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The Ethiopian Climate Resilient Green Economy (CRGE) Strategy and the CRGE Facility

  1. Introduction

These days, whenever we speak about development and economic growth the concept of green economy and sustainability have become a great concern. In the Growth and Transformation Plan (GTP) the issue of sustainable development has been given much emphasis. Out of the four main GTP objectives the two of them focused on sustainability. These are:-

  • Establishing suitable conditions for sustainable nation building through the creation of a stable democratic and developmental state
  • Ensuring the sustainability of growth by realizing a stable macroeconomic framework.

Moreover, the seven strategic pillars of the GTP deal about sustaining rapid and broad based economic growth giving detailed attention to equitable growth, agricultural and industrial transformation, quality of social and infrastructure development, building capacity and good governance.

Based on this background, the Government of the Federal Democratic Republic of Ethiopia launched the Ethiopia’s Climate Resilient Green Economy (CRGE) Facility in August 2012 to insure sustainable and environmentally friendly economic growth. Ethiopia which aspires to reach a middle income country by 2025 and sets a goal of double digit economic growth needs a green economy strategy that helps in multidimensional aspects to the country which is highly vulnerable to climate change.

The CRGE initiative has triple goals of economic growth, net-zero emission and building resilience. The CRGE facility governance structure which has ministerial steering, technical and management committee predominantly embraced   Ministry of Finance and Economic Development (MoFED) and Ministry of Environment Protection and Forestry as active participants and implementers.

  1. Greening Ethiopia’s Economy

Ethiopia is one of the fastest-growing economies in Africa and in the world. It aspires to achieve middle-income status by 2025, without increasing its net greenhouse gas emissions and while protecting itself against the negative impacts of climate change. Ethiopia recognizes the link between environmental concerns and economic development. The country has historically been prone to extreme whether events. High rainfall variability causes droughts and floods on an almost annual basis, with severe consequences for the country's economy and people. The social and economic costs arising from climate variation and climate extremes are significant, and expected to become even more severe under climate change. If no adaptation measures are taken, climate change may reduce Ethiopia's GDP by as much as 2.5% per year by 2050. The government of Ethiopia therefore recognizes the importance of designing development policies with a view to climate and climate change. For Ethiopia, green growth is a necessity as well as an opportunity to be seized. It is an opportunity to realize our country’s huge potential in renewable energy and a necessity so as to arrest agro-ecological degradation that threatens to trap millions of our citizens in poverty.

 

3.The Ethiopian CRGE Initiative

Recognising the close links between environmental and development concerns, Ethiopia is working to integrate climate considerations into its broader development planning processes. The Ethiopian Climate Resilient Green Economy (CRGE) initiative, which was launched in late 2011, laid the foundation for integrated planning for climate-resilient development. Ethiopia’s CRGE initiative aims to "climate-proof" its National Development Plan goals so as to stabilise its net greenhouse gas emission while building resilience to against current climate risks and future climate change. Over time, Ethiopia aims to go beyond climate-proofing, to fully align its green growth and climate resilience objectives with its future national development plans. The CRGE initiative led to establishment of new institutions, new efforts in capacity building and financial resource mobilization, and triggered comprehensive climate risk and vulnerability analyses.

 

Ethiopia's decision to develop a strategic, national-level response to climate change has been triggered by a strong awareness about climate risks and strong political leadership. The historically high exposure to climate variability has created strong awareness about current and future climate impacts in Ethiopia. In its national development plan, the Ethiopian government explicitly identified climate variability and climate change as a threat to its development goals, and hence called for plan of action, strategies, laws, standards and guidelines, etc. to lessen the effect of forecasted climate change.

 

The CRGE process builds on Ethiopia's five-year national development plan, with a view to ensuring that Ethiopia's development targets are achieved in a low-carbon and climate resilient manner. The CRGE's three key objectives are to:

i)foster growth and economic development;

ii)manage greenhouse gas emissions; and

iii)improve resilience to climate change.

 

This marks a significant shift in Ethiopia's climate change policy, lifting both climate change mitigation and adaptation from the environmental to a cross-governmental sphere. To fully mainstream climate resilience and green growth into development planning, Ethiopia aims to feed the CRGE into its next national development plan, which will cover the period 2015‑2020.

