The World Bank has committed $600 to finance both physical and institutional sustainable modernization of 117 cities and urban centers across Eastern Africa’s most populous nation.
Estimates from the World Bank say Ethiopia is one of the fastest urbanizing countries in Sub-Saharan Africa, with the urban population growing at 3.8 percent a year.
Ethiopia is also the biggest economy in Eastern Africa as well as projected by the World Bank to be the second fastest expanding country in Sub Sahara Africa at a rate of 8.2 percent, slightly behind Ghana.
Rapid urbanization poses challenges as cities struggle to provide infrastructure, services, and jobs.
The World Bank funding will include helping cities manage their revenue streams, develop infrastructure that reflects a growing urban population and manage clean and green systems.
The funds will be channeled through the International Development Association (IDA) – the financing arm of the World Bank that support world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve lives.
This will build upon successful program that World Bank has run in Ethiopia since the early 2000.
“While the new investment builds upon earlier successes, it also incorporates important lessons learned and introduces a new approach. This new approach will help Ethiopia to develop a strategy for sustainably financing urban development,” said Carolyn Turk, World Bank Country Director for Ethiopia.
The allocated funds will be managed through a new Urban Institutional and Infrastructure Development Program (UIIDP) replacing an earlier program known as Urban Local Government Development Program (ULGDP).
“To successfully manage urbanization and deliver on their evolving mandates, cities are likely to require fiscal transfers for the foreseeable future. This program will help cities to realize their revenue potential,” said Abebaw Alemayehu, World Bank Task Team Leader for the project.