REGIONAL DEVELOPMENT PLANNING IN ETHIOPIA: PAST

EXPERIENCE, CURRENT INITIATIVES AND FUTURE

PROSPECTS1
Tegegne Gebre Egziabher*
Abstract: This paper examines the evolution of regional development planning in Ethiopia and
explores its future prospects. The main contention of the paper is that in the past,
regional development, in line with the functional integration approach, was considered
a national project. Four main problems have influenced regional policy areas, namely:
a) the need for rapid growth and development, b) the need to industrialise, c) the need
to develop water resources, and d) the need to develop resource frontiers and
expansion of agricultural export. A concentration strategy and package programs;
import substitution industrialisation; river basin development and commercial farms
have been the regional policy responses to the above problems. These policies were
not adequate to stimulate regional development and reduce the imbalances in the
country. The current initiatives of regional policies are marked by decentralised
planning systems, inter-regional allocation of resources; investment policies; regional
capacity building; river basin planning and special area programs. The adequacy of
each of these elements, however, indicates that there is room for improvement. In
addition these policies are not implemented as part of an overall regional policy. The
future orientation of regional policy should be based on the macro-economic
development model of the country. Hence regional policy should derive from the
policies of deregulation, liberalisation, promotion of private investment, export-led
growth and rural centred strategies. Similarly, the deepening of decentralisation should
lead to more emphasis on local level development. Explicit concern with bringing
regional equity should guide the resource allocation in future. It is recommended that
the country should develop an explicit regional policy whose components should
emphasise inter-regional cooperation; regional competitiveness; and regional resource
mobilisation. Regional policies at regional levels should work towards achieving
appropriate incentives/investment policy, participation of the people and generation of
inter-sectoral plans.

1. INTRODUCTION
Ethiopia has had some experience of regional development planning in the past years and
had followed different strategies. However, these strategies have evolved by taking a
certain shape that may be identified with a certain framework and ideology. In the past,
regional development has been considered in so far as it improves the national economy.
The main aim was to assist national growth and development. Since the fall of the Derg
regime, regional planning has been given new impetus and focus. It has received
political, administrative and economic support by such concepts of governance as
federalism, decentralisation of power, revenue sharing etc. which are being implemented
*

Director, Institute of Development Research, Addis Ababa University.

Tegegne. Regional Development Planning in Ethiopia

66

in the country. The Five-Year Development Peace and Democracy Programme has made
it explicit that there is a need to provide priority in, financial and technical support to less
developed regions in bringing equitable development among regions. Similarly, the
objective of enhancing regional capacity for administration is also given priority
importance. This is a new direction in the focus and framework of regional planning.
Currently regional development planning has been practised at two levels: at the
federal or central, and at regional levels. The first level corresponds to what is known as
inter-regional planing in the literature and the second level corresponds to intra-regional
planning. Though the country has not accumulated wide experience along these lines,
some programs have been undertaken. Regional development programs are not limited to
one or other element. Rather, they constitute many elements in different areas and each
element forms an ingredient of a larger picture which shows the direction of regional
development policy in the country as a whole.
The objective of the paper is to examine the evolution of Regional Development
Planning (RDP) in Ethiopia and explore its future prospects.
The specific objectives are:
1. To briefly examine past regional policies used to address regional problems with
a view assessing their adequacy;
2. To identify the ingredients of the policy/programs which are guiding
regional/area development today with a view to bringing out their adequacy and
content; and
3. To provide suggestions for a future regional policy orientation which the country
may need to follow.
It is hoped that such analysis will give insights into the future regional planing
efforts of the country by understanding the failures of past polices and the adequacy of
the present efforts. The introduction in section one is followed by a conceptual
framework on the paradigms of regional development in section two. Section three
highlights major aspects of past regional policies. Section four discusses the different
elements that make up regional policy today. Section five elaborates the prospects of
regional development planning, while section six is a concluding section.

2. CONCEPTUAL FRAMEWORK - PARADIGMS OF REGIONAL

DEVELOPMENT
Theoretical approaches to regional development have witnessed different paradigms. The
functional integration and the territorial development approaches are the two dominant
paradigms that seem to guide regional development practices.

EASSRR, Vol. XVI, no. 1 January 2000

67

The functionalist approach considers development of regions as a function of

national/economic development (Henderink and Titus 1988). This approach comes under
the general paradigm of development `from above'. Development `from above' is an
urban development paradigm and derives its inspiration from modernisation theory of
capitalist economic growth. The approach aims at efficiency and modernisation using
principles, means and practice of national economic planning, free trade,
entrepreneurship and innovations as the driving forces for industrialisation, comparative
advantage principle and central government intervention (Evangelinides-Arachovitu
1990). Regional economic policy and planning influenced by the functional regional
development paradigm find expression in two major strategies, viz. growth centre and
rural service center strategies.
In the last twenty years, established theories of regional development and planning
have witnessed shifts. Arguments for functional development and functional integration
of economic space have lost their credibility in favour of decentralisation, territorial
development and local autonomy. The territorial development approach emphasises the
satisfaction of the basic needs of the regional population using principles, means and
practices of wilful community action, selective regional closure, strategic regional
advantage, small and medium sized projects, labour intensive mode of production,
appropriate
technology
and
self
management
organisational
forms
(Evangelinides-Arachovitou 1990). Friedman and Weaver (1979), the proponents of the
approach, indicate that political decision making, governance and hence institutional
changes form integral parts of the entire approach.
Territorial development comes under the paradigm of development `from below'.
Development `from below' involves a change of perspective of development. According
to Stohr (1981), it implies going from the present principles of maximising return for
selected factors to one of maximising resource mobilisation, substituting the principles of
comparative advantage by one of equalising benefits from trade; and emphasising
territorial rather than functional organisation. It also implies a change of development
from that based on economic criteria, competitive behaviour, external motivation and
large-scale redistributive mechanisms to a new model of development incorporating
broader societal goals, collaborative behaviour and endogenous motivation. The
principles and ideas of development `from below' are derived from the less developed
countries and hence are more appropriate for regions in low-income countries.

3. SALIENT FEATURES OF PAST REGIONAL STRATEGIES IN

ETHIOPIA
Regional Development as a National Project
Unlike many African countries, Ethiopia has never been under colonial powers that
ravaged many African countries. In the absence of a colonial power, internal historical
factors and policies have given rise to the emergence of unbalanced regional
development characterised by a primate city, uneven distribution of services,
infrastructure and facilities and languishing rural regions kept out of the mainstream
processes of modernisation. Ethiopia has espoused different regional policies in the past.

