Letter from the World Bank
Ishac Diwan, Country Director for Ethiopia
May 17, 2006
On May 11 your website published an article raising questions about the World Bank's strategy in Ethiopia, particularly in regard to the proposed Protection of Basic Services project. We have written to your website previously on this topic and do so again, in the interests of continuing to engage in an open debate and to ensure an accurate portrayal of the Bank's motives and instruments for providing aid to Ethiopia.
I would like to begin by pointing out the fact that what is called "direct budget support" to the Government of Ethiopia has been suspended since December 2005, because of the perceived risks of providing fully discretionary funding without strong mechanisms which would provide us -- and other direct budget support providers -- information that funds had been used for intended purposes only.
Second, at that time, all direct budget support partners clearly indicated that they would be exploring alternative instruments that would have stringent reporting requirements and explicit mechanisms for promoting transparency and accountability in public budgets, resource use and service delivery. The proposed Protection of Basic Services project is the result of these explorations. The motivation is the universal recognition that the needs are extremely high in Ethiopia -- especially in terms of basic services in education, health, water and agriculture -- and that the abrupt withdrawal of significant aid amounts inevitably hurt the poorest of households. There is also consensus among the development community that Ethiopia, under this Government, has made progress on several key human development fronts -- malnutrition, numbers of children going to (and completing) primary education, child survival, etc. -- which cannot be allowed to be rolled back. Finally, our collective assessment is that the Government's commitment to poverty reduction and broad-based growth remains strong.
Third, the proposed project conforms to the specific suggestions that your article makes. (i) It is not providing direct budget support, which needs to be understood as an aid instrument which has no expenditure tracking or specific restrictions on sectors where the funds can and cannot be spent. (ii) The World Bank is channeling resources to the poor through an investment project vehicle. The project meets all the requirements of a Bank investment project. In terms of being a "standard" project, you may wish to note that there is no such thing since the Bank believes that each project needs to be designed to respond to the conditions which it aims to address. (iii) The project has not one, but two, strong components that would seek to empower the poor to demand quality public services. We fully agree with you that incentives for efficient delivery of basic services at the local level are only realized when beneficiaries become clients to whom suppliers, including public officials, are accountable.
Fourth, we note that the project, has been prepared in full consultation with the Development Assistance Group in Ethiopia. As a result of the collaborative effort, the U.K., European Commission, Canadian, Irish, Swedish, and Dutch governments, and the African Development Bank are considering support to Ethiopia for the Protection of Basic Services.
Finally, we want your readers to know that we have consulted extensively with leaders of the opposition parties, civil society organizations and donor agencies in Ethiopia, and members of the Ethiopian Diaspora to discuss whether this is an appropriate approach. The general feedback we have received is that this is appropriate, and moreover, that the emphasis on fairness, transparency and accountability built into the project - and on which the resource flows depend - are very welcome developments. We continue to hold these consultations, the summary of some of which can be found on our website. www.worldbank.org/et
Sincerely,
Ishac Diwan
Country Director for Ethiopia
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Related Articles
On May 11 your website published an article raising questions about the World Bank's strategy in Ethiopia, particularly in regard to the proposed Protection of Basic Services project. We have written to your website previously on this topic and do so again, in the interests of continuing to engage in an open debate and to ensure an accurate portrayal of the Bank's motives and instruments for providing aid to Ethiopia.
I would like to begin by pointing out the fact that what is called "direct budget support" to the Government of Ethiopia has been suspended since December 2005, because of the perceived risks of providing fully discretionary funding without strong mechanisms which would provide us -- and other direct budget support providers -- information that funds had been used for intended purposes only.
Second, at that time, all direct budget support partners clearly indicated that they would be exploring alternative instruments that would have stringent reporting requirements and explicit mechanisms for promoting transparency and accountability in public budgets, resource use and service delivery. The proposed Protection of Basic Services project is the result of these explorations. The motivation is the universal recognition that the needs are extremely high in Ethiopia -- especially in terms of basic services in education, health, water and agriculture -- and that the abrupt withdrawal of significant aid amounts inevitably hurt the poorest of households. There is also consensus among the development community that Ethiopia, under this Government, has made progress on several key human development fronts -- malnutrition, numbers of children going to (and completing) primary education, child survival, etc. -- which cannot be allowed to be rolled back. Finally, our collective assessment is that the Government's commitment to poverty reduction and broad-based growth remains strong.
Third, the proposed project conforms to the specific suggestions that your article makes. (i) It is not providing direct budget support, which needs to be understood as an aid instrument which has no expenditure tracking or specific restrictions on sectors where the funds can and cannot be spent. (ii) The World Bank is channeling resources to the poor through an investment project vehicle. The project meets all the requirements of a Bank investment project. In terms of being a "standard" project, you may wish to note that there is no such thing since the Bank believes that each project needs to be designed to respond to the conditions which it aims to address. (iii) The project has not one, but two, strong components that would seek to empower the poor to demand quality public services. We fully agree with you that incentives for efficient delivery of basic services at the local level are only realized when beneficiaries become clients to whom suppliers, including public officials, are accountable.
Fourth, we note that the project, has been prepared in full consultation with the Development Assistance Group in Ethiopia. As a result of the collaborative effort, the U.K., European Commission, Canadian, Irish, Swedish, and Dutch governments, and the African Development Bank are considering support to Ethiopia for the Protection of Basic Services.
Finally, we want your readers to know that we have consulted extensively with leaders of the opposition parties, civil society organizations and donor agencies in Ethiopia, and members of the Ethiopian Diaspora to discuss whether this is an appropriate approach. The general feedback we have received is that this is appropriate, and moreover, that the emphasis on fairness, transparency and accountability built into the project - and on which the resource flows depend - are very welcome developments. We continue to hold these consultations, the summary of some of which can be found on our website. www.worldbank.org/et
Sincerely,
Ishac Diwan
Country Director for Ethiopia
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