Understanding Poverty : The Ethiopian Context

Transcription

1 Understanding Poverty : The Ethiopian Context ( A Paper presented at The Gambia AAPAM Roundtable Conference, Banjul, The Gambia, April 19-23, 2004 ) Asmamaw Enquobahrie (Ph.D.) Asst. Professor (HRM) & Managing Director Global Vision Consultants International March 2004 Addis Ababa - Ethiopia

2 Table of Contents Page 1. Introduction Definition of Poverty in Ethiopia Determinants of Poverty in Ethiopia Socio-economic Performance during the 1990s Agriculture Industry Employment Sectoral Analysis of Poverty in Ethiopia Agriculture Food Security Primary Education Health and Nutrition Distribution of Poverty in Ethiopia Rural Poverty Urban Poverty Ethiopia s Development and Poverty Reduction Strategy ADLI and Food Security Justice system and Civil Service Reform Governance, Decentralization and Empowerment Capacity Building Summary and Conclusion References 2

3 A C C R O N Y M S ADLI - Agricultural Development Led Industrialization CSA - Central Statistical Authority CSO - Central Statistical Organization EEA - Ethiopian Economics Association EHNRI - Ethiopian Health and Nutrition Research Institute FAO - Food and Agricultural Organization FSS - Forum for Social Studies MoFED - Ministry of Finance and Economic Development MEDaC - Ministry of Economic Development and Cooperation SDPRP Program - Sustainable Development and Poverty Reduction WFP - World Food Program List of Tables 3

4 1. Gross Domestic Agriculture Output at Constant Factor Cost (million Birr). 2. Fertilizer Consumption of the Peasant Sector (m.t.). 3. The Performance of Medium and Large-scale Manufacturing Industries. 4. Value Added at Factor Cost by Industrial Categories (1991/ /97 in 000 Birr) 5. Unemployment by Sex, Rural and Urban Areas. 6. Area, Production and Yield of Major Crops (1979/ /01). 7. Vulnerable Population (million), Approximate Crop Production, Food Aid Requirements and Needy Population. 9. Estimates of Food-insecure in the 1990s. 10. Gross and Net Primary Enrollment Rate by Gender, Geographic Area (from grade 1 to 6). 11. Literacy Rate (%). 12. Trends in Absolute Poverty between Urban and Rural Areas in Ethiopia : 1995/ /00 (%). 13. Trends in Urban Poverty. 14. Poverty Profile of Five Secondary Cities in Ethiopia (1995/ /00). 15. Projected Urban Population of Ethiopia ( ). 4

5 Understanding Poverty: The Ethiopian Context 1. Introduction: By Asmamaw Enquobahrie (Ph.D.) * Poverty is generally considered as a situation in which the underprivileged do not have adequate food and shelter, lack access to education and health services, are exposed to violence, and find themselves in a state of unemployment, vulnerability and powerlessness. Poverty is multi-dimensional and has to be looked at through a variety of indicators such as levels of income and consumption, social indicators and indicators of vulnerability to risks and socio-political access and participation. The most common approach to the measurement of poverty is based on incomes or consumption levels. It is widely understood that an individual is considered poor if consumption or income level falls below some minimum level necessary to meet basic needs i.e. poverty line. The nature and level of basic need satisfaction varies along with time and societies and the poverty line to be established should be appropriate to the level of development, societal norms and values (World Bank Poverty Net). Information on consumption and income is obtained through sample surveys where households are to give feedback on their spending habits and sources of income, the nature of their basic needs and their perception of poverty. Income and non-income indicators like social indicators for education and health, access to services and infrastructure are used for data gathering and assessment of trends on the poverty situation of a country. The study of poverty also includes developing indicators to track other nonincome dimension of poverty such as risk, vulnerability, social exclusion and access to social capital. This facilitates comparison of a multidimensional conception of poverty. Participatory approaches help illustrate the nature of risk and vulnerability, how cultural factors and ethnicity interact and affect the livelihood of the poor and how social exclusion sets limits to peoples participation. A typical poverty scenario as described above is reflected in the socioeconomic condition of Ethiopia. In that respect, Ethiopia has carried out several economic reform programs in order to achieve economic stability and renewed growth in the fight against poverty. Though the programs have resulted in improved macro-economic performance, they have had a limited impact on the poverty situation at household level. In fact the poverty situation in Ethiopia over the past decade has been exasperated by the Structural Adjustment Program (SAP) and other reform measures as well as by the irregularity of natural conditions, war and other human and environmental factors. As a result almost half of the Ethiopian population is believed to be below the poverty line. Dr. Asmamaw Enquobahrie is Asst. Professor (HRM) and Managing Director of Global Vision Consultants International (GVCI). 5

