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

 Table of Contents
Page

1. Introduction ................................................................. 1
1.1 Definition of Poverty in Ethiopia.......................... 2
1.2 Determinants of Poverty in Ethiopia ....................... 3

2. Socio-economic Performance during the 1990s............... 4

2.1 Agriculture ............................................................. 4-6
2.2 Industry ................................................................. 6-8
2.3 Employment ........................................................... 8-9

3. Sectoral Analysis of Poverty in Ethiopia ......................... 9

3.1 Agriculture ............................................................. 9-11
3.2 Food Security ......................................................... 11-12
3.3 Primary Education .................................................. 13-14
3.4 Health and Nutrition ............................................... 14-15

4. Distribution of Poverty in Ethiopia ................................. 15

4.1 Rural Poverty ......................................................... 15
4.2 Urban Poverty ........................................................ 15 - 18

5. Ethiopia’s Development and Poverty Reduction

Strategy............................................ 19
5.1 ADLI and Food Security ......................................... 19
5.2 Justice system and Civil Service Reform 19
.................
5.3 Governance, Decentralization and Empowerment 19
...
5.4 Capacity Building ................................................... 20

6. Summary and Conclusion................................................ 20 - 21

References

2
 ACCRONYMS

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 - Sustainable Development and Poverty Reduction

Program

WFP - World Food Program

List of Tables
3
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 (1991/92-
1996/97 in ‘000 Birr)
5. Unemployment by Sex, Rural and Urban Areas.
6. Area, Production and Yield of Major Crops (1979/80-2000/01).
7. Vulnerable Population (million), 1980-2001.
8. 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 : 1995/96-1999/00 (%).
13. Trends in Urban Poverty .
14. Poverty Profile of Five Secondary Cities in Ethiopia (1995/96-
1999/00).
15. Projected Urban Population of Ethiopia (1995-2020).

4
 Understanding Poverty: The Ethiopian Context
By Asmamaw Enquobahrie (Ph.D.)*

1. Introduction:
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 non-
income 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 socio-
economic 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
 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..

1.1 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
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 poverty-
stricken 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$124.28 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
institutional structures. These key elements are in fact connected with each other to
influence the poverty situation in Ethiopia.

8
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
1990/91 5330.71 779.48 4.7 6114.89
1991/92 5147.39 795.20 5.01 5947.60
1992/93 5488.27 814.77 5.28 6308.32
1993/94 5271.85 800.57 5.58 6078.00
1994/95 5450.03 828.60 5.90 6284.00
1995/96 6519.76 856.80 6.10 7206.00
1996/97 6879.29 887.60 6.40 7453.90
1997/98 6313.46 814.59 5.87 6887.40
Growth in
Log-/inear/% 3.79 1.24 3.89 2.85
Source: MEDaC, Survey of the Ethiopian Economy: Review of Post-reform
Developments (1992/93-1997/98), 1999, A. A.

9
 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 sub-
sector 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

1991 117,3922 29,573 146,965
1992 135,4677 17,191 152,658
1993 84,3688 11,600 95,968
1994 156,000 15,000 17,100
1995 198,199 4,410 242,609
1996 205,348 40,524 245,872
1997 164,778 45,164 209,942
1998 182,798 77,460 260,258
Growth in
Log-linear 9.65 15.50 10.50
(%)
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
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 pre-
reform situation mainly because of retrenchment from public enterprises (CSA 1992-
1999 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
 The performance of Medium and Large- scale
Manufacturing Industries

Average
Indicator 91/92 92/93 93/94 94/95 95/96 96/97 97/98 growth
rate
Number of 283 289 499 501 642 741 762 20.3
establishments
Gross value of product.
(in ‘000 Birr) 238153 254682 455761 566722 579910 593682 702549 22.2
2 4 5 5 2 8 7
Value added at factor
cost (in ‘000 Birr) 455161 678896 134916 154487 159383 166521 168685 28.5
6 4 8 9 7
% shore of GDP 2.9 3.9 4.3 4.4 4.3 4.4 4.7 4.9
Employment 82822 82273 88862 90679 91199 93166 94023 2.2
Fixed capita (in’000 994995 132691 180521 177205 225449 272849 312012 21.7
Birr) 1 5 4 8 0 6
Foreign Sales
(in’000 USD) 44889 47568 49005 63005 63468 68782 79272 10.3
Source: CSA (1992 - 1999 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
(1991/92 - 1996/97 in ‘000 Birr)