Tegegne. Regional Development Planning in Ethiopia

68

These regional policies, however, were dominated by the then philosophy of national
growth, which was highly dependent on a centrist ideology that looked upon regional
development as a national project. Hence the objectives of regional development were
national growth, and integration of regional economies into the national economy.
The problem areas that defined the policy contents were a) the need to bring rapid
growth and development in the country; b) the need to industrialise the country; c) the
need to develop water resources; and d) the need to develop resource frontiers and
expansion of agricultural exports.
The first type of problem was addressed through a strategy which has its theoretical
underpinning in the growth pole theory or concentrated investment strategy. As a
strategy, it encouraged governments to concentrate investments in areas which were
believed to be promising from a national development perspective. In this regard, the
Second Five-Year Plan emphasised the importance of assessing the roles of each region
in the long term economic development of the country and identified the
Shashemene-Nazreth-Awash-Tendaho belt as a priority investment location since the
area has already attracted a considerable number of agro-industrial activities and was
served by communication and transportation facilities (Taddesse 1985). The
development of agriculture in this area was seen as a prerequisite to fulfilling the targets
envisaged in the Second Five-Year Plan for the production of cotton, wheat and
livestock.
The concentration strategy was further- promoted the Third Five-Year Plan which
considered the intensification of agricultural development through package programmes.
A more striking strategy along this line was the integrated rural development
programmes of selected regions. The intensification of agricultural development through
package programs in relatively small and well-defined areas was identified as a major
area of concern in the Third Five-Year Plan. The Chilalo Agricultural Development Unit
(CADU), The Welaita Agricultural Development Unit (WADU), The Ada District
Development Project (ADDP), the Tach Adyabo and Hadgiti Development Unit
(TAHDU), the Southern Regional Development Project (SORADEP) and the Humera
Agricultural Development Project were different projects along this line with different
objectives and comprehensiveness (Fossil 1985). CADU, which was launched in 1967,
however, was the most popular project with a comprehensive package of improved
technology, dissemination of new practices, credit, output, marketing, training, rural
water supply, health services, road building, soil conservation, etc. (Dejene 1996:48).
Others like WADU and ADDP followed similar lines. But these policies were led by
sector specific policies and did not encourage any specific territorial regional
development.
The second type of problem was addressed by following an industrialisation
strategy of import substitution of consumer goods and excessive dependence on foreign
ownership and management of industry (Woldu 1983). Import substitution strategy has a
clear spatial implication of favouring selected regions. Import substituting industries
require close access to urban markets. Similarly, foreign owned and managed industries
require locations with easy international communications and access to decision making.
Addis Ababa thus became the favoured city as it fulfilled the requirements of import

EASSRR, Vol. XVI, no. 1 January 2000

69

substitution industries. It is well known that the industrial distribution of the country
even now is dominated by few places which attract services and population, exacerbating
the pattern of inequality between regions. The fact that the urban system in Ethiopia is
dominated by a primacy structure emanates from such past policies.
The third type of problem was addressed mainly by implementing a river basin
development strategy. Though river basins such as Wabishebelle and Blue Nile were
candidates for development, it was actually the Awash Valley where activities had been
undertaken. The Awash Valley Authority was the only regional frame of planning in
Ethiopia, other than the administrative regions (Teshome 1985). The Awash Valley
Authority (AVA) chartered in 1962, had the sole purpose of administering and
developing the natural resources of the Awash Valley. Among the achievement of the
AVA were large-scale concessionaires and medium and large scale commercial farms,
numerous agro-industries, electricity production, village water supplies etc. (Teshome
1985). In addition some settlement schemes had also been implemented in the area. The
AVA had features that clearly manifested that it was a national project. The fact that
increasing traditional grazing land was given to concessionaires for commercial
agriculture by displacing the nomads and without successfully integrating them in the
development process bore witness to the objective of the AVA in maximising output and
growth. Similarly, the fact that most of the developmental activities depended on foreign
finance and investment indicated that the profits from the activities were withdrawn from
the region (Teshome 1985).
The need to develop resource frontiers forced past development efforts to
concentrate on large scale commercial farms. Fiscal policies such as duty-free import of
tractors and fuels were employed in order to attract foreign private capital and
managerial know-how into agricultural sector (Dejene 1996:45). The commercial farms
were concentrated in lowland areas. About 82% of the area under commercial crops in
1975 was located in Setit Humera, the Awash Valley and the Rift Valley. These farms
focused on industrial raw materials and export crops. Mechanised fanning played a
significant role in the economy in terms of employment and production. For example,
mechanised farms gave rise to employment of 350,000 people each year and some farms
such as Setit Humera led Ethiopia to capture 20% of the export market in seasame
production (Dessalegn 1986). The commercial farms however were by and large
unintegrated with the local population.
By the middle 1970s, Ethiopia was adopting a socialistic idea in which interregional inequalities were seen as undesirable elements of the development process. For
instance, the Second National Development Campaign programme mentioned the need
to foster the equitable distribution of the benefits of socio-economic development among
the people in all regions of the country and this was reflected in all subsequent five
annual plans (Taddesse 1985). It is safe to conclude that the five annual plans of the Derg
regime did not contain strong substantial policies and strategies in regional development
that could have been implemented.
Some authors such as Taddesse (1985) indicated that perhaps the most important
development in the sphere of regional planning during this time were the establishment
of a physical planning department within the organisational structure of the National

Tegegne. Regional Development Planning in Ethiopia

70

Revolution Development Campaigns and the creation of a provincial development

campaign and planning offices in each of the 14 administrative regions of the country.
Regarding the latter, seven regional planning units were formed by combining different
administrative regions. These planning units were the Northern, Southern, Eastern,
Western, South Eastern, Central and the Addis Ababa planning offices. The creation of
these planning units, however, was more in line with administrative deconcentration as
they were mostly meant to facilitate the functioning of national planning in different
regions, by collecting and submitting data to the national level. These planning offices
did not operate autonomously in planning and executing development programs of the
different regions.
All the efforts made prior to 1991 had a clear national development orientation in
that the different programs were meant to integrate each region's economy with the
national economy and regional development was understood as long as it aided national
growth and output. Hence the functionalist integration approach seems to have provided
inspiration for the various regional development practices of the country.

4. CURRENT INITIATIVES IN REGIONAL DEVELOPMENT

The current initiatives in regional development could be understood in terms of the
country's decentralised political system that gives greater power and responsibilities to
regions and in terms of the government's commitment to redress regional imbalances.
Thus the regional development objectives of the current government include the
reduction of regional inequality through the provision of financial and technical support
to less developed regions and the enhancement of regional capacity. Similarly, the
objective of attaining a decentralised regional development is also given priority as the
government has created an enabling environment to this end. The major initiatives
discussed below are thus related to fulfilling these objectives.
Elements of current practices of regional development could be divided as interregional and intra-regional. Inter-regional practices have been undertaken at the federal
or central level while intra-regional practices are undertaken at the regional level. Among
those practices which could be termed inter-regional are fiscal decentralisation or
inter-regional allocation of grants; investment policy; river basin planning; special area
planning; and regional capacity planning. Intra-regional practices include the
decentralised planning system and its attendant institutional structure, resource
mobilisation and the preparation of regional five years and annual development
programs.
4.1 Decentralised Planning System
Decentralisation paves the way for a territorial approach to economic development by
moving important decision-making powers from the central government to lower levels
in the hierarchy whether to provinces, municipalities or regional governments. To the
extent that decentralisation is an attempt to strengthen the territorial units (districts,
provinces, municipalities) at sub-national level, it is a key component of regional policy
(Kekwete 1997).

