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Improving Public Investment Management: Spotlight on Ethiopia

Mario Marcel's picture
 
Overview of Addis Ababa, Ethiopia. Photo - Arne Hoel / World Bank
Overview of Addis Ababa, Ethiopia. Photo: Arne Hoel / World Bank


Last month I met with ministers and local officials in Addis Ababa to explore areas where we, at the World Bank, can help build institutional capability in Ethiopia. The trip was an enriching experience, both personally and professionally. It was gratifying to see first-hand the good work and commitment to development exhibited by our staff in the country.

We have had a decade-long engagement with Ethiopia with a successful track-record. Ethiopia has one of the largest World Bank portfolios in the Africa Region (US$6.1 billion in 2014) and the partnership is strong, with a robust future.

During my visit, I gave a lecture at Addis Ababa University on Public Investment Management before an audience of faculty, students, civil society organizations and donors. I shared with them how much public infrastructure investment has done for the country. Ethiopia has the third-largest public investment rate in the world and three times the average for Sub Saharan Africa.

This effort has contributed to growth that has averaged 10.9 percent since 2004—a figure higher than that of their neighbors or low-income countries on average. Infrastructure investment has also been helpful in expanding access to services and in gaining competitiveness, being a large landlocked country. 

Some of the credit goes to sound management of key investments, particularly roads, which received on average 18 percent of total public investment over the past decade. The lack of roads was a major handicap to development of Ethiopia in the late 1990s. Between 1997 and 2014, the road network expanded by 275% and the share of roads in good condition rose from 22 to 70 percent. 

Yet more work needs to be done. The infrastructure deficit remains substantial, despite a high public investment to GDP ratio over the past decade. And even in the roads sector there is evidence of cost and, especially, time overruns. To help Ethiopia – or any country – develop in a sustainable, smart way requires quality investments. This, in turn, demands a good system Public Investment Management (PIM) across all tiers of government.

With that in mind, the World Bank Group recently published a book, The Power of Public Investment Management, which provides a holistic framework for assessing the key stages of public investment. The book draws on a large sample of nearly 90 PIM diagnostics performed by the Bank in the last few years and features a synthesis of relevant experiences from over 30 countries.
 
The World Bank’s analytical framework is based on a number of “must haves” that any PIM system needs to develop to perform effectively, from project formulation to appraisal, procurement, operation and ex-post evaluation, with a greater focus on functionality rather than form, to adapt to the different institutional traditions of countries.
 
Drawing on that global knowledge, we stand ready to assist the governments such as Ethiopia’s with self-assessments of current systems for selecting and managing public investments. This includes helping policymakers develop systems aligned with their own budget, oversight and evaluation processes.

We are already leveraging our new Governance Global Practice structure to provide “tailor-made” technical assistance and support to establish a functional PIM system.

Part of this work can now be shared with the International Monetary Fund, which is drawing increasing attention to the importance of PIM to increase the effectiveness of public investment and raise the growth potential of countries and has even developed a diagnostic tool –PIMA—that focuses on the fiscal and administrative processes supporting public investment.

With the help of our country counterparts, we at the Governance Global Practice of the World Bank are not only developing partnerships with other international organizations, but also identifying synergies across areas of our own operational work that had been previously separated. So now we are prepared to link traditional public investment management with procurement and citizen engagement.

Our goal is to add value to the work of our clients across the whole investment cycle, where they may need it most. 

Tweet this:  Between 1997-2014, #Ethiopia's road network expanded by 275%. 

Comments

Submitted by Getahun T. Desta on

One of the key issues in managing public investment I believe is maintaining the right balance in intergenerational resource allocation. Ethiopia is currently doing a marvelous job in laying the foundations for future growth that is going to benefit future generations. The job dividend from infrastructure investment to current generation is limited to life span of infrastructure projects. Hence, due attention needs to be given to raising actual production which directly benefit current generation. Maintaining this balance is crucial for Ethiopia.