6 This study presents the extent and depth of the poverty situation in Ethiopia and shows the challenges ahead with regard to poverty alleviation efforts in the country Definition of Poverty in Ethiopia Poverty is characterized by inadequacy or lack of productive means to fulfill basic needs such as food, water, shelter, education, health and nutrition. The multi-dimensional character of poverty in Ethiopia is reflected in many respects, such as destitution of assets, vulnerability and human development. The World Banks definition of poverty indicates that poverty is...a pronounced deprivation of well-being related to lack of material income or consumption, low levels of education and health, vulnerability and exposure to risk and voicelessness and powerlessness (World Bank 2001a, as quoted by Pradham et al., 2002). This definition fairly describes the nature of poverty in the Ethiopian context. As the concept of poverty reflects socially perceived deprivation of basic human needs, its understanding also considers the minimum living standards of the people. Poverty alleviation and reduction of economic inequality is the major socio-economic and political issue in the country. As experience has shown, the existence of large number of poor people and the prevalence of economic inequality may bring about social tensions which would induce various criminal acts if situations go beyond the limits of social tolerance. Poverty alleviation would, therefore, enhance economic development and result in improved incomes and better well-being of the people which is a pre-requisite for peace and further development. However, attempts to eradicate poverty would require strong commitment on the part of concerned authorities in favor of economic development to induce the sustainable livelihood of millions in urban and rural areas of Ethiopia. Understanding poverty in the Ethiopian context also needs to consider its multidimensional characteristics which go beyond mere income and food provision. Such characteristics includes aspects of human capabilities, assets and activities necessary for sustainable livelihoods. A sustainable livelihood is one that can cope with and recover from stresses and shocks and maintain or enhance its capabilities and assets both now and in the future, without undermining the natural resource base (Carney 1998). The fundamental bases of livelihood comprise natural (land, forests, water, pastures, wild life), physical (farm animals, tools/machinery, economic and social infrastructure), financial capital (income and savings), social relations and human capital (health, education etc). The Ethiopian situation clearly reflects the degree to which the bases for sustainable livelihood are adversely affected by natural and man-made calamities. The underprivileged poor have limited access to most of the livelihood capital assets which has widened income disparity and undermined their bargaining power to establish sustainable livelihoods. This socio-economic condition emphasizes the need for political capital as a means of ensuring better participation in deciding on matters that affect the well-being of the poor and enhance improved security of subsistence needs (Dubois 2002). Thus, the issue of governance in addressing poverty in Ethiopia is considered a vital element in the poverty alleviation process. Good governance can 6

7 facilitate participatory approaches to poverty issues, ensuring power sharing and empowerment of the poor. In addition, understanding the role of formal and informal processes and structures is realized to be an important aspect of the coping strategies of the poor, particularly with respect to employment generation (Edmunds and Wollenberg, 2002, et al, as quoted by Dubois). Poverty alleviation programs in Ethiopia, as in other developing countries, need to protect the poor from destitution, sharp fluctuations in income and social insecurity. Involving the poor in rural works, provision of food-subsidy and encouraging self-employment can be the basic components of poverty alleviation efforts. Self employment of the poor can be induced through provision of productive assets and appropriate skills, subsidy and bank credit, supply of improved tools and other support services and provision of durable social and economic assets for sustained employment and development. Such efforts would require adequate funds, appropriate policy framework and effective delivery mechanism to make use of resources in cost-effective manner which, apparently, requires high degree of commitment, motivation, competence, integrity and adequate monitoring systems. In Ethiopia today, large number of poor people live in urban areas because of the continued migration of rural poor in search of better opportunities. The poverty alleviation program, therefore, should emphasize more on rural poverty in order to curb the flow of rural poor that has congested the urban areas. The prevalence of poverty in Ethiopia, as reflected in the number of povertystricken population, is determined on the basis of a poverty line that separates the per capita income or consumption below which an individual is considered to be poor. The proportion of people in Ethiopia who are absolutely poor (those whose total consumption expenditure was less than US$ per year) during the year 1999/00 was 44% (MOFED, SDPRP, 2002). Moreover, the proportion of people who are categorized as poor are estimated to be 37% in urban areas and 45% in rural areas (Ibid.). The most vulnerable segments of the Ethiopian population include: (1) the rural land-less, (2) small holders with a limited size of land, (3) drought victims as a result of shortage of rainfall, (4) female-headed households, (5) the urban unemployed in particular, and the urban poor in general and (6) street children. 1.2 Determinants of Poverty in Ethiopia The poor in Ethiopia are entwined in a web of interrelationships between the various determinants of poverty. Intrinsic deficiencies in the resource base of the productive forces have become critical drawbacks in alleviating the poverty situation. Lack of equity in the access to productive resources and basic services and their consequential benefits as well as lack of access to opportunities to develop skills and human capabilities have impeded the socio-economic development of the poor. In addition, absence of the means by which the poor can address their problems and enhance their active participation in decision-making have hindered their attempts to move out of the state of deprivation. Accordingly, a closer assessment of the poverty situation in Ethiopia clearly depicts the prevalence of six major factors that are highlighted as contributing to the exasperation of poverty in Ethiopia. These include: low agricultural production, low non-farm income, low education and poor health, high population growth and weak 7

8 institutional structures. These key elements are in fact connected with each other to influence the poverty situation in Ethiopia. 8

9 2. Socio-economic Performance During the 1990s: 2.1 Agriculture Some policy reforms were introduced in the early 1990s in order to facilitate agricultural development. These policies included, among others, liberalization of both agricultural output and input markets, removal of substantial taxation of agriculture, removal of restrictions on private sector participation in grain movements and the quota system of grain delivery, liberalization of the fertilizer markets and creation of a multi-channel distribution system. Measures were taken to transfer unprofitable state farms to surrounding farmers or to employees or private investors on favorable terms. The Government of the Federal Democratic Republic of Ethiopia formulated the Agricultural Development Led-Industrialization (ADLI) strategy which emphasized the need for giving priority to the development of agriculture as a fundamental basis for industrialization in Ethiopia. ADLI took agriculture as the prime mover of the Ethiopian economy, because of its high potential for linkages in economic growth, surplus generation, market creation and provision of raw materials and generation of foreign exchange. Despite, the intention to priorities and support agricultural development, the policy reforms and the various other interventions could not bring about improved agricultural production. As shown in the table below (Table 1), agricultural production, particularly in the area of crop and livestock, showed growth rate of 3.8% per annum during the period 1990/91 to 1997/98, while overall annual growth rate of agriculture and allied activities was on the average 2.85% over the same period. Apparently, the growth rate of agriculture as compared to the 3% population growth is found to be inadequate (MEDaC, 1999). Moreover, production levels have continued to fluctuate with rainfall patterns and growth rates have gone down further in 1998/99 and 1999/00 due to the erratic nature of weather conditions. As a result, about 8 million people were estimated to require emergency food aid, which was found to be even worse during early 2000 (Ibid.). Table 1: Gross Domestic Agriculture Output at Constant Factor Cost (million Birr) Agriculture and Years Agriculture Forestry Fishing Allied activities 1990/ / / / / / / / Growth in Log-/inear/% Source: MEDaC, Survey of the Ethiopian Economy: Review of Post-reform Developments (1992/ /98), 1999, A. A. 9