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71

Ethiopia has entered into an era of decentralisation in which the powers and
responsibilities of central government are shared with lower sub-national local
authorities. In the decentralisation process, the government structure has changed from a
unitary to a federal one. As per the constitution, the country has been divided into nine
regional governments and two administrative regions. These regions are relatively
autonomous in that they have elected bodies and power to legislate and policy decisions
regarding many activities. The formulation and execution of social and economic
development policy is among the many responsibilities given to the regional
governments.
This localisation and decentralisation process poses a new challenge to regional
development in the country. The old top-down, centralised planning system is no longer
feasible. In response to this, regions have attempted to institutionalise' a system that
resembles a decentralised planning system. The elements of this system could be studied
by looking at the organisation of the planning process, the means of resource
mobilisation and the mechanisms of popular participation.
Concerning the organisation of the planning process, the planning system in
different regions closely follows the local government system. The structure of the local
government system is depicted in figure 1. Regional, wereda and kebele councils are
elected bodies. The administration is responsible for different bureaux, departments and
offices at regional, zonal and wereda levels respectively. The administration at each level
plays the central role in approving the plans and budgets and it is supported by planning
and sector units. The planning units are the regional planning bureaux and zonal
planning departments which have cross-sectoral mandates. There are no planning units at
wereda level and the tasks of cross-sectoral planning at this level is undertaken by
wereda development committees. The sector units are different sector bureaux,
departments and offices at different government levels. Sector units are responsible for
planning for their own sectors and submitting the same for horizontal planning units at
each government level.
The actual process of policy formulation at regional level is a combination of
top-down and bottom up approaches. Guidelines initiated from regional executive
committees and concretised by regional planing bureaux flow down through sectors and
lower planning units. Proposals which are initiated by sectoral offices, compiled by
planning bureau and approved by executive committees pass all the way to the regional
executive committees and later to the regional councils for approval (Tegegne 1998).
The executive committee plays a significant role in policy making at the regional level.
The executive committee, after analysing proposals submitted by bureaux and lower
units councils, presents policy proposals to the regional council, for adoption. Regional
councils, after discussing the policy proposals submitted to them, endorse the policy by
consensus or voting.
Under such decentralised planning systems regions have formulated five-year
development plans and annual budget plans. An examination of the five-year
development plans of different regions, however, reveals that the plans have much to be
desired to qualify as a document of regional development strategy guiding the medium
and long term developmental needs of the region. This is mainly due to the fact that what

Tegegne. Regional Development Planning in Ethiopia

72

are presented as regional plans are mere aggregates of sectoral proposals expressing
wishes and activities to be performed. For instance, the five-year development
programme of the Oromiya region2 admits this by indicating " the approach of
preparation of the document of this plan is such that it is a summary and compilation of
sectoral programmes" (The Regional Government of Oromiya 1995). Moreover the
document indicates standards as to the number of schools and hospitals to be built,
amount of seeds and fertilisers to be distributed etc. This is a demand side approach
which does not consider the supply or resource constraint. Hence the document does not
relate investment to demand.

73

EASSRR, Vol. XVI, no. 1 January 2000

Figure 1: Local Government Structure in Ethiopia

Regional
Council
Office of
the President

Woreda
Council

Regional Administration
Regional Sectoral
Bureaux

Zonal Administration
Zonal Departments

Woreda
Administration
Woreda Offices

Kebele
Administration

Kebele Administration
Executive & Judiciary
Committees

In terms of resource mobilisation, proclamation no. 33/1992 defined the sharing of

revenue between the central government and the regional governments. Accordingly,
revenues are categorised as central, state and joint (see Appendix). State governments'
tax revenue is mainly derived from personal income taxes while federal government
revenue is drawn mostly from indirect taxes. For instance, the federal government
collects about 90 percent of all indirect taxes with over 80 percent of sales taxes and 100
percent of import duties (Brosio and Gupta 1997). The tax sources which have higher
yields are concentrated in the hands of the Federal Government. One major observation
that emerges vividly is that the revenues collected by different regions cover only a small
portion of their expenditure. This will affect the competitiveness of regions since they
are dependent on external sources for financing their development.
In order to fulfil the objective of competitiveness, there is a need, on the part of local
government, to be able to mobilise all local resources and all local agents for the
achievement of a common goal. Participation, negotiation and consensus-building
therefore become integral elements of successful regional and local development
strategies. These are non-economic objectives of development. The participation of
agents and stakeholders in the development process implies the creation of institutional

Tegegne. Regional Development Planning in Ethiopia

74

sets of relations in situ. Local government as the representative institution should have
the task of convening participants in search of local consensus and cooperation (Lathrop
1997).
Some regions have put in place a structure in which local people find a way of
expressing their interest and wishes particularly in the development process of their
locality. For instance, in both Tigray and Amhara Regions, grassroots development
teams comprising people from different sectors of society (youngsters, women, and the
elderly) have been established. These development teams are accountable to subkebeles
which in turn are accountable to the kebeles. It seems that these development teams are
created to express their wishes and participate in developmental work through
contribution of resources. Hence real participation in decision making seems to be far
removed from the current planning practices. In other regions there are no grassroots
institutions which will help people participate in the planning and decision making
process.
4.2 Inter-Regional Allocation of Grants
It seems that there are two reasons for exercising inter-regional allocation of grants by
the Federal Government. The first is the inability of regions to cover their own
expenditure because of low resource mobilisation, and the second is the commitment of
the government to bring equitable development among regions. Regarding the latter, the
government has chosen a policy of inequitable resource allocation to achieve equity
among regions.
The grant system has thus become an important instrument of regional development
and has occupied a prominent position in the economic and social development of
regions. As a result, the lump sum capital budget allocated in the form of subsidy for all
National Regional States/ Administration increased from Birr 1434.04 million in 1993/94
to Birr 2324.72 million in 1997/98 with an annual average growth rate of 13 percent
while the recurrent budget increased from Birr 1845.27 million in 1993/94 to Birr
2908.64 million in 1997/98 with an annual average growth rate of 12 %. (MEDAL 1998)
The system of allocating grants among different regions uses a formula that has
equity bias in its criteria and computations. The equity bias is derived from the intention
of the government to be redistributive of the fruits of development. Population size,
levels of development and ratio of revenue to capital budgets transferred form the major
criteria in allocating resources to different regions.
Table 1 shows the total budget of regional governments, the per cent share of
federal money in regional budgets and the per capita share of federal money for the years
1994/95 to 1997/98. The table shows that except Addis Ababa, all other regions are
major recipients of federal money. The per cent share of the federal money ranged from
a low of 31 per cent in Dire Dawa to a high of 77 percent in Tigray in 1994/95. In
1977/98 the federal money ranged from a low of 60 per cent in Dire Dawa to a high of
91 per cent in Afar. There is a clear trend that both the lowest and the highest shares of
federal money are increasing which is an indication of more reliance on federal money
by all regions. Similarly, the magnitude of the per capita federal money also seems to
have increased for all regions from 1994/95 to 1977/98.

