Poverty outlook reveals yet many challenges

When Ethiopian Prime Minister Meles Zenawi outlined his government's latest scorecard in its fight against poverty on 14 February, he posed a quandary to wealthy nations.

Ethiopia is one of the poorest nations on earth, yet it receives one of the lowest levels of aid, he said at the UN Conference Centre in the capital, Addis Ababa.

The World Bank and UN say the country has the capacity to spend more, wide-scale reforms are being implemented and the international community has pledged its support. Yet Ethiopia receives a little over US $13 per head in foreign aid, compared to an African average of $27.

Little wonder then, Meles added, that the Horn of Africa nation remained burdened by massive poverty, hunger and disease.

The UN estimates that 42 million people in Ethiopia receive what is considered to be below the minimum nutritional requirement. Around seven million are dependent on food aid, while HIV/AIDS claimed the lives of 100,000 people in 2004. Added to that is the $116 million a year Ethiopia must pay in interest on debts - a sum equivalent to health care spending in Ethiopia - and the challenges are colossal.

Yet the economy grew last year by 11.6 percent, inflation was cut to nine percent, school enrolment was dramatically increased and health care coverage rolled out, Mekonnen Manyazewal, state minister for finance and economic development told IRIN.

Roads, he added, were being built at a faster rate than ever before - outstripping targets - and water supply coverage had been increased. The government, according to Mekonnen, was meeting its own targets and now the international community should do its bit by radically up-scaling aid.

"Over the last year Ethiopia has made quite visible and measurable progress in its development effort," the minister said of the second annual progress report of the country's sustainable development and poverty reduction programme. But, he added, acceleration of its development was "largely one of affordability".

Since the launch of the country's poverty reduction programme two years ago, the levels of aid, while increasing, are only creeping up. Initial estimates by the Ethiopian government and UN are that the country needs $122 billion over the next decade to reach the global Millennium Development Goals (MDGs) to reduce poverty and hunger by 50 percent.

Currently, it receives $1.9 billion a year. When food and emergency aid is taken out, less than $1 billion a year is being injected into Ethiopia for long term, sustainable development work - the type of aid most agree will make a real dent in cutting poverty and hunger.

"There is a long and daunting list," Ishac Diwan, head of the World Bank in Ethiopia, told IRIN. A weak financial sector, bureaucratic red tape, poor housing, irrigation and the empowerment of ordinary Ethiopians are but a few areas the World Bank chief says need to be addressed.

"Scaling up will require not only more resources, but also the ability to carry on this expanded agenda with ever-more courage and imagination, and with a constant attention to sustainability, efficiency and cost effectiveness," Diwan added.

Bill Hammink, head of the US Agency for International Development (USAID), said the private sector must be promoted with a level playing field with state-owned businesses.

Speaking on behalf of the Donor Assistance Group (DAG) he said the population growth of the country - growing at around 2.8 percent a year - is undermining poverty reduction.

The DAG also stressed the enormous challenges facing the government over its flagship public works scheme that involves ending food dependency for five million people. They warned that the most vulnerable populations should not be excluded - like the disabled, the elderly and women who cannot work for their food or cash - from the scheme.

"We cannot underestimate the challenge involved in moving 5.1 million people into the productive safety nets programme over the next 12 months," he said.

The DAG called for a greater role for Ethiopia's civil society - a move echoed by the Poverty Action Network of Ethiopia, the umbrella coalition of civil society organisations in the country. Likewise, the European Union (EU) - Ethiopia's largest donor, added that strengthening governance was likely to boost aid.

"The EU firmly believes that establishing good governance - including civil society empowerment and human rights - as a key element of our partnership will improve the way we deliver support," said Dutch ambassador Rob Vermaas, whose country currently holds the presidency of the 25-member union. With national elections scheduled for May, the EU added, it was "crucial" that a level playing field for all political parties was secured.

With the 2015 MDGs a decade away, Ethiopia is slowly inching its way towards the targets.

According to the British government, most of Africa, including Ethiopia, is likely to achieve those goals by 2156 - more than 150 years late.

Modibo Toure, country representative of the UN Development Programme, said both donors and the government must be prepared to change.

"More needs to be done," he told IRIN. "To reach the Millennium Development Goals none of us can continue business as usual. On the contrary, we need to revisit all aspects of our work so as to improve and work better together."