Ethiopia Sustains Reforms to Spur Growth and Boost Investment Climate and the Finance Sector

The World Bank

WASHINGTON, March 19, 2020— The World Bank’s Board of Executive Directors today approved $500 million ($312.2 million grant and $187.8 million credit) from the International Development Association (IDA) in continued support of the Government of Ethiopia’s Homegrown Reform Agenda. The Second Ethiopia Growth and Competitiveness Development Policy Operation (DPO) is intended to accelerate Ethiopia’s economic growth and achieve its vision of becoming a lower-middle-income country.

This operation is the second of a series of DPOs and provides both financial and technical support to Ethiopia’s economic reforms. The operation is designed to help Ethiopia revitalize the economy by broadening the role of the private sector and attaining a more sustainable development path. Ethiopia, with support from the operation has:

  • Continued the implementation of reforms in the energy sector to improve efficiency and cost recovery, while protecting the poor.
  • Established the new telecom regulator, Ethiopian Communication Authority, and launched the process of consultation and issuance of two licenses to new firms.
  • Enabled private sector actors to provide value added services at dry ports, to continue enhancing the efficiency of the logistics sector, which is catalytic to growth and exports.
  • Approved new Investment and Privatization proclamations, fostering competition and facilitating private sector participation in a number of sectors.
  • Removed distortions in the financial sector and introduced new government financing instruments, helping reduce direct cash advances from the Central Bank that were generating inflation.
  • Continued introducing regulation that allow for greater civil society organizations and citizen participation in the development process.

“This operation builds on the structural reforms initiated in 2018 and contributes to Ethiopia’s efforts to improve competitiveness, boost exports, generate jobs and accelerate inclusive growth,” said Miguel Eduardo Sanchez Martin, World Bank Task Team Leader for the Operation.

The Second Growth and Competitiveness DPO focuses on three pillars: maximizing finance for development, improving the investment climate and developing the financial sector; and promoting transparency and accountability.

“The reforms implemented will help turn-around the electricity sector’s financial performance and support Ethiopia’s ambition to provide universal access to electricity,” said Mikul Bhatia, Senior Energy Specialist and Task Team Leader for the program.

This operation is aligned with the World Bank Group’s twin goals of ending extreme poverty and promoting shared prosperity, the Country Partnership Framework for Ethiopia, as well as the Government of Ethiopia’s development strategy.

*The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 76 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.6 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $21 billion over the last three years, with about 61 percent going to Africa

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Ethiopia Sustains Reforms to Spur Growth and Boost Investment Climate and the Finance Sector