EASSRR, Vol. XVI, no. 1 January 2000

75

The table shows that Gambella is the highest per capita recipient and is followed by
Harari, Benishangul and Afar in that order. These regions, except Harari, are the most
less developed regions in the country. This indicates that the grant system has a strong
redistributive effect. It does not, however, mean that the grant system brings equity,
because there are other variables which enter in to the picture, affecting the extent of
equity regions may attain. First, extra-budgetary allocations from donors may distort the
picture and those regions which may have the lowest per capita grant system may have
other sources of income, masking the differences in the Federal grant allocations.
Second, equity cannot be ascertained only by looking at the per capita figure or the total
sum of federal grant. Internal redistribution of benefits and access to benefits will
influence the extent to which people in the region enjoy equally the fruits of
development.

Table 1. Regional Government Budget in Million Birr (1996/79), Percentage of Federal Money and Per Capita Share of Federal Money
1994/95

1995/96

Grand
Federal
Percapita
total money as share of fed
% of total
money

Tigray
Afar
Amhara
Oromiya
Somali
BenishanguUGumuz
SNNp
Gambella
Harari
Addis Ababa
Dire Dawa

327.8
141.8
741.4
1039.6
165.3
106.6
608.0
90.2
40.7
109.7
36.5

76.8
73.1
71.6
62.6
57.1
70.5
72.9
76.3
72.5
0.0
31.2

Source: MEDAC, 1998, unpublished report.

1996/97

1997/98

Grand
total

Federal
money as
% of total

Percapita
share of
Federal
money

Grand
total

Federal
money as
% of total

Percapita
share of
fed money

Grand
total

Federal
money as
% of total

80.32 328.5
97.8 142.1
38.3 813.7
34.7 1079.0
29.5 165.7
163.47 106.8
42.75 650.5
380.7
90.2
225.2
40.7
- 106.8
45.4
36.6

73.9
75.1
71.7
61.7
61.8
69.2
73.4
74.9
77.4
0.0
35.2

75.77
98.98
41.3
34.55
31.54
157.2
44.92
365.4
233.3
0.0
49.8

384.3
166.4
956.0
1267.7
194.6
121.5
764.8
101.7
46.7
120.6
42.8

68.0
82.0
75.8
65.2
64.0
84.4
68.6
82.5
82.2
0.0
33.6

79.3
123.4
49.2
43.6
37.4
212.4
47.7
441.6
276.3
0.0
53.1

379.8
249.6
951.6
1253.6
375.3
180.2
788.4
138.9
88.4
55.0
53.5

67.3
90.5
76.2
65.9
75.2
89.4
70.3
90.8
87.1
0.0
59.8

Per
capita
share of
Federal
money
75.3
199.3
48.4
40.5
82.5
325.7
48.7
646.7
531.0
0.0
113.5

4.3 Inducement of Private Sector Participation

The recognition of the limited capacity of the state to lead and run development activities
has forced nations to adopt a market oriented system in which the private sector occupies
a key position in the overall development process. Privatisation is a new policy
environment Ethiopia is currently following. The private sector is considered a major
force to implement the economic strategy of the country. The government is expected to
create favourable conditions for encouraging and strengthening private capital. Private
investors are expected to promote and enhance their participation in development by
establishing business ventures in the various regions, taking advantage of the enabling
environment (MOPED 1993). Private capital is expected to go to regions designated as
priority regions by the government and to widely participate in the economic
development of the country. Regions, in turn, are expected to cultivate and attract private
investors in their effort to develop their own economies. The role of the private sector in
regional development is an emerging issue that requires appropriate policy and strategy.
The privatisation process requires a new role for central and regional governments and
poses a challenge in properly developing and guiding the private sector.
The inducement of private sector participation is done through investment policy.
The government has promulgated a national investment policy, the purpose of which was
to attract and guide the distribution of investment. With regard to attracting investment,
the policy provides different encouragement (incentives) based on capital and sectoral
priorities. The incentive types are exemption from customs import duty, income tax
holiday, R & D incentives, remittance of capital, losses carried forward, etc.
Sectors are distinguished as pioneer, and, promoted, activities. Pioneer activities
receive tax exemptions ranging from 3-5 years while promoted activities receive tax
exemption from 1-3 years. Full, or 100% exemption from the payment of import customs
duties and other taxes levied on imports, is granted to all investment capital goods, such
as plant, machinery equipment, etc., as well as spare parts worth up to 15 % of the value
of the imported investment capital goods, if the goods are neither produced nor available
locally.
In response to this policy, 3520 private investment projects with an estimated
capital of 27097.6 million Birr have been approved between the periods 1992/93 and
June 1997. Out of the total approved, 732 investment projects (20.8 %) with investment
capital of 4956.7 million Birr have started production and 552 projects (15.7%) are still
under implementation (MEDAL 1998). The amount of investment attracted so far is far
below expectations and this triggers an examination into the problems and constraints of
investment attraction in the country.
With regard to guiding the distribution of investment, the policy indicates that its
objectives are to encourage balanced development and integrated economic activity
among the regions, and to strengthen the inter-sectoral linkages of the economy (FDRE
1996a). In this regard the policy makes spatial discrimination in the provision of
incentives, particularly tax exemption. The geographical criteria are clearly spelt out in
the Investment Incentive Council of Ministers Regulation (FDRE 1996b). It is stated that

Tegegne. Regional Development Planning in Ethiopia

78

where the investment is in Addis Ababa, Nazreth or in a locality within a radius of

15 kms of the main highway connecting the two cities, the period of tax exemption
shall be for one year. Where the investment is in relatively underdeveloped regions
such as Gambella, Benishangul and Gumuz, South Omo, certain zones in Afar,
Somali and other regions to be determined by the Board the period of exemption
shall be for 3 years (FDRE 1996b)

While the above tax holidays apply to promoted activities, the tax holidays for
pioneer activities are 3 years for the city of Addis Ababa and the surroundings while for
underdeveloped regions this goes to 5 years and this is given to be 4 years for other
locations (table 2).
Table 2. Tax Holidays by Locations
Location

Type of
investment
activity

Tax holidays
(in years)

Addis Ababa, Nazreth and in locations

within 15 km of the main highway
connecting two cities
Relatively underdeveloped locations:
Benishangul and Gumuz. Gambella, South
Omo, certain zones in Afar, Somali and
other regions which will be determined by
the investment board
All other locations

Pioneer

Promoted
Pioneer

1
5

Promoted

Pioneer
Promoted

4
2

Source: Ethiopian Investment Authority, 1998.

Similarly, business enterprises that suffer losses during the tax holiday period can
carry forward such losses following the expiry of the exemption period under the
conditions stated in table 3.

