Social sector spending cited as emerging challenge for the country

By Melaku Demissie

The World Bank's recent public expenditure review summary reveals that Ethiopia faces challenges that are almost unique - human development needs are arguably the greatest of any country in the world, while at the same time the capacity to finance those needs is probably lower than anywhere else.

The expenditure requirements confronting the government to provide even minimum levels of health and education services are enormous. It says this is partly because of the current human development status of the population which is very poor. About 59 percent of children are malnourished to some degree; the average Ethiopian has less than one year of schooling; women face a five percent probability of dying during child birth; and at least five to six million people are so chronically short of food that they face potential starvation each year, and only survive thanks to massive inflows of food aid.

During a discussion on the review, World Bank economists said that Ethiopia was starting from an exceptionally low base in terms of the coverage of existing systems and facilities. The secondary school system only has capacity for about eight percent of high-school aged children; there are 1,300 medical doctors for a population of 67 million people; only 18 percent of the family planning needs of married women are being met; and water supply coverage, which stands at 24 percent, is the lowest in sub-Saharan Africa.

As a consequence, the economists said, there was a massive unserved population where over 12 million children are not in school, 26 million people have not yet been provided with access to some kind of basic health facility, 1.9 million additional children need to be immunized each year, and 51 million people are estimated to be without access to potable water.

The World Bank says the capacity to finance these services is far lower than elsewhere.  Ethiopia's per capita income, which is 100 US dollars, is lower by half of that of most of the world's poor countries. The country, thus, has a correspondingly lower capacity to generate revenue domestically. At the same time Ethiopia receives proportionally less foreign aid than other poor countries. In 2001, Ethiopia received official development assistance (ODA) amounting to 16 dollars per capita compared to about 33 dollars per capita for Burkina Faso, Rwanda, or Ghana.

It added that massive further increases will take place over the coming two decades. The population is currently growing at two million persons per year, and by 2020 is projected to reach 106 million, adding a further 40 million people for whom health care, education, adequate food and water supply will be needed. "Mounting an aggresive family  planning program can have a major impact, and is one of the most important things that government can do," the Bank noted.

Because the cost of different programs will primarily be incurred by regional governments, there is a need for a major increase in the share of resources transferred to lower-level government structures, the bank also said, adding that the very limited capacity to finance these needs domestically will largely drive up the level of foreign aid requirements over the next two decades.

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