Submitted by Anonymous on

nice idea..your goal towards like Ethiopia can give them a better future especially the children.

Submitted by Merlin Gabrielle on

Don't tell us this kinds of bullsheet stories ,because we knows what we have inside of our country ,poverty is everywhere animals are deiyng in East afar region and southern Ethiopia also most of the educated people are on the street because of the unemployment rate is become unexpectedly very high. All over the place that is bring the racially or tribalism rulling government made up all things to become difficult so please all of the international media's don't look at your personal interests as much as you can? do your job and give your priority for your job ,Give clear and tangable information for the world, specially your career "journalisem" is a very respectful & powerful job so follow up the ethics.dont bring this kinds of full of lies information to the worldwide at all .Shameful

Submitted by bahta on

Dear let me add some truth which i have seen it with in my recent trip to our dear country, it has a lot of corruption,z government depends on z city while z rural is a dull as it is, school with out proficional teachers ppl r letting them to kill each other by givig them guns meanwhile no love between z ppl . Unfortunately our dear brothers went to addis and excaggerate about it how did u define a developemnt ? If ppl don't have a proper education,if ppl r killing each other, if ppl don't work together if corruption is highly more than u expected then. If it has poor network no water unfortunatley ppl those who r living at z borders to sudan r 90% using sudanese network imagine it's ethiopian place.sudan covered all sudanese place tottally and beyond that it reached ethiopia this is because z communication companies r private they compitted now in sudan internet is probably free anyway let's not exaggerate gov.is transparencing and looking forighners and depending on western europes morethan his own ppl.God bless Ethiopia.

Submitted by Anonymous on

It's always good to see such progress in our developing Africa. I'm from Southern Africa and it's true that the World Bank is doing a marvelous job in in public investment finance. We have a limitation though as African states when it comes to maintenance of the current public investments. Maintenance expenditure is always financed only through domestic resources (tax revenue). Poor maintenance of infrastructure decreases durability of public capital and also decreases the efficiency of infrastructure.

Submitted by Afraid on

What is quite fascinating is how you chose other variables in the economy as if they have never existed. The government of Ethiopia has made those investments in roads and infrastructures at the expense of private sector development. all local and international finances available were channeled to public investments targeted at only showing off high growth figures. This public investment driven growth has made the economy unbalanced and industry still accounts less than 10 percent of the economy. 80% of the labor force still engaged in the agricultural sector. We understand why the bank wants to sell Ethiopia as a good news though....why not when it fails you will use those shoddy numbers of yours to proof it is “unforeseen shocks” caused it…

Submitted by Anonymous on

MARIO,
Thank you for your observations, professional views and commitments to support our clients on this very important Public Investment governance area (PIM). The Bank is not only financial but also a knowledge institution where by we try to share global developmental good experiences/practices, based on data and analytical works, to other client countries. Mario's blog is about priority area of investment in one of our client countries (Ethiopia) and trying to assist this effort of our client country to achieve more sustainable development that benefits the public with improved value for public money/resources. In my view, the blog has not witnessed or commented on any equity issue, good governance issue or level of poverty issue in Ethiopia. Our institutional mission is to end extreme poverty and ensure shared prosperity. We trust if countries better manage their public investment, the fruits can reach the grass root poor and poverty can be reduced. We trust if public resources are better managed, some fruits may reach the grass root poor and the economic gains from this improved public resource management may spillover the need of the advantaged elites and be shared to the grass root poor. But if Public Investments are not managed well, they will open doors for corruption, wastage and deterioration of livelihood of the majority poor. What good public investment management entails is knowledge based business management with transparent, competitive, accountable, and predictable investment management system that optimizes the interest and benefit of the public from the very scarce global resources. What the GGP tries to promote and support is our development partners or countries realize sustainable development that optimizes the environmental, social and economic interest of today’s generation without compromising the ability of future generation to meet their needs. We have global expertise on this and we are ready to help our clients on this.

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