No. 91/92 92/93 93/94 94/95 95/96 96/97

Total manufacturing
value added 336815 712841 1187266 1344007 1593838 1681871
1. Food value added (VA) 70083 119843 18866 286801 462215 482606
% share 20.8 16.8 15.9 21.3 29.0 28.7
2. Beverage VA 43981 72186 175865 216430 193715 180123
% share 13.1 10.1 14.8 16.1 12.2 10.7
3. Textile VA 57378 150190 219224 180092 171806 155252
% share 17.0 21.1 18.5 13.4 10.8 9.2
4. Leather and shoes VA 2086 7999 126395 134475 15782 177804
% share 6.0 11.2 10.6 10.0 9.1 10.6
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).

12
 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

1984 1994
EAP (in UEP UER EAP UEP UER
Area Sex million) (in ‘000) (in %) (in (in ‘000) (in %)
million
)
Total Male 8.6 83.1 1.0 15.0 415.7 2.77
Female 6.2 86.5 1.4 11.5 335.1 3.09
Total 14.7 169.6 1.2 26.5 770.8 2.9
Rural Male 7.7 22.8 0.3 13.4 83.9 0.63
Female 5.6 32.6 0.6 10.3 81.1 0.78
Total 13.3 55.5 0.4 23.7 165.0 0.69
Urban Male 0.9 60.2 6.8 1.6 331.8 20.4
Female 0.6 53.9 9.5 1.1 274.0 24.2
Total 1.4 114.2 7.9 2.8 605.8 22.0
13
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 1984 -
1994 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
entrenched in the country (CSO, 1987; CSA, 1989-2001). 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 1979/80-2000/01 (both seasons)

Area Production Yield

Year (Mn. Ha) Mn. Qn (Qn/Ha)
1980/81 5.7 56.6 11.6
81/82 5.7 63.0 11.1
82/83 6.1 78.1 12.8
83/84 5.7 63.4 11.1
84/85 5.9 48.6 8.2
85/86 6.0 5.0 9.0
86/87 5.6 62.6 11.2
87/88 5.9 66.0 11.1
88/89 5.8 71.9 12.5
Average 80/81 -
89/90 5.8 64.2 11.1
1993/94 7.2 57.4 8.0
94/95 7.7 75.0 9.7
95/96 9.1 103.3 11.4
96/97 8.9 104.4 11.7
97/98 7.7 81.0 10.5
98/99 8.5 88.7 10.4
99/00 8.9 92.3 10.4
2000/01 10.4 110.4 10.6
Average 93/94 -
2000/01 8.6 89.1 10.3
Source: CSO 1987, CSA 1989 - 2001

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
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) 1980 - 2001

Year Rural pop. Vulnerable pop. % rural pop.

1980 33.7 3.7 11.0
81 34.8 3.3 9.5
82 35.7 4.2 11.8
83 36.8 4.0 10.9
84 37.9 5.1 13.5
85 39.0 7.9 20.3
86 40.2 6.9 17.2
87 41.3 2.5 6.1
88 42.3 2.2 5.0
89 43.4 2.3 5.3
Average 1980 - 89 38.5 4.2 10.9
1992 44.4 7.6 17.1
93 45.3 5.0 11.0
94 46.2 6.7 14.5
95 47.1 4.0 8.5
96 48.4 2.8 5.8
97 49.8 3.4 6.8
98 51.2 4.3 8.4
99 52.6 5.4 10.3
2000 54.0 7.7 14.3
2001 55.5 6.2 11.2
Average 92 - 01 49.6 5.3 10.7
Source: CSA 1991 for population 1980-1989;
CSA 1999 for population between 1992-2001;
DPPC 1999 for Vulnerable Population 1980-1999;
DPPC 2000; DPPC 2001.

