THE STATE OF ADDIS ABABA 2017

THE STATE OF ADDIS ABABA 2017 THE ADDIS ABABA WE WANT © United Nations Human Settlements Programme (UN-Habitat), 2017 All rights reserved United Nations Human Settlements Programme (UN- Habitat) PO Box 30030, Nairobi, Kenya Tel: +254 2 621 234 Fax: +254 2 624 266 www.unhabitat.org

HS Number: HS/033/17E ISBN Number (Series): 978-92-1-133397-8 ISBN Number (Volume): 978-92-1-132745-8

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Front cover photo: © Dereje /Shutterstock

DISCLAIMER The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning delimitation of its frontiers or boundaries, or regarding its economic system or degree of development. The analysis, conclusions and recommendations of the report do not necessarily reflect the views of the United Nations Human Settlements Programme, the Governing Council of the United Nations Human Settlements Programme or its Member States. THE STATE OF ADDIS ABABA 2017 THE ADDIS ABABA WE WANT FOREWORD BY UN-HABITAT

t gives me great pleasure to introduce the State of Addis recommendations for building an Addis Ababa that can serve as Ababa 2017 Report – the first of its kind to provide a an engine of prosperity, as well as a centre of cultural and social comprehensive assessment of existing socio-economic and well-being, while protecting the environment. Ienvironmental conditions in the city and to provide evidence- UN-Habitat, the leading UN programme on sustainable based policy recommendations for achieving more sustainable urbanization with more than forty years of expertise and as a pathways of development. focal point for sustainable urbanization and human settlements The report is very timely, given Ethiopia’s ongoing rapid in collaboration with other United Nations entities, is committed urbanization and the growing economic, social and spatial to support Ethiopia’s sustainable urban development process. transformations of the last two decades. Both the federal government and Addis Ababa’s city administration have made significant progress in improving economic and social conditions for residents of Addis Ababa. At the same time, challenges remain for Addis Ababa to become a more inclusive, safe, resilient and sustainable city in line with the Sustainable Development Goal 11. Notably, urbanization has caused increasing pressure on the city’s capacity for affordable and adequate housing, employment, and access to basic services, particularly for the most poor and vulnerable. Addis Ababa will also face additional challenges in facilitating access to housing and land, while ensuring that social networks are not lost, and addressing the growing desire of the citizens of Addis Ababa to participate in decision-making processes. These issues are explored in-depth in the report, which are presented in the context of the New Urban Agenda, the outcome Dr. Joan Clos document of Habitat III, and its avenues of implementation Under-Secretary General of the United Nations by local authorities. It thereby provides tangible and practical Executive Director UN-Habitat THE STATE OF ADDIS ABABA 2017 OF ADDIS ABABA THE STATE ii FOREWORD BY THE ADDIS ABABA CITY ADMINISTRATION

he African Union Agenda 2063 spells out the of Understanding between the City of Addis Ababa and UN- aspirations to be a prosperous continent, with the Habitat who have agreed to collaborate in initiatives that make means and resources to drive its own development, with the city prosperous and liveable –socially inclusive, economically Tsustainable and long-term stewardship of its resources. Structural vibrant, environmentally sustainable and well managed. transformation is a necessary condition to translate the region’s The report is a result of a commendable effort of UN-Habitat recent impressive economic growth rates into inclusive and to undertake in-depth data collection and analysis that give an sustainable development. The agenda’s realization is strongly overview of the current state of the city pertaining to spatial, linked to the way urbanization is managed, as cities are hubs of socio-economic and environmental issues. cultural and economic activities, and Africa is urbanizing rapidly, The city administration is determined to guide the growth projected to becoming predominantly urban within the next of Addis Ababa towards a more sustainable path. I trust that 20 years. this report will provide both the information and inspiration In Ethiopia, the recognition of the “urban” potential for needed to continue transforming Addis Ababa into a role model economic transformation translated into the National Urban for managing the rapid urbanization to unlock its potential for Development Policy of 2005, and further into the Second Growth structural transformation in Africa. and Transformation plan (GTP II). GTP II aims to transform Ethiopia into an industrialised middle-income country by 2025 and mainstreams the sustainable development goals (SDGs), while pursuing the strategy of fostering the governance and management of rapid urbanization to accelerate economic growth. Urban development strategies such as increased investment to improve urban infrastructure, housing development and job creation through the engaging the youth demonstrate the commitment of the city government to transform Addis Ababa THE STATE OF ADDIS ABABA 2017 as a hub of innovation, economic production, and as a culturally diverse and environmentally sustainable capital city. I am therefore pleased to introduce the State of Addis Ababa Diriba Kuma 2017 report, which has been prepared under a Memorandum Mayor of Addis Ababa

