the World Bank’s Board of Executives has approved a US$380 Million loan to Ethiopia. The loan will be used for improving the capacity and performance of local urban governments to expand sustainable urban infrastructure and services in cities across the nation, according to a press release on the Bank's website.
Ethiopia is on the verge of completing the first phase of Urban Local Governments Development Program (ULGDP) and it is now embarking on the second phase of the project, ULGDP II. And it was for this second project the government requested the loan.
According to the press release by the World Bank on May 2, 2014, the use of the Program for Results (PforR) instrument, the International Development Association (IDA*) credit for the Second Urban Development Program (ULGDP II) will scale up support to 26 new Urban Local Governments—for a total of 44 ULGs—across nine regional governments.
ULGDP is a program architected to address institutional and fiscal gaps at the urban local government level. And this is planned to be achieved through the support of improved urban services and infrastructure by the local governments. As of July 2013 the program has benefited around 2.6 million people through the finance it has made for infrastructure and service.
According to Guang Zhe Chen, the World Bank Country Director for Ethiopia, “Ethiopia is rapidly becoming more urban which means poverty becomes more of a city phenomenon. In 2000, 11 percent of Ethiopia’s poor lived in cities, but this rose to 14 percent in 2010/11. Through efforts to leverage well-functioning and productive urban centers, the operation is expected to maintain a focus on the urban poor and increase access to basic infrastructure services, spur inclusive growth and fuel job creation”.
ULGDP II is aimed to improve institutional performance of participating urban local governments by developing and sustaining urban infrastructure and services. Commenting on this Abebew Alemayehu, the World Bank Task Team Leader for the program, said “The ULGDP II will consolidate and expand the achievements of the first phase by providing grants to urban local governments based on their performance across a range of areas including fiduciary management, asset management, revenue generation, management of environmental and social systems, , planning and budgeting practices, execution of planned operations and maintenance, governance, transparency and participation, among others”.
The fund to the program is to be disbursed based on the performance participant local governments have shown and it is to be allocated for investment in urban infrastructure and service.
According to the press release the first phase of the project was a success. It has benefited 2.6 million people from the infrastructure and service built by the finance from ULGDP. It was managed to build 970 kilometers of roads and 588 kilometers of drainage system and many more. And because of the roads built, residents’ mobility has increased, values of properties have increased and small enterprises have also increased. Flooding has also diminished because of the roads built by the finance of ULGDP.
Source: World Bank
