Niger, Senegal, Tanzania, and Zambia) of the eighteen countries in the SPA survey, were also included in the OECD/DAC survey. SPA has worked with DAC to avoid duplication, so the SPA questionnaire was included within the (more comprehensive) DAC questionnaire (part D) for these six countries. A draft report has been prepared.

There are SWAps in education, health, and transport sectors. Building on the positive harmonization experience using single-sector, multi-donor SWAPs, harmonized multi-sector, multi-donor investment support such as the Productive Safety Nets Program and the Public Sector Capacity Building Program (PSCAP) have been developed.

The EC has established pool funding to support the Road Sector Development Program. The EC, USAID and WB are attempting harmonization of food sector policy and programs.

Delegated cooperation agreements in the education and health sectors exist between Norway and Sweden.

Five bilateral donors (Belgium, Ireland, The Netherlands, Sweden, and the United Kingdom) have decided to move toward full harmonization with pooling of funds using common procedures for commitments; disbursements; M&E; information sharing; procurement and financial management (including auditing and reporting); and relying to the extent possible on GoE laws, regulations, and procedures as outlined in the education program implementation plan. The Memorandum of Understanding (MoU) between these donors and the government is being finalized. The former program implementation manual is being revised to reflect relevant capacity building efforts, budget process reforms, and procedures governing the handling of pooled funds.

The education sector program includes capacity building such as the Teacher Development Component, which is also supported by donors. The Public Service Delivery Capacity Development Program (PSCAP), a multi-sector, multidonor program designed to meet the capacity building needs of implementing a poverty reduction strategy in a decentralize public service delivery structure, is making progress.

ILO, UNAIDS, USAID, World Bank Institute (WBI) and the Ethiopian Business Coalition Against AIDS (EBCA) fund a capacity development program developed by EBCA and the WBI, and launched in December 2004. The series of localized tools and services developed to help these firms include tailored corporate HIV/AIDS policies, and hands-on help to implement workplace and community outreach programs.

The Country Financial Accountability Assessment (CFAA), undertaken as a multidonor product (EC, Ireland, Netherlands, Norway, Sweden, UK and WB), has been completed in 2003. Focus is now on capacity building to support the CFAA outcomes in an integrated CPAR/CFAA action plan.

A Public Expenditure Review (PER) - joint product of DFID, GTZ, Ireland, UNFPA, WB, and WHO - was completed in 2004.

A Country Economic Memorandum (CEM) on Growth and Governance is in an advanced preparatory stage.

In the area of environmental safeguards, the World Bank and DFID, in close collaboration with UNDP and the donors’ technical group on environment, are carrying out an assessment of environmental legislation.

In addition, the World Bank is providing support for activities at the project level, namely for common financial reporting system; standard bidding document for goods, civil works and consultants; common thresholds for post and prior reviews in co-financed projects, as well as common thresholds for national competitive bidding (NCB) and international competitive bidding.

The Development Gateway (DG) in partnership with the WB, OECD and UNDP developed the Aid Management Platform (AMP), a web-based e-government tool designed to assist with aid management, coordination and reporting capabilities of developing country governments and their donors. In May 2005, the first two modules of AMP (focusing on aid tracking and reporting) were successfully piloted in Ethiopia with the assistance of the Ministry of Finance and Economic Development (MoFED). Licensing arrangements support sustainable capacity-building. More than 30 staff members at MoFED have been trained on the system. DG is actively working with MoFED, DAG, UNDP and WB on the next phase which includes modules for a government/donor planning calendar, scenario-builder, and knowledge management tool.

The first SPA harmonization mission to Ethiopia was in October 2002. The mission was conducted jointly with the PRSP learning group of the Economic Commission for Africa (ECA). A follow-up mission was held in Nov./Dec. 2003.

The annual SPA Plenary Meeting was held on January 19-20, 2005 in South Africa. Working Groups and other technical meetings were held on January 16-18, scheduled sequentially. For example, the Budget Support Working Group (co-chaired by EC and DFID) and the Sector Support Working Group (co-chaired by Germany and the US).

Ethiopia was represented at the AfDB and WB sponsored Africa Regional Workshop on Harmonization and Alignment for Development Effectiveness and Managing for Results which was hosted by the Government of Tanzania in Dar-es-Salaam on November 9-11, 2004. The workshop prepared participants for the Second High-Level Forum (HLF-2) on Harmonization and Alignment in Paris, Feb. 28-March 2, 2005.

GoE participated in the Paris HLF and was a signatory to the “Paris Declaration on Aid Effectiveness” of March 2005.