copy the linklink copied!3. The evolution of rural development policies in Ethiopia

Rural development is at the centre of Ethiopia’s national development agenda. Indeed, the Government of Ethiopia has put considerable efforts and resources in establishing an explicit rural development strategy, as well as launching a series of sectoral programmes targeting the multidimensional needs of rural areas. This chapter reviews the evolution of Ethiopia’s rural development policies since 1991. Moreover, given the growth in Ethiopia’s urbanisation, and its catalyst role for rural development, it also reviews the progression of Ethiopia’s urban policies and their interactions with rural policy. It highlights that, although national development plans are evolving and recognising the role of urban areas for structural transformation, rural and urban policies remain fragmented. It argues that fragmented policies can limit the scope for stronger rural-urban linkages. Thus, the chapter calls for better co-ordination of urban and rural policies in order to reap the benefits of Ethiopia’s ongoing changes and facilitate rural-urban transformation.


copy the linklink copied!Introduction

Rural development is at the heart of Ethiopia’s national development strategies. Given the size of the rural population, and the importance of agriculture for Ethiopia’s development, the country’s efforts to effectively foster rural development constitute as a national development objective.

Rural policy is, however, constantly changing. These changes result from the structural transformation of rural economies, changes in the national economy and international markets, a shift in the political system, or a new ideology governing development interventions. For this reason, understanding the evolution of rural policy is a necessary condition to identify potential areas for reform. Moreover, this further requires understanding how national development plans have embedded rural (and urban) development efforts.

Despite its importance, the agricultural sector has not always taken a central role in Ethiopia’s national development plans. Ethiopia’s political ruling prior to 1991, encompassing the Monarchy (1941-74) and the Derg period (1974-91), prioritised the industrial sector. This was done through mixed strategies: export-oriented (mainly during the Monarchy period) and industrial development-based import substitution, while the agricultural sector was frequently used as a source of foreign currency.

In 1991, following changes in the political system, Ethiopia’s development strategies dramatically changed. They went from emphasising industry to promoting agricultural development. This led to the establishment of the Agricultural Development-Led Industrialisation (ADLI) strategy, which promoted small-scale agricultural sector development. Under ADLI, agricultural sector development and rural areas were placed at the heart of the national development agenda. ADLI functioned as the main guiding framework for subsequent national development strategies (SDPRP, PASDEP, GTP I and GTP II). Alongside structural reforms, the new government also implemented a series of multi-sectoral flagship programmes to address the multidimensional needs of rural areas. These include large infrastructure and social protection programmes, which have enhanced rural residents’ access to the nearest agglomerations, facilitated linkages across small towns and intermediary cities, as well as reducing poverty. For instance, Ethiopia’s flagship social protection programme, the Productive Safety Net Programme (PSNP), reaches today almost 8 million beneficiaries (both in rural and urban areas), and has lifted 1.5 million Ethiopians out of poverty.

This chapter reviews the evolution of rural policy in Ethiopia since 1991. It highlights that, although ADLI has set the foundations for Ethiopia’s economic success, Ethiopia’s demographic, economic, and spatial transformations call for an update in the ADLI in order to better reflect current challenges. Notably, as urbanisation plays an increasingly important role for Ethiopia’s development, policy actions affecting the urban areas will have a second order effect on rural populations. For this reason, the chapter also looks at the main changes in national urban policies and calls for better co-ordination between urban and rural policy.

This chapter is structured as follows. The first two sections briefly summarise the changes in national development approaches across two political systems prior to 1991, and the national development strategies since 1991. The third section highlights the main government programmes targeting rural areas, while the fourth section describes rural areas’ governance and institutional frameworks, as well as the roles and responsibilities of subnational governments. To complement this analysis, the fifth section outlines Ethiopia’s national urbanisation plans and the ways in which urban areas have been embedded into national development strategies. The chapter ends with a short conclusion.

copy the linklink copied!Brief overview of national development strategies in Ethiopia before 1991

Monarchy period (1950-74)

Ethiopia’s national development strategy under the monarchy aimed to foster industrialisation. Export-oriented growth strategies were first adopted in order to attract foreign direct investments. Due to the unsuccessful outcomes of export-oriented strategies, the monarchy switched to import substitution industrialisation (ISI) strategies in order to develop an industrial sector.

Three five-year development plans were launched during the monarchy. The First Five-Year Development Plan (1957-62) promoted improved production of cash crops, including coffee, which accounted for 70% of foreign exchange earnings (Welteji, 2018[1]). Similarly, the Second Five-Year Development Plan (1963-67) continued to prioritise industrial development. Large-scale commercial farms for production of cotton, coffee and sugar were promoted as a source of income over small-scale subsistence farms, which accounted for 80% of cereal production (Alemu et al., 2002[2]).

The Third Five-Year Development Plan (1968-73) shifted its focus to the development of the agricultural sector in order to address the rising problem of food shortages in Ethiopia. The Integrated Rural Development project was also established to address rural development challenges and expand the agricultural commercial market system. It predominantly focused on improving the distribution of agricultural inputs, such as fertilisers and seeds used by commercial farmers, and expanding rural health services. Nonetheless, the monarchy continued to envision the development of the non-agricultural sector as the main driver of economic development (Alemu et al., 2002[2]).

During the monarchy, Ethiopia had a complex land tenure system, with very limited private ownership of land. The monarchy and the church had strong control over most of the agricultural land.

A combination of public dissatisfaction, food shortages and the rise of a military government led to the monarchy to be overthrown in 1974 (Clapham, 2019[3])

Derg period (1974-91)

The Derg government changed the previous national development strategy, placing the emphasis on a centrally planned economy. Industry-led development was deployed as the main development strategy. Rural land and other productive assets were nationalised, and land was distributed among farmers. Commercial farms were put under GoE control, and land tenancy was abolished. Furthermore, private commercial labourers and commercial farming were marginalised, and large collectivisation programmes were promoted through resettlement and villagisation programmes (Welteji, 2018[1]). The military government maintained an overvalued currency and implemented marketing and pricing policies; in addition, the GoE established the Agricultural Marketing Corporation (AMC) to set pricing systems, for agricultural goods and set quotas for grain production which were significantly lower than market prices (Alemu et al., 2002[2]).

Following the severe drought of 1983-84, the government introduced the Ten-Year Perspective Plan. This plan primarily aimed to promote self-sufficiency in food production, as well as surplus agricultural production. The central government set production targets and utilised the AMC to increase the production surplus of agricultural resources (Alemu et al., 2002[2]). In 1987, the government unveiled a mixed economy strategy and the Ten-Year Perspective Plan was partially changed to focus on the production of staple food crops, until the plan was terminated in 1990.

Rural development was not part of the overall development agendas of either the Derg government or the monarchy. Investment in the agricultural sector was primarily used as a means to manage foreign exchange earnings or capital accumulation for investment in the industrial sector. However, by the end of the period of the Derg government, and with the formation of the new government, national development strategies had shifted focus.

copy the linklink copied!Ethiopia’s national and rural development strategies post-1991

Ethiopian People’s Revolutionary Democratic Front (1991 to present)

The Ethiopian People’s Revolutionary Democratic Front’s (EPRDF’s) rise to power in 1991 resulted in a considerable shift in national development strategies. The EPRDF moved Ethiopia’s development vision away from the previous centrally planned industrial development and towards a new agricultural-led development approach. Many of the previous governments policies were reversed, agricultural price controls were removed, and state farm assets were privatised. In addition, the new government adopted an export-oriented development strategy and implemented structural adjustment programmes (SAPs). In 1994, the home-born ADLI was launched as the foundation for national development, with the main objective of attaining food self-sufficiency by increasing agricultural productivity and output. Table ‎3.1 below highlights the changes in national development strategies across the three political systems.

