AfDB’s new 2023-2027 strategy to help spur economic transformation in Ethiopia

ADDIS-ABABA The African Development Bank [AfDB] recently approved the 2023-2027 Country Strategy Paper for Ethiopia, which will support the country in expanding inclusive and sustainable growth through agro-industrialization, improved connectivity, and competitiveness, and reduced vulnerability to shocks.

The strategy focuses on improving economic and financial governance for greater resilience, enhanced service delivery and private sector growth, and developing quality, as well as sustainable infrastructure to support Ethiopia’s agro-industrialization.

Under the first priority area, the Bank will support Ethiopia to strengthen institutional and human capacity in macroeconomic and financial governance, including monetary policies and debt management. A key focus is to improve the government’s capacity to deliver quality and equitable essential social services, promote transparency and accountability, and strengthen the resilience of institutions and services.

Specific results envisaged include increased access to essential services, improved economic opportunities for women and youth and an expanded role for the private sector in the economy.

In particular, the share of the population with access to essential health services within a two-hour travel time is expected to increase from 60 percent in 2022 to 65 percent in 202 while the share of the population with access to safe drinking water is projected to rise to 63.5 percent from 58.5 percent.

Meanwhile, the share of the population with access to basic sanitation services is expected to increase from 20 percent to 25 percent.

On the other hand, private investment as a share of gross domestic product is expected to increase from 24 percent to 28 percent, and the rate of youth access to credit facilities to increase from 25 percent to 30 percent (30 percent of them women).

Regarding the second priority area of the strategy, the AfDB plans to support the development of quality, sustainable and climate-friendly infrastructure. “This will help expand agro-industrialization and value chains, improve connectivity and inclusion, diversify production and facilitate structural transformation.”

It is envisaged that the development of high-quality infrastructure in Ethiopia will reduce the cost of doing business, facilitate the movement of goods and people and increase productivity.

“The Bank’s support will also help improve access to energy systems to meet domestic demand and strengthen regional connectivity. Investments will focus on constructing transmission and distribution lines as well as mini-grids. They will also support energy reforms and enhance human and institutional capacity for increased efficiency and quality of services,” officials say.

They say the implementation of this pillar will contribute to increasing the proportion of cooperatives and farmers’ organisations linked to agro-industrial parks from 34 percent in 2022 to 40 percent in 2027; wheat production from 5.2 million tonnes to 6.5mln tonnes; and milk from three billion to 5bln liters by 2027.

According to officials, the share of households with access to electricity will rise to 50 percent of the population by 2027, from 44 percent in 2022. Energy exports will increase from 1,145 gigawatt-hours per year to 2,374 gigawatt-hours, mainly to Kenya and Djibouti.

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