The CRGE consists of four elements which, once finalized, are intended to build a comprehensive national framework for Ethiopia’s climate change mitigation and adaptation policy. These elements include:

a.the development of a national vision, laying out the key objectives and long-term development goals;

b.the development of a national strategy, outlining concrete steps for both climate change adaptation and mitigation;

c.the establishment of an institutional climate change system to facilitate cross-governmental co-operation and planning linkages; and

d.the establishment of financial and capacity-building mechanisms to support the implementation of the national CRGE strategy.

  1. The CRGE Vision

The CRGE Vision was the first step in Ethiopia's efforts to achieve climate-resilience green development. It formalized Ethiopia's aspiration to become a climate-resilient green economy by 2025, and set the framework for the development of concrete policy action. The vision summarizes key challenges and opportunities arising from climate change in Ethiopia, defines common goals and objectives, and outlines key steps required to achieve for achieving a climate-resilient development. Prepared under the leadership of the Prime Minister's office, the CRGE vision has been an important step for creating awareness about the benefits of climate resilience for economic and social development across the government, and helped building a momentum for change. The CRGE Vision also received noteworthy international attention when it was presented at the 2011 climate negotiations in Durban.

 

  1. The CRGE Strategy

Building on this vision, Ethiopia began to develop a national CRGE Strategy to identify and prioritise concrete steps for building a climate-resilient green economy. The CRGE strategy comprises two distinct components: the mitigation-focused Green Economy (GE) Strategy and the adaptation-focused Climate Resilience (CR) Strategy. The GE Strategy has been published in September 2011, and the development of the CR strategy is going on (it is completed for the Agriculture and Water, Irrigation and Energy Sectors).

  1. Getting the Institutions Right

Linking climate change and development planning requires close co-ordination and co-operation across ministries and levels of government. In recognition of this, Ethiopia has worked to establish a new institutional set-up for effective development and implementation of the CRGE. The concrete design of this structure has evolved significantly since the CRGE launch in 2011, in response to administrative, coordinative or technical needs as they became apparent. The changing nature of the CRGE's institutional framework reflects the novelty of climate-resilient development planning and points to the need to adopting a flexible, 'learn-by-doing' approach.

To spur the development of the CRGE strategy in early 2011, Ethiopia has put in place a new institutional system. The Environmental Council, chaired by the Prime Minister Office and comprising members from federal ministries, presidents of regional states, and private sector and civil society representatives provides overall oversight and responsibility the realization of the CRGE Vision. A new body, the CRGE Inter-Ministerial Committee, was established to directly oversee and guide the process to ensure overall policy coherence and alignment to existing government structures. The CRGE Inter-Ministerial Committee is composed of high-level representatives from line ministries and chaired by the Prime Minister's Office, which provides a direct link to Ethiopia's key national planning institution. Line Ministries have also established CRGE units, with overall responsibility of coordinating and facilitating the planning and implementation of sectorial CRGE strategies. The government furthermore has upgraded the Ethiopian Environmental Protection Agency to obtain ministerial status with enhanced role of coordinating the realization of the CRGE Vision.

  1. Securing sufficient financing- The CRGE Facility

Finance is one of the three constraints (in addition to technology and capacity), which can pose a major challenge to effectively implement the CRGE. Preliminary estimates indicate that building the green economy will alone require total expenditure of around US$ 150 billion over the next 20 years[1], with around US$ 80 billion of required funding estimated to be capital investment and the remaining US$ 70 billion assessed as being necessary to cover operating and program expenses. The government of Ethiopia should therefore mobilize significant amount of new and additional finance from international, domestic, public and private sources.

                                                                                                                                 

4.The CRGE Facility

To secure finance for the implementation, Ethiopia established the CRGE Facility within the Ministry of Finance and Economic Development (MOFED) in 2012. The CRGE Facility aims to mobilize additional resources from domestic, international, public and private sources and to ensure that implementing entities at federal and regional levels have access to sufficient funds. The Facility has a number of financing instruments such as loan, co-financing, result based payment, grantee, grant, etc. The Facility was established with a view to channel all climate and domestic finance into one multi-donor trust fund, operated and hosted by the Ministry Finance and Economic Development (MoFED). The Facility foresees to allocate resources to sectors according to9 prioritized investments as detailed the sectorial implementation plans. Its resources will complement existing investment and funding streams, meaning that ministries could therefore draw on the Facility to access additional funding for CRGE projects. Resources disbursed to sectors from the Facility are channeled through existing delivery mechanisms.

