Ethiopia) Growth and Transformation Plan II, Vol I. (2015 ,16-2019 ,20) PDF

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Federal Democratic Republic of Ethiopia

Growth and Transformation Plan II (GTP II) (2015/16-2019/20)

Volume I: Main Text

National Planning Commission May, 2016 Addis Ababa i

Table of Contents Title

Page No.

Table of Contents ........................................................................................................................... i List of Figures.................................................................................................................................. iv List of Acronyms .............................................................................................................................. v

Preface........................................................................................................................................... ix Introduction......................................................................................................................................1 PART I: ............................................................................................................................................4 PERFORMANCE UNDER THE FIRST GROWTH AND TRANSFORMATION PLAN (GTPI) ...4 I. Macroeconomic Performance ........................................................................................................5 1.1. Economic Growth and Poverty Reduction ..................................................................................... 5 1.2. Price Development ......................................................................................................................... 9 1.3. Fiscal Policy and Public Finance ................................................................................................... 9 1.4. Saving and Investment ................................................................................................................. 12 1.5. External Resource Mobilization and Management ...................................................................... 13 1.6. Monetary policy ........................................................................................................................... 14 1.7. Merchandize Export and Import .................................................................................................. 15 1.8. Private sector development .......................................................................................................... 18 II. Economic Sectors ....................................................................................................................... 24 2.1. Agricultural Development............................................................................................................ 24 2.2. Industrial Development ................................................................................................................ 28 2.3. Trade ............................................................................................................................................ 32 2.4. Mining .......................................................................................................................................... 33 2.5. Construction ................................................................................................................................. 34 2.6. Urban Development and Housing ................................................................................................ 35 III. Economic Infrastructure .......................................................................................................... 37 3.1. Road Infrastructure ...................................................................................................................... 37 3.2. Railway Infrastructure.................................................................................................................. 37 3.3. Telecommunication ...................................................................................................................... 37 3.4. Energy Infrastructure ................................................................................................................... 38 3.5. Information and Communication Technology ............................................................................. 38

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3.6. Potable Water Supply and Irrigation Development ..................................................................... 39 3.7. Transport ...................................................................................................................................... 40

IV. Social sector development ................................................................................................ 42 4.1. Education ..................................................................................................................................... 42 4.2. Health ........................................................................................................................................... 43 V. Capacity Building and Good Governance .................................................................................. 45 5.1. Implementation Capacity Building .............................................................................................. 45 5.2. Good Governance ........................................................................................................................ 47 VI. Building the Democratic System ............................................................................................... 52 6.1. Strengthening Public Participation............................................................................................... 52 6.2. Building and Enhancing National Consensus .............................................................................. 53 6.3. Strengthening Multi Party Democratic System............................................................................ 53 6.4. Media ........................................................................................................................................... 54 VII. Cross Cutting Sectors .............................................................................................................. 55 7.1. Women, Children and Youth ....................................................................................................... 55 7.2. Science and Technology .............................................................................................................. 57 7.3. Sport ............................................................................................................................................. 59 7.4. Social Welfare and Labour Affairs .............................................................................................. 59 7.5. Culture and Tourism .................................................................................................................... 60 7.6. Population and Development ....................................................................................................... 61 7.7. Environment and Climate Change ............................................................................................... 61 VIII. Monitoring and Evaluation System of GTPI .......................................................................... 63 IX. Strengths and Challenges encountered in implementing GTPI ................................................. 65 9.1. Strengths, Best Practices and Lessons Drawn.............................................................................. 65 9.2. Challenges .................................................................................................................................... 67 X. Summary.................................................................................................................................... 70 PART II .......................................................................................................................................... 75 THE SECOND GROWTH AND TRANSFORMATION PLAN (GTPII) .......................................75 I. Basis, Departures, Objectives and Strategic Pillars of GTP II .....................................................76 1.1. Basis of the Second Growth and Transformation Plan ................................................................ 76 1.2. Major Departures of the Second Growth and Transformation Plan (GTPII) ............................... 78 1.3. Objectives of GTPII ..................................................................................................................... 80 ii

1.4. Pillars Strategies........................................................................................................................... 81 1.5. Selected GTPII macroeconomic, social and economic development targets ............................... 93 II. Macroeconomic Plan .................................................................................................................. 98 2.1. Macroeconomic Policy Objectives .............................................................................................. 98 2.2. Economic Growth ........................................................................................................................ 99 2.3. Structural Change....................................................................................................................... 102 2.4. Merchandize and Service Exports, Imports and Balance of Trade ............................................ 105 2.5 Ensuring Macroeconomic Stability............................................................................................. 106 2.6. Fiscal Policy ............................................................................................................................... 107 2.7. Monetary Policy and Financial Industry Development.............................................................. 110 2.8. Saving and Investment ............................................................................................................... 111 2.9. Employment and Poverty Reduction ......................................................................................... 113 III. Financing the Plan (Financial Plan) ........................................................................................ 115 3.1. Budgetary Financing Plan .......................................................................................................... 115 3.2. Sources of off-budget Financing and Requirement for Investment Finance.............................. 116 V. Economic Development Sector Plan ......................................................................................... 120 4.1. Agriculture and Rural Transformation ....................................................................................... 120 4.2. Manufacturing Industry.............................................................................................................. 135 4.3. Mining Sector............................................................................................................................. 150 4.4. Construction Industry................................................................................................................. 153 4.5. Urban Development and Housing .............................................................................................. 157 4.6. Trade .......................................................................................................................................... 162 4.7. Culture and Tourism .................................................................................................................. 166 V. Economic Infrastructure .......................................................................................................... 169 5.1. Integrated Transport and Logistics Services .............................................................................. 171 5.2. Expansion and Ensuring the Qualities of Road Infrastructure Development ............................ 173 5.3. Expansion and Ensuring the Qualities of Railways Infrastructure ............................................ 174 5.4. Air Transport .............................................................................................................................. 175 5.5. Maritime Transport services ...................................................................................................... 177 5.6. Expanding Energy Infrastructure and Ensuring its Quality ....................................................... 177 5.7 Ensure Digital Infrastructure Expansion and its Quality ............................................................ 180 5.8. Potable Water Supply and Irrigation Development (GTPII) ..................................................... 181 iii

