The World Bank’s board of executive directors have approved $500 million ($250 million grant and $250 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 revitalise 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 privatisation 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 organisations 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: maximising 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 programme.