Author: Getnet Alemu

Publisher:

Published: 2009

Total Pages: 38

ISBN-13:

Foreign aid has played a major role in Ethiopia's development effort since the end of World War II. It has been instrumental in bridging the country's savings-investment and foreign exchange gaps. Its importance as a source of financing for the development of capacity building (human capital, administrative capacity, institutional building, and policy reforms) is also unquestionable. Thus, increasing efforts were made to mobilize foreign aid in the last two regimes. Following the change in political regime in 1991 and the adoption of the structural adjustment program in 1992/93 in particular, the country has enjoyed a significant amount of aid. A large and growing inflow of concessionary loans and grants has occurred since 2001, following the issuance of the first poverty reduction strategy paper (known as the Sustainable Development Poverty Reduction Program) from 14 multilateral sources--mainly IDA, EC, the Global Fund, and the African Development Fund and more than 30 bilateral sources--mainly the USA, UK, Italy, Canada, Germany, Ireland, Japan, Netherlands, Norway, and Sweden. ... We have seen that Ethiopia has been one of the major recipients of international aid in recent times. The health sector is among the few that enjoyed large shares of ODA. A large and growing inflow of aid followed the development of the Health Sector Development Plans (HSDPs) by MoH. Resources were delivered by ten multilateral sources, more than 22 bilateral sources, and more than 50 international NGOs. Getting the complete picture on the flow of aid in the health sector is very difficult because of problems associated with the disbursement channel itself. This problem may be understood better by briefly looking into the three disbursement channels practiced in Ethiopia. It could be said that funds disbursed through "channel 1," MoFED, are immune to data reporting problems: they are invariably captured in the budget. Funds disbursed through "channel 2" via sector bodies, are disbursed outside the mainstream government budget and thus might not be captured. As noted by MoFED (2005), some federal line ministries deal directly with donors and may spend funds without notifying MoFED, let alone reporting to MoFED. Funds through "channel 3" are those disbursed directly by donors without involving any government agency; they are usually not captured in the budget and, disturbingly, are not reported at all in many cases. In some cases they do report to the regional bureaus or to the sectoral ministry concerned but these parties may not report to MoFED. There seems to be no systematically organized and comprehensive data available on a regular and consistent basis regarding the trends of aid flows to the health sector--either by MoFED or MoH.