iii ACKNOWLEDGEMENTS

This report was prepared under the leadership of Dr. Mathias Spaliviero, Senior Human Settlement Officer at UN-Habitat. He was assisted by Prof. Fantu Cheru, Senior Researcher, African Studies Centre, Leiden University, and Senior Advisor to the UN-Habitat Ethiopia country office. The research team was composed of experts from social, economics, and urban environment backgrounds. The core team that undertook the research and drafted the report comprised Dr. Meseret Kassahun, Assistant Professor, School of Social Work, College of Social Science, Addis Ababa University; Dr. Belay File, Assistant Professor of Development Economics and Urban Development Expert, Department of Development Economics, Ethiopian Civil Service University; Marjan Kloosterboer, M.Sc, PhD Student at the University of Glasgow in Urban Studies; and Dr. Linda Zardo, Department of Civil, Environmental and Mechanical Engineering, University of Trento, Italy. Aklilu Fikreselassie, Habitat Programme Manager Ethiopia at UN-Habitat, played a crucial role in coordinating the research process and providing relevant contextual feedback.

UN-Habitat is grateful for the generous financial support provided by the Sweden Embassy in Ethiopia towards the field research as well as in the final production of the State of Addis Ababa 2017 report. Similarly, UN-Habitat also acknowledges the tremendous political and technical support received from the Addis Ababa City Administration throughout the process.

The report was reviewed and edited by Prof. Fantu Cheru and Dr. Joseph Maseland, Human Settlements Officer at UN-Habitat, in close coordination with Katharina Rochell, International Consultant, Regional Office for Africa, UN-Habitat, who was also responsible for proofreading and the overall coordination of the production of the report with the assistance of Jessica Mundia, Intern in the Programme Division at UN-Habitat. Marcia Guambe, Urban Planning and Mapping Analyst at UN-Habitat in Mozambique, was responsible for providing GIS support and producing maps for this report.

This study could not have been completed without the dedication and contribution of Ato Demissie Damite and Abebaw Getachew who provided statistical support. The research team is further grateful for the research assistants Milki Getachew, Serawit Umar, Bethelhem Aschalew and Saada Ali. UN-Habitat would like to thank Mr. Geo Kalev for the courtesy of providing his photographs to illustrate this report.

The report also benefitted from the contribution of experts from the City Government of Addis Ababa Renewal Agency, the Addis Ababa Bureau of Finance and Economic Development, as well as from the Ethiopian Institute of Architecture, Building Construction and City Development, the Consortium of Christian Relief & Development Associations, Cordaid, as well as the Ethiopian Cities Association.