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Table ‎3.1. Changes in Ethiopia’s National Development Approaches 1950 to present

Political ruling


Derg government





1991 to present

National development strategies

Industrial development through import substitution and industrialisation

Centrally planned, industry-led development

Home-grown, agricultural-led, export-oriented development policies

Selected policies

• Land was mainly owned by the state and the church

• Establishment of large commercial farms producing coffee, as means of earning foreign currency

• Prioritised the development of non-agricultural industries

• Nationalisation of land and other productive assets

• Collectivisation of farms and promotion of villagisation programmes

• Mixed economic policies (1988-89). Distortion of markets through price controls, and overvaluation of the Ethiopian birr

• Land remains state owned

• Changed national development priority to agricultural development

• Adoption of SAPs and export-oriented open economy

Key rural development issues

• Food shortages

• Neglect of cereal production despite accounting for 80% of the cultivated area

• Severe droughts and famine in 1983-84 and food insufficiency

• Civil conflicts

• Persistent food shortages

• Rise in rural population

• Environmental degradation and climate change-related shocks

Source: Welteji (2018[1]), Alemu et al (2002[2]).

Since 1991, the EPRDF has implemented a series of national development plans, for which the ADLI still stands as the main pillar. Nonetheless, urban areas are now increasingly targeted to tap into the country’s potential for developing a manufacturing sector.

Ethiopia’s policy frameworks for national development since 1991

The ADLI has functioned as the guiding framework for national development

Under the ADLI, the GoE envisioned agricultural sector-driven economic transformation. The programme entailed three main strategies: expansion of agricultural technologies; investment in agricultural infrastructure, including inputs; and boosting rural non-agricultural sectors. The programme aimed at boosting agricultural productivity by improving the use of fertilisers and seeds, with the ultimate aim to boost agricultural production to serve as input and drive industrial development (Dercon et al., 2019[4]).

The ADLI also encompassed wider socio-economic development programmes, including investment in infrastructure such as roads, telecommunication and electricity grids. Furthermore, the plan aimed at enhancing the flow of finance, local governments’ administrative capacity, and the development of agro-processing industries (Mellor and Dorosh, 2010[5]). A series of investment plans were made under the ADLI, including rural technical and vocational education and training services (TVETs), the development of water resources (hydro power and irrigation), improvements in microfinance institutions, improvements in the marketing of agricultural products, and the restructuring of smallholder co-operatives.

The GoE heavily invested in extension programmes and introduced the Participatory Demonstration and Training Extension System (PADETES). PADETES was used to distribute fertilisers, seed and credit, as well as to spread information on better agricultural practices, to smallholder farmers. The ADLI remains the key pillar and guiding framework for other successive development plans, including the SDPRP, PASDEP, GTPI, and the current GTPII.

The SDPRP (2002-05) affirmed agricultural development as a key sector for poverty reduction

The SDPRP was the first poverty reduction strategy to be introduced by the EPRDF, and covered the period between 2002 and 2005. While the ADLI constituted as one of the four pillars of the SDPRP, the programme also encompassed wider sectoral reforms, including the reform of the justice system and civil service, decentralisation, and empowerment and capacity building in the public and private sectors. SDPRP objectives included poverty reduction, food security and macroeconomic stability (MoFED, 2002[6]).

The SDPRP recognised the need for a multisectoral, rural development strategy to expand beyond an agricultural sector focus. It built on the ADLI principles and policies of labour-intensive agricultural sector development as a way of reducing poverty and improving food security and growth. It promoted the expansion of the agricultural sector into international markets by increasing commercialisation and intensive farming through improved technologies and access to microfinance institutions. In addition, the SDPRP aimed to expand education and training programmes such as TVET, and to strengthen rural co-operatives in order to further develop the links between small-scale farmers and the non-agricultural private sector (MoFED, 2002[6]).

The PASDEP (2005-10) tapped into the role of urban areas for poverty reduction while agriculture remained a national priority

The PASDEP was Ethiopia’s second poverty reduction strategy, covering the period between 2005 and 2010. The plan mainstreamed and built on the ADLI’s main objective of attaining food self-sufficiency by increasing agricultural productivity and output. However, the PASDEP altered its approach to agricultural growth, changing from a focus on small-scale subsistence farming alone to larger-scale farmers; in addition, it called for “specialisation, diversification and commercialisation of agricultural production” (MoFED, 2006[7]).

The PASDEP promoted agricultural specialisation and diversification by encouraging farmers to focus on agricultural activities with the highest comparative advantage. The plan was aimed at increasing agricultural diversification by establishing high-value and niche markets, such as floriculture, production of spices, horticulture and mining. In addition, the PASDEP created a long-term programme of private sector engagement in the agricultural sector in order to facilitate the state’s long-term progressive withdrawal from the sector (MoFED, 2006[7]). Moreover, under the PASDEP, the GoE promoted the provision of capacity building in technology use, and other skills training for farmers.

The PASDEP differed from previous poverty reduction strategies in that it focused on urban areas and promoted rural-urban linkages. Moreover, it widened its focus beyond rural areas and agriculture to include urban areas, and it emphasised their role in industrial and rural development. The plan highlighted the need for rural-urban linkages, and for small cities and towns to create these linkages. As such, the plan called for the development of 600 small towns, each with 20 000 inhabitants, as a way of promoting rural-urban linkages (MoFED, 2006[7]). By 2012, the number of towns in Ethiopia with up to 20 000 inhabitants had exceeded 700 (EGIS International, 2015[8]).

The PASDEP contained a series of urban development-related objectives, including infrastructure development (such as road, market infrastructure), the creation of urban employment and the development of low-cost housing. It embedded the goals of the National Urban Development Policy, which was launched in 2005 (MoFED, 2006[7])

GTPI (2010-15) widens the national development agenda towards industrialisation

GTPI was the third national development plan covering the period between 2010 and 2015. GTPI advanced the Ethiopian national agenda towards becoming a lower middle-income economy by 2025. Regarding agricultural sector growth strategies, GTPI highlighted the need to identify and scale up smallholders’ best agricultural practices. It introduced new agricultural technologies aimed at helping to improve soil productivity, and it provided support to small-scale farmers through training and fertiliser provisions. In addition, GTPI promoted the production of high-value crops and set sector-based targets (MoFED, 2010[9]).

GTPI built on the PASDEP and widened its remit to include industrialisation as a way of creating structural transformation. The plan recognised the importance of urban areas and industrial development for structural transformation and for creating employment for Ethiopia’s growing population (MoFED, 2010[9]). It promoted investment in labour-intensive micro and small-scale enterprises (MSEs), as they provide significant opportunities for processing of agricultural goods. The plan envisioned labour-intensive manufacturing MSEs as a strategy for creating linkages with the rest of the economy (including the agricultural sector), as well as a strategy for an import substitution and export-oriented industrialisation programme. GTPI also promoted investment in urban infrastructure, employment creation and promotion of low-cost housing (MoFED, 2010[9]).

