World Bank approves $1.15 billion interest-free credit to Ethiopia

WASHINGTON, September 25, 2012 – The World Bank’s Board of Executive Directors today endorsed a new Country Partnership Strategy (CPS) for Ethiopia to build on the country’s development progress over the last five years of its previous country strategy and to help its government and communities go further in their efforts to create more growth, more jobs, better health and education, and significantly less poverty.  

Consistent with the new CPS, the Board approved two International Development Association (IDA*) interest-free credits totaling US$1.15 billion to support Ethiopia’s commitment towards expanding the reach of key services to poor people across the country, and further develop its road networks to help promote better regional trade and internal travel.

As a result of today’s decisions, the World Bank Group will mobilize US$600 million in development financing for the third phase of the Promoting Basic Services (PBS III) program, which serves approximately 84 million people across Ethiopia, and is co-financed by the Government of Ethiopia, and other development partners such as the European Union, the UK Department for International Development, the African Development Bank, Italy, Austria and others. 

Since 2006, the program has helped hire over 100,000 new primary school teachers at the ‘woreda’ (district) level; more than 38,000 health extension workers nationwide; and some 45,000 agricultural extension workers. The program has also promoted transparency and citizen engagement by posting its budgets and performance score-cards in 84% of its operating districts and encouraging greater social accountability.  

In recent years, Ethiopia has reduced its under-5 mortality rate from 123 per 1,000 live births in 2005 to 88 per 1,000 live births in 2010.  

“PBS III will contribute to Ethiopia’s rapid progress towards achieving many of the Millennium Development Goals, by providing funding for crucial staff to help to improve key services such as education, health, food production, water and sanitation, and rural roads. Promoting improved access to quality, decentralized basic services is also central to the core elements of Ethiopia’s new CPS,” said Guang Zhe Chen, World Bank’s Country Director for Ethiopia.

Ethiopia’s new Country Partnership Strategy has two main areas of focus?“Fostering competitiveness and employment” including improved delivery of infrastructure, and “Enhancing resilience and reducing vulnerabilities”, including developing a comprehensive approach to social protection and risk management.

Supporting the Government’s impressive progress in expanding the road network, the Ethiopia Transport Sector Project will invest US $ 415 million to upgrade five main roads that will play an important role in supporting economic growth in Ethiopia over the medium to long term by providing better access for industrial, agricultural and tourism developments, and will also provide improved access for beneficiaries in the project areas to essential services.

“The size and quality of the national road network is a major barrier to more economic growth and less poverty in Ethiopia. By improving conditions and safety on these main roads, we believe the project will help stimulate local development, as well as create more jobs and opportunity for people across the country,” said Chen.

Another priority of the Ethiopia Country Partnership strategy will be to further emphasize the development role of women by mainstreaming their close involvement in both the expanded PBS and roads projects.