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132 Diagnosing Corruption in Ethiopia
Forum (MSF) in 2006 set a new standard for the sector in terms of consultation
and transparency, followed by additional MSFs in December
2007 and October 2009.
Under the policy of decentralization, regional water bureaus and
woreda water desks are in charge of investment planning, monitoring, and
technical assistance to service providers. Although several mechanisms of
financing rural water supply remain (as further discussed in the next section),
the country’s 700 woredas now receive block grants from the central
government and can decide autonomously how to use these grants
within broad criteria set by the Ministry of Finance and Economic
Development (MOFED). In rural areas, community water and sanitation
committees—or Water User Associations (WUAs)—operate water systems
and promote sanitation, supported by woreda and regional water
and sanitation government staff.
Challenges Ahead
Considering the ambition of the UAP, Ethiopia has done remarkably well
in attracting finance to the sector. The combined budgeted volume of
the financing modalities employed in Ethiopia (about Br 1.2 billion, or
US$109 million) closely matches the government’s estimated annual
costs of meeting either the MDG for rural water supply (Br 900 million,
US$81 million) or the UAP (Br 1.1 billion, US$99 million). 7 However,
the World Bank’s (2009) recent Public Finance Review added a number
of caveats:
• High inflation and an increase in project costs have forced the government
to revise the annual cost of implementing the UAP upward to
Br 1.7 billion (US$154 million) for the 2009–12 period.
• Government and development partner support must be renewed to
sustain this level of funding for rural water supply.
• Only 60 percent of budgeted finance is actually spent, with the result
that funding is not being translated into an equivalent increase in
service delivery. 8
A joint technical review of rural water supply in January 2009 commended
the progress made but identified the following main sector issue
areas: underexpenditure, planning, capacity, procurement, and coordination
at the regional and woreda levels. 9
Table 4.1, drawn from the World Bank’s (2009) recent Public Finance
Review, summarizes costs and budgets for rural water supply and provides