High Level Forum (HLF) between the GoE of Ethiopia and the Development Assistant Group was held on 7th March 2017 in Ministry of Finance and Economic Cooperation. The forum brought together Ministers, high level Government officials and DAG members to deliberate on youth employment and global partnership on effectiveness development cooperation. At the forum the Government reiterated its commitment to give high priority to industrialization, inclusive growth and youth employment opportunities in order to sustain the country’s development gains.
In line with the country’s vision of attaining a middle-income country and becoming Africa’s light manufacturing hub by 2025; the Government’s strategic focus is on labor-intensive industries that create jobs and bring structural transformation. It was agreed that concerted efforts should be made in the areas of capacity building for entrepreneurs and government institutions; provision of land, credit and other necessary services; creation of linkage with other sectors and addressing humanitarian and development challenges in a more comprehensive and coordinated manner.
DAG co-chairs expressed their concerns regarding youth unemployment particularly in rural areas and highlighted the significance of having a sound industrialization strategy; environmental and social safeguards for sustainable development. The forum noted that joint efforts will be made towards improved institutions to enhance coordination and synergy across the various programs on job creation and youth employment by development partners. In terms of global partnership on effective development cooperation, it was agreed that Government and development partners will focus on three indicators- Aid predictability, Aid on budget and Use of Country Systems-setting individual targets by each agency and collectively at national level to improve Ethiopia’s performance on future Global Partnership on Effective Development Cooperation monitoring survey.
Minister of Finance Dr. Abraham Tekeste noted that government’s vision for Ethiopia is to attain a diversified economy that generates adequate resources to address risks with a robust resilience and social protection system, both in rural and urban areas in the coming years.
The High Level Forum on social accountability between the Government of Ethiopia and development partners was held on 24th March 2016 at MoFEC. The meeting was opened by H.E. Mr. Abdulaziz Mohammed, Minister of Finance and Economic Cooperation (MoFEC). The forum was attended by Ministers, Head of Agencies, high Government senior government officials and experts from different various development agencies. In his opening remarks, Minister Abdulaziz stated that the High Level Forum (HLF) titled, “The Imperative of Social Accountability for Ethiopia’s Sustainable Growth” was took place at a pivotal time, when Ethiopia is was embarking on the second phase of its Growth and Transformation Plan (GTP II) and the launching of Sustainable Development Goal(SDGs). It was noted that Ethiopia’s Social Accountability Program (ESAP) provides a good entry point to address social accountability challenges in the country. Development partners jointly work with the Government towards the attainment of GTP II and Addis Ababa Action Agenda (AAAA), which is was equally ambitious and grand.
Government and Development Partners hold successor Growth and Transformation Plan Consultations
Development partners and Government ministers have conducted the final leg of national consultations on the forthcoming successor Growth and Transformation Plan (GTP II). This consultation comes just ten days before the draft national plan is submitted to National Planning Council (NPC) and parliament for endorsement.
Chaired by Mr Ahmed Shide, State Minister at the Ministry of Finance and Economic Cooperation (MoFEC), this consultation was attended by over 300 representatives from the donor community, diplomatic corps, government and heads of UN agencies in Ethiopia.
State Minister Shide said that the gathering was part of a ‘tradition’ set at the beginning of GTP I ‘to engage with development partners on draft plans, have a consensus on its main objectives, plans and targets and in addition to solicit support’.
Delivering opening remarks, Minister Abdulaziz Mohammed (MoFEC) noted that Ethiopia has made tremendous social and economic gains in the last 5 years and that this ‘stride demonstrates our viability’ forward. He thanked development partners saying that their contribution was ‘commendable’ in the GTP I period and also underlining that Government’s commitment will continue as the national development plan is aligned with three key pillars in the Sustainable Development Goals (SDGs) that seek to foster economic development, social and environmental protection advancement goals. Plans for enhancing good governance require special focus on mobilizing domestic resources he added, and for this there is need to ‘build stronger partnerships locally and with development partners’. He called on development partners’ support through ‘open dialogue’ in ‘technical assistance and capacity building’ also saying that GTP II would harness such partnerships taking into account that Ethiopia’s development is a ‘responsibility of multiple stakeholders’.
GTP I was described as ‘ambitious’ but ‘we are determined to aim high given the critical importance of addressing our accumulated development deficits’, noted Dr Yinager Dessie, Minister at the National Planning Commission (NPC) ahead of a presentation by Deputy Commissioner of NPC, Mr Getachew Adem who gave an overview of GTP I achievements, challenges and opportunities for continuing sustainable development work initiated in the last 4 years. According to Mr Getachew, a main shift between GTP I and GTP II is the fact that the former focused on agriculture while the latter will give greater emphasis to industrial growth, particularly the manufacturing sector. In the 2010/11 and 2013/14 GTP period, real Gross Domestic Product (GDP) growth rates for three key sectors namely, agriculture, industry and services accounted for 6.6%, 20.0% and 10.7% respectively. Efforts in agricultural transformation enabled ‘farmers to shift to high yield crops’ through ‘irrigation development, water harvesting and river diversion’ while in industry, small and micro enterprises were created and strengthened.
