Ethiopia Seeks Reform and Openness as Pathway to Change

Recovery from war, pandemic and drought requires a fresh approach

Country rich in history and strife seeks recovery and renewal

Ethiopia has a rich and ancient history. Its ancient walled city Harar has been a center of trade in the Horn of Africa for centuries. It is often considered the birthplace of coffee since cultivation began there in the 9th century.

Currently, though, the country is slowly emerging from a devastating two-year civil war that set back economic and governance progress. Agriculture is a critical sector and yet productivity is under constant threat from recurring droughts. The triple stresses of the pandemic, climate change and war have pushed many of its people further into poverty and humanitarian need has increased.

Recovery will require a willingness to embrace new ways of addressing these challenges as well as outside help – an infusion of resources can go a long way if the government adheres to global standards to manage its budget more effectively.

Government participation in open budget signals openness to change

Ethiopia was added to the latest round of the Open Budget Survey in 2021 thanks to support from the European Commission. Among other things, the survey allows countries to see how their budget systems measure up against other countries and is used by global investors as a tool for choosing where to invest. Most importantly, it provides governments with actionable steps they can take to be more inclusive in their budget processes. When people are more involved in these decisions it can lead to better delivery of critical services that can in turn propel economic and social progress.

It is the government’s ambition to make our system transparent and accountable and enhance our basic service delivery.

Dawit Shimelis, Ethiopia Ministry of Finance Tweet

“It is the government’s ambition to make our system transparent and accountable and enhance our basic service delivery,” said Dawit Shimelis, Public Financial Management (PFM) Reform Director at Ethiopia’s Ministry of Finance. One way to gauge that effort is to compare Ethiopia’s budget transparency with other countries, a deciding factor for the government to take an active role in the survey.

“We wanted to see whether the reforms we have conducted so far are in line with internationally accepted standards, to find the gaps and to check whether we are on the right path,” Shimelis said.

They are, said Abdurahman Ali Hussien of The Horn Economic and Social Policy Institute (HESPI), the research organization which helped to conduct the survey. He said the Ethiopian government is headed in the right direction and the survey provided a roadmap to see where it should head next. Going through the rigorous survey process, Hussien saw how valuable the measurements could be – as it goes beyond other measurement tools the Ethiopian government had already been using.

The survey assesses the federal budget process because it is the level where key decisions are made in most countries. Shimelis noted that local governments in the country, whose budgets are not included in the survey, have full autonomy and are further along in pursuing transparency measures, but he welcomed the exercise and the opportunity to learn more about how to improve at the federal level.

Transparency, oversight and public participation seen as key

The survey shed light on areas where the Ethiopian federal government can be more participatory in its budget processes to prioritize what people most need. Sectors like agriculture, water and education are clearly services that require greater investment. “To enhance the quality of these services, the government is currently allocating a larger portion of the budget to them. And to manage scarce resources, we believe there should be public participation, so we know where (those resources) are needed most,” Shimelis said.

HESPI’s Hussien agrees. “Public participation (in the budget process) ensures that government spending is focused on counteracting the cost-of-living pressure on society,” he said. Rising costs are making it ever more difficult for people to afford the basics they need to live.

“In a country like Ethiopia where our resources are so limited, we want to channel those resources to areas that [reflect] the priorities of the public,” Hussien added.

Ethiopia’s findings identified areas for improvement in transparency, oversight and participation practices. Ethiopia scored highest in budget oversight, with an overall composite score of 57 out of 100 (the global average is 52). The survey noted that while Ethiopia’s Federal Parliamentary Assembly holds public hearings before approval of the budget review, the public’s participation is limited. The survey recommended allowing any member of the public or civil society organization to testify during the budget proposal before it is approved. The survey also urged the Ministry of Finance to include the public during the budget’s formulation and allow the public to also monitor how the funds are implemented in their communities.

In a country like Ethiopia where our resources are so limited, we want to channel those resources to areas that [reflect] the priorities of the public

Abdurahman Ali Hussien, The Horn Economic and Social Policy Institute (HESPI) Tweet

Shimelis views the survey recommendations as an opportunity to improve and learn.

He acknowledged that at the federal level, public budgets are not as transparent as they could be. “We should strengthen that.” He added that more public participation for public investments is going to be a hallmark of the Ethiopian government’s reform plans. “It will help to make the government trusted and more accountable when delivering services. If there is participation and transparency, then the public can hold us accountable in both a positive and negative way.”

Shimelis said the government has carefully studied the survey results and is starting to convert the findings into a “plan of reform.” “Once it is finalized we’ll embark on the implementation.”

Forging a good working relationship between government and civil society

IBP’s Supervisor for the Open Budget Initiative, David Robins, initially reached out to the Ethiopian government in 2020 and began working with the Ministry of Finance that year. “We presented the survey as an opportunity for a greater dialogue between the government and civil society, through a formal questionnaire and also an informal dialogue,” said Robins. “We want our researchers and the government to build a relationship.” Why? When such relationships develop, more transparency often follows. “So, for instance, a researcher can call and say, ‘When did you publish this document?’ and get an immediate response,” Robins added.

Hussien said that in this first collaboration between his organization and the government on the survey “we didn’t engage as much as we’d like,” but he added that attending September’s Integrated National Financing Framework (INFF) workshop together with Shimelis in Nigeria was a further step in the right direction. The INFF serves as a tool for countries to create more integrated plans to finance their sustainable development goals. The INFF forum gathered more than 300 government and civil society representatives in Abuja in September 2022 to help them move ahead with action plans to increase investment, manage risks and achieve their priorities “This workshop did help to bring us together even more strongly – we established a better connection,” Shimelis said. He also noted the progress other countries have made after participating in previous rounds of the survey. “That gives us motivation for a stronger collaboration and hopefully in the coming rounds we will engage even more strongly.”

Although Ethiopia’s government has collaborated with civil society in the past, “this type of assessment gives (the government) additional input and leverage,” Shimelis said. “We already communicate and work together, but it’s not documented and assessable like this,” he added. “We should see how we’re going on the right track or the wrong [one]. In the past, we didn’t have that – this gives us that.”

Hussien says if Ethiopia continues on this openness track, in the longer term, he hopes that, like other countries in the survey, it should lead to outside investments in the areas the country needs most, such as transportation and energy development. “Using the survey, we would like to compare countries and see if those that are better at openness and accountability are better able to improve social outcomes,” Hussien stressed.

Ethiopia’s government also found it useful to see how they stack up against others. “Most of the actions (the survey suggests) we can achieve in the future,” Shimelis said. “Some we can learn from other countries and some we have the information but are not properly documenting it according to the (survey’s) standard. Assessing with an independent body, we learned a lot and know where we stand comparatively with other countries,” Shimelis added. “We are a nation that is ready for change.”

In early November, the warring Ethiopian government and Tigray forces that recently held a ceasefire set up a hotline as new peace talks between the two sides begin. Both actions were public and official, leading many to hope that this will mean accountability on both sides, and lead to a permanent resolution. For a nation that is ready to change, it will be a welcome start.

This work is supported by the European Commission.