Ethiopia and the World Bank in the 2000s

The role of donors in Ethiopia has emerged as a focus of an ongoing debate on authoritarian aid. (See here and here) As part of a broader wariness of where  moralizing hubris  can lead, I made a decision a few years ago to focus my work on the challenges of ‘messy democracies’ (which, evidently as of 2021, includes the USA and other Northern countries). Though I don’t intend to engage with the current controversy, between 1999 and 2008 I was quite centrally involved with the World Bank’s engagement in Ethiopia, especially from a governance perspective; I subsequently  wrote about that experience. Here, as a contribution to the current debate, is the relevant extract from my 2014 book, Working with the Grain.

“Ethiopia – planting seeds of bottom-up accountability.  Between 2000 and 2010, aid inflows averaged about 5-8 percent of total annual income (in the range of $1 billion annually) – and accounted for about one-third of public expenditures. When it comes to aid, mutuality often  plays out in a troublingly superficial way: political support from citizens of donor countries depends importantly on the aid effort’s ability to evoke among ‘Northern’ taxpayers a warm feeling of doing the right thing.

Prior to Ethiopia’s 2005 election, the country had become a poster-child of ‘good’ aid. Back in the 1970s, along with Bangladesh it had been the country where images of starving children had evoked a rash of ‘live aid’ rock concerts and feel-good donations. For a while, the brutality of the  repressive military Derg regime undercut the narrative. But finally, with the emergence in Meles Zenawi of  a new-generation-leader committed to development, the narrative could come together.  The strength of   commitment by donors to Meles Zenawi’s government was evident both in the amount of aid, and in the form in which it was given. Ethoiopia became a leading example of new, cutting edge approaches to development aid. 

A common criticism of aid is that it supports gold-plated enclaves (complete with the donor country nameplate)  in the form of  initiatives which destroy the capacity of national governments by undercutting the recipient government’s ability and willingness to make choices, and by  luring the most talented people away from the public sector. In response to this criticism, in countries where governments seemed committed and capable, donors increasingly were moving to provide aid as annual ‘budget support’ for the country’s expressed priorities. (This isn’t quite the blank check it seems. It provides a platform for in-depth dialogue between donors and recipient governments as to priorities and performance. As champions of budget support pointed out, having some influence over all of government spending was surely likely to do more to combat poverty than having direct control over what rarely amounted to more than 5-10 percent of the total spend.) Meles’s commitment to development, plus the country’s track record of managing resources prudently, had made Ethiopia a major recipient of budget support.

But in the violent aftermath of the 2005 election, the positive story came undone. It became politically impossible to write an annual budget support check; that would signal seemingly unqualified support for the Meles regime. Instead, the clamor arose for donors to withdraw support entirely from Ethiopia. What was to be done? Donors adopted a two-part response.

One part was a fig-leaf of sorts. In place of budget support, and without cutting aggregate levels, donors embraced a new aid model for Ethiopia: the protection of basic services. Formally, there were two large differences between the old and new models. Aid no longer was made available for general purposes: it was specifically targeted to support a scaling-up of social sectors by paying the costs of teachers and health workers. Better yet, in Ethiopia’s radically devolved formal constitutional arrangements,  education and health were the functions of regional governments, the support provided was no longer going directly to Meles. In practice, though, budget revenues that aren’t used for one thing can be used for another. Provincial levels had no independent revenue-raising capabilities, and teachers and health workers were already being paid indirectly by the center through inter-governmental transfers. But budget fungibility is an argument  for technicians. Viewed through a more political lens, the advantages are large vis-à-vis donor country electorates of reframing aid  in terms of direct support for teachers, nurses and doctors.  

The second part of the donor response also might initially have seemed symbolic – though it was especially difficult to negotiate with the Ethiopian government. In return for large-scale continuing aid support for the provision of basic services, donors pressed hard for the introduction of a variety of bottom-up mechanisms to enable citizens and civil society organizations to monitor whether public resources indeed were delivering on their intended purposes.

Implementation was a long, slow process; for four years, there were repeated disagreements between donors and government, and associated delays. But, remarkably, the Ethiopian authorities themselves increasingly have embraced the bottom-up approach. As of 2012, over 3,000 officials from across the country had been trained in how to design and implement good practices in local-level financial transparency and accountability; over 50,000 local leaders have been sensitized as to how they can proactively monitor public spending; over 90 percent of all local governments were posting budgets.

To be sure,  no one would confuse contemporary Ethiopia with a vibrant, multi-party democracy along the lines of contemporary Korea.  Meles’ regime was not one to make the same mistake twice. Going into elections in 2010, there was little doubt as to the outcome. In the event,  the EPRDF won close to two-thirds of the vote, and 99% of the seats in national and regional parliaments. But the journey of development along the dominant trajectory can be a long and surprising one. In the early 1960s, no one would have predicted that forty years later Korea would be a thriving multi-party democracy. Whether Ethiopia can sustain a further two decades of stability and broad-based, inclusive economic growth is  enormously uncertain – and Meles’ untimely death only underscores the risks. But if Ethiopia is able to remain on its current trajectory, the seeds of better governance which have been planted over the past two decades – a de jure democratic constitution with strong formal checks and balances; and a de facto willingness to explore how bottom-up transparency can help hold public officials accountable for performance – could yet be early harbingers of a profoundly transformed polity and society.” (2014; pp. 65-67)

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