 

4.1 The CRGE Facility Structure and Governance

The structure of the CRGE Facility is tailored to the unique circumstances and needs of Ethiopia, and its scope of work. With regard to the governance arrangement, an inter-ministerial steering committee, which is comprised of the CRGE implementing sectors and chaired by the Prime Minster Office (PMO), among others sets overall policy direction and provides guidance. Under this umbrella, there is CRGE Facility Management which oversights the operations and functioning of the Facility. The Management Committee is Co-chaired by State Ministers of MOFED and MEF, which is a manifestation of genuine collaboration between the two ministries in coordinating and pushing the agenda of Green Growth and Climate Change Resilience building forward. A secretariat, which is comprised of technical staff in MOFED and MEF, ensures that the Facility provides its functions and coordinates its portfolio. An advisory board comprised of non-state actors and developments provides technical advice and support to the Facility Secretariat.

4.2 Capitalizing the CRGE Facility and Financing the CRGE Initiatives

The government of Ethiopia has been allocating significant amount of domestic public finance annually for implementation of projects and programs that have contribution to both GHG emissions reduction and climate change resilience building. The government is investing in clean energy sources from as hydro, geothermal, wind and solar. It is also allocating finance and mobilizing the wider public on landscape management and restoration.

 

Furthermore, the government is mobilizing development partners to provide support to the green growth agenda of the country and channel their support through the CRGE Facility. Since late 2013, development partners have started to capitalize the CRGE Facility. Austria provided an initial tranche of development support; DFIF provided further, substantial tranches of support. Other developing partners have also committed to provide support through the Facility. The Facility currently has signed MOU with six federal line ministries to finance over 40 projects and is in the process of disbursing the first tranches of support to the line ministries

 

5.Conclusion

The government of Ethiopia which has been working towards the overall economic development and social wellbeing of the society is in a promising socio-economic path that the international organizations and development partners witnessed. According to the recent measurements, it became public knowledge that Ethiopia has been one of the fastest growing countries in the world. Moreover, the Ministry of Finance and Economic Development (MoFED) that has the powers and duties of initiating policies which ensure sustainable and equitable economic development as well as macro-economic stability in the country has been working focusing on the green economy. Therefore, the CRGE Facility is a very crucial mechanism in order to implement the green economy strategy which aims to achieve sustainable development with net-zero emission and building resilience.

 

[1] As cited in the ‘Green Economy Strategy, September 2011’ developed under Ethiopia’s CRGE. It should be noted that not all of this expenditure is necessarily additional to current investment plans – rather, a large part of this expenditure (for example, for power generation infrastructure or transport infrastructure) would also occur in a conventional growth scenario.


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The 4th UNDAF with 3 billion Dollars Development Assistance

Introduction

Ethiopia has made tremendous socio-economic progress over the last two decades. The country celebrates the fact that it has achieved most of the MDGs including halving the proportion of people living below the poverty line, significantly reducing the prevalence of hunger and undernourishment, expanding access to education and narrowing the gap in enrollment between boys and girls. In the area of health, under-five mortality has been reduced by two thirds and substantial progress has been made in reducing HIV/AIDS, malaria, tuberculosis and other diseases. Alongside this successful trajectory over many years, and in particular in support of the MDGs, subsequent United Nations Development Assistance Frameworks (UNDAFs) in Ethiopia since 2002 have proven instrumental in rallying the capacities, resources and comparative advantages of all members of the UN system behind the strategic vision and priorities of the national development agenda. The breadth and complementarity of UN agencies mandates have allowed the UN Country Team to effectively support the entire spectrum of the MDGs and other development objectives in a systematic and holistic manner.