Finally and importantly, the contribution of renewal induced relocatees and condominium housing unit owners was absolutely crucial to this report. THE STATE OF ADDIS ABABA 2017 OF ADDIS ABABA THE STATE iv CONTENTS

Executive summary...... 1 FIGURES Introduction...... 3 Figure 1: Growth rate of Addis Ababa...... 12 1 Addis Ababa’s evolution and governance structure...... 6 Figure 2: Share of the key economic sectors, Addis Ababa, 1.1 The evolution of Addis babaA until 1935...... 7 2011-2015...... 19 1.2 Urban planning in Addis Ababa...... 8 Figure 3: Sectoral composition of urban employment...... 19 1.3 Land and housing policy in Addis Ababa...... 9 Figure 4: Per capita income trends over time...... 20 1.4 Addis Ababa today: Population and Figure 5: High PCI growth scenario 2011-2025, in USD...... 21 demographic characteristics...... 11 Figure 7: Modest PCI growth scenario, 2011-2025, in USD...... 21 1.5 The governance structure of Addis Ababa...... 13 Figure 6: Low PCI growth scenario 2011-2025, in USD...... 21 Figure 8: Various PCI scenarios for the city of Addis Ababa...... 21 2 The economic role of Addis babaA ...... 16 Figure 9: Addis Ababa’s employment by major 2.1 The economic role of Addis babaA ...... 17 occupational group...... 23 2.2 Addis Ababa city productivity...... 18 Figure 10: Urban unemployment by major occupation...... 23 2.3 Labour markets...... 22 Figure 11: Addis Ababa’s major occupation out of total 2.4 Municipal finance and land value capture...... 27 employment by gender (2015)...... 23 2.5 Revenue structure and performance...... 28 Figure 12: Employed population by status in employment...... 24 2.6 Land value capture: challenges and opportunities...... 33 Figure 13: Addis Ababa's unemployment trend...... 24 2.7 Competitiveness and drivers of economic growth...... 35 Figure 14: Share of major revenue sources...... 28 2.8 Foreign direct investment...... 36 Figure 15: The share of municipal revenue during GTP period...... 30 2.9 Enabling business environment and city competitiveness...... 37 Figure 16: Addis Ababa city revenue per capita in ETB...... 30 Figure 17: Share of various expenditure components in Addis Ababa in 3 Housing to the poor...... 46 total expenditure...... 31 3.1 Urban planning, land and housing policies under the EPRDF Figure 18: Share of municipality revenue to total expenditure ...... 31 since 1991...... 47 Figure 19: Per capita expenditure in ETB...... 32 3.2 Housing affordability...... 51 Figure 20: Recurrent vs. Capital expenditure (in ETB millions)...... 32 3.3 Affordability of mortgage ...... 53 Figure 21: Proportion of MSE jobs created by major sectors, 3.4 Relocation, compensations, and the socio-economic 2011-2015 ...... 35 impacts of relocation...... 54 Figure 22: Perception of housing affordability ...... 51 3.5 Accessibility and affordability of basic services...... 60 Figure 23: Mortgage payment defaults ...... 52 3.6 The urban renewal program's socio-economic impacts on Figure 24: Main sources of housing finance ...... 54 relocatees ...... 65 Figure 25: Inner-city land expropriation by sub-city (hectare) ...... 55 Figure 26: Number of households evicted from 2009-2013 4 The urban environment...... 72 by neighbourhood ...... 55 4.1 Growth, resources and equitable well-being...... 73 Figure 27: Satisfaction on justification on relocation and 4.2 The city we want...... 78 compensation ...... 56 4.3 Strategies and policies...... 80 Figure 28: Number of households compensated ...... 57 4.4 Basic services, environment and public health...... 82 Figure 29: Water service dependability ...... 