Key Points
- Adapting the developmental state model applied in fast-growing Asian economies, the Ethiopian state designed a set of pro-poor policies and generated the government income necessary to implement them successfully.
- Donors played a key role in Ethiopia’s stunting reduction story by contributing resources, especially in the health sector, but the Ethiopian government has successfully coordinated the actions of various donors under its motto “One Budget, One Plan, One Report.”
- Ethiopia’s unique brand of decentralization, which provided local authorities with the power to implement but not to make policy, has created accountability for the quality of service while allowing for an unusually coherent set of government priorities across the country.
- Especially in recent years, the government has increased investment in data collection and analysis as a key part of its push to improve the quality of services.
- The community health system, created at scale over a very short period of time, helped provide the vast majority of Ethiopians who received no health care with access to basic services.
In the late 20th century, the East Asian Tigers, especially China, practiced what is known as state-development capitalism. In this form of governance, the state limits the role of the private sector and plays some of that role itself, using the revenue to implement centrally designed development strategies. The justification for this approach is the notion that the private sector has no incentive to spend on building blocks for the future, whereas the state will make the massive investments necessary for pro-poor sustainable growth if it can mobilize enough capital to do so.
Adapting this model to its circumstances, the Ethiopian government rejected the so-called Washington Consensus, the free-market oriented economic policies favored by the International Monetary Fund, the World Bank, and other major international development players.
For example, Ethiopia’s developmental state holds a telecommunications monopoly, which, according to one study, is “as a result both substantially more expensive and less efficient than in comparable countries,” but which generates a lot of revenue. Similarly, Ethiopian banks are required to hold a portion of their reserves in government bonds, which amounts to a forced loan to the state.
The government has invested the proceeds from these activities in pro-poor infrastructure projects, including the education and health systems discussed later in the study, massive road and rail expansion, and the construction of the largest hydroelectric power plant in Africa. However, some economists question whether the developmental state approach, and the constraints placed on the private sector, limit the long-term growth potential of the economy.
Ethiopia’s relationships with international donors is unique. The government’s development state capitalism runs counter to the preferences of the World Bank, International Monetary Fund, and many bilateral donors, but the country’s successes— and its role as a stabilizing force in the Horn of Africa—have attracted investment from donors.
In the decade following the new government’s assumption of power in 1991, the amount of aid received from donors declined, at least in part because donors wanted to send the message that they disapproved of the quasi-socialist economy. As a result, the government designed its flagship agriculture and health programs on its own.
According to one observer:
When it became clear that Ethiopia’s programs worked, donors started pouring money in. From 1.16 billion dollars in 1992 to a low of 579 million in 1997, total aid rose by 2006 to 2.04 billion and by 2017 to 4.12 billion. This pattern is especially visible in the health sector. Between 1997 and 2004, the average growth rate in donor aid to health was approximately 65 percent; between 2005 and 2010, it was approximately 130 percent, with the total amount of health sector financing from donors surpassing US$1 billion per year in 2013.1
Ethiopia has continued to manage these relationships largely on its own terms. Government officials are known for being explicit about the conditions they will and will not accept, and walking away from aid linked to unfavorable conditions. The government slogan – “One Plan, One Budget, One Report” – is a clear message that it will not tolerate donor-funded programs running parallel to its national strategies. Since 2006, Ethiopia has administered the Promotion of Basic Services program, a block grant program and the largest donor-supported program in the world. It filters more than US$1 billion annually to woredas to fund service delivery. Half of the funding for the program is provided by donors, who have little control over what happens to it, although they take part in routine meetings where they review progress, examine new data, and provide feedback on process and planning.
In 2018, Ethiopia’s five largest donors were the World Bank, the US Agency for International Development, the UK Department for International Development, the European Union, and the African Development Fund.
One of the leading themes in development over the past generation is decentralization, the devolution of governmental authority to the local level. Governments that are closer to the people, it is assumed, will be more responsive to their needs. But the drawbacks to decentralization are also widely recognized—local officials sometimes lack the capacity and resources to govern effectively, and the incoherence of dozens or hundreds of locally made decisions can impede efforts toward larger policy goals.
Ethiopia’s unique brand of decentralization may have helped the country minimize the drawbacks while retaining many of the benefits. This process of decentralization happened in two stages: (1) After 1991, the national government delegated power and resources to the nine newly created federal regions. (2) In 2002, power and resources were shifted to woredas (districts), an even lower level of government. Woredas are now primarily responsible for service delivery in education, agriculture, health, water, and roads. To fund these activities, more than US$1 billion is delivered annually in block grants.
The nature of the power wielded at the local level is different in Ethiopia, however, than in many other countries. Ethiopia is administratively and fiscally decentralized, so that programs are run and money is disbursed at the woreda level, but they are not strategically decentralized. In other words, locals run the programs, but the basic design of the programs is not determined by local officials; they do not have the freedom to set their own priorities. Policies are set by the federal government, and every decision that local officials make is aligned to those policies and aimed at the targets they include.