 

The United Nations Development Assistance Framework (UNDAF) 2016-2020 is the fourth UNDAF in Ethiopia and represents the strategic response of the UN Country Team to the national development priorities articulated in the second Growth and Transformation Plan (GTP II). Under the joint leadership and partnership of the Government and the UN system, the UNDAF 2016-2020 has been developed in a widely participatory manner. In addition to Government and UN agencies, it draws on inputs from development partners, private sector and civil society organizations. As part of the Delivering as One process in Ethiopia, which requires all members of the UN family to work together in an integrated manner, the UNDAF represents the key programming instrument and foundation for joint strategic UN system support to the national development agenda. Following the mainstreaming of the Sustainable Development Goals into the GTP II, the UNDAF is also directly linked to the SDGs relevant to the Ethiopia context. This provides a solid foundation for close collaboration between the Government and the UN system in localizing and rolling out the SDGs during the life cycle of the UNDAF 2016 –2020.

 

To continue Ethiopia’s successful path towards becoming a middle income country and a climate resilient green economy by 2025, the UNDAF 2016 - 2020 is strategically focused on supporting Ethiopia’s continued growth and transformation in five areas including inclusive growth and structural transformation, building resilience and green economy, investing in human capital and expanding basic social services, good governance, participation and capacity building, and equality and empowerment. The UN Country Team in Ethiopia will use their combined wealth of technical expertise, global networks and reach to help the country realize the objectives of the GTP II and stay on course for achieving its vision 2025. Finally, we would like to extend our sincere appreciation to all partners who contributed to the development of this UNDAF document. Under the framework of the global 2030 Agenda for Sustainable Development, we look forward to continuing our collaboration and strengthening our partnerships with all stakeholders over the next four years, in order to achieve the planned outcomes of the UNDAF 2016 – 2020 as an important contribution to peace and prosperity for the people of Ethiopia.

 

UNDAF Overview

The United Nations Development Assistance Framework (UNDAF) 2016-2020 is the key programming instrument of the Delivering as One (DaO) process in Ethiopia. It aims to ensure coherent, efficient and effective UN system operations in full alignment with national development priorities. As the overarching strategic programmatic framework for the United Nations (UN) agencies, funds, programmes and entities in Ethiopia who are signatories of this document. The UNDAF promotes and benefits from strong Government ownership, and is guided by United Nations Development Group (UNDG) programming policies and the five key UNDG programming principles: a human rights-based approach; gender equality; environmental sustainability; capacity development; and results-based management. Ethiopia has made tremendous socio-economic progress over the last decade. The country has roughly halved the poverty rate and Ethiopians now have greater access to education, healthcare and other basic social services. Ethiopia has achieved all but two of the Millennium Development Goals (MDGs). Despite these successes, challenges still remain in improving the quality of services across the social sectors, strengthening governance structures, dealing with vulnerabilities, ensuring sustainable growth and reducing inequalities related to income and gender. Furthermore Ethiopia experiences various humanitarian challenges, including the effects of climate change, migration, and political instability in the region, that result in Ethiopia hosting the largest refugee population in Africa. The Federal Government of Ethiopia has articulated strategies to tackle these and other challenges in its medium term strategy dubbed the Growth and Transformation Plan (GTP II). The GTP II is the third five-year national development plan to guide the country towards becoming a middle-income and climate-resilient green economy by 2025. The UNDAF is aligned to the GTP II and contributes directly to eight of the nine GTP II pillars through the following UNDAF pillars:

Pillar 1: Inclusive growth and structural transformation

Pillar 2: Resilience and green economy

Pillar 3: Investing in human capital and expanded access to quality and equitable basic social

              services

Pillar 4: Good governance, participation and capacity development

Pillar 5: Equality and Empowerment

 

The selection of these five pillars is the result of a participatory and collaborative process between Government partners, civil society organizations (CSOs) and the United Nations Country Team, jointly coordinated by the Ministry of Finance and Economic Cooperation (MoFEC) and the UN Resident Coordinator (RC). The mid-2016-mid-2020 UNDAF is now fully aligned to the Government’s fiscal year. It benefits from the mid-term review of the current UNDAF (2012-2016), and from the lessons of previous rounds of UNDAF implementation in Ethiopia. Over the course of the next four years, UN agencies, funds, programmes and entities will use their combined wealth of technical expertise, global networks and reach to contribute to the vision of the Government of Ethiopia. Specifically through capacity development of institutions; support to evidence-based policy and strategy development; support to strengthening capacities for the implementation of sound evidence- and equity-based policies and programmes; and strengthening of monitoring systems for increased accountability and transparency. Environment and climate change, human rights, HIV AIDS, gender equity, information communications and technology, migration and development are cross-cutting themes that have been integrated into the UNDAF to ensure the sustainability of the articulated results.

