OECD and PSI - Rural Development Strategy Review of Ethiopia

Countries like Ethiopia are placing rural areas at the centre of their national development efforts. With almost 80% of its total population residing in rural areas, and a similar share of employment in agriculture, Ethiopia has made rural development a priority in its development agenda. Starting in the mid-1990s, Ethiopia has implemented a series of reforms focusing on promoting agricultural development coupled with unprecedented public investment in pro-poor sectors. As a result, Ethiopia has achieved a two-digit economic growth rate and reduced rural poverty by half. However, as is the case of many countries in the region, Ethiopia is confronted today with a series of challenges that call for a revision of the existing policy framework for rural development.

The Rural Development Strategy Reviews (RDSRs) are an OECD assessment and guiding tool that provides comprehensive analysis and policy guidance for inclusive and sustainable rural-urban transformation. They are produced in response to countries demands for new analytical tools that go beyond sectoral approaches and harness the functional roles of rural and urban areas. Moreover, the RDSRs build on the OECD Development Centres New Rural Development Paradigm (NRPD). The new paradigm stresses the need for strategies that are multi-sectoral. Beyond just agriculture, they should focus on rural industry and services, and beyond rural areas, they should focus on rural-urban linkages. Strategies have to be multi-agent and multi-level, involving not just national but also local and regional governments, as well as the private sector, international donors, non-governmental organisations and rural communities.

The RDSR of Ethiopia was made possible thanks to the support of the Korean International Co-operation Agency (KOICA) that seeks to promote rural development in developing countries. It was carried out by the Social Capital Rural Development Unit of the OECD Development Centre, in co-operation with the Policy Studies Institute (PSI) of Ethiopia. It involved an extensive consultation process with multiple stakeholders and benefited from the experience of national and international experts. The RDSR of Ethiopia has been a process of dialogue, consensus and trust building. It has provided the opportunity to identify common ground for future reforms that would allow Ethiopia to reap the benefits of its demographic, economic, and spatial transformations, and improve the well-being of its rural population.

The RDSR highlights the progress made by Ethiopia in promoting rural development over the last three decades. It sheds light on how the countrys ongoing demographic, economic, and spatial transformations, will bring about major challenges, but also a large set of opportunities for structural transformation and rural development. In this vein, it reviews Ethiopias current rural development strategy and analyses the roles of intermediary cities in addressing these three transformations and promoting rural development. The review proposes key areas for reform. They include: a) a new approach to agricultural development, beyond just agricultural productivity, that promotes productivity gains along the entire agri-food chain; b) mobilising resources and scaling up investment to improve rural population well-being, implementing co-ordinated actions for investment in basic services and infrastructure, and fostering job creation; c) improving co-ordination mechanisms between rural and urban policies, to limit fragmented programmes and policy action; and d) complementing development efforts with a territorial approach that better accounts for interaction between urban and rural areas, and increases the knowledge base of spatial process.