61 4.5 Towards a climate resilient Addis Ababa...... 86 Figure 30: Electric service dependability...... 61 4.6 Conclusions and future directions...... 87 Figure 31: Service satisfaction level ...... 64 Figure 32: Loss perceptions due to relocation ...... 66 5 Conclusions, recommendations and way forward: Figure 33: Prior membership in social organizations...... 68 the Addis Ababa we want...... 90 Figure 34: Formal social support extended to relocatees...... 69 5.1 Improve the urban economy and business environment...... 92 Figure 35: Land-cover Addis Ababa 1999...... 74 5.2 Improve regional planning ...... 93 Figure 36: Land-cover Addis Ababa 2014...... 74 5.3 Increase access to housing...... 94 Figure 37: Ecosystem services supply in Addis Ababa per sector ...... 75 5.4 Improve urban governance and basic services delivery...... 95 Figure 38: Total ecosystem services supply in Addis Ababa...... 76 5.5 Tackle critical environmental issues and improve Figure 39: Ecosystem services supply and demand per subcity...... 77 urban planning and design...... 96 Figure 40: Examples of new ecosystems for the city ...... 80 5.6 Conclusions...... 97 Figure 41: Inter-linkages between basic services and a clean environment ...... 83 1 THE STATE OF ADDIS ABABA 2017 T Executive summary liveability, productivity, competitiveness andsustainability. environment. It provides recommendations toenhancethecity’s delivery, accesstoaffordable housingforthepoorand theurban urbanization onitseconomicdevelopment, socialservices the report shedslightontheimpactsofAddis Ababa’s ongoing urban governance structure, systemandpractices.Specifically, economic and environmental conditions within the city’s dynamic perspective. Amore is polycentric urbansystemof the country by Addis Ababa needstobetackled from aregional planning in thecurrent governance structure ofAddis Ababa. weak stateofurbanplanningandpoorimplementation capacity mega challengesthatcannotbe solved overnight, consideringthe role ofcitizens ininfluencingpublicpolicydecisions. These are environment and quality of life; and urban governance and the accessibility and affordability the urban of basic urban services; economy andjobs;urbanrenewal andhousingthepoor; solutions forimprovement. It covers five thematicareas: urban in Addis Ababa andtoofferplausible recommendations and inmanagingtherapidpaceofurbanization and opportunities about asaresult oftherapidandunplanned urbanization. report highlightssocial,economic,andspatialchallengesbrought not beinterpreted atfacevalue thatalliswell inAddis Ababa. The being fullyrealized. Thesepositive developments should,however, making isseriouslybeingdebatedthoughprogress isfarfrom a scaleneeded;anattempttoengagecitizens more indecision- such aswaterandelectricityisimprovingservices though notat aided by federally funded mega projects; the provision of basic mushrooming; fiscalinfrastructure hasimproved dramatically, manufacturingfirms dramatic. Theeconomyisbooming;new are of Addis Ababa over the past fifteen years has been more than ensure consistency, credibility andreliability ofthefindings. comparison and triangulation by data source has been applied to and evidence-basedfindings. In the overall draftingprocess, cross- critically reviewed literature and is presented as a set of coherent c. b. a. This isbasedonextensive report research, including: At thenationallevel, therapidurbanizationprocess experienced This isthefirstofitskindthattriestocapturereport thechallenges Indeed, theeconomic,socialandspatialtransformation The quantitative and qualitative data has been integrated with

