Ethiopia closes in on $300 million World Bank loan for rural food project
The Ethiopian government has made significant efforts to secure a $300 million loan from the World Bank for the "Rural Connectivity for Food Security" project.
The government had formally requested the loan in 2021 after submitting a concept document in October of the same year. The World Bank has now confirmed that the project appraisal has entered its final stages, Addis Standard reports.
The initiation ceremony for the study document commenced on August 28, 2023.
At the ceremony, Bezawit Tesfaye, a World Bank representative, announced that the study is projected to conclude by March 2024, with implementation scheduled to commence in April 2024.
The primary objective of the project is to construct 108,797 kilometers of rural roads, connecting 5921 kebeles currently lacking all-season roads. The World Bank is anticipated to cover approximately 40% of the 10-year project cost, estimated at $774 million.
Given Ethiopia's population exceeding 120 million, with approximately 80% residing in rural areas with inadequate road infrastructure, and 66% of the labour force engaged in agriculture, improving connectivity to markets is deemed crucial for development. Ethiopia, being landlocked, places additional importance on enhancing rural connectivity.
Ethiopia's growth strategy in recent decades has heavily relied on substantial public infrastructure investments. Until 2020, the country allocated 4% of its GDP each year to road construction.
In June 2023, Finance Minister Ahmed Shide presented the budget proposal for the 2016 Ethiopian fiscal year to parliament members. He highlighted a serious fiscal imbalance due to factors such as declining tax revenue, reduced external loans, and increased public spending related to events like the militarized conflict and unprecedented drought sequence.
“Due to this fiscal imbalance, the government has had to halt the launch of new road projects…Instead, our focus will be on completing the projects that have already been started within the designated timeframe.” Ahmed told MPs.
The World Bank has been a major supporter of the Road Sector Development Program (RSDP), with five phases since 1997. Under the RSDP, the country's road network expanded from 26,500 kilometres to 144,027 kilometres in 2020, with an estimated cost of 414.7 billion birr ($ 7.3 million).