 

Under the direction of the joint Government/UN High Level Steering Committee, the UNCT and the UN Resident Coordinator will provide direction and close oversight of the UNDAF working groups and ensure maximum alignment and complementarity with other DaO work streams, including UN system operations and communications and advocacy of the UNDAF A total estimated US$ 3.038 billion is required to implement the UNDAF fully over the next four years. Linked to the five pillars are 15 outcomes, 63 outputs, and 313 (50 outcomes and 263 output)

indicators (Table 1).

UNDAF Table

 

Pillars

Outcomes

Outputs

Indicators

Budget (US$)

1

Inclusive growth and structural transformation

 

2

9

12 (45)

  197,914,619

2

Resilience and green economy

3

13

8 (55)

1,932,716,491

3

Investing in human capital and expanded access to quality, equitable basic social services

 

5

25

17 (93)

   718,726,187

4

Good Governance, participation and

capacity development

 

 

3

8

7 (44)

   211,080,000

5

Equality and empowerment

2

8

6 (26)

     67,887,394

Total

5

15

63

50 (263)

3,038,324,691

 

Pillars Outcomes Outputs Indicators4 Budget (US$)

UNDAF in the Global Context

The UNDAF 2016-2020, which covers four years following the Ethiopian fiscal cycle (July- June) was developed within a new global development and development financing context. It falls within the period of the 2030 Agenda for Sustainable Development which explicitly confirms the important role and comparative advantage of the United Nations system in supporting the achievement of the Sustainable Development Goals (SDGs) and sustainable development. In view of this important mandate for the UN system to support countries in pursuing and achieving the 2030 Agenda and the SDGs, the Ethiopia UN Country Team, in close partnership with the Federal Government of Ethiopia, has formulated this UNDAF to focus on supporting the attainment of the lagging MDGs 3 and 5, as well as the realization of equitable and sustainable development in line with the 2030 Agenda and the SDGs. In order to support the localization of the SDGs to the Ethiopian context, the United Nations

 

Country Team (UNCT) is committed to use this UNDAF to work closely with the Government on issues of implementation, monitoring and financing of the SDGs at the country level. In light of Ethiopia’s continued double-digit economic growth and the country’s aspiration to become a middle income country by 2025, the UNDAF represents a “transition” programme towards an increased focus on evidence-based upstream level policy and advocacy work in addition to focusing on service delivery. There has been significant progress in reducing poverty and less than one-third of Ethiopia’s population lives below the poverty line. Maintaining this progress service delivery support and building a resilient social protection system will remain a major focus of the new UNDAF.

 

The programme cycle 2016-2020 is also shaped by an altered global aid financing environment as reflected in the Outcome Document of the 3rd Financing for Development Conference, the Addis Ababa Action Agenda. In particular, the post-2015 aid context is characterized by a reduction in traditional ODA and an increasingly important role of public domestic resources as well as public international resources from new donors (e.g.BRIC countries) and private international and domestic resources (e.g.foundations, public-private partnerships). Ethiopia, too, is undergoing a significant change in its development financing landscape. Broadly speaking, although the volume of ODA to Ethiopia is not decreasing, the importance of ODA as a portion of GDP is declining as the economy grows and other sources of funding become more important. Furthermore, the portion of concessional (soft) loans vis-à-vis grants is steadily increasing (to 23 per cent of total ODA in 2012). The UNCT strives to provide predictable, on-budget development assistance that uses the country’s public financial management and procurement systems as envisaged under the Mexico, Busan, Accra and Paris commitments.

 

The UNDAF 2016-2020 takes into account the effect of population dynamics, in particular migration, fertility and urbanization, on development outcomes. Many developing countries, including Ethiopia, are at various stages of a demographic transition in which declining levels of fertility combined with a very young population structure can be turned into a demographic dividend with adequate policies and resources. Ethiopia, too, has a population of which 48 per cent are under the age of 18. The ongoing demographic transition highlights the importance of supporting adolescent girls and boys to develop the skills to lead healthy and productive lives and contribute to building prosperous, safe and peaceful communities. While the vast majority of the world’s poor still live in rural areas, urbanization is one of the key factors influencing developing outcomes in many parts of the world, including in Ethiopia. The UNDAF seeks to strengthen the Government’s capacity to manage the risks and challenges associated with rapid urbanization.