Secondary datafr Secondary administration; and Intervie urban renewal strategyand992condominiumwinners; former innercityresidents relocated ofamassive aspart inv A survey the CentralStatistical Agency(CSA). urbanization processes vis-à-vis assessment of thecity’s historical, demographic and he State ofAddis Ababa 2017report presents acritical ws with key officials from the Addis Ababa city olving 1,315individualsoutofwhich323 om citygovernment and departments its current socio- show living incondominium thatoutof1,315studyparticipants residents withincomes below thepoverty line.Survey results the housingoffered isnotaffordable tothe20%ofcity’s however, have beenrendered lesseffective thananticipatedas urban environment through slumreduction. Theseefforts, increasing thecity’s housingstockandimproving thephysical The production ofcondominiumhousing hasbeensuccessfulin affordable housingfor itslow- andmiddle-income residents. foreign investments by improving thebusinessenvironment. resource mobilization,includingattractingmore domesticand improving taxcollection,butalsoby exploringotherformsof city and moderninfrastructure, the demand forbetterservices municipal revenue overtime. decliningfurther With growing far too heavily on state revenues and grants, with the share of public expenditures. Thecity’s current publicexpenditure relies challenges inraisingthemunicipal(own) revenue tofinanceits urban economicactivity. Evidence shows that thecityfacescritical particular, thatwouldgenerateemployment opportunities. competitive inorder toattractinvestment, manufacturingin economy needstotransformsignificantlyandbecomemore rates thanthenationalaverage. It isimperative thatAddis Ababa’s Ababa, therefore, registers persistentlyhigherunemployment broad spread fordifferent ofjobopportunities skilllevels. Addis Consequently, theurbaneconomydoesnotofferasufficiently in producing broad-based inclusive sustainableeconomicgrowth. development, ithasyet todemonstratethepotentialofMSEs development through micro andsmallenterprise(MSE) government toenhancelocaleconomic hastakensignificanteffort slow thoughimproving inthepastfive years. Although thecity dominant whilethepaceofmanufacturinggrowth hasremained sectorremains the economicbaseofcapital,service the federalgovernment andthecityadministrationtodiversify experienced rapideconomicdevelopment. of Despite theefforts current primacy. attractiveness, providing valid alternatives to Addis Ababa’s the nationalterritory, withtherequired andfactorsof services investments, andtoestablishasystemofcitiesablesustain their implementation through well-coordinatedand support develop and implementnationalandregional spatialplans corridors. Bothfederal and regional governments are urgedto andinter-linkedthrough development/transportation country urban centres andpolesofattractionwell-distributed across the establishing asystemofcitiescomposeddifferent important investment, businessesandpopulationinAddis Ababa, by recommended, henceavoiding theover-concentration ofcapital The cityhasalsomadehugeinvestments insubsidisedand Addis Ababa’s revenue raising capacityneedstobettermatchthe Over the past twenty years in particular, Addis Ababa has must enhanceitsrevenue generationcapacity, notonlyby THE STATE OF ADDIS ABABA 2017 2 Although the city administration has adopted environmental environmental adopted has administration city the Although international other and Union African the of seat the as Finally, urban governance improving commitment towards The city’s pollution mitigation, run-off regulation and the provisioning of the provisioning regulation and run-offmitigation, pollution negatively This in turn triggers costs while impacting clean water. Neighbourhoods residents. Ababa Addis of the on the wellbeing the least vulnerable communities have more accommodating the ecosystem. and the benefits of an adequate areas access to green action translating these into practical policies and regulations, capacity technical and financial to due challenge a proven has institutional awareness need to create is dire constraints. There implementing for better and regulations policies on existing and climate strategies to tackle pollution, waste management, change mitigation and adaptation. is limitless. economic future Ababa’s organizations, Addis global for the capital city to become a premiere in order However, urban At present, overcome. be deficit must the governance city, and sometimes inappropriate heavily suffers from governance institutional capacity for corrupt as weak even practices as well urban as areas such critical in the case is especially This planning. land, basic urban services attack on housing. Any frontal and determined and nepotism will require corruption, rent-seeking procurement flawed of tightening the leadership, political collection, besides practices, computerization of revenue individuals of rule the of prosecution and law of enforcement in those bad practices. Corruption is one of the main involved extension, by and, environment business conducive a to deterrents flows. investment direct to attracting domestic and foreign has administration the past decade, the city is genuine. Over as well structural various and institutional reforms introduced and competence the enhance to initiatives building capacity as servicesin institutions municipal of delivery responsiveness and tape that frustrates business operators red bureaucratic to reduce as on the same as well progress measure To alike. and citizens should establish a system Ababa Addis satisfaction levels, citizens’ for annual feedback on services delivery for each sub-city of in government federal effort the by current The Ababa. Addis