10 The sample survey on agriculture conducted by the Central Statistical Authority (CSA) indicated that performance of the sub-sectors within agriculture was not consistent and showed significant variation. For instance, the performance of food grain production was encouraging between 1991 and 1997 which showed increases in cereal, pulses and oil seeds by 8.6%, 4.3% and 18.8% respectively (Ibid.). A recovery similar to food grain production, however, was not observed in coffee production, which is the dominant source of the country s foreign exchange (Ibid.). Moreover, the liberalization and devaluation measures have not created significant positive impact on the export sector in order to fulfill the foreign exchange requirements of the country. Livestock are important sources of food, draught power, traditional fuel and cash income. According to the national account estimates, this sub-sector contributes about 12 to 15% of total GDP and 25 to 30% of the agricultural GDP (MEDaC, 1999). However, it is widely believed that the performance of the subsector has not been encouraging. Overall, the growth record of agriculture in the 1990s reveals no sign of optimism. Response of the agricultural sector to the economic reform and the new extension program is not significant (CSA: Agricultural Sample Survey, various issues). The stagnation of yield contrasts sharply with marked increase in fertilizer consumption (see Table 2). Table 2: Fertilizer Consumption of the Peasant Sector (metric tons) Years Dap Urea Total , , , , , , , ,600 95, ,000 15,000 17, ,199 4, , ,348 40, , ,778 45, , ,798 77, ,258 Growth in Log-linear (%) Source: National Fertilizer Input Agency Use of fertilizers is a major characteristic of modern input utilization in Ethiopia. In this regard, 37% of the cereal area received chemical fertilizer in 1996/97, compared with 2% for improved seeds (CSA, Statistical Abstract, 1997). Vast majority of farmers use chemical fertilizer along with local seeds, leading to low yield response. Quality of improved seeds is also low in many instances. For example, most of the improved wheat varieties were found sensitive to rust during the 1989/99 cropping season (Mulat, 1999). In a recent study (Howard, et al., 1998), 10

11 it was revealed that there was no significant yield difference recorded between the local and improved Teff, which is the most important cereal crop in the country. Another factor which contributed to low agronomic efficiency of fertilizers in Ethiopia is because of complete dependence of agricultural activities on rainfall that has become increasingly unpredictable in recent years (CSA, 1997). 2.2 Industry The introduction of the manufacturing industry into Ethiopia dates back to about a century. The emergence of central government, the prevalence of political stability and construction of the Ethio-Djibouti Railway were among the main factors that facilitated the emergence of the manufacturing industry (Legal Notice No. 10, 1950). Up to the take over of the military government in Ethiopia in 1974, 273 medium and large scale industrial enterprises had been established among which. 65% were wholly or partially owned by foreigners. The military regime nationalized the industrial enterprises which were under the ownership of both nationals and foreigners. Under the centralized command of socialist economic management, private sector participation was highly restrained and had adverse effects on the contribution of the sector to industrial development in Ethiopia. Capital ceilings were imposed on new investments and expansion of facilities. The system introduced discriminatory policies against the private sector which took the form of restrictions on the supply of foreign exchange, price control, allocation of skilled manpower and credit, high tax rates as well as tedious and bureaucratic red-tape procedures for acquiring licenses. The socialist system of managing the economy emphasized on public sector development and did not consider the private sector as an important partner of socio-economic development. Such a scenario weakened the significant potential that the private sector could have played in the expansion and development of the manufacturing industry. However, the establishment of the Transitional Government of Ethiopia in 1991 brought with it some policy measures that facilitated the creation of enabling environment for the development of the sector. The measures comprised of reforming the public enterprise sector, introduction of freely accessible and partly liberalized foreign exchange market, lifting of government intervention in market and price control, measures related to encouragement of private investment in the sector and adjustment of taxes and tariffs (MEDaC, 1999). Nevertheless, employment in large and medium manufacturing showed only small improvement over the prereform situation mainly because of retrenchment from public enterprises (CSA and National Accounts, revised series). The table below (Table 3) shows the performance of medium and large scale establishments during the reform period. Table 3: 11

12 The performance of Medium and Large- scale Manufacturing Industries Indicator 91/92 92/93 93/94 94/95 95/96 96/97 97/98 Average growth rate Number of establishments Gross value of product. (in 000 Birr) Value added at factor cost (in 000 Birr) % shore of GDP Employment Fixed capita (in 000 Birr) Foreign Sales (in 000 USD) Source: CSA ( and National accounts (Revised Series) Favorable performance of the manufacturing industry during the reform period could be attributed to the revival of capacity utilization, following prevalence of peace and stability, abolition of monopolistic and discriminatory practices, public sector reform programs and generally the creation of a relatively favorable environment which facilitated availability of foreign exchange skilled manpower and other resource inputs (Ibid.). The table below exhibits the structure of the Ethiopian industrial sector in the country. It is shown that large and medium scale manufacturing in Ethiopia is mainly dominated by four industries producing consumer goods (Food, Beverage, Textile, Leather and Shoes). Table : 4 Value added at Factor Cost by Industrial Categories (1991/ /97 in 000 Birr) No. 91/92 92/93 93/94 94/95 95/96 96/97 Total manufacturing value added Food value added (VA) % share Beverage VA % share Textile VA % share Leather and shoes VA % share Source : Report on large and medium scale manufacturing industries survey CSA, 1998/99 ( percentages are the Author s calculations). The contribution of manufactured exports to foreign exchange earnings has been limited to not more than 15% (MEDaC, 1999)