Nevertheless, decentralization has made the government accountable to the people, if not for what it does, then for how well it does it. According to a 2015 report, “Ethiopian decentralization has created significant space for citizen engagement on local service delivery issues, despite limited space for engagement with national decision-making.” For example, the government has rolled out social accountability tools, including report cards, participatory budgeting, and regular meetings between service providers and users. The Ethiopian Institution of the Ombudsman and Regional Grievance Handling Offices have been created to guarantee third-party review of complaints from citizens about woreda officials. Moreover, 90 percent of woredas publish information about budgets, targets, and performance, creating authentic transparency.
“A federal system that is notably closed to citizens at the national level has significantly opened at the local level,” the 2015 report concludes. “And local engagement has facilitated rapid improvements and rising equality in primary service provision.”
Ethiopia has long prioritized health and nutrition research. In 1995, the Ethiopian government created the Ethiopian Public Health Institute, which conducts public health studies and disease surveillance and provides high-quality laboratory services.
Since the early 2000s, the government has significantly increased its investments in administrative data collection and analysis to generate the insights needed to evaluate the impact of its programs. The second education and health sector development plans in 2002 included education and health management and information systems as targets, but it took a while for these systems to get off the ground.
The Health Management Information System was fully rolled out in 2008, after rounds of assessment and pilot testing, with the intention that it would cover primary, secondary, and tertiary care facilities. In 2013, HMIS was available at 98 percent of hospitals and 87 percent of health centers, although a routine data quality assessment found that only 72 percent of source documents were available and fewer than 60 percent of those were complete.
Until recently, these systems were paper-based, severely limiting their accuracy and efficiency. Since the mid-2010s, the Ministry of Health has prioritized the creation of an electronic Health Management Information System. In 2018, the health data management platform and software needed to roll out the electronic system were launched, but the system is not yet fully operational.
Beyond the health sector, the government established the Central Statistical Agency in 2005. The agency is responsible for collecting, processing, analyzing, and disseminating statistical data and providing technical assistance to government agencies and institutions working with statistical data. In 2009, the government launched its first National Statistical Development Strategy. The second strategy, launched in 2015, has received over ten times more funding (US$357 million) than the first, suggesting that the use of data to inform decisions has become a greater priority for the government.
The government launched its Health Extension Program in 2003, training 40,000 local women, called health extension workers (HEWs), to provide basic preventive care in every community across the country.2
The Health Extension Program was designed with several key principles in mind: the HEWs would be women from local communities who had received at least a tenth grade education, they would be government employees and would be paid (though not much), they would receive standardized training and supervision, and they would be linked to the rest of the health system so they could refer complicated cases.3
Over time, the Health Extension Program evolved as its leaders evaluated the data. In 2006, for example, they instituted a model families program based on the agriculture sector’s demonstration plots. These families received 96 hours of training and were expected to adopt best practices of healthy behaviors to model for other families. Since HEWs could not be in every community every day, model families would provide consistent reinforcement.4 In 2011, many members of these model families joined the Health Development Army, a group of 3 million volunteers who supported the work of the Health Extension Program by underscoring key messages, hosting community meetings, and otherwise promoting healthy behavior among their neighbors.5
The effects of this community health work on overall health coverage were noteworthy. Between 2000 and 2016, the percentage of pregnant women who attended all four recommended prenatal visits tripled (from 10 percent to 30 percent) and immunization rates more than doubled (from 30 percent to 73 percent).6
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1
Teshome SB, Hoebink P. Aid, ownership, and coordination in the health sector in Ethiopia. Dev Stud Res. 2018;5(suppl 1):S40-S55. https://www.tandfonline.com/doi/full/10.1080/21665095.2018.1543549. Accessed 2019.
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2
Assefa Y, Gelaw YA, Hill PS, Taye BW, Van Damme W. Community health extension program of Ethiopia, 2003-2018: successes and challenges toward universal coverage for primary healthcare services. Global Health. 2019;15(1):24. https://doi.org/10.1186/s12992-019-0470-1. Accessed 2019.
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3
Bilal, 2014; Wang, 2016; Perry, 2016; Perry, 2017; USAID, 2017; Ramana and Workie, 2014; El-Saharty, 2009.
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4
Bilal NK, Herbst CH, Zhao F, Soucat A, Lemiere C. Chapter 24: Health Extension Workers in Ethiopia: Improved Access and Coverage for the Rural Poor. In: Chuhan-Pole P, Angwafo M (editors). Yes Africa Can: Success Stories from a Dynamic Continent. Washington, DC: World Bank; 2011. http://documents.worldbank.org/curated/en/304221468001788072/930107812_201408251045629/additional/634310PUB0Yes0061512B09780821387450.pdf. Accessed 2019.
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5
Maes K, Closser S, Tesfaye Y, Gilbert Y, Abesha R. Volunteers in Ethiopia’s women’s development army are more deprived and distressed than their neighbors: cross-sectional survey data from rural Ethiopia. BMC Public Health. 2018;18(1):258. https://doi.org/10.1186/s12889-018-5159-5. Accessed 2019.
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6
World Bank. Immunization, DPT (% of children ages 12-23 months) – Ethiopia [data set]. Washington, DC: World Bank; 2019. https://data.worldbank.org/indicator/SH.IMM.IDPT?locations=ET. Accessed 2019.