GTPII (2015-20) continues the industrialisation agenda, and taps into the potential of urban areas

GTPII builds on the main objectives and pillars of GTPI. GTPII continues to operate within the framework of the ADLI and Ethiopia’s agenda of becoming a lower middle-income country by 2025. Smallholder agriculture remains considered “the single most important source of economic growth” (NPC, 2016, p. 82[10]).

GTPII promotes agricultural sector development by encouraging the production of selected crops, including high-value crops, and the production of both industrial inputs and export commodities. In addition, GTPII recognises the wider developmental needs of rural areas. For example, under the new plan, the GoE aims to strengthen land rights through the provision of land use certificates for 7.2 million rural male- and female-headed households. Additional plans also include an increase in irrigation development, enhanced agricultural research programmes, increased private sector participation, and capacity building for rural workers (NPC, 2016[10]).

Under GTPII, the GoE envisions Ethiopia to become the leading light manufacturing hub in Africa. In this regard, urban development is an important feature of GTPII, as urban areas are projected to grow and play a key role in Ethiopia’s industrial development. In return, it is expected that industrial development will propel urbanisation even further, and the plan advocates the development of urban infrastructure and an integrated housing development programme to meet the expected housing demand increase (NPC, 2016[10]).

The changes and progressions across Ethiopia’s national development strategies reflect the changes in the socio-economic dynamics of the country, since 1991. Table ‎3.2 shows some of the main distinctions in policy approaches across the plans, and highlights some of the development strategies specifically targeting rural areas.

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Table ‎3.2. Evolution of Ethiopia’s National Development Strategies since 1991


Strategies and plans

Key policies

National development strategies

1994 to present


A framework for all national development strategies, with agricultural sector development recognised as a catalyst for economic transformation



Builds on the ADLI, with primary focus on poverty reduction, macroeconomic stability and meeting the Millennium Development Goals (MDGs) standards



Within the ADLI framework, but promoted large-scale commercial farming, development of manufacturing sector; and stronger rural-urban linkages



Reprioritised commercialisation of smallholder agriculture, set dual objectives of agricultural and industrial sector development. Urban areas recognised as a catalyst for industrial development.



Builds on GTPI, mainstreams the ADLI and continues to position urban areas as catalyst for economic transformation and development of light manufacturing industry.


Rural Development Policy and Strategy (RDPS) (2003)

The first explicit rural development strategy. Promotes smallholder agricultural development-driven growth.

Policies targeting rural areas


Food Security Program


• Resettlement Program

• Household Asset Building Program

Attempts to provide systemised and consistent support to poor and food-insecure rural and urban households.


Road Sector Development Program (RSDP)

Road infrastructure development programme to address the country-wide infrastructure gap. Programme focused on restoration of existing roads and building of new roads.


Universal Rural Road Access Program (URRAP)

Follow-up road infrastructure programme

2010 to present


Investment in targeted high-potential agricultural areas to improve agricultural commercialisation and creation of value chains



A strategy for aligning rural job creation strategies within the framework and the objectives of GTPII

Source: MoFED (2002[6]) (2003[11]) MoFED (2006[7]) MoFED (2010[9]), NPC (2016[10]), MoA (2015[12]), MoA (2017[13]).

copy the linklink copied!Programmes targeting Ethiopia’s rural areas

Ethiopia’s explicit rural development strategies

The Rural Development Policy and Strategy (RDPS) prioritised agricultural sector development

Prior to 2003, Ethiopia did not have an explicit targeted plan for rural development. The new Rural Development Policy and Strategy (RDPS), launched by the MoFED, was the first comprehensive development plan specifically aimed at rural areas and at the well-being of rural populations. The plan was designed to address persistently low agricultural growth, food shortages, and disproportionately higher levels of poverty in rural areas (MoFED, 2003[11]).

The RDPS echoes Ethiopia’s national development plans and establishes agricultural development as the main catalyst for overall rural development. Agricultural sector development is set to address some of Ethiopia’s most important development objectives. These include ensuring rapid and sustained economic growth, enhancing population well-being, eliminating food dependency, and promoting market-oriented economic development. The plan also highlights the importance of developing the financial infrastructure to improve rural finance, and calls for the establishment of a clear institutional framework to manage and co-ordinate rural development strategies (MoFED, 2003[11]).

The RDPS also highlights the need to follow an integrated development path and take into account the role of small towns and cities in fostering rural development. It highlights the need to integrate agricultural sector development plans with wider industrial development plans as well as investment in public services and infrastructure. It is acknowledged that urban areas play a key role in supporting rural development through their involvement in processing agricultural goods, as well as providing sources of non-agricultural employment for rural youth (MoFED, 2003[11]).

Land use and land laws, especially in rural areas, also have important roles to play in rural development and in the development of the agriculture sector (see Box ‎3.1).

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Box ‎3.1. Rural land policies in Ethiopia

Land tenure laws have a major impact on rural development trajectories. Having clearly defined land rights creates incentives for farmers to sustainably invest and efficiently manage the land, and reduce land degradation in the long term. With secure land tenure, farmers are also more likely to diversify their livelihoods and participate in non-farm activities, as they have a lower risk of losing their land. The gains from secure land tenure promote agricultural productivity and facilitate rural-urban migration (Zewdu and Malek, 2010[14]; Alemu, 2011[15]).

Ethiopia’s land tenure laws have not significantly changed since early or mid-1990s. Under the 1995 Constitution, Ethiopia’s federal government and the public bear the right of ownership and are the custodians of all land. The federal government is responsible for land distribution, and regional governments are charged with responsibility for overseeing administration of the land. The Ministry of Agriculture (MoA) is responsible for administering large-scale land deals (i.e. those above 50 km2”), whereas regional governments continue to administer smaller land deals (Alemu, 2011[15]).

Households earning their livelihood from farming have the right to access a plot of land at no cost. Farmers operating at a large-scale agricultural production level have access to land on a long-term lease. Landholders must be permanent residents in the farming community, and the land cannot be sold, exchanged for other property or mortgaged. It cannot be used as collateral for bank loans. However, farmers can lease their plots of land to a third party, or use family labour to cultivate the land. In addition, land can be transferred, inherited or leased to investors for a determined amount of time.

Ethiopia’s current land policies create a range of restrictions which limit the scale of its rural transformation. First, the small land sizes allocated per household limit agricultural outputs. In addition, families further split land plots among their children once the children establish their own family units, thereby further reducing land availability. This means that farmers have longer working hours and higher costs for small land units, ultimately leading to lower production. On a larger scale, this reduces the food flows from rural to urban areas, consequently reducing household income (Zewdu and Malek, 2010[14]). Second, policies on land use, where households must be involved in farming activities in order to be entitled to a plot of land, restrict individuals’ ability to diversify their livelihoods beyond farm activities, and inhibit migration to urban areas for seasonal work. In addition, land use restrictions discourage farmers from transitioning from small-scale to larger-scale commercial farming (Zewdu and Malek, 2010[14]).

The Agricultural Growth Program (2010 to present) continues to boost agricultural sector development in high-potential areas

The Agricultural Growth Program (AGP) is one of Ethiopia’s flagship programmes targeting the agricultural and rural sectors. It was first established in 2010, with the objective of improving agricultural productivity and enhancing access to markets. The programme aimed to enhance food security, facilitate agricultural transformation and tap into high-potential areas for agricultural production (MoA, 2015[12]).