13 The role of the manufacturing sector in creating employment in urban areas is also very much limited, due to the low level of development of the sector and its relatively high capital requirements for investment and utilization of imported material inputs which eroded the foreign exchange reserve of the country. As Retrenchment and privatization forced public employment in the manufacturing sector to decline at a rate of 1.8% per annum. The 2% growth in employment is, therefore, attributable to private manufacturing establishments which relatively mushroomed during the reform period (Ibid.). On the whole, the manufacturing sector s contribution to the absorption of the large unemployed workforce that could have been the potential contributor of development in the manufacturing sector is not that significant. As a result the efforts of the Ethiopian Government to implement its poverty reduction strategy in the face of increased unemployment in urban areas would be a serious challenge. 2.3 Employment In Ethiopia, the challenge of employment generation is tantamount to achieving the objectives of sustained growth and reduction of poverty. The poverty dimension of employment is also critical given the structure of labor absorption capacity of the economy where the subsistence rural economy still supports more than half of the country s poorest segment of the population. In addition, the mounting unemployment in urban areas and the ever expanding informal sector calls for measures that could simultaneously address poverty alleviation and employment promotion. Unemployment is said to occur when persons actively seeking for jobs could not find it. This mainly takes place when the economy fails to generate adequate and well paying job opportunities for the labor force. The availability of job opportunities in turn depends upon the overall performance of the economy. The table below (Table 5) shows the unemployment situation in Ethiopia by gender (sex) as well as by rural and urban areas.. Table 5: Unemployment by Sex, Rural and Urban Areas Area Total Rural Urban Sex Male Female Total Male Female Total Male Female Total EAP (in million) UEP UER (in 000) (in %) EAP (in million ) UEP (in 000) UER (in %)

14 Source CSA : Based on the Population and Housing Censuses estimates of 1984 and 1994 Note: EAP : Economically Active Population; UEP : Unemployed Population UER : Unemployment Rate In 1994 the rate of unemployment in the urban areas was about 22% while that of rural areas stood at less than 1%. The sex (gender) distribution of unemployment indicates that unemployment is acute among women population than that of men. Urban open unemployment has become critical as reflected in the substantial increase of the unemployment rate from 7.9% to 22% during the period. In general, unemployment in Ethiopia seems to be an urban phenomenon, being prevalent mainly in the cities. The majority of the unemployed are young people with modest levels of formal education (CSA, Population and Housing Census Estimates of 1984 and 1994). Enhancing employment in agriculture through increased land productivity mechanisms and non-farm activities in rural areas should be given due attention since one of the root causes of high unemployment in urban areas is believed to be rural-urban migration. Apart from this, the issue of promoting productive education along with sustained private sector investment is believed to be crucial in reducing urban youth unemployment. 3. Sectoral Analysis of Poverty in Ethiopia: 3.1 Agriculture Agriculture is given strategic importance in the economy. About 85% of the Ethiopian population living in rural areas derive their livelihood from this sector directly or indirectly. Intense land pressure in some regions of the country is a critical feature of the sector which has adversely affected the small holder agriculture that is left to struggle with the limited land resources available (MOFED, SDPRP, March 2002). Despite government emphasis and donor support to the agricultural sector in Ethiopia, rural poverty is still a critical challenge in socio-economic development efforts. The cyclic nature of drought has severely affected agricultural production, which on average had remained almost stagnant during the 1990s, with declining per capita food production. Even in subsequent years, no significant improvement has been observed in the poverty situation of the rural areas in Ethiopia. Attempts to enhance agricultural productivity with application of traditional farming technology, scarcity of cultivable land and the rapid increase in the growth of population have been critical challenges for alleviating poverty in rural Ethiopia. The recent land and agricultural survey undertaken by the Ethiopian Economic Association (2002) reveals that average plot size for the country as a whole has declined to 0.98 ha. Thus, the limited area of land available for cultivation as compared to the increase in population growth has, apparently, made it difficult to produce enough food to meet household consumption requirements. The evidence thus suggests that peasant agriculture in Ethiopia has fallen victim to all kinds of pressures which have progressively exhausted its potential for improved production and clearly shows the degree to which rural poverty is 14

15 entrenched in the country (CSO, 1987; CSA, ). The limited land available for agricultural activities, pressure of population growth, the undeveloped nature of farming technology and absence of adequate market access have retarded the production capability of agriculture (EEA, 2002; FSS, No.1, 2003). Accordingly, land productivity as measured by crop yield in the last two decades shows no significant change (Ibid). Table 6, below, shows that, productivity in 1990s are in fact slightly lower than those in the 1980s. The highest yield achieved was 12.8 qn. per ha. in 1982/83 and 12.5 qn. per ha. in 1988/89. These figures have not even improved in subsequent years despite the wide distribution of fertilizers and improved seeds since the mid 1990s. A better yield was achieved during the 1996/97 harvest with crop yield of 11.7 qnts. per ha. Such a situation combined with the decline in per capita food production would not enable the rural poor to produce enough to support its livelihood let alone achieving marketable surplus. Table 6: Area, Production and Yield of Major crops 1979/ /01 (both seasons) Year Area (Mn. Ha) Production Mn. Qn Yield (Qn/Ha) 1980/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/ Average 80/81-89/ /94 94/95 95/96 96/97 97/98 98/99 99/ / Average 93/ / Source: CSO 1987, CSA The limited opportunities for livelihood diversification, due to absence of supplementary income from other non-farm activities, has made the rural poor more vulnerable. Cultural barriers, in some cases, have become setbacks in the demand for new processes of production and new products. The limited capacity of the government to introduce new farming technologies through adequately organized extension services could not meet the needs and requirements of the rural sector. The vulnerability of rural households is further aggravated by the continuous ecological stress brought about large scale degradation and depletion of natural and 15