On the other hand, Mr. Getachew added that despite ‘significant improvements in domestic saving mobilization over the last four years, the gap between the investment requirements and the level of domestic savings has widened’, an issue that would have to be addressed in GTP II.
In depth discussions on macro economy, productive economic, social and infrastructure sectors as well as capacity building and good governance were then held to come up with development partner recommendations for GTP II.
Speaking on behalf of the Development Assistance Group (DAG) in Ethiopia, DAG Co-chair, Mr Paul Sherlock mentioned three priority DAG support areas for Ethiopia including sustainable growth, provision of quality basic services and ensuring inclusive development. Acknowledging Ethiopia’s successes, Mr. Sherlock said that ‘poverty has fallen, from close to 40% in 2010 to 26% in 2013. In absolute terms, 2.5 million people (50,000 people per year) have been pulled out of poverty’. He also mentioned some gaps that would have to be addressed in the GTP II period such as greater inclusive development to provide more opportunities for women and youth and low-land areas, ensuring delivery of quality basic service and sustainable growth that takes into account unforeseen external shocks such as the global economic, environment and climate change effects.
H.E. Prime Minister Hailemariam Desalegn of Ethiopia in joining the consultations said that ‘issues raised were pertinent’ referring to recommendations put forward by the development community. In his reflections, Prime Minster Desalegn highlighted that ‘Ethiopia aspires to become a leader in light manufacturing, a sector government is ‘keen’ to see moving forward. He further stated examples of light manufacturing such textile, apparel, leather and agro processing, which he termed as ‘key areas where Ethiopia wants to secure more support’. ‘We are getting aggressive in designing industrial parks expecting $1b of revenue (export earnings) – these will help attract more foreign direct investment (FDI)’; moreover, the ‘local private sector is engaged in this sector’. Adding that there is ‘need to diversify exports especially in the mining sector and tourism’, Prime Minister Desalegn said that government has ‘crafted strategies to address a widening gap between imports and exports’. On macro economy, Prime Minister Desalegn disclosed that government plans to boost local potentials for domestic savings to increase 30% in GTP II period. Ethiopia is behind the Sub-Sahara Africa (SSA) average with regards to the tax-to-GDP ratio, which government intends to increase to 4%. He called on development partners’ to provide capacity building support on ‘how to collect taxes and better tax administration reforms’; in other words governance and accountability. Noting that Ethiopia needs ‘additional financing’, Prime Minister Desalegn stressed that ‘public finances are essential and that government savings are also important. Ethiopia stands at 60% capital expenditure against 40% recurrent expenditure and this needs to change’ a higher recurrent budget is required to maintain quality of public services.
Ethiopian public financial system does not take into account public profit making institutions, which are administered sparely. With respect to recommendations raised about the banking sector, Prime Minister Desalegn said that government plans seek to ‘make the domestic private sector competitive’. On debt sustainability, the prime minister said that Ethiopia can mitigate associated risks through its large scale investments in the power sector, citing the potential that the Gilgel Gibe III projects and others brings to Ethiopia through export earnings once completed, which will in turn be used to service debts.
In closing, Prime Minister Desalegn and State Minister Shide thanked development partners for support Ethiopia received throughout GTP I phase and expressed the government’s commitment for enhancing the partnership throughout GTP II period.
Renewing Commitment to Harmonisation
The 10th High Level Forum (HLF) has agreed to re-vitalise the joint Harmonisation Taskforce initially established in 2002 fol-lowing a working organised by the government on the Harmonisation of multiple donor procedures.The Taskforce is in line with the Paris Declaration on Aid Effectiveness and complements other existing mechanisms to streamline
government-donor dialogue and mutual accountability architectures such as the HLF, and thematic working groups. Spe-cifically, it allows for both the government and development partners within the DAG to reach a harmonisation agenda for Ethiopia with clear priorities and timeframe.
The Development Assistance Group (DAG) comprises 30 bilateral and multilateral development agencies providing development co-operation to Ethiopia. The DAG was established in 2001 as a forum for donors to share and exchange information to foster meaningful dialogue with Government.
In the coming years, the DAG will build on lessons learned to-date and reorient itself towards making a contribution to Ethiopia's second Growth and Transformation Plan (GTP II: 2015-2020) and the achievement of the sustainable development goals (SDGs). The next phase of the DAG Project will capitalise on supporting the country's economic growth, poverty reduction and inclusive development in the context of a post-2015 global agenda.
By adopting more harmonised approaches and enhancing mutual accountability, development partners and Government have come a long way towards realising global aid effectiveness commitments, including those recently made at the Nairobi High Level Meeting (2016) and the Busan Partnership for Effective Development Co-operation (2011). Monitoring these commitments and deciding how to further improve the effectiveness of development co-operation in Ethiopia is at the heart of the DAG-Government engagement.
CURRENT DAG CO-CHAIRS
Ms. Carolyn Turk
Ms. Kati Csaba
Head of Development Cooperation