The AGP has two components: 1) improvement of agricultural productivity and commercialisation of smallholder farmers through private sector participation, improved agricultural marketing and technology; and 2) provision and maintenance of rural small-scale infrastructure to develop and improve selected agricultural value chains.

The AGP is a multistakeholder and multidimensional programme. It contains multidimensional agricultural and rural sector components, including research, promotion of private sector investment, and providing livelihoods through infrastructure development. The AGP also fosters sustainable development, and it promotes the mainstreaming of climate-smart agricultural practices. The programme takes a value chain approach, and promotes forward and backward linkages across its various components and also with other national agricultural initiatives.

The AGP is currently in its second phase of the programme implementation process. The first phase targeted 96 woredas (i.e. districts or third-level administrative divisions), and an additional 61 woredas were targeted in the second phase of the programme across eight regions, including Dire Dawa. The objectives of the second phase of the programme are aligned with the agricultural objectives of GTPII, and these objectives aim to ensure increased participation of youth and women in economic activities in rural areas (MoA, 2015[12]). The AGP is co-financed between the GoE and multiple development partners. The programme is implemented at kebele level (i.e. the smallest administrative unit of Ethiopia), and complemented by capacity building programmes for implementation (MoA, 2015[12]).

Large government investment in rural road development programmes led to improved rural welfare and access to urban centres

Since 1991, the GoE has invested extensively in the road sector, and has launched a series of road development plans. These include the Road Sector Development Program (RSDP) (1997-2010) and the Universal Rural Road Access Program (URRAP) (2010-15), administered by the Ethiopian Road Authority (ERA). The RSDP was launched countrywide to address constraints related to road infrastructure access. During the first phase of the programme, the efforts mainly focused on the restoration and rehabilitation of old road networks, whereas subsequent phases focused on the construction of new roads (Worku, 2011[16]). In 2010, the GoE launched the URRAP, under GTPI, with the aim of enabling rural areas to access all-weather road connectivity, as well as improving rural livelihoods (Nakamura et al., 2019[17]).

Ethiopia’s national road construction programmes have positively contributed to rural well-being. They have contributed to economic development and have facilitated rural-urban linkages by connecting rural areas to market centres. Under the URRAP, rural households increased their consumption level by 3.8% per year between 2012 and 2016. Furthermore, during the same period, farmers in remote rural areas were 16.1% more likely to sell their crops, due to their improved access to markets. In addition, thanks to the URRAP, households in remote rural areas have seen their access to paid employment increase by 2.8%, and the URRAP has particularly benefited rural women and youth (Nakamura et al., 2019[17]). Moreover, expansion of roads in rural areas, especially under the RDPS, has had a positive impact on enterprise development. Improved access to road infrastructure has led to an increase in the number of new firms being established, and it is positively linked to the survival of existing firms (Shiferaw et al., 2012[18]).

Rural Job Opportunity Creation Strategy (RJOCS) (2017)

The Rural Job Opportunity Creation Strategy (RJOCS) was launched by the MoA and was adopted by the Council of Ministers in 2017. The strategy aims to align rural job creation strategies with the objectives of ongoing national development plans (GTPII) as well as with Ethiopia’s Climate-Resilient Green Economy (CRGE) initiative (MOA, 2017[13]). The RJOCS has eight objectives, including: strengthening rural-urban linkages and market expansion for job creation; facilitating labour mobility for decent employment; promoting rural entrepreneurship; enhancing the supply of decent sustainable and quality jobs; facilitating access to jobs for rural youth and women; and reducing overall rural unemployment (MOA, 2017[13]).

The RJOCS is a multistakeholder programme, engaging various ministries at the federal level, as well as woreda and kebele-level governments. The MoA is the main stakeholder and it holds responsibility for co-ordinating the strategy. However, other stakeholders include the Ministry of Labour and Social Affairs (MoLSA), the Ministry of Urban Development and Construction (MoUDC), and a number of other partners in the RJOCS have formal mandates within the programme.

The RJOCS is a comprehensive strategy that takes a multisectoral approach to rural job creation. It promotes employment creation beyond the agricultural sector and highlights the need for cross-sectoral linkages, it calls for better territorial linkages, and it highlights the importance of rural-urban linkages and the development of small towns for rural job creation. In addition, the RJOCS addresses the need to take a value chain approach to job creation and unlock job creation bottlenecks on both the supply and demand side of value chains.

Rural livelihoods and employment creation are at the heart of Ethiopia’s national development agenda. Although the RJOCS is the main explicit job creation strategy, the GoE is also prioritising job creation initiatives across many programmes targeting rural areas. Programmes such as the PSNP, the Sustainable Land Management Programme (SLMP) and the AGP all include initiatives to improve livelihoods in various different ways. In addition, the GoE is also tapping on the agro-processing sector, as a means to create job creation as well as establishing agricultural value chains. Box ‎3.2 highlights the Integrated Industrial Park Program, one of Ethiopia’s latest effort in the development of agro-processing industry.

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Box ‎3.2. The Integrated Agro-Industrial Parks (IAIP) programme in Ethiopia

In 2016, Ethiopia launched the Integrated Agro-Industrial Parks (IAIP) programme to accelerate the country’s industrialisation and economic transformation agenda. The IAIP programme entails the development of a cluster of agro-processing firms and rural transformation centres (RTCs) in four pilot sites across four regions. The number of IAIPs will further increase to 17 sites based on agro-industrial growth corridors (AIGCs) identified during the programme feasibility study phase. Three of the pilot agro-industrial parks have now been opened.

The IAIP programme entails the development of agro-processing parks in small urban areas or towns, surrounded by a network of RTCs. The RTCs will be located in surrounding villages or catchment areas, and they will serve as collection and distribution points for raw materials and agricultural inputs. The RTCs will also serve as hubs for infrastructure and services to support the running of agro-processing parks, and to provide support services for farmers. Services provided in the RTCs will include information centres, training programmes, financial services and health clinics.

The IAIP programme is aimed at fostering Ethiopia’s structural transformation process, as well as fostering agricultural sector productivity. It aims to support agricultural sector commercialisation by changing the approach from a supply-driven development strategy to one that is demand driven. In addition, it is envisaged that the IAIP programme will increase rural job creation, reduce rural poverty, and facilitate strong linkages between the agricultural and agro-industry sectors, thus fostering the development of agricultural value chains. The IAIP programme also aims to integrate smallholder farmers into the supply chain in order to boost their income and reduce poverty.

The IAIP programme is a multistakeholder programme. The programme planning and implementation processes are conducted in partnership between the GoE, the United Nations Industrial Development Organization (UNIDO), other international development partners, and the private sector.

Source: (UNIDO, 2015[19]).

Social protection programmes for poverty reduction and sustaining livelihoods

Ethiopia’s social protection programmes play a major role in rural poverty reduction. As such, the GoE has put significant effort and resources in a number of social protection programmes; it has expanded coverage and has established social protection as an integral part of the government’s GTPII and as a way of boosting welfare (Endale et al., 2019[20]). Ethiopia’s social protection programmes are aimed at addressing multidimensional issues such as food security, public service provision, and nutrition programmes, employment promotion, infrastructure development, and much more (MoLSA, 2012[21]).