16 environmental resources. The stress is further worsened by deterioration of soil fertility, loss of forestry and vegetation, hillside farming and the drying up of both surface and sub-surface water, which speeds up ecological vulnerability (Dessalegn Rahmato, ed., FFS Studies on Poverty, No.1, 2003). The following table (Table 7) shows the degree of vulnerability of the rural population in terms of food requirements over the last two decades (CSA and DPPC Reports). Table 7: Vulnerable Population (million) Year Rural pop. Vulnerable pop. % rural pop Average Average Source: CSA 1991 for population ; CSA 1999 for population between ; DPPC 1999 for Vulnerable Population ; DPPC 2000; DPPC Food Security It was initially believed that the process of liberalization would largely solve the food security problem in Ethiopia. However, it appears that Ethiopia is still in a state of economic crisis and the food insecurity issue remains a number one challenge for the country (Multi-donor Report on Food Security Program; FAO/WFP, Ethiopia, ). The findings of the 1999 crop and food supply assessment by FAO and WFP has indicated a dramatic polarization of food security in 2000 due to differences between normal, deficit and surplus areas (FAO/WFP, Crop and Food Supply Assessment Report, 26 th January 2000). The study shows that while the 1999 meher, the harvesting season in Ethiopia, was the third best in recorded Ethiopian history. Moreover, the total in- country grain availability was estimated to be close to the 1998 levels with 11,830,000 mt., estimated food aid requirements indicating the 16

17 extremely high level needs of the population compared to that of the pre levels (see Table 8 below). Currently, the fundamental basis of the Government s strategy for economic growth is Agricultural Development Led Industrialization, which places high emphasis on agriculture as the prime mover of socio-economic growth. However, farm size, lack of tenure security and declining productivity are still some of the constraints that affect agricultural development in the years ahead (Annual EEA Report, 2000). Table 8 : Approximate Crop Production, Food Aid Requirements and Needy Population Year Estimated crop production (in million MT) Revised Estimates of Food Aid Requirements (in Mt. Tone) 17 Revised Estimates of needy population (in million) , , , , , ,936* 7.7** Source: FAO/WPP, Ethiopia, Note: * It was expected that estimated food requirements will ultimately exceed 1 million metric tones by the end of the year. ** 7.7 million drought affected. The figure rises to over 8 million when the internally displaced population are included. The decline in the size of cultivable land is envisaged to further exasperate the currently observed worse food insecurity situation unless non-farm activities are made to compensate for the livelihood stress prevalent in the rural areas (Dessalegn Rahmato). It is widely understood among donors and government development agencies that food aid would be of limited value in poverty reduction efforts in the long-term or even in the mid-term. Food aid programs are regarded as poorly organized and inefficient which has become extremely costly as a short-term response to the livelihood stress (MEDaC, Welfare Monitoring Unit, 1999). The Ethiopian experience shows that delays and logistical constraints associated with large scale food aid delivery to highly inaccessible areas seriously reduce the effectiveness of the programs to tackle the immediate problem of the rural poor. Apparently, despite the increasing effort in the supply of food-aid, the food security situation has not improved as expected. Two most recent studies on food aid which targeted the poverty situation in the country estimated the proportion of food insecure people to be between 19 million (43.2%) and 25 million (45.5%) (Ibid). Table 9: Estimates of Food- insecure People in the 1990s Study/ Measurement/ Social Category by size survey indicator Social category Size- (mien) % of total Pop. % of food insecure

18 MEDaC Income and Rural Poverty study expenditure Urban survey Total Source: MEDaC, WMU, Note : % total refers to proportion of food insecure in the total population. % food- insecure refers to concentration of food insecure people. 3.3 Primary Education Education is the fundamental basis for human development. Evidences accumulated from Africa, Asia, and Latin America show that an increase in coverage of basic education increases the rate of economic growth, improves agricultural productivity, increases employability of the labor force, reduces infant and maternal mortality, and helps slow down population growth. Therefore, any long-term strategy to alleviate poverty in Ethiopia must be linked closely to improvements on the quality and quantity of education. A closer look at the Ethiopian situation reveals that net primary enrollment (1 to 6) rate stood at 33.8% in 1999/00. The table below (Table 10) shows that the net primary enrollment rate for girls in rural areas stood at 28% in 1999/00 and is considered very low. The lower percentage of attendance for girls in rural areas is due to both their high drop-out rate and non-enrollment because of family pressure. Table 10: Gross and Net primary Enrollment Rate by Gender, Geographic Area (From Grade 1 to 6) Gross primary school enrollment Net-Primary enrollment rate Urban Rural National Urban Rural National Source: MoFED, 1999, SDPRP 1995/ /00 M F Al M F Al The national overall literacy rate in 1999/00 was only 29%. The literacy rate has increased slightly from 27% in 95/96 to 29% in 1999/00 (MEDaC, Welfare Monitoring Survey, 1997, 1998 and 1999/00). The studies indicate that females have a lower literacy rate (20%) than that of males (40%). The literacy rate is also much lower in rural areas (22%) than in urban areas (70%) (Ibid). The increase in literacy rate for females is conspicuously lower by almost half the literacy level of males over the 1995/96 to 1999/00 period. (see Table 11 below). Table 11: Literacy Rate (%) 95/ /00 Urba Rural All Urba Rural All Urban Rural All Urban Rural All 18

19 n n Male Female Total Source: Welfare Monitoring survey, 1997, 1998 and 99/00. 19