is very and the city much welcome, and renewal’ reform ‘deep effortsstrengthen to administration must build on these current and to enhance transparency institutional and planning capacity, of government the responsiveness and to improve accountability, These undertakings institutions to the demands of the citizenry. the space for can be successful if the city administration broadens participationcitizens in decision-making. per year. The scarce The scarce per year. 2 which has a huge impact on public health urban environment With respect to solid waste, the city administration will need respect With and the urban ecosystem in particular areas green Ababa’s Addis Likewise the existing housing strategy should be reviewed Likewise should be reviewed the existing housing strategy case of expanding basic services In to the population, the picture has been urban growth The one victim of rapid and unplanned to introduce best practices such as waste separation, compost to introduce pollution water Moreover, re-use. and recycling production, discharges from controlling and regulating needs to be tackled by could be both houses and factories. Communities themselves and river mobilised for monitoring activities to preserve the river banks. that the built show Trends desirable standards. far below remain at a speed of 4-5 km increasing are up areas as well. Air and water pollution are exceeding acceptable standards acceptable standards exceeding Air and water pollution are as well. consequences for the health of the city residents. with negative of air and water pollution include the use of The major sources for cooking and heating purposes old cars, the use of charcoal sewage as the lack of proper and dryas well waste management. While the challenge of air pollution is huge, the city needs to existing legislation rather enforcing pollution by better regulate of new than the introduction regulations. for incorporating a wider range of options beyond ownership ownership beyond for incorporating a wider range of options housing, housing of condominium housing units (i.e. rental to expand affordable etc.) and upgrading, housing cooperatives, housing finance. services Although access to health and education is mixed. has involved two sectors have since these improved increasingly challenge, huge a remains quality improving sector, private the particularly former inner-city residents in new settlements where Likewise with mobility: despite continuous been relocated. have better transportation to promote effortsby the city government first Light Rail servicesof Ethiopia’s including introduction transportation and access to efficient and affordable Train, with high transaction cost and problematic mobility remains particularly residents, to the majority of the city’s inconvenience under the urban renewal to peri-urban zones for those relocated programme. the housing, 41% are spending more than 30% of their household than 30% spending more housing, 41% are of costs, illustrating the lack of affordability income on housing compensation addition, In strategy to the poor. this (re)housing inner be unfair by found to are mechanisms and regulations into the implementation fails to take city landholders as while determining compensation. values consideration market reflect true insufficiently calculations cost Likewise,replacement and upgrading urban that here noted is constructionIt costs. wholesale on deciding before explored be to need densification as a final option. and relocation demolition, renewal green areas and poor ecosystem in the city negatively affect and poor ecosystem in the city negatively areas green 3 THE STATE OF ADDIS ABABA 2017 E Introduction annually (World Bank, 2015) the rateofurbanizationisexpectedtoaccelerateatabout 5% at 19%,low even by sub-Saharan Africanstandards. However, 2015). Thelevel ofurbanizationin Ethiopia currently stands rate of3.8%annually, isexpectedto tripleby 2037(World Bank, 4.87 to11.86millionbetween 1984and2007and,growing ata However, Ethiopia’s urbanpopulationmore thandoubledfrom statistical abstract,themajorityofEthiopians reside areas. inrural level. However, sincetheearly2000s, attention hasshiftedtowards has beenacritical factorinthecountry’s current low urbanization rural predispositionprogramme. Thishistoric towards agriculture the Agricultural Development-led Industrialization (ADLI) agriculture development undertheumbrella andrural of Ethiopia’s development policywasheavilybiasedtowards Until recently low andgiven itsvery level ofurbanisation, The physicaltransformationofAddisAbaba.©GeoKalev ▲ Agency (CSA),2014).According totheCSA's2014annual an estimatedpopulationof90million(CentralStatistics inAfrica,has thiopia, thesecond-mostpopulouscountry 1 . exchange. toenabling Thiswithaview Ethiopian cities tobetter environments andbecoming nodesofinnovation andeconomic Ethiopian cities’ economies towards providing betterbusiness demonstrate thegovernment’s commitment totransforming Expansion ofurbaninfrastructure investments inparticular have significantlycontributedtosubsequent economicgrowth. Bank, 2015). towards and,toalesserextent,manufacturing(World services sectors’ contributiontotheGDP–awayfrom agriculture the Ethiopian economy, resulting inanoticeable shiftineconomic ialization hassignificantlycontributedtorapidtransformation of (MOFEC) 2015). of (Ministry efforts Finance and Economic Cooperation and industrialisationatthecentre ofnationaldevelopment urban development policyin2005whichputsurbanization country’ statusby 2025.Thegovernment adoptedafirstnational industrialization as Ethiopia strives to achieving ‘middle-income This majorpolicyshifttowards urbanizationandindustr-

