Poverty In Ethiopia

From road research 5 Economic Dev’t in Ethiopia

Ethiopia is an agrarian economy where agriculture provides employment for about 80% of the population (PASDEP, 2006) and constitutes for about 48% of overall GDP in 2004/05(IMF, 2006a). The agricultural system in the country is mainly rain-fed subsistence farming. . Ethiopia is among the poorest countries in the world and its per capita income is much lower than the SubSaharan African average of US$1225 (World Bank, 2012). Although the incidence of poverty has been declining nationally, it still remains quite high at 30 % in 2011(MOFED, 2012).2 Ethiopia made the transition to a market economy in 1991 through successive economic reform measures along the lines with the World Bank and IMF reform

For the last six years since 2003 the country has shown fast economic growth about 11% per annum (World Bank, 2012). In 2005/06 the government has designed and endorsed a plan for accelerated and sustainable development to end poverty (PASDEP). The plan was to bring economic growth and to achieve Millennium Development Goals. Ensuring rural economic growth and poverty reduction is one of main thematic objectives of this plan which is now followed up by the Growth and Transformation Plan (GTP) since 2010. The economy has been growing at about 5% during 1995-2002 and by more than 8% annually since 2002. The GTP is designed to achieve pro-poor growth as well as meet the Millennium Development Goals. The major objective of the plan is to strengthen modern and productive agricultural economy in which industries and technologies play a leading role (MOFED, 2010). Government underlined the expansion and provision of quality infrastructures to achieve the MDGs. Transport infrastructure has been playing substantial role in the economy especially since the federal government’s decision to launch a Road Sector Development Program in 1997. In the past few years, every poverty reduction strategic plans have given priority to improve accessibility of

Over the fourteen years of the program a total of 57950 Km road construction work has been carried out of which about 20668 km were federal roads while 36428 km are regional roads. During this period 3662 km of link roads have been constructed, 5931 km of roads were upgraded and about 2380 km roads were rehabilitated. The total cost of the RSDP for the period 1997-2010 was about USD 7.3 billion which is about 79% of planned budget. Of the total disbursement 34% was spent on rehabilitation and upgrading of trunk roads while 39% was for construction and upgrading of link roads and about 9.4% for expansion and maintenance of regional roads. The remaining 15% is spent on federal road maintenance, institutional support projects and construction of community roads. About 71% of the RSDP spending is financed from domestic source while 29% was development aid obtained from the World Bank, European Union, Government of China, African Development Bank and other international donors (ERA, 2011). Government of Ethiopia is the largest financer which covers about 57% of spending for the RSDP. The focus of the first RSDP was rehabilitation, maintenance and upgrading of existing roads while the following phases focused on upgrading and construction of new roads. Hence, government