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EASSRR, Vol. XVI, no. 1 January 2000

Table 3. Losses Carried forward
Location

Type of investment activity

Period of losses
forward after the
expiry of tax holiday

Addis Ababa, Nazreth and

in locations within 15 kms
of the main highway
connecting the two cities

Pioneer

Promoted

Underdeveloped locations:
Benishangul and Gumuz,
Gambella, South Omo,
certain zones of Afar,
Somali and other regions
determined by investment
board
All other locations

Pioneer

Promoted

Pioneer

Promoted

Source: Price Waterhouse Coopers, 1999.

While the above incentive policy is clearly biased towards the less developed
regions and aims to discourage development in already developed regions, the extent to
which such a policy has influenced or is adequate to attract investment towards the less
developed regions is a matter for study. In this regard the regional investment
distribution after July 4, 1996, the date of issuing the regulations, shows that the
incentive policy could not achieve its stated goal of attracting investment to the less
developed regions.
Table 4 shows that the relatively well developed regions of Oromiya, Addis Ababa,
Tigray and Amhara lead the investment attraction. Benishangul and Afar still trail in
investment distribution as they did prior to July 4, 1996 (see table 4). This perhaps
indicates that the provision of incentives alone in the form of tax holidays is not adequate
to influence the regional patterns of development. The use of incentives to entice firm
locations in not feasible unless there are real comparative advantages in terms of natural
resources, unique locations, special skills, etc. (Kaothien and Webster 1999).
In addition to the national investment policy, regional governments have developed
institutional structures for the administration of investment and have provided some
proclamations regarding the use of rural and urban land for investment purposes.

Tegegne. Regional Development Planning in Ethiopia

80

Table 4. Private Investment in Regional States/ Administrations,

1992/93-1995/96 (in Million Birr)

Projects
expenditure
on
production

Approved projects
Region

1992/93

Tigray

1121.83
(12)
44.52
(1)
32.97
(22)
113.59
(43)
102.00
(1)
-

Afar
Amhara
Oromiya
Somali
Benishangul
& Gumuz
SNNP
Gambella
Harari
Region 14
Dire Dawa
Total

34.26
(9)
18.95
(1)
2468.57
(459)
3.28
(1)
3940
(549)

1993/94 1994/95
313.19
(24)
500.80
(13)
198.16
(32)
364.19
(101)
-

1329.20
(148)
320.23
(21)
190.43
(73)
563.06
(150)
-

34.01
(1)
249.68
(20)
2.39
(1)
72.75
(2)
2166.14
(360)
11.67
(3)
3913
(557)

44.46
(5)
227.77
(46)
0.29
(1)
209.16
(40)
1818.80
(199)
8.86
(8)
4712.3
(691)

1995/96

1996/97

Total

1992-97

386.87
(146)
229.67
(29)
825.91
(123)
1493.36
(276)
6.64
(4)
195.45
(21)
334.56
(76)
4.37
(3)
52.52
(21)
3342.67
(220)
36.79
(12)
6908.8
(931)

174.47
(19)
-

3325.56
(349)
1095.22
(64)
3714.90
(312)
3523.45
(774)
127.83
(10)
362.28
(37)
1351.28
(312)
28.36
(8)
364.25
(88)
13062.1
6(1515)
142.29
(51)
27097.6
(3520)

2076.56
(251)
564.07
(8)
352.81
(93)
613.07
(143)
-

2467.43
(62)
989.25
(204)
19.19
(5)
88.36
(10)
505.01
(161)
2.36
(2)
29.82
(25)
3265.98
(277)
81.69
(27)
7623.6
(792)

159.94
(18)
264.49
(91)
22.16
(4)
1.45
(1)
896.67
(121)
5.51
(2)
4956.73
(732)

Source: MEDAL, 1998.

Note: Numbers in parentheses are number of projects.

The regional performance and distribution of investment, however, does not

corroborate the intention provided by the regional investment proclamation. The
participation of private investors is far below expectations (The Regional State of
Oromiya 1995). This obviously indicates that neither the regional investment policy nor
the incentive system are adequate to lure investors. There may, however, be
administrative and other problems which preclude the attraction of investment to regions.

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EASSRR, Vol. XVI, no. 1 January 2000

4.4 Special Area Programmes

The kind of regional development practised in some countries has focused on special
area programmes such as less developed areas, tribal areas, etc. The purpose of such
special area programmes is to alleviate the particular problems these regions might be
facing.
In Ethiopia some regions have been seriously affected in-the past by drought and
war. Schools, hospitals, clinics, bridges, airports, buildings have been destroyed in the
course of a protracted war. The Ethiopian Social Rehabilitation Fund (ESRF) was
established in December 1992 to reconstruct the country's war torn and neglected
infrastructure and re-establish social services (ESRF 1995). ESRF aims at helping the
target groups who are demobilised soldiers, returning refugees, internally displaced
people, women heads of household, disabled people, orphans and street children. ESRF
started its operation in three pilot regions namely: Addis Ababa, Tigray and Hossaina
and with 10 % of its fund going to non-pilot regions (ESRF 1995). These regions were
selected on the basis of their special problems. Tigray is a food deficit region and is one
of the war torn areas where infrastructure and facilities have been destroyed. Addis
Ababa, the capital city, has suffered from population increase as many displaced people
have put a strain on the infrastructure and services while Welaita, which is one of the
highly populated regions of Ethiopia, has a very high concentration of the target groups.
The ESRF assists demand driven and community based micro projects. Those eligible
for funding are productive and income generating projects, social infrastructure and
social assistance projects, and economic infrastructure projects. By June 30, 1995 ESRF
had committed Birr 54,410,372 to finance 217 micro projects in different regions out of a
total of 1024 microprojects submitted for funding (see table 5).
Table 5. Geographic Distribution of Submitted and Approved Microprojects and ESRF Commitment by June 30, 1995
Region

Addis Ababa
Tigray
Hossaina .
Non-pilot
Total

Projects
submitted

On-going
projects

ESRF commitment

293
192
365
174
1024

71
61
56
29
217

16,428,090
17,335,285
16,841,777
3, 805,220
54,410,372

Source: ESRF, 1995.