High publicinvestments ininfrastructure projects

THE STATE OF ADDIS ABABA 2017 4 ▲ 2013: Streets of Addis Ababa. © Shutterstock report consists of five sections. of five consists report 2017 Ababa Addis of State . 2 As part of the government’s ambitious plan to achieve ‘middle- to achieve plan ambitious As part government’s of the symbolic significance of the ongoing the actual and Despite This Ababa’s Addis of to analyses The second section is devoted made by discusses the challenges and the progress three Section alarming rate of Ababa’s Addis The fourthdiscusses section actionable report and presents concludes the five Section income country’ status by 2025, Addis Ababa has benefited from has benefited from Ababa Addis 2025, status by income country’ and urban renewal the past decade. Massive over huge investments its underway are the city to improve projects across redevelopment location, to tackle the huge backlog as a business competitiveness housing and basic servicein affordable delivery accelerated through As a housing programs. and public in infrastructure investment has experienced Ababa interventions,of these state Addis result domestic and economic dynamism, attracting both tremendous economic other and creation job generate that investments foreign opportunities. both the spatial and urbanization that is significantly changing empirical data is reliable Ababa, economic landscapes of Addis it is not always possible to understand and lacking. Consequently, and transformation of the growth of recent quantify the drivers and social impacts. city and their socio-economic, environmental at is aimed 2017 report Ababa of Addis State the current Hence, assessment of existing socio- comprehensive a more providing the city and what the conditions in economic and environmental opportunitiescity could do to better tap into the economic and and global levels. potentials at the national, regional of the city in the late presents the historic development The first demographic and 19th century as its current as well to the present characteristics. governance productivity the city’s critically reviewing economic characteristics by further section second The the highlights competitiveness. and to enhance challenges and opportunities capture of land value that could be measures and other promising municipal revenues, condition, including attracting fiscal the city’s pursued to improve investment. direct and better domestic and foreign both more One key housing. affordable the city administration in providing renewal city urban inner is housing strategy present of the aspect to newly-built condominium housing. of residents and relocation supported the inner city by are programs While these renewal with challenges, including has been fraught the process residents, land or replacement whether through the compensation offered, many relocatees condominium units, that has been contested by alike. and land owners While the city administration has degradation. environmental translating these guidelines and regulations, environmental adopted problematic be to shown action has strategic and practical into This section also due to lack of institutional and human capacity. with basic urban highlights the connectedness of the environment as mitigation and adaptation mechanisms as well service provision change on the wellbeing impacts of climate the negative to reduce of the inhabitants. covered. for each of the thematic areas recommendations access and exploit opportunitiesaccess and (Ministry of the global economy and Construction (MOUDCo) Housing Development, of Urban 2014)

 ADDIS ABABA’S EVOLUTION AND GOVERNANCE STRUCTURE

ddis Ababa was established in the late 19th century and in comparison to other capital cities it is relatively young. Addis Ababa has evolved from a smallA rural settlement up to the 1950s into a vibrant modern metropolis today. Much of this urban transformation began during the period of Imperial Rule but accelerated in the post-1991 era. This section discusses and reviews the planning approaches over time and under successive regimes, and how these have collectively shaped today’s socio-economic and spatial characteristics of the city.