20 The above data shows that the majority of the population in Ethiopia is illiterate. As the experience of several developing countries has shown, lack of education is highly correlated with poverty. Accordingly, development is considered to be impossible without widespread literacy which is the pre-requisite for acquisition of better skill and knowledge. The situation of the out-of-school youth is found particularly critical. Unless vocational schools are initiated and made to fulfill the skill requirements for self-employment and enhancement of income generating capabilities, the economically active population particularly the youth would be condemned to a life of poverty and deprivation. 3.4 Health and Nutrition Considering the negative effects of poor health on the efficiency and effectiveness of human activities, it is generally agreed that labor force productivity is directly linked to the health status of economically active population. Repeated illness or chronic disease reduces the victim s capacity to work, and thereby directly influencing the outputs and productive capabilities (MoFED, 1999). The health status of the population in Ethiopia is found to be generally low. This is reflected in the high infant (under five) and maternal mortality rates which is currently estimated at 105 per 1000 live births and 159 per 1000 children and 5.6 per 1000 live births respectively. Life expectancy at birth has only averaged at 53 years (51.8 for male and 54.1 for female). Although some improvements in health service delivery are observed, the situation is likely to get worse in the years ahead due to the AIDS and Malaria epidemic (Ibid.). Ethiopia has one of the highest fertility rates in the world with a woman having an average 7.7 births during her reproductive years. Rapidly rising population combined with high mortality and morbidity exert severe pressure on an already stressed health services which suffers from inadequate trained manpower and inadequate levels of funding (Ibid). The common health problems in Ethiopia have their roots as manifested in the complex poverty syndrome of malnutrition. According to the 1993 survey of Ethiopian Health and Nutrition Research Institute (EHNRI), the prevalence of underweight children and stunting stood at 47 % and 64%, respectively, among children between the ages of 6 and 59 months (MEDaC, 1999/00). Other major causes of child morbidity and mortality are diarrhea, the six vaccine preventable infections, and acute respiratory infections particularly pneumonia. Immunization coverage stood at only percent in 1994 (Ibid.). Another indicator of child malnutrition under 5 years of age in Ethiopia is the proportion of children which are severely wasted and wasted, which stood at 1.8% and 9.6% respectively during the period 1999/00, with the situation being more severe in rural areas than in urban areas. Optimal nutrition is dependent on several critical factors. Enough food of adequate calories and containing specific nutrients must be available at household level. Child care practice must ensure that a child is fed an adequate number of times a day. Accordingly, disease, which may decrease appetite or adequate absorption/utilization of food, must be dealt with seriously in order to maintain the health status of rural households. The fact that chronic malnutrition amongst children exists in Ethiopia is reflected in the prevalence of stunting which clearly indicates long-term malnutrition among children between the ages of 6 to 59. Severe stunting for the same age 20

21 group stood at 31.3% during the same year. Both stunting and severe stunting are higher in rural areas than in urban areas. 4. Distribution of Poverty in Ethiopia: 4.1 Rural Poverty In Ethiopia, prevalence of poverty and destitution has reached a surprisingly high level due to population growth and land degradation, crop and market failures associated with policy, droughts and other environmental factors, low productivity due to primitive farmi9ng techniques as well as low access to assets. An estimated 45.0% of all rural households were considered to be poor in 1999/00 (MEDaC, 2002). The most common cause of destitution is crop failure occurring mainly due to droughts or inadequate and untimely rainfall and other hazards such as pests and frost. Severe droughts that occurred with varying frequency in different areas of the country often caused mass destitution (Yared Amare, Rural Poverty in Ethiopia, 2002 and 2003). Some research evidence also shows that land suitable for agriculture represents a small fraction of the total land area. About 55% of the total land area in Ethiopia constitutes moisture - stressed arid and semi-arid areas with less than a four-month crop growing period (Tesfaye Teklu, FSS Discussion Paper No.10, 2003; Hurni, 1988). Some studies (Hurni, 1988) have estimated that only 22% of the total land area is arable which is suitable for farming while the Government reports a higher percentage (38%) Land degradation varies across the country with acute depletion observed in highland areas characterized by poor climate (e.g. low and variable rainfall), long history of population settlement, deforestation, overgrazing and intensive crop farming and recurrent droughts and related impoverishment (Tesfaye Teklu, 2003; FAO, 1986; Aynalem,1987; Mesfin, 1991; Muluneh, 2001). These environmental factors are associated with declining productivity. and even total failure in agricultural production (Ibid). Agriculture is still the primary source of employment, production and subsistence with supplementary income generated from diversified sources involving other allied activities of rural households. Since the majority of rural poor are primarily engaged in agricultural activities, poverty in these areas is largely related to the low productivity of farm labor. Studies on determinants of poverty confirm dominance of agriculture in rural livelihoods and largely identify various factors that influence the poverty situation in rural Ethiopia. Accordingly, the studies generally agree that the poverty situation is significantly related to subsistence farming or low-return occupations outside of the farming activities, poor agricultural potential, physical inaccessibility, poor health of working adults within households, shortage of assets for agricultural production (land and oxen), low educational attainment, small size and quality of cultivable land (Ibid.). 4.2 Urban Poverty Inadequacy of urban development efforts for over the last three decades has further exasperated urban poverty in Ethiopia. This has left behind it weak urban 21