Microprojects are submitted by community beneficiaries, local administration, and
local and international NGOs. Community beneficiaries involve village, kebele, peasant,
women, and youth associations, while local administrations involve woreda, zonal or
regional administrations and regional government technical bureaux. The highest number
of micro projects were submitted by local administrations. In its expanded phase, the

Tegegne. Regional Development Planning in Ethiopia

82

fund has spread to all regions of the country under the name ESRDF (Ethiopian
Rehabilitation and Development Fund) to finance projects on education, health and
sanitation, small scale irrigation, rural water supply, micro finance, training and capacity
building (ESRF 1995). In this expanded phase ESRDF is accepted as one of the poverty
reducing strategies, the target people being mainly poor rural communities with special
focus on women. It also attempts to give focus and special assistance to regions with
weaker institutional capacity such as Afar, Somali, Benishangul and Gambella (ESRF
1996).
From the above discussion we can observe that ESRDF has expanded its objective
from assisting special target groups to overall poverty reduction. To the extent that
poverty has a regional dimension and is more pronounced in some regions, the program
can be thought to have a regional component. The explicit regional component, however,
has diminished from the pilot phase which started with a strong regional component. The
activities of ESRDF, however, need to be integrated with regional government activities
so that they contribute or become part of the overall regional development strategies.
4.5 River Basin Planning
River basin planning is a resource development strategy which involves the physical
development of water resources. River basin planning has a strong regional development
component in that it is expected to stimulate economic growth within the region (Le
Marquand 1989). River basin development stimulates regional development first, as the
money spent on physical development and its multiplier, increase income in the region.
Secondly, new forms of economic activity such as irrigation, fishing, new business and
industry will be attracted to the region to take advantage of the opportunities created by
the project (Le Marquand 1989).
In the past, Ethiopia had followed a strategy of river basin planning by developing
the Awash Valley. It was noted that the development of the Awash Valley is more of a
national than a regional project. At present the government has placed great emphasis on
river basin development and has commissioned master plan studies of major rivers of the
country such as the Abbay, Tekeze, Omo-Ghibe, Baro-Akobo, Genale and Wabisheble
rivers. The master plans which indicate the development plans of these basins are
completed. The key reasons for the continuation and intensive use of the river basins in
Ethiopia are the different types of demand for water resources. Ethiopia has a huge
demand for irrigation, hydropower, livestock, industry and drinking water etc. According
to one study, the irrigation water demand in Ethiopia is in the order of 40 billion m3 of
water while the domestic hydro demand is estimated at about 23, 700 Gwh/year and the
export hydro demand is 70,000 Gwh/year (Zewdie 1994). This is estimated to require
about 76 billion m3 of regulated water discharge. Similarly the livestock water demand is
estimated to increase from about 230 million m3 in 1990 to 700 million m3 by the year
2040 and the industrial water demand is also expected to increase from 100 million m3 in
1990 to 28, 600 million m3 in 2040 when full industrialisation is achieved (Zewdie
1994). The drinking water demand in both urban and rural areas is enormous. All this
indicates that there is a demand for utilising the water resources of the country which is
one of the prerequisites for developing river basins (Le Marquand 1989).

EASSRR, Vol. XVI, no. 1 January 2000

83

There are, however, a number of issues which surround the use of river basin
planning as a regional policy in Ethiopia. First of all, these rivers, unlike the Awash
River, have an international dimension in that they cross the boundary of the country and
flow to neighbouring countries. The extent to which Ethiopia can use these rivers
unilaterally in strategies of her own choice is a matter for further resolution. Secondly
these rivers are shared by two or more regional governments within the country. For
instance the Omo-Ghibe river basin is shared by the Oromiya and SNNP regions and the
Baro Akobo river basin by Gambella, Oromiya, Benishangul Gumuz and SNNP. Hence
inter-regional co-operation must first be fostered in terms of developing these river
basins. The fact that the constitution does not have any provision for inter-regional
co-operation requires that the regions need to design mechanisms and ways of
developing such resources together. Where separate commissions or institutions are
established, these should be supra regional in their authority. Thirdly, in many cases river
basin development involves resettlement as the development process involves social
dislocation from the previous places or the occupation of virgin areas. For example,
pastoraiists in the Awash Valley were displaced to make way for huge commercial
farms. The issues of resettlement in an ethnic based federal country will be different
from those of a unitary government. In the former, resettlements may cause
inconvenience and potential conflicts among the settlers as it involves mixing different
ethnic groups. Fourthly it remains to be seen whether the master plans adopt appropriate
technology which minimises the environmental impacts and the social dislocation of
people from the project area. Lastly it also remains to be seen whether these river basins
can be regional projects in that they foster regional development wherever they are
physically found, instead of being a national project aimed at maximising HEP and
Irrigation for national growth.
4.6 Regional Capacity Building
The process of regionalisation and a decentralised planning system entail the creation of
machinery that has to provide the necessary human resources and logistical support.
Ethiopia having no a priori experience in decentralisation programs was faced with
problems of capacity in human resources, materials and equipment. Some of the
problems observed to be true in all regions are: weak administrative capacity, shortage of
technical experts, weak institutionalisation of regional administration, poor logistical
supply.
In terms of administrative capacity, regions lack the trained, skilled, experienced
and qualified manpower needed to carry out regional administration. The problems are
more severe in some regions than others. Regions such as Afar, Somali, and Benishangul
where, during previous regimes, there had not been a base to establish trained manpower
are the ones most seriously affected. The consequence of weak administrative capacity is
poor implementation of development activities and budgets.
The problem of technical expertise in different development fields is also a major
problem of all regions. The regional distribution of trained manpower by level of
education ranging from Diploma to Ph.D. shows that in 1996 there were only 37,438
professionals excluding the Afar region and the figure was 49,402 in 1997.

Tegegne. Regional Development Planning in Ethiopia

84

The regional distribution shows that some regions such as SNP, Amhara and
Oromiya have the highest share of professionals. These regions account for 75 and 76
percent of the professionals in 1996 and 1997, respectively (see tables 6 and 7).
Table 6. Regional Distribution of Professional Civil Servants by Level of Education 1996
Region

Tigray
Afar
Amahara
Oromiya
Somali
Benishangul .
& Gumuz
SNNPR
Gambella
Harari
Addis Ababa
Dire Dawa
Total

Diploma

B.ABSc.

M.D

D.V.M

M.A/M.Sc.

Ph.D.

Total

1638
NA
6607
7957
NA
206

565
NA
2459
2795
NA
30

78
NA
273
282
NA
30

22
NA
114
117
NA
3

69
NA
346
474
NA
-

NA
3
17
NA
-

2372
9802
11462
333

4890
145
325
3090
220
25078

1
43
155
29
891

1
43
155
29
364

83
5
1
9
10
364

288
16
10
151
5
1359

175
1
1
6
204

6964
271
527
5138
388
37,438

Source: MEDAC, 1998.

Table 7. Regional Civil Servants (professionals) Distribution by Level of Education, 1997

Region
Tigray
Afar
Amhara
Oromiya
Somali
Benishangul
Gumuz
SNNPR
Gambella
Harari
Addis Ababa
Dire Dawa
Total

Diploma

B.AB.Sc.

M.D

D.V.M

M.A/M.Sc.

Ph.D.

Total

1638
NA
7385
10499
NA
& 341

565
NA
2440
2850
NA
108

78
NA
732
341
NA
52

22
NA
123
146
NA
5

69
NA
357
485
NA
14

NA
6
8
NA
1

2372
11043
14329
521

8775
384
490
5127
441
35080

2695
50
169
1625
125
10627

230
15
40
120
27
1635

85
6
1
8
10
406

489
15
11
167
17
1624

7
1
1
6
30

12281
471
712
7053
620
49402

Source: MEDAC, 1998.