The GoE has developed a number of policy frameworks, including the National Social Protection Policy (NSPP) in 2014 and the National Social Protection Strategy (NSPS) in 2016; it also implemented the Action Plan for NSPS in 2017 (Endale et al., 2019[20]). At the same time, Ethiopia’s total government spending on social protection, in real terms, also saw growth increase from 2.8% to 3.4% of GDP between 2012/13 and 2015/16 (Figure ‎3.1 and Endale et al, (2019[20])). The NSPP and the subsequent social protection frameworks, all aimed at establishing an integrated and co-ordinated framework for existing and future social protection programmes in both rural and urban areas, under the responsibility of the MoLSA (MoLSA, 2012[21]).

The frameworks highlight five focus areas: 1) promotion of safety nets; 2) enhanced employment and livelihoods; 3) improved access to basic services; 4) extended legal protection for persons vulnerable to violence and abuse; and 5) increased social insurance coverage (MoLSA, 2012[21]).

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Figure ‎3.1. Ethiopia’s total expenditure on social protection (2012/13-2015/16)
Figure ‎3.1. Ethiopia’s total expenditure on social protection (2012/13-2015/16)

Source: Endale et al. (2019[20]) ‘’Financing Social Protection in Ethiopia: A long-term perspective’’.

Safety nets in rural and urban areas are some of the most important components of Ethiopia’s social protection programmes. These have been implemented through key flagship initiatives, including the Food Security Program (FSP), which includes the PSNP, the Household Asset Building Program (HABP), the Voluntary Resettlement Programme (VRP) and Complementary Community Investment (CCI). In fact, between 2012/13 and 2015/16, safety nets accounted for 71% of total expenditure on social protection. The primary objective of Ethiopia’s FSP and safety nets, especially the PSNP, was to transition from emergency-led support to more predictable and consistent responses to food-related emergencies.

Rural Productive Safety Net Programme (RPSNP) (2005 to present)

The PSNP is a safety net programme which targets both selected urban areas and chronically food-insecure and vulnerable rural households. The PSNP is currently in Phase 4 and is one of the largest social protection programmes in Africa in terms of the number of direct beneficiaries. The Rural Productive Safety Net Programme (RPSNP) has two components: 1) the provision of direct food and cash transfers to vulnerable households, who are direct beneficiaries; and 2) the provision of financial support in exchange for supply of labour for public works. The first phase of the RPSNP was implemented in 2005, following severe droughts in 2002/03, in order to provide a comprehensive response to chronic food insecurity, droughts and shocks. The RPSNP has been successful in replacing previous emergency-driven support with a predictable support system, thus enabling rural households to achieve food security and build assets.

The RPSNP provides food and cash transfers for vulnerable households living in chronically food insecure regions. Recipient households contributing labour to public works receive transfers for a period of 6 months. Public works encompass participation in activities aimed at improving rural resilience and livelihoods, such as rehabilitation and conservation of water and land resources, and rural infrastructure programmes, such as building schools and rehabilitating rural livelihoods. Those with limited or no ability to provide labour receive RPSNP payments without any specific conditions, and they receive transfers for a period of up to 12 months. The RPSNP extends across eight regions of Ethiopia. It aims to ensure food security, and to protect and help develop assets for vulnerable rural households (Domelen and Coll-Black, 2012[22]). In addition, it aims to address the underlying causes of food insecurity through its work on infrastructure development and natural resource conservation, as well as training programmes aimed at improving livelihoods (MoARD, 2014[23]).

The RPSNP is managed by the MoA and other stakeholders. The federal Food Security Coordination Bureau (FSCB) manages the public works component of the programme, whereas the MoLSA manages the direct support component (MoARD, 2014[23]). Although the programme itself is financially supported by multiple donors and international development partners, its implementation is integrated into subnational governments and various ministries’ mandates; this is co-ordinated by the MoA and the FSCB (Endale et al., 2019[20]).

The RPSNP currently reaches approximately 8 million people with its cash and food transfer programmes. The RPSNP plays a significant role in poverty reduction, and it accounted for the 1.5 million people who were lifted out of poverty between 2005 and 2014. In addition, the RPSNP contributed to the delivery of additional benefits, including better nutrition, enhanced agricultural productivity and better access to basic services. Nonetheless, there remains a significant resource gap in order to cater to the growing number of RPSNP beneficiaries, which it is estimated to increase to 8.3 million by 2019/20 (Endale et al., 2019[20]).

copy the linklink copied!Governance and institutional framework of rural development in Ethiopia

Local governance systems and decentralisation in Ethiopia

Ethiopia has been operating under an ethnic federal governance system since 1991. The country underwent its first phase of decentralisation in 1991, transitioning from what was previously a highly centralised system. The federal government comprises nine regional states: Afar; Amhara; Benishangul-Gumuz; Gambela; Oromia; Harar; Somali; Southern Nations, Nationalities, and Peoples’ Region (SNNPR); and Tigray; and two autonomous city administrations, Addis Ababa and Dire Dawa. The regional governments are further divided into three administrative units, known as zones and woredas, which are responsible for district-level administration, and kebeles (wards), which are responsible for local-level administration. Woredas can be either rural or urban, and their average population totals approximately 125 919 inhabitants per municipality. Kebeles, on the other hand, are smaller units, accounting for around 5 000 inhabitants each (Fenta, 2014[24]). Figure ‎3.2 shows Ethiopia’s decentralised governance structure.

The first decentralisation process took place between 1991 and 2000 and was codified in Ethiopia’s 1995 Constitution. With this process, many responsibilities were transferred from national-level to regional-level governments. Regional governments were given legislative, judicial and executive power, as well as oversight of progress in social and economic development within their respective jurisdictions. They were also given the authority to collect tax revenue. The second wave of decentralisation took place at the district level in 2001 and 2002, and it included the transfer of political and fiscal powers from regional-level to woreda-level administration. During this time, woredas were given the autonomy to plan and implement development activities within their capacities and resources. In addition, human and financial resources were re-delegated from zones to woredas.

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Figure ‎3.2. Ethiopia’s decentralised governance system
Figure ‎3.2. Ethiopia’s decentralised governance system

Source:Authors’ elaboration.

Kebele-level governments did not experience any major changes throughout the decentralisation process. Their structures and powers remained unchanged from the period of the previous Derg government, when their primary function was to collect agricultural outputs from rural areas and transfer them to urban areas. Following the transition from the Derg government to EPRDF period in 1991, and second decentralisation process in 2001 and 2002, kebele-level governments were used to implement development plans designed by woredas (Bekele and Kjosavik, 2016[25]; OECD/UCLG, 2016[26]).

Roles and responsibilities of subnational governments in rural and urban development

The MoFED and the MoA are the two main rural development actors at the federal level. The MoFED is responsible for establishing country-level development strategies, including national development plans such as the ADLI, GTPI and GTPII. The MoFED is also responsible for establishing mechanisms for follow-up reviews as well as budgets for national development plans (Bekele and Kjosavik, 2016[25]). At MoFED level, a Council of Ministers, comprising 20 line ministers, is in charge of devising and implementing policies and strategies for rural development (USAID, 2013[27]).

The MoA is responsible for drawing up sector-based development plans, in particular agricultural and rural economic development strategies. The range of MoA responsibilities include developing land policies, formulating and overseeing the implementation of national, rural and agricultural policies, and supporting subnational governments that have weak capacity in the area of policy implementation (Tadesse and Tsegaye, 2014[28]). The MoA is further subdivided into a number of directorates. Each directorate has its own mandates and responsibilities to implement programmes. Some of the mandates include implementing agricultural extension programmes, setting up advisory and training programmes for smallholder farmers, mapping out priority areas for investment, establishing and overseeing policy impacts on the Policy and Investment Framework, etc. (USAID, 2013[27]).