22 governance and management structure, poorly staffed and under-financed municipal administrations, obsolete local tariff and revenue structures, critical shortage of trained personnel and declining urban infrastructure and services (Meheret Ayenew (ed.), June, 2001). It is believed that such a scenario is hardly capable of reducing poverty in the urban areas which is clearly manifested in beggary and prostitution, growing number of homeless and street children, and increasing trend in youth and adult unemployment (Ibid.): Official statistics (Table 12) have indicated that the level of urban poverty was 37% in 2002 and is estimated to be growing at 5-6 percent per annum (MoFED, Poverty Profile of Ethiopia, March, 2002). Out of the estimated total urban population of about 11 million, nearly 4.1 million live in a state of poverty and misery (Meheret, 2001). In Addis Ababa alone poverty level is estimated at 60% which implies that 1.7 million out of the 2.8 million people residing in Addis Ababa are categorized as below poverty line (Abebe, 2000). In recent years, urban poverty in Ethiopia has been growing at a faster rate than rural poverty. According to available statistics (MOFeD, March 2002), the level of urban poverty stood at 37% while rural poverty was registered at 45% in 1999/00. Between 1995/ /00 urban poverty has increased by 11.1% while rural poverty has declined by 4.2%. Table 12 Trends in Absolute Poverty between Urban and Rural areas in Ethiopia / /00 (Percent) Location 1995/ /00 Change in percent over 1995/96 Urban Rural Total Source: MoFED : Poverty Profile of Ethiopia, March Urban poverty has also become a serious issue of concern in most regions of the country. As the following table exhibits, urban poverty in Ethiopia has increased in 7 of the country s 11 regions between 1995/96 and 1999/00. The highest percentage increase was recorded for Gambella (57.4%) followed by Dire Dawa (34.6%), Tigray (32.8%), Oromia (30.1%), Addis Ababa (20.7%), Harar (20.3%) and Somale (15.3%) (MoFED, Sustainable Development and Poverty Reduction, May 2002). The empirical evidence confirms that there is a dire need for a national strategy that can efficiently and effectively address issues of poverty alleviation in the various regions of the country. Table 13 Trends in Urban Poverty - Head Count Indices (measures number of people in urban population below poverty line) No. Region 1995/ /00 % change in Po 1. Tigray

23 2. Afar Amhara Oromia Somale B.Gumuz SNNP Gambella Harari Addis Ababa Dire Dawa Total Source : FDRE, MoFED, Ethiopia, Sustainable Development and Poverty Reduction, Addis Ababa, Ethiopia, May Government data and statistics have revealed that the depth, incidence and severity of urban poverty are quite high in most secondary cities ( MEDaC, 1999; MoFED, 2002). For instance, the result of the poverty situation analysis made by the Welfare Monitoring Unit of MEDaC revealed the poverty profile for selected secondary cities (Table 14). Table 14: Poverty Profile of Five Secondary Cities in Ethiopia (1995/ /00) No. City Absolute poverty level, percent of poor people 1995/ /00 1. Mekelle Bahirdar Awassa 33 No 4. Jimma Nazreth National Source: MEDaC, Welfare monitoring unit 1999, MoFED, As can be seen from the above table, the absolute level of poverty between 1995/96 and 1999/00 has slightly declined for some cities like Mekelle and Nazareth, while significant decline was indicated for Bahirdar. On the other hand, the level of poverty has sharply increased for Jimma. Overall, urban poverty at the national level increased from 33% to 37% during the same period (Ibid) Factors Contributing to Urban Poverty a. Fast Urban Population Growth As it can be seen from the following table (Table 15), urban poverty in Ethiopia is exaggerated by high rate of urban population growth. The main factors underlying rising urban population revolve around natural population growth and 23

24 rural-urban migration. The rural-urban migration is a result of the scarcity of land as compared to the growing rural population and the need for employment and income generating opportunities to support their livelihood. Urban poverty has, thus, been aggravated by the increase in population that is beyond what the urban economy can support (CSA, Statistical Abstract, 1997). Table 15: Projected Urban Population of Ethiopia ( 1995 to 2020) Year Total Pop. ( 0005) Urban Pop. ( 0005) Percentage of Urban Pop Source: Central Statistical Authority, Statistical Abstract, 1997, Addis Ababa, Ethiopia. b. Unemployment and Lack of Income According to Ethiopia s Sustainable Development and Poverty Reduction Paper of 2002, unemployment and lack of income account for the poverty situation in urban areas. Studies conducted clearly revealed that urban unemployment increased from 7.9% in 1984 to 26.4% in 1999 which is a significant increase of three and half times over the 15 years period, particularly the highest increase in unemployment recorded for the youth in the age range (CSA,1994; Genere, et al., 2001). c.. Weak Urban Governance Urban poverty is exacerbated by absence of capable urban administration that could provide adequate social services and infrastructure to urban dwellers (Meheret, 1998). Studies have suggested that rural and urban development must be viewed as supportive and complementary to each other. Accordingly, the current focus on the rural sector vis-a-vis the Agricultural Development Led Industrialization (ADLI) strategy should also consider other aspects of complementary strategies in order to enhance the poverty alleviation programs initiated by the Government. 5. Ethiopia s Development and Poverty Reduction Strategy: The Federal Democratic Republic of Ethiopia has targeted real economic growth at 5.7% per annum until 2015 in order to reduce the current poverty level by half (MoFED, SDPRP, July 2002). However, the modest improvements in institutional efficiency such as reform of the legal system, ensuring property rights, maintaining peace and stability and public service reform efforts are likely to be the critical challenges in meeting the target. In this regard, multi-dimensional 24