EASSRR, Vol. XVI, no. 1 January 2000

85

The government has made some efforts to enhance regional capacity. One of the
activities undertaken was the redeployment of civil servants and technical experts from
the centre to regions. For example in 1994/95, 679 skilled professionals from 16 sectoral
ministries and offices of the Central Government were deployed to different
National/Regional states (MEDAL 1998). There have also been training programs for
executive committee members and regional bureau and department heads in areas of
policy analysis, development planing, public finance, project management, etc. Similarly
several workshops and study tours have been organised for different experts in various
fields.
Of more far-reaching impact, however, was the establishment of the Ethiopian Civil
Service College whose purpose is training civil servants from regions at degree level.
Since its foundation in 1995, the college has provided short term and degree level
training in various fields. The Ethiopian Management Institute has also provided training
ranging from three to thirty days for many trainees serving in various bureaux and
organisations of the regions (MEDAL 1998).
In regional human capacity building one of the crucial issues beside enhancing the
capacity of regions, is the consideration that needs to be given to the prevailing
remuneration systems. Under the present civil law, all government workers of the same
profession in different regions receive the same remuneration except in the extreme cases
of arid and desert areas where some allowances are given. Since locations have different
advantages in terms of the facilities they support and by implication their liveability,
professionals will not be attracted to the poorer regions. Under such circumstances,
remuneration incentives that lure professionals to the poorer regions should be given
adequate attention.
A similar consideration on skilled professionals is the extent of demand posed by
different local authorities. In places where there are many authorities the demand for
professionals will be high. It is quite possible to manage the demand situation by
reducing the number of local authorities to fewer but bigger regions.
4.7 Non-State Centred Development
The increase in political and social freedom in Ethiopia has given rise to the (re)
emergence of civil societies such as NGOs and Community Based Organisations
(CBOs).
The emergence of NGOs in Ethiopia was mostly in response to the critical needs of
the famine during 1972/73 and 1983/84 (Adey 1998). At those times the sole objectives
of NGOs were relief assistance and life saving. The NGOs gradually shifted to
developmental activity as the emergency situation subsided. As a result NGOs in
Ethiopia are involved in a number of development projects assumed to take place at
grassroots level with the participation of the rural people (Tegegne 1994).
The government requires that both indigenous and international NGOs register with
the Ministry of Justice, and the Disaster Prevention and Preparedness Commission. The
NGOs are, to the extent possible, made to work closely with sector offices and
departments in various regions, zones and weredas. For all intents and purposes the

Tegegne. Regional Development Planning in Ethiopia

86

co-operation of NGOs with government authorities, however, does not go beyond

providing information on NGO activities. NGOs are not made part of the planning and
programming process in the various regions and zones of the country. In this regard it is
important to recognise the gap filling role they play in development activities and their
integration with government activities needs to be seriously considered.
The major type of CBOs that have recently flourished in Ethiopia are the
Development Associations (DAs). These Associations are locality/ethnically based and
are established with the objective of contributing to the social, economic and physical
development of the home area. The well-known Development Associations at the
regional level are the Tigray Development Associations (TDA) in Tigray region. The
Amhara Development Associations (ADA) in the Amhara region, the Oromo
Development Associations (ODA) in the Oromiya region and the Southern Ethiopia
Peoples Development Associations (SEPDA) in the Southern Nations, Nationalities and
Peoples Region (SNNPR). Some Development Associations play a co-ordinating role.
For instance SEPDA co-ordinates nineteen Development Association found at zonal and
wereda levels in the region.
Development Associations have emerged in response to perceived opportunities of
wider public participation in development after the fall of the previous government
(Poescheke et al. 1997). Development Associations are supported by governments and
have legal personality as they are established on the basis of a proclamation to form
associations.
The major preoccupation of most Development Associations is the provision of
social and economic infrastructure for their home area. Hence engagements in the
construction of schools, clinics, rural roads and water supply form the major share of
their activities. Some Development Associations, however, are engaged in other
activities such as income generating rehabilitation of displaced persons, irrigation works,
and soil and water conservation.
Development Associations rely on several sources of funds to support their
activities. Members' contributions, fund raising campaigns, financial assistance by
regional and local government and international donors are the main sources. Some
Development Associations like those in the Southern region impose levies such as road
tax, tax on cross border trade etc., even if they are not entitled to collect taxes by the
regional government (Poescheke et al. 1997).
The Development Associations movement has taken place throughout the country
and they represent a significant force in regional and local development. This is mainly
due to their potential in mobilising communities at wereda and zonal level, and
facilitating the participation of individuals and institutions interested in regional and
local development. Development associations, however, face some problems mainly due
to their lack of experience and capacity. Some Development Association studied in the
Southern Ethiopia mentioned lack of capacity to define and design projects, lack of clear
objectives and priorities, limited implementation capacity, problems to include non-elite
and non-intellectual members in the leadership, lack of management guidelines for
financial issues as the major problems they are facing (Poescheke et al. 1997). Similarly,

EASSRR, Vol. XVI, no. 1 January 2000

87

Development Associations are not made part of the regional planning and policy-making
processes due to absence of institutional mechanisms.
The non-state centred development efforts being undertaken in various regions and
zones need to be integrated with the state initiatives and policy. These development
agents also need to be encouraged by creating an enabling environment in the legal,
economic and social spheres.

5. PROSPECTS AND FUTURE ORIENTATION OF REGIONAL

DEVELOPMENT
The prospects of regional policy in Ethiopia should be seen from the perspective of the
system of government it has adopted, the policies it follows and the institutional structure
in place in the last seven years.
The federal system of government in Ethiopia has created regional governments
which have constitutional rights to elect their own local governments. The country has
also opted for a decentralised institutional structure that will empower local
governments. In addition to political decentralisation, the Ethiopian government has
clearly articulated the concept, 'regional',3 to be one that is based on ethnicity4 and is
incorporated in the constitution. The Five-Year Peace, Democracy and Development
Programme asserts that attaining regional equity by assisting less developed regions is
one of the main aims of the country.
Regional development is thus seen as an indispensable form of development which
the country must follow. The constitutionally elected regional governments with their
power to administer, plan and execute development plans will more than ever demand
regional policy and regional planning. Though decentralisation cannot be equated with
regional policy, it is quite true that through decentralisation one can address problems at
the regional and local level in a more effective way (Dusseldorp 1997). This is because
decentralisation allows participation of the local people, the generation of locally
relevant plans and achievement of horizontal co-ordination. Hence the institutional
structure facilitates a particular type of regional policy, namely a bottom up approach.
Similarly the articulation of the concept regional indicates that regional planning should
be defined territorially.
The future orientation and nature of regional policy should be based on the macro
economic model the country is following and on the present regional policy adopted as
guiding the nation's effort. In this regard we can assume that the present trend of
development will continue. The macro economic model is characterised by
de-regulation, liberalisation, promotion of private investment, export led growth, and
rural centred strategy. All this indicates that the type of regional policy that may be
needed should be one which strengthens and goes hand in hand with such policies.
Deregulation, liberalisation and promotion of private investment reduce the role of
the state and advocates a greater role for market forces in shaping the development of the
country. As we know, regional policy is conventionally understood to mean a sponsoring
of activities by the state and less reliance on market forces. It is, however, becoming