Regional governments have the authority and the autonomy to create rural development policies; however, the policies must be approved at the federal level. Each region and woreda has a corresponding representative of a federal ministry. At the regional level, the Bureau of Agriculture and Rural Development (BoARD) is the main rural development policy actor, and the Bureau of Finance and Economic Development (BoFED) corresponds to the MoFED at the regional level. The most highly populated regions have zonal-level administration, and act as an intermediary between regional and woreda governments. The roles of zonal governments vary by region; in some regions, they co-ordinate and monitor woredas, whereas in others they have an intermediary role and function as an arm of the regional government.

The regional rural development institutions are further decentralised, and have corresponding institutions at woreda level. For example, the BoARD is represented by the Woreda Office of Agriculture and Rural Development (WOARD), and it is also represented at kebele level. Woredas consist of between 20 and 30 kebeles, and they have the autonomy to establish and implement policies within their jurisdictions once the plans have been approved by regional governments. Overall, woreda-level governments are responsible for the implementation of local projects and policies deriving from regional governments; the delivery of local public services; and the distribution of extension services (Bernard and Spielman, 2008[29]). Woredas have the authority to collect local tax revenue, and the resources are allocated once the kebeles’ main priorities have been compiled and compared against the available woreda budget (Snyder et al., 2014[30]).

Woreda-level governments play a key role in overseeing and implementing rural development plans. They are also responsible for overseeing service delivery in rural primary education and the distribution and implementation of extension services, as well as for the provision of rural infrastructure and water services. In addition, woredas have the autonomy to define their own district development plans, to co-ordinate them, and to establish monitoring and evaluation programmes, at the discretion of regional governments (MoFED, 2003[11]).

The role of kebeles is mainly to implement projects that have been authorised and agreed by woreda-level offices. Actors at kebele level have very limited autonomy to define policies or rural programmes, and their role mainly revolves around implementing rural and agricultural sector plans by mobilising communities, co-operatives and development agents. In doing so, kebeles mobilise large numbers of smallholder co-operatives and lower-level civil service organisations. Kebeles provide local training for farmers and mobilise development agents across the country to deliver capacity-building programmes.

Within the institutional framework of Ethiopia’s rural development plans, each level of government has the mandate to train and establish capacity building programmes for their subordinate levels of government. Regional-level governments are responsible for providing political leadership for woreda governments in addition to facilitating the improvement of woredas’ administrative and managerial capacity. Regional governments also train the staff members and technicians who are deployed to serve woreda and kebele-level governments (MoFED, 2003[11]). Ethiopia’s rural development and governance is also influenced by various other formal and informal actors. Box ‎3.3 below highlights the various actors in Ethiopia’s rural development policies and implementation, and Table ‎3.3 provides an institutional mapping of rural governance.

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Box ‎3.3. Governmental and non-governmental institutions with roles in rural development

A number of additional organisations play a fundamental role in the implementation of Ethiopia’s rural development plans.

Smallholder farmer co-operatives

Smallholder co-operatives (SHCs) have had a long history in Ethiopia. Although their role has changed in line with various governance transitions over many years, they remain key players in Ethiopia’s rural livelihoods and development. Since 1994, the GoE has put significant effort into developing and supporting SHCs, including ensuring the establishment of a new co-operative proclamation, which sets out key universal principles. In addition, the Federal Cooperative Agency was established as the main agency to guide and implement co-operative legislation and policies. The number of agricultural co-operatives increased from 6 825 to 15 568 between 2008 and 2014 (Ahmed and Mesfin, 2017[31]). At the regional level, SHCs are managed by the Bureau of Cooperative Promotion (BoCP). At the lower governance level, they are housed in, and co-ordinated by, woreda offices and they work closely with BoARDs (Bernard and Spielman, 2008[29]). Their importance is recognised at the state level, as illustrated by the introduction by the GoE of a five-year plan for co-operatives covering the period 2005-10 (Bernard and Spielman, 2008[29]).

The main objectives of SHCs are to improve smallholder agricultural productivity and facilitate the commercialisation of smallholder farming. SHCs stand at the intersection of the public and private sectors. In addition, SHCs play an intermediary role between formal and informal governance; they liaise between communities and kebele-level governments; they occupy a key position between the state, private sector and civil society; and they function as channels in which communities can access public services and articulate their views.

SHCs have multiple functions. First, they serve as implementation agencies for public sector-related programmes to support local governments with limited fiscal, technical and human resource capacity; they also support the provision of extension services, farmer training, and awareness raising on issues such as health. Second, co-operatives support local governments in mobilising resources for farmers, such as facilitating access to farming inputs provided by the state to communities at better prices than those offered by the private sector. For example, in 2010, co-operatives provided 56% of total chemical fertilisers distributed in Ethiopia. In addition, SHCs provide credit services for farmers in order to enhance farm production (Ahmed and Mesfin, 2017[31]).

Research and evidence-based institutions – influencing policy formulation

The GoE has established a number of research and data collection institutions to disseminate knowledge and support the policy-making process. The Central Statistics Agency (CSA) is the main source of national data, surveys and censuses as well as the main source of agricultural data; in addition, the CSA works directly with ministries, including the MoA and the MoFED. Research institutions, such as the Policy Study Institute (PSI), the Agricultural Transformation Agency (ATA) and the Ethiopian Institute for Agricultural Research (EIAR), are also key suppliers of knowledge for policy making at the federal and regional levels. Furthermore, there is an increased level of collaboration between international and national research institutes which have the capacity to contribute to government policy and programmes. For example, the International Food Policy Research Institute (IFPRI) and the PSI have joined forces and have launched the Ethiopia Strategy Support Program (ESSP 1 and ESSP 2). In parallel with this initiative, international development organisations and bilateral donors, such as the World Bank and the International Monetary Fund (IMF), have considerable influence on the Ethiopian policy-making process (Tadesse and Tsegaye, 2014[28]).

Civil society organisations, non-governmental organisations and the private sector

Ethiopia has a large network of civil society organisations (CSOs) as well as local and international non-governmental organisations (NGOs) whose work is directly linked to the agricultural sector and rural development. Some of their areas of intervention include food security; health, including HIV awareness; provision of basic services, including water and sanitation; education; infrastructure; and environmental protection. However, the influence of NGOs and CSOs on policy formulation and implementation remains limited, as bureaucratic challenges still remain, including lengthy registration processes and restrictions on their ability to influence policy (Tadesse and Tsegaye, 2014[28]).

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Table ‎3.3. Mapping Ethiopia’s rural governance

Government level

Responsible ministry/agency


Governmental and non-governmental influencers

Policy formulation

National/federal level

MoFED and MoA

(All other ministries are responsible for their respective sectors)

• Planning agricultural and rural development policies

• Co-ordinating food security programmes (FSCB)


Research institutions: EIAR, ATA, PSI

Regional level

BoARD, BoFED and other ministry representatives

• Autonomy to both draw up and implement policies, at the discretion of federal-level governments.

