Ethiopia is one of the East African countries with the second largest population in Africa. There are approximately 107 million people in Ethiopia only second to Nigeria.
Ethiopia is reported to have the largest social safety net program in the entire African continent. This is according to the Public Expenditure Review 2015 by World Bank.
There are three levels of government in Ethiopia. That is federal, regional and woreda.
World bank estimates that Ethiopia spends at least 3% of her GDP on social protection.
Ethiopia has been spending an average of 20 percent of the total state budget on education. Despite that there are still disparities in access to education among and between regions of Ethiopia.
At the time, World Bank reported that Ethiopia had reduced its recurrent expenditure. This coincided with the end of Ethiopia-Eritrea war.
The Ethiopian public expenditure had focused more on development expenditure and hence reduced operations and maintenance budget. Capital spending is being prioritized even at the woreda level.
Revenues
This is the second section of Ethiopia public Finance review. We are now focusing on revenue performance.
Ethiopia is one of the East African countries with the second largest population in Africa. There are approximately 107 million people in Ethiopia only second to Nigeria.
Ethiopia is reported to have the largest social safety net program in the entire African continent. This is according to the Public Expenditure Review 2015 by World Bank.
There are three levels of government in Ethiopia. That is federal, regional and woreda.
World bank estimates that Ethiopia spends at least 3% of her GDP on social protection.
Ethiopia has been spending an average of 20 percent of the total state budget on education. Despite that there are still disparities in access to education among and between regions of Ethiopia.
At the time, World Bank reported that Ethiopia had reduced its recurrent expenditure. This coincided with the end of Ethiopia-Eritrea war.
The Ethiopian public expenditure had focused more on development expenditure and hence reduced operations and maintenance budget. Capital spending is being prioritized even at the woreda level.
Revenues
In 2007/2008, tax revenues in Ethiopia reduced to an all time low of 8.7% of the Gross Domestic Product. This has over time improved to 12.7% of GDP. According to the World Bank, the last time Ethiopia engaged in tax reforms was back in 2002 and at that time, sales tax effectively replaced Value Added Tax (VAT).
Level of control
In Ethiopia, the federal government controls 60% of the total expenditure while regions control 20% of expenditure and woredas control 20% of the total expenditure.
Universal Healthcare Coverage
Ethiopia is reported to have achieved the Millennium Development Goal 4 three years a head of schedule. Despite the great progress in healthcare, Ethiopia is reeling from challenges of high rates of maternal mortality.
The World Bank reports that overall expenditure on health sector has increased in recent times but the resources are from non-state actors. Government is reported to only contribute not more than 20% of the total health spending.
External assistance towards health sector is estimated to contribute to approximately 50% of the total public spending on health. Out of pocket spending was responsible for a 1/3 of the total expenditure.
When you compare with other countries in the region, Ethiopia is spending less on health. There is a high reliance on out of pocket expenditure and donors. This situation affects the poor households the most.
An excess of 70% of all capital expenditure happen at the federal government level while 60% of recurrent expenditure occur at the woreda level. The federal government of Ethiopia is responsible for policy reforms just like in Kenya’s devolved system of government.
More than ½ of health spending is on primary care which is considered to be the most effective level of healthcare in any part of the world. The Ethiopian government spends at least 21 percent of health resources on reproductive health and 16 percent on HIV/AIDs.
World Bank informs us that Ethiopia spends an average of 3% of her Gross Domestic product on social protection. Subsidies and social safety nets form the largest part of the social protection programs.
Donors are the largest financiers of these social protection programs. The government largely provides resources for social insurance and subsidies. In 2013 alone, Ethiopia’s safety net program benefited at least 10 million people.
Education
It is estimated that in a period of 10 years, Ethiopia expanded its reach from 10 million to 23 million learners. However, there were disparities in access to education from region to region. For example, there was increase in enrolment in urban areas as compared to the rural areas. It is estimated that at least 20% of Ethiopia’s budget has been consistently been spent on education for the past 10 years (World Bank 2016).
There is also increased efforts to recruit more and more teachers to offer the essential teaching services. Higher education in Ethiopia takes the lion’s share of education budget taking up 80% of the state capital. This is the money which the country used to construct new universities.
However, there is an ironical twist considering that this huge portion of national budget is not spent on academics, it is spent on housing, administration costs and food subsidies.
There are disparities in access to education. For instance, the Pupil Teacher Ratio (PTR) was 60 nationally but it also varied from 32.1 in Harari to 158 in Somali.
According to the Public Expenditure Review 2016 report, the poorest of the poor remain unrepresented at the universities or what we call higher education. For instance, only 2% of the student population at the institutions of higher learning and 1% are studying at the Technical and Vocational Education Training institutions. Basically, the World Bank is telling us that the largest number of students at Ethiopian universities are from the wealthiest households in the country.