Tegegne. Regional Development Planning in Ethiopia

88

increasingly clear that regional policy can operate within the market environment and
assist market forces as well. Gary (1992) indicates that market based regional
development policy prioritises government investment based on the ability of that
investment to facilitate, expand and improve the functioning of the market system.
Regional policy should thus induce and stimulate private capital to play a key role in
regional development. It should help regions to become competitive.
The other aspect of the macro economic model is export-led growth strategy. As
such, regional planning should facilitate export production. Thus regional policy should
alleviate supply constraints or study the demand structure in order to assist exporting
regions. The need to design transport, infrastructural, and social support systems to
produce exports and increase the flow of natural resources to world markets should be
considered as one orientation of regional policy consistent with export-led growth
(Gilbert 1997).
Rural centred strategy is another major policy reality that should guide this type of
regional policy. Regional policy should be able to assist the development of rural areas
or bring rural regional development. In this regard small service centre development,
market town development, and regional agricultural development should be fostered.
A continuation and further strengthening of the decentralised system is another
political reality, which regional policy should take into account. It could be expected that
with more experience and deepening of decentralisation, emphasis should be on local
level development. Hence policies which promote local development should be given the
utmost attention.
The current concern to attain regional equality will also shape the future regional
policy as it does at present. The provision of technical and financial assistance to achieve
equity should continue, but not in a manner that discourages self-development.
6. CONCLUSION
Ethiopia is a country marked by regional diversity in resource endowment, population
distribution, levels of development, and participation. Under such circumstances a
regional approach plays a key role in bringing development. Thus regional policy should
be at the centre of the overall policy of the country. The fact that the prospects of
regional policy are bright will also necessitate the articulation of a proper regional policy
in the country.
The past regional policy was not capable of addressing real regional problems as it
was oriented more towards national development and also originated from above. From
this perspective the policy has a high(er) touch of the functionalist regional development
paradigm. Mainstreaming and integrating the different regional economies with the aim
of contributing to the national development was predominant.
The current regional policy initiatives attempt to cover wider areas ranging from
inter-regional to intra-regional development practices. Efforts to attain equity through the
allocation of grants and regional capacity building, the commitment to develop natural
resources particularly water resources, policies aimed at attracting and distributing

EASSRR, Vol. XVI, no. 1 January 2000

89

investment and establishing a decentralised system are all elements of the current
initiatives by the Government. Non-Government initiatives by NGOs and Development
Associations are also unfolding in the country.
From the theoretical perspective the current initiatives seem to embrace elements
both of the functionalist and the territorialist approaches. All the inter-regional planning
efforts are aimed more at integrating and contributing to national development while the
intra-regional efforts seem to have a territorial touch in that attempts are made to
undertake planning from within, with a focus on the development of the region for its
own sake.
Though it is not possible to establish comparative indicators of regional growth and
development of past and present, mainly due to changes in the organisation of space and
absence of comparative quantitative indicators, regional growth and development at
present has certainly shown improvement. In terms of regional disparity, efforts of
inter-regional resource allocation and regional capacity building should reduce the
disparity, though regional disparities will still remain. The exercise in self administering
economic and social development by regions is a step forward in creating stronger
regions capable of planning and implementing regional development. The proliferation
of non-state centred regional development efforts through Development Associations and
NGOs point to a new approach in the country's regional development history and present
alternative forces in achieving the goals of regional growth and development.
Despite such improvements, there are a number of concerns that arise from the
above discussion: It is quite evident that the country does not have an integrated,
inter-regional or national regional policy that designs the achievement of balanced
regional development, that guides the distribution of investment and population. There is
also an absence of inter-regional policy to foster inter-regional co-operation among
different regions in dealing with extra regional affairs. Hence the country needs to
formulate an explicit regional policy that focuses on;
Inter-regional co-operation and complementarities among regions so as to enable
regions to exploit their comparative advantage;

Diminishing inter-regional grants and focusing more on regional resource

mobilisation; and

. Regional capacity building through human resource development, sharing of

experience and making remuneration systems attractive to professionals in poor
regions.
Though intra-regional policies should vary by region, the overall components of intraregional policies at different regions should all aim at;

Fostering regional competitiveness by designing adequate incentive systems,

coupled with the provision of infrastructure;

Developing private-public partnership in the provision of infrastructure and

development ventures;

Tegegne. Regional Development Planning in Ethiopia

Enhancing local entrepreneurship in a variety of fields including agriculture;

Implementing participation and negotiation in the real sense of the words;

Undertaking serious efforts to generate inter-sectoral plans; and

Instituting an enabling environment to facilitate the work of civil societies.

90

NOTES
1.

The earlier version of this paper was presented at the 25th Anniversary of the Institute of
Development Research held from November 26-28, 1998.

The use of the Oromiya Region for illustration purposes is because of the region's
accessibility to the author.

The concept of `region' is very elusive in that it has been articulated on the basis of several
factors: geographical, programming and planning, ethnicity, etc.

several cases, although the concept of `regions' has been negatively associated with ethnicity
and regionalism and with a group of people expressing what could be called "local
nationalism", it has also been taken as a basis of political development in other cases
(Wekwete 1997).

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EASSRR, Vol. XVI, no. 1 January 2000

Appendix
Categories of Revenue Sharing between the Federal and Regional Governments

Federal
Duties, taxes and other charges on
imports and exports
Personal income tax of employees in
federal government, international
organisations and those working in
enterprise owned by federal
government
Profits tax and sales tax from federal
government owned enterprises and
those operating across regional
boundaries
-

Taxes on national lottery prizes and

gambling
Taxes from air and marine transport
Taxes from rent of property owned
by the federal government

Charges and fees on licenses and

services of federal government;
stamp duties; and rents of federally
owned government houses and
properties
-

State

Joint
-

Personal income tax of state

government employees and
those working in enterprises
owned by states and in the
private sector
Profits tax and sales tax from the
state government owned
enterprise

Personal income tax of employees

working in enterprises owned jointly
by federal and state governments

Profits tax and sales tax of enterprises

owned jointly by federal and state
governments

Income tax, royalties and land

rents from small scale mining
enterprises
Agricultural income tax from
private and incorporated farmers
_

Profits tax, royalties and rent from

large scale mining, petroleum and gas
enterprises that are incorporated
-

Free from water transportation

within the state
Taxes from rent of property
owned by the state government
and income from private
properties within the state
Charges and fees on licenses and
service of the state government
rents on state owned houses and
properties; and fees on the use of
land.
Profits and sales taxes from
individual merchants who are
residents of the state
Forest royalties

Profits tax on corporations and tax on

dividends paid to shareholders
-