• Support the MoA in co-ordinating and establishing rural and agricultural policies

Zonal level

Intermediary role between regional and woreda-level governments

Policy/plan implementation

District/woreda level

WoARD is the local point of reference for rural development-related tasks

• Implementing agricultural and rural development plans

• Distributing agricultural extension systems; collecting local tax revenues.

Kebele level

(rural and urban kebeles)


Development Agents

Delivering basic services; distributing agricultural extension systems; capacity building programmes; organising local labour; resolving conflicts through social courts; etc.


Source: Authors’ elaboration.

copy the linklink copied!Ethiopia’s urbanisation plans

Ethiopia’s fast urbanisation process has large implications on rural development. As highlighted in Chapters 1 and 2, the lion’s share of Ethiopia’s urbanisation is taking place in intermediary cities and small towns, which tend to have a strong connection to rural areas. Indeed, despite shortages and vast knowledge gaps, there are intricate and dynamic socio-economic interactions between rural and urban areas, which entail flows of labour, goods and services, and information. Therefore, policies targeting either rural or urban areas will influence their linkages, as well as development outcomes in both territories. For this reason, in order to better understand the evolution of rural policy in Ethiopia, it is necessary to further understand how urban policy has evolved and been embedded in national development efforts. This section reviews the way in which national development strategies have incorporated urban areas.

The inclusion of urban development in national development strategies

Ethiopia’s national development strategies have gradually expanded their remit to include the growing role of urbanisation and urban areas in national development. The Plan for Accelerated and Sustained Development to End Poverty (PASDEP), GTPI and GTPII recognise the key role of urban areas, especially in Ethiopia’s industrial development agenda. The PASDEP is particularly distinctive among the national development plans, as it is the only plan which explicitly promotes the urban agenda, has a comprehensive urban plan, and integrates the National Urban Development Policy (NUDP) into the objectives of the development plan. The PASDEP is also the only plan that promotes rural-urban linkages as a pillar of urban development; in addition, it highlights the need for small town development and the need to better link rural areas to small towns through investment in road infrastructure, rural electrification and telecommunications (Dorosh and Schmidt, 2010[32]).

The GoE particularly recognises the importance of harnessing Ethiopia’s increasing urbanisation rate in its GTPII objectives. Under GTPII, urbanisation is framed as a catalyst for economic growth and structural transformation. The plan highlights the need to embed urban areas into the national development strategy, as such urban development is considered to be a key foundation for industrial development. Furthermore, the plan calls for effective planning of a well-functioning and linked urban system, with urban areas that serve as centres of economic activity for surrounding rural areas (NPC, 2016[10]).

In this regard, the federal and regional governments, as well as the municipalities, have dedicated effort and resources to urban management. At the federal level, the Ministry of Urban Development and Construction (MoUDC) (formerly the Ministry of Urban Development and Housing (MoUDH)) is the main institution responsible for urban development and management. The ministry launched its first NUDP in 2005 and implemented a series of additional sectoral urban, housing and construction policies. In addition, the MoUDC has also been supporting municipalities and towns in designing urban plans. As a result, most of the major urban centres have produced urban plans, and an increasing number of small towns are also following suit. Table ‎3.4 shows the number of urban centres with urban plans in various regions across Ethiopia.

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Table ‎3.4. Ethiopia’s urban centres with and without urban plans


Total number of urban centres

Total number of urban centres with plans

Share of urban centres with plans (%)

Total urban population

Urban population (%)





1 080 000






2 783 000






2 419 000






4 221 000






110 000






716 000






165 000






256 000






117 000


Dire Dawa




276 000


Addis Ababa




3 046 000



2 056

1 924


15 189 000


Note: Data extracted from CSA (2013) and NUSDP projections are used where the population figure is inaccurate.

Source: Data from the MoUDC, regional governments, and EGIS International (2015[8]).

In 2005, the GoE launched two sub-programmes, the Urban Development Package (UDP) and the Urban Good Governance Package (UGGP), as strategy documents to complement the PASDEP and the NUDP. The sub-programmes comprised Ethiopia’s urban agenda, and were developed in line with PASDEP urban development strategies. Each sub-programme comprised a set of pillars, with the UDP focusing on the development of micro and small enterprises (MSEs), housing development, youth employment, provision of land and infrastructure services, and rural-urban and urban-urban linkages. By contrast, the UGGP mainly focused on policies and reforms for urban governance, land development and administration, service delivery and capacity building (UN-Habitat, 2014[33]). Both sub-programmes highlighted issues concerning the lack of strong rural-urban linkages, and unbalanced development across urban areas, as well as focusing on the needs of small towns and villages.

In addition, following the establishment of GTPI and GTPII, the Ministry of Urban Development, and Construction (MoUDC) was designated to prepare the sectoral policy for urban areas, and it launched the Ethiopian Cities Resilient and Green Growth Program Package for the period 2011-15. The plan is regularly revised and it focuses on broad urban development issues, including job creation in MSEs, housing development, capacity building, urban planning, infrastructure development, construction sector development, good governance and the greening of cities (UN-Habitat, 2014[33]).

National Urban Development Policy (NUDP) (2005)

Ethiopia’s National Urban Development Policy (NUDP) was launched in 2005 under the mandate of the MoUDC and it was approved by the Council of Ministers. The NUDP was fully endorsed by the PASDEP, and it currently functions as an overarching strategy for other urban policies falling under the remit of the MoUDC. The NUDP established a set of principles, which include co-ordinated rural and urban development, the strengthening of forward and backward linkages across urban centres, and the reduction of poverty.

The scope of the NUDP is wide, encompassing rural areas and small towns, and it highlights the interdependencies between rural and urban areas. Rural development is seen as the foundation for urban development, and in parallel, urban development is seen as a catalyst for accelerated rural development. As a result, the policy establishes the promotion of rural-urban and urban-urban linkages as one of its four main pillars. Furthermore, among other issues, lack of strong rural-urban and urban-urban linkages are presented as some of the main constraints inhibiting effective urban development, which could also benefit rural areas. The policy calls for the improvement of rural-urban linkages through the promotion of MSEs, expansion of investment in road links across urban and rural areas, and rural electrification and telecommunication; it also highlights the investment needed to facilitate market links between rural and urban areas (MoWUD, 2005[34]).

The NUDP is a comprehensive policy, which incorporates the wide range of issues facing Ethiopia’s urban areas. The plan also highlights the need for effective autonomous and decentralised urban governance, investment in urban housing and infrastructure, and expansion of social services. In addition, it advocates for environmentally sustainable urban development. Furthermore, the plan also includes a set of principles for urban land regulations and allocations (MoWUD, 2005[34]).

The Urban Productive Safety Net Program (UPSNP) (2017 to present)

In 2017, the GoE extended its flagship PSNP to urban areas, with the aim of targeting 4.7 million urban poor. Given the rapid rise of urbanisation in Ethiopia since mid-2000s, there is a growing need to cater to increasing rates of urban poverty and vulnerability. As such, the Urban Productive Safety Net Program (UPSNP) was established to address the aforementioned urban challenges to be delivered in a ten-year period. The first phase of the project was aimed at supporting 604 000 urban poor living in 11 of Ethiopia’s largest cities (Endale et al., 2019[20]; World Bank, 2017[35]).