25 interventions that are supportive of the sustainable development strategy would be required to effectively address the issue of the wide spread poverty in the country. Thus, the overall development strategy of Ethiopia is currently based on some major areas, namely: Agricultural Development Led Industrialization and Food Security, Justice System and Civil Service Reform, Decentralization and Empowerment and Capacity Building in Public and Private Sectors (Ibid.). 5.1 ADLI and Food Security The existing reality in Ethiopia shows that there is a critical shortage of capital. Moreover, the country is faced with severe population pressure, large number of working age population and scarce and fragmented cultivable land with a declining trend of soil fertility due to man-made and environmental factors (Ibid.). However, it is believed that faster economic development could be realized if the country adopts a strategy that can help generate employment opportunities for its huge labor force and enhance the productivity of farm land. Extensive use of manpower and intensive use of land resources are expected to make significant contribution to growth and capital accumulation. 5.2 Justice System and Civil Service Reform The other key factor that can play significant role in the strategy for poverty reduction is reform of the justice and civil service system envisaged to address economic and political issues. The Government of Ethiopia embarked on comprehensive justice and civil service reform programs in 1996, which sought to build a fair, transparent, efficient, effective and ethical civil service, primarily by focusing on institutional strengthening of the public sector (MoFED, SDPRP, July 1999). 5.3 Governance, Decentralization and Empowerment Decentralization is an outcome of the adoption of a Federal system of Government in Ethiopia. Implementation of economic policies and development programs are expected to be partly shifted from the center to the regions and local governments following devolution of power as a result of the establishment of the Federal Structure of Government in Ethiopia. However, actual implementation of such poverty related development programs at regional and district levels seems to face serious challenges. This is primarily because Ethiopia s Federal system is based on ethnicity rather than geographic considerations, which might trigger ethnic conflicts particularly in multiethnic regions. 5.4 Capacity Building: Aspects of capacity building are envisaged to embrace programs that address development of human resources, strengthening of institutions, and establishment of effective working practices. The capacity building program in Ethiopia can be effective if it can apply participatory approaches that involve the beneficiary institutions and the underprivileged poor. Training of farmers, supporting micro- 25

26 financing institutions, strengthening of private and public sector organizations involved in the development of agriculture, and education and training in order to increase the stock of trained man-power are some of the important activities envisaged in the program (MoFED, SDPRP, July 2002). 6. Summary and Conclusion: Evidence emerging from studies conducted on poverty alleviation in Ethiopia points out that poverty remains widespread in both rural and urban areas, and will be a major challenge confronting the country in the decades to come. These studies have also identified several determinants of poverty namely: low agricultural production due to limited land resources, landlessness, mineral agricultural inputs, inadequate extension services, declining soil fertility and erratic weather conditions that resulted in low productivity of agriculture. This situation is largely determined by the inherent stagnation of the structure of the Ethiopian economy over the past decades, low level of education coverage, poor health conditions, high population pressure and weak institutional structures. Despite renewed attempts to achieve economic growth through adoption of various development strategies such as: Agricultural Development Led- Industrialization, civil service reform, decentralization, empowerment and capacity building efforts in poverty related sectors, a major breakthrough has not been realized to mitigate the effects of the poverty situation in the country. Attempts in macro economic growth over the last decade have not brought about observable changes in the social indicators which reflect a deteriorating living standards and widespread poverty. The benefits of growth have not been adequately shared by majority of the population. The income disparity between the various population groups has widened. Household food insecurity and low agricultural productivity have persisted. Employment opportunities remain limited and labor incomes are low compared to the high cost of living. Heavy reliance on the agricultural sector as emphasized in the development strategy of the government could not sustain rural employment with the limited labor absorption capacity and low productivity. Demographic pressures and weak institutional structures have also slowed down economic development and have adversely affected poverty alleviation efforts in the country. Measures to expand education and health services are being counteracted by population growth. Children and women in Ethiopia are most vulnerable to poverty with disastrous consequences particularly in rural areas. Some issues and common features with significant policy and program implications to both rural and urban sectors are also observed. These may be summarized as follows: (i) (ii) (iii) disparities in \access to resources, productive assets, services, and investment in human capital; institutional weaknesses in administrative and delivery structures to render services to the poor; limited commitment and orientation of authorities at various levels of hierarchy towards approaches in participatory development and decentralization; 26

27 (iv) (v) policy inflexibility like rural and urban land policy and overall development strategy of the country; marginal involvement of the poor in development initiatives and decision- making including limited capacity of social organizations at the grass-roots level. This situation, therefore, clearly indicates that poverty alleviation still commands a high priority on Ethiopia s development scenario. There is no simple solution for such a complex issue. Various policy reforms and strategies considered will be required to address the serious poverty situation of the country. Most importantly, it will require strong commitment of the government to address the issues in practical terms. In efforts to enhance socio-economic development as a vehicle for poverty alleviation, there is a dire need for more participatory approaches involving the ultimate beneficiaries of development at the grassroots. First, attempts so far in economic development have not been a sufficient condition for poverty reduction. Development strategies will have to focus on the removal of the structural bottlenecks and institutional weaknesses that remain as serious impediments to change and development. The most critical strategy will be involvement of the poor as important participants in the country s development efforts. Sustainable and equitable socio-economic development will not be possible unless the underprivileged take part in the emerging economic and social opportunities as the ultimate beneficiaries of development efforts. Thus, development programs aimed at targeting poverty alleviation need to be oriented towards people-centered approach in order to produce results and become sustainable. Second, the development process must be looked at from medium to longterm perspective in order to make it more sustainable instead of focusing mainly on emergencies and rehabilitation efforts. Emphasis on long-term economic development and enhanced social services through improved health and education is essential if the country is to come out of the vicious circle of poverty. The provision of services such as primary health care, basic education, family planning, nutrition, and water and sanitation are among the most cost-effective ways of reducing the magnitude of poverty. Such a tendency and approach in socioeconomic development strategy will attract domestic and foreign investment in longterm development projects in Ethiopia. Third, it will be difficult to fully mitigate poverty and disease within the next decade unless serious and genuine efforts are exerted to improve deficiencies in socio-economic structures in urban and rural areas. This would require adequately organized, transparent and participatory socio-economic management in the country. Accordingly, ongoing and genuine assessment of various policies and institutional set-ups in favor of a positive development trend would be vitally important. 27

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