3.2 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,
1995-2000).
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, 26th 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
extremely high level needs of the population compared to that of the pre- 1996 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
Estimated crop Revised Estimates of Revised
Year production Food Aid Requirements Estimates of
(in million MT) (in Mt. Tone) needy population
(in million)
1995 10.2 492,000 4
1996 11.8 262,000 2.7
1997 8.8 329,000 3.4
1998 11.3 602,000 5.3
1999 10.7 460,000 6.6
2000 – 898,936* 7.7**
Source: FAO/WPP, Ethiopia, 1995 - 2000
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 Size- % of total % of food
category (mien) Pop. insecure
17
MEDaC Income and Rural 22.3 47.5 89.8
Poverty study expenditure Urban 2.4 33.2 10.2
1999 survey Total 24.7 45.5 –
Source: MEDaC , WMU, 1999.
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)

1995/96 1999/00
M F Al M F Al
Gross primary Urban 98.2 94.6 96.4 103.1 107.6 105.4
school Rural 35.1 17.0 26.3 62.7 41.4 52.4
enrollment National 43.0 27.6 35.5 67.4 50.0 58.9
Net-Primary Urban 65.5 62.0 63.7 74.1 74.8 74.5
enrollment rate Rural 16.1 9.2 12.8 30.7 25.2 28.0
National 22.3 16.4 19.4 35.8 31.6 33.8
Source: MoFED, 1999, SDPRP

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 (%)

95/96 97 98 99/00
Urba Rural All Urba Rural All Urban Rural All Urban Rural All

18
 n n
Male 82.3 29.2 36.5 81.0 25.1 33.4 81.0 28.8 36.3 82.1 33.0 40.0
Female 60.4 9.2 18.1 60.8 7.3 16.5 59.0 8.8 17.1 61.2 11.0 19.5
Total 70.0 19.4 27.3 70.3 16.2 24.8 69.0 18.8 26.6 17.4 29.8 29.4
Source: Welfare Monitoring survey, 1997, 1998 and 99/00.

19
 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 under-
weight 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 28-44 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
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
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 1995/96 - 1999/00 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 - 1995/96-1999/00 (Percent)

Change in percent
Location 1995/96 1999/00 over 1995/96
Urban 33.3 37.0 11.1
Rural 47.0 45.0 – 4.2
Total 5.5 4.2 – 2.9
Source: MoFED : Poverty Profile of Ethiopia, March 2002.

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 1995/96 1999/00 % change in Po

1. Tigray 0.457 0.607 32.82

22
 2. Afar – 0.268 –
3. Amhara 0.373 0.311 -16.62
4. Oromia 0.276 0.359 30.07
5. Somale 0.016 0.261 15.31
6. B.Gumuz 0.345 0.289 -16.23
7. SNNP 0.459 0.402 -12.42
8. Gambella 0.244 0.384 57.38
9. Harari 0.291 0.350 20.27
10. Addis Ababa 0.300 0.362 20.67
11. Dire Dawa 0.246 0.331 34.55
12. Total 0.332 0.369 11.14
Source : FDRE, MoFED, Ethiopia, Sustainable Development and Poverty
Reduction, Addis Ababa, Ethiopia, May 2002.

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
(1995/96-1999/00)

Absolute poverty level, percent of

No. City poor people
1995/96 1999/00
1. Mekelle 46 43
2. Bahirdar 38 22
3. Awassa 33 No
4. Jimma 29 37
5. Nazreth 29 28
6. National 33 37
Source: MEDaC, Welfare monitoring unit 1999, MoFED, 2002.

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).

4.2.1 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
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)

Total Pop. Urban Pop. Percentage of

Year (‘0005) (‘0005) Urban Pop.
1995 56677.1 8681.0 15.3
2000 66755.8 11753.6 17.6
2005 79369.5 15952.8 20.1
2010 94246.0 21400.4 22.7
2015 111583.8 29569.7 26.5
2020 131485.2 39530.1 30.6
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 15-29 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
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 multi-
ethnic 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
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) disparities in \access to resources, productive assets, services, and

investment in human capital;
(ii) institutional weaknesses in administrative and delivery structures to
render services to the poor;
(iii) limited commitment and orientation of authorities at various levels of
hierarchy towards approaches in participatory development and
decentralization;

26
 (iv) policy inflexibility like rural and urban land policy and overall
development strategy of the country;
(v) 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 long-
term 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 socio-
economic development strategy will attract domestic and foreign investment in long-
term 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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29