VI. Human Development and Technology Capacity Building ....................................................... 185 6.1. Education and Training .............................................................................................................. 185 6.2. Health Sector Development ....................................................................................................... 189 6.3. Science and Technology Development ...................................................................................... 192 VII. Developmental Good Governance and Building Democratic System ..................................... 195 7.1. Ensuring Good Governance and Building Developmental Political Economy ......................... 195 7.2. Building Democratic System ..................................................................................................... 203 VIII. Cross Cutting Issues............................................................................................................. 208 8.1. Women and Youth Empowerment ............................................................................................. 208 8.2. Environment and Climate Resilient Green Economy ................................................................ 211 8.3. Sport Sector ................................................................................................................................ 216 8.4. Strengthening social welfare and security.................................................................................. 216 8.5. Labour Affairs ............................................................................................................................ 218 8.6. Population and Development Issues .......................................................................................... 219 IX. Opportunities and Threats...................................................................................................... 221 9.1. Opportunities.............................................................................................................................. 221 9.2. Threats/ Risks............................................................................................................................. 222 9.3. Risk management strategies ....................................................................................................... 222 X. Monitoring and Evaluation System of GTP II .......................................................................... 224

List of Figures Figure 1.1 GDP Growth by Major Economic Sectors (2009/10-2014/15) .............................. 5 Figure 1.2 Percentage share of GDP by major economic sector (%) ...................................... 8 Figure 1.3 Domestic revenue, expenditure and deficit as a Ratio to GDP@CMP (%) .... 111 Figure 1.4 Gross Domestic Saving and Investment as a Ratio to GDP @ CMP ............... 133 Figure 1.5 Export and import of goods and services as a share of GDP @ cmp (%) ....... 177

List of Tables Table 1.1

Selected GTPII Targets ....................................................................................... 94

Table 2.1

GDP growth rate under base case scenario (in %) valued at 2010/11 price .... 99

Table 2.2

GDP growth rate under high case growth scenario (in %) ............................. 102 iv

Table 2.3

Share of major economic sectors in GDP under base scenario (in %)........... 103

Table 2.4

GDP’s share of some major economic sectors under high growth scenario (in %) .................................................................................................................... 103

Table 2.5

Projection of merchandise export earring’s (in million USD) ........................ 104

Table 2.6

Projected share of merchandise export in GDP (in %) ................................... 104

Table 2.7

Government Revenue and Expenditure Projection (in billion birr) .............. 109

Table 2.8

Government Revenue and Expenditure as a ratio to Nominal GDP (in %).. 109

Table 2.9

Total consumption expenditure, investment and resource gap as a Ratio to GDP @ CMP ........................................................................................................ 112

Table 3.1

Percentage Distribution of projected capital expenditure requirements by major socioeconomic sectors (in %) ............................................................ 115

Table 3.2

Total Sources of Finance, (in million ETB unless otherwise specified) ........ 116

Table 3.3

Percentage Distribution of Finance Sources in total Finance (in %) ............. 116

Table 3.4

Sectoral Allocation of Domestic Credit, in million ETB unless otherwise specified ................................................................................................................ 117

Table 3.5

Percentage Distributions of projected domestic Credit allocation in total domestic Credit (in %)........................................................................................ 117

Table 3.6

Distribution of Demand and Supply of Foreign Exchange by Economic sector (In million USD) ....................................................................................... 118

Table 3.7

Demand and Supply of Foreign Exchange (Percent Share in total) ............. 1188

List of Acronyms AGOA AMDAR APRs AWOS AWS AWS BA BDS CBE CCC CMP

Africa Growth and Opportunity Act Aircraft Meteorological Data Relay Annual Progress Reports Automated Weather Observing System Aviation Weather Service Automatic Weather Stations System Bachelor of Art Business Development Services Commercial Bank of Ethiopia Community Care Coalitions Current Market Price v

CO2 COC CO2e CPR CRGE CSA DBE EA EBA EIO ENALCO ERA ETB EU FDI FTA Gbs GDP GDS GEF GER GERD GHE GHG GIS GTS GTP GTPI GTPII GVA GW GWH Ha HDI HEPP HICES HIV/ADIS HoPR ICAD ICT

Carbon Dioxide Certificate of Competence Carbon Dioxide Emission Contraceptive Prevalence Rate Climate Resilient Green Economy Central Statistical Agency Development Bank of Ethiopia Ethiopian Airlines Everything but Arm Ethiopian Institute of the Ombudsman Ethiopian National Logistics Coordination Council Ethiopian Road Authority Ethiopian Birr European Union Foreign Direct Investment Free Trading Area Gigabytes Gross Domestic Product Gross Domestic Saving Global Environment Facility Gross Enrolment Rate Grand Ethiopian Renaissance Dam Greenhouse Gas Emissions Green House Gas Geographical Information System Global Telecommunications System Growth and Transformation Plan The First Growth and Transformation Plan The Second Growth and Transformation Plan Gross Value Added Giga Watt Giga Watt per Hour Hectare Human Development Index Hydro Electric Power Project Household Income Consumption Expenditure Survey Human Immune Virus/Acquired Immune Deficiency Syndrome House of Peoples Representative Innovative C...