 

Finally, the UNDAF is responsive to the increasing importance of transnational issues that shape development contexts. In particular issues related to climate change, migration, radicalization, conflict and global epidemics, require partnerships and responses that transcend national boundaries. Ethiopia is affected by a number of transnational issues and the UNDAF seeks to strengthen regional mechanisms and bodies to respond to these challenges. Over 80 per cent of the population resides in rural areas and depends on rain-fed agriculture. In line with the SDGs and GTP II, the UNDAF is based on the principle of sustainability and building communities’ resilience through linking development and humanitarian programming.

 

UNDAF in the National Context

Under the UNDAF 2016-2020, the United Nations system continues to collaborate with the Government of Ethiopia as a partner in the country’s quest to become middle income and carbon neutral by 2025. Based on the Delivering as One (DaO) approach, the 2030 Agenda and the SDGs, the joint UN/GoE High Level Steering Committee comprising the Government, the UN, and development partners, provides strategic direction and oversight to the achievement of planned UNDAF results.

 

Under the current UNDAF (2012–2016), the UNCT has implemented three flagship joint programmes on 1) gender equality and women’s empowerment, 2) maternal and newborn health, and 3) support to the four Developing Regional States. Collaborative programming and joint programmes on priority themes such as social protection, resilience, migration and financial inclusion will continue to be prominent modalities to ensure that the UNDAF delivers tangible and sustainable development results.

 

In this context, the One UN Fund for Ethiopia remains an important vehicle for mobilizing and allocating resources to joint programmatic initiatives. Based on findings from the country analysis which informed the development of this UNDAF, the comparative advantages of the UN system in Ethiopia include its capacity to connect government and other local partners with best practices from other countries and regions, to facilitate and broker for different issues and partnerships, to respond effectively to humanitarian challenges including accessing hard-to-reach populations, to support building national resilience as well conduct advocacy to bridge inequalities between people and regions. In addition, the UN system can use its role and expertise to support Government in developing context-specific strategies for financing the SDGs, as well as establishing baselines and indicators for measuring progress on the SDGs and the implementation of Financing for Development (FfD) recommendations.

 

The UNDAF 2016-2020 represents the programmatic framework for the United Nations (UN) agencies, funds, programmes and entities in Ethiopia who are signatories of this document. Complementary to the UNDAF, the United Nations in Ethiopia continues its efforts to streamline and harmonize its business processes, thus improving their efficiency and cost effectiveness. Under a UN Business Operations Strategy (BOS) the United Nations in Ethiopia envisages significant savings through reducing material, time and labour costs in areas such as procurement, ICT, legal affairs, human resources, a harmonized approach to cash transfers, and business continuity. In order to operationalize the DaO approach including the UNDAF, the United Nations Country Team (UNCT) has developed a strong DaO governance framework in line with the UNDG Standard Operating Procedures for DaO, bringing together focused teams working on common programmatic, operational, communications, policy, advocacy, and monitoring and evaluation issues. This architecture continues to be refined and strengthened, and will be aligned as relevant with national coordination structures to ensure robust UNDAF implementation.

 

 

Conclusion

The UNDAF responds to a total of 149 of the 169 targets of the SDG , leading to an average SDGs integration rate of 88 per cent with full alignment for the goals dedicated to end poverty (SDG 1), to end hunger (SDG 2), to achieve gender equality (SDG 5), to ensure access to water and sanitation for all (SDG 6), access to sustainable and modern energy (SDG 7), employment and decent work for all (SDG 8), resilient infrastructure and sustainable industrialization (SDG 9), reduce inequalities (SDG 10), sustainable consumption and production patterns (SDG 12), combat climate change (SDG 13), Life on Land (SDG 15) and Peace and Justice, building strong institutions (SDG 16).

 

Moreover, the UNDAF responds to eight of the nine GTP II pillars showing an alignment rate of 89 per cent. This means that the UNDAF responds to all the GTP pillars.

 

Source:- United Nations Development Assistance Framework For Ethiopia 2 0 1 6 - 2 0 2 0, Addis Ababa, 2016