The UPSNP has three components: 1) a productive safety net, 2) livelihood services for poverty alleviation, and 3) programmes for institutional strengthening. The safety net component of the UPSNP is the largest programme and serves 84% of the total number of beneficiaries. The safety net is administered by the MoUDC, and delivers its services through three sub-programmes: 1) cash transfers in exchange for labour of able-bodied persons; 2) direct cash transfers to those unable to work, under the administration of the MoLSA; and 3) programmes to support safety nets through regularising wages and market prices. This component of the programme accounted for 85% of the total expenditure between 2015/16 and 2018/19 (Endale et al., 2019[20]).

There is strong demand for the UPSNP in Ethiopia’s urban areas. The number of programme beneficiaries doubled between 2015/16 and 2016/17 (during the pilot phase of the programme), and by 2017/18 they were estimated to exceed 500 000. The UPSNP is endorsed by multiple national and international stakeholders, and has been mainstreamed across various sectoral programmes in urban areas (Endale et al., 2019[20]).

The UPSNP received substantial financial and technical support from international development agencies, in particular the World Bank. In fact, the UPSNP was co-financed by the World Bank, which covered USD 300 million of the total estimated cost of the first phase of the project, which amounted to USD 450 million. The GoE is currently financing the remaining costs. In the long term, however, GoE aims to increase domestic financing of the overall programme (Endale et al., 2019[20]; World Bank, 2017[35]).

The UPSNP is a comprehensive social protection plan and is embedded into Ethiopia’s National Social Protection Policy. The GoE launched the Urban Food Security and Job Creation Strategy as a way of implementing the UPSNP, with the newly formed Federal Urban Job Creation and Food Security Agency acting as the implementing agency for the programme (World Bank, 2017[35]).

Other urban policies and initiatives

The MoUDC has also implemented numerous dispersed initiatives which address the various needs of urban development. Table ‎3.5 lists some of the urban initiatives established by the MoUDC.

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Table ‎3.5. MoUDC urban development and related initiatives

Urban development initiatives and their sub-programmes


Urban Planning, Sanitation and Beautification Program

A capacity building programme to support cities, towns and the private sector in urban planning, urban beautification and sanitation

Housing development and management

• Integrated housing development program (2007-10)

• Urban housing development

• Job creation through construction of affordable housing

Construction industry development and management

Development of policies and strategies to support a competitive construction sector

Urban planning and land policies

• National Policy Framework for Grading and Defining Urban Centres

• Federal Urban Planning Law and Building Code

• Federal Urban Lease Policy

• Federal Urban Capacity Building Strategy

Micro and Small Enterprise Development Policy and Strategy (2016)

• To generate employment, increase income and reduce poverty

• To create a foundation for industrial development and links to rural development

• To attract development investors in urban areas

Source: Authors’ elaboration, adapted from EGIS International (2015[8]).

copy the linklink copied!Conclusions

Ethiopia’s rural and national development strategies have paid off. The ADLI and related follow-up strategies have not only contributed to rural development, but they have also served as a foundation for Ethiopia’s unprecedented GDP growth rate and poverty reduction. In addition, Ethiopia’s Rural Development Policy and Strategy (RDPS), as well as the flagship programmes targeting rural areas (such as the National Social Protection Policy, the Productive Safety Nets, the Rural Job Opportunity Creation Strategy, and Agricultural Growth Programme) have attempted to address the multidimensional needs of vulnerable rural households. These efforts have led to significant improvements in reducing rural poverty.

Since mid-1990s, Ethiopia’s rural and national development strategies have evolved to reflect the country’s socio-economic transitions. We can observe that Ethiopia’s approach to rural and national development evolved from mainly focusing on poverty reduction in mid-1990s and early 2000s (ADLI, SDPRP, and PASDEP), to promoting growth through industrialisation and development of light manufacturing sector since 2010 (GTP I and GTP II). In early 1990s, Ethiopia was in a post-conflict era, with a predominantly agrarian population, limited industrial development and with a long history of food insecurity and droughts. To this end, the ADLI responded to the needs of Ethiopia at the time by targeting rural areas and boosting small holder agricultural productivity.

As Ethiopia’s economic growth started to accelerate in the early 2000s, national development plans set industrialisation as one of their development agenda. GTP I and GTP II widened their scope to include urban areas in their plans, as they were considered to be catalysts for industrialisation and structural transformation. Moreover, current government investment efforts in SEZs (including industrial parks), as well as investment in agro-processing parks (i.e. the IAIP see Box ‎3.2), reinforce the government’s industrialisation strategy, and indicate changes in the developmental thinking of Ethiopia’s authorities. These changes in development thinking will further influence the next national development plans.

There is scope for improvement in Ethiopia’s national and rural development approaches. In the first place, the analysis presented in this report, along with the discussion that took place in two workshops in Addis Ababa, suggests that although the ADLI has served its purpose, it may now be reaching its limits. In the second place, Ethiopia’s current rural and urban policies are highly fragmented, and policies targeting the two territories are not articulated together across most development plans. In fact, despite the integration of urban areas into the national development plans, there is limited attempt to promote reciprocal linkages between rural and urban areas. As a result, rural and urban policies are developed and implemented in silos, and do not sufficiently capture the diverse socio-economic interactions between the two territories. This fragmentation reduces the scope for policy complementarities and limits the positive effects of rural-urban linkages.

However, it is important to highlight that, PASDEP and the NUDP stand out in their approach. Both plans take broader spatial approach and recognise the need for stronger rural-urban linkages, for inclusive rural development and promote the development of small towns. The two plans are well co-ordinated, and PASDEP embeds the main objectives of the NUDP as part of its urban development agenda. However, this approach is not carried on in the following development strategies. This may be due to limited institutional capacity, which impacts policy continuity across Ethiopia’s rural development strategies. For instance, the MoA underwent a series of changes in terms of mandates and responsibilities, as well as facing high turnover rates during the last 10 years. The latter may have reduced the capacity of the ministry, and in its ability to build an institutional knowledge base.

Ethiopia’s ongoing spatial, economic and demographic transformations call for a shift in rural development strategies. Rural-urban transformation cannot take place without co-ordinated territorial policies that account for inherent links and interdependencies between rural and urban areas. For example, the success, and transformative outcomes of Ethiopia’s current efforts in the investment of industrial sectors, agro-processing zones is partially dependent on their backward and forward linkages with the economies of their surrounding rural areas. This requires strong reciprocal linkages across the chains along the rural and urban continuum. Therefore, as argued in Chapter 4, adopting wider territorial approaches could help better co-ordinate policies between rural and urban areas, facilitate backward and forward linkages across sectors, and provide the foundation needed for rural-urban transformation.

Furthermore, Ethiopia’s rural development policies ought to account for the large heterogeneity across regions. Ethiopia’s regions are highly heterogeneous in terms of population distribution, assets and agro-ecological zones. Some regions are located in the highlands, accounting for a large share of the total population and agricultural production, while there is lower population density in the lowland and pastoralist regions (Dorosh and Schmidt, 2010[32]). This has significant implications for Ethiopia’s rural-urban transformation. Rural and urban policies ought to account for intra- and inter-regional heterogeneity in terms of institutional capacity, economic activities, assets and constraints in order to effectively foster inclusive rural transformation.

Finally, improved reporting on the implementation outcomes of Ethiopia’s national and rural development strategies could help highlight policy gaps. Despite the numerous rural and urban development programmes, there is a large human and financing capacity gap in implementing and monitoring the progress these programmes have made. Improved reporting regarding the human and financial capacity needed to implement the programmes, could enhance overall rural development planning.


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