▲ Old and new Addis Ababa. © Geo Kalev 7 THE STATE OF ADDIS ABABA 2017 1.1 I as ‘Taitu’s eramasterplan’, thatguidedcitydevelopment until an informalmasterplanledby Emperess Taitu, oftenreferrred planning practices.However, historiansbelieve thatthere existed Tufa, 2008) were believed topossesscurative powers (Pankhurst, 1961; the royal couplewasattracted totheFilowa hotspringswhich and defensive position,andancestralhistory. It isallegedthat area land,mildclimate,geographicallystrategic foritsfertile

101 Sketch ofTaitu's eramasterplan(Mahiteme,2007). ▲ allotted landindifferent partsofthecity wereresponsibleforadministering and administration wasnecessary tomaintain 1910, thepopulation ofthe citywas estimated tobe 65,000.Accordingly, acivil as the population of the city started to grow due to political and After 1896,the administration of AddisAbab of eachchiefandthenumbersubordinatesthey had. or loyalty to the king. The size of the plot is Proximity tothepalaceshows eithertherole political hierarchies, which showtherole of local chief inthe politicalsystem. during the time of Menelik. The settlements were the spatial projections of socio- organization ofthecitywashi clustered villages(Fig.1).From Taytu’ssketch, it is evident that the spatial existing socio-political set-up gave the city’s landusepatterntheappearance of conflicts betweenlandowners. This early between the settlements wasleft intentiona P Æ ¹ ¹ ‘New Flower’ inEnglish). Theemperor selectedthe Finfinne Taitu foundedtheCityofAddis Ababa (Addis Ababa means n late19 ²³ of Addis Ababa today of AddisAbaba Administrative boundary stream ²³ road

School Hospital ²³ ²³ Mule house Mule Workshop servants palace for Residence centre Commercial house Livestock Palace 0.5 ²³ ²³ ²³ ²³ ²³ ²³ ²³ Local chiefs' residential areas residential chiefs' Local Addis Ababauntil1935 The evolution of ²³ ²³ ²³ ²³ 3 th ²³ . Addis Ababa evolved organicallywithoutformal ²³ century, Emperor Menelik IIandhiswifeEmperess ²³ ²³ ²³ ²³ ²³ ²³ ²³ ²³ km ²³ Fig. 1 Earlysettlements of Addis Ababa. ²³

ghly influencedbythepolitic ²³ ²³ ²³ ²³ ²³

²³ ²³ concept of space and its utilization by the rules and regulations. Chiefs who were rules and regulations. Chiefs who were s ofthechiefinpalaceadministration also an important indicator of the power alsoanimportant indicatorofthepower ²³ ²³ the Italian occupationofEthiopia in1935(Mahiteme, 2007) capital city(Mahiteme, 2007; Tufa, 2008) proximity toeachother, ratherthanastrong centralcore and campsurrounded villagesclustered by rural inclose of amilitary organization ofthecityinitiallyreflected thetraditional layout market (Arada) andthechurch (St. Georgis). Thesocio-spatial economic and cultural nodes: the imperial palace (the Gebbi), the A multicentred settlementspawledaround three mainpolitical, lasted well intothe1960s. reign ofEmperor Menelik. Addis Ababa’s characteristics rural duringthe delivery realised inurbaninfrastructure andservice therefore, physicalimprovements notsurprisingthatfew were address theemergingurbanchallenges(Mahiteme, 2007).It was, capacity and restricted political mandate could not effectively (Giorghis &Gérard, 2007) responsible fortheday-to-daymanagementofaffairscity lly toserveasabufferzoneavoid ²³ ²³ a became more of a civil administration In 1909,amodernurbanadministrationwasestablished, ²³ ¹ ²³ ¹ ¹ ¹ ²³ al structureofthecountry ²³ 6 . However, thecity’s limitedfinancial P Æ ²³ natural factors. In ²³ ²³ 5 ²³ . ²³ . 10 4 . THE STATE OF ADDIS ABABA 2017 8 ▲ N ; Ahderom, ; Ahderom, 10 20 . While Abercombie’s plan While Abercombie’s . 9 . Many of the major roads that still criss- roads of the major . Many 7 cialist ideology, the . Proposed master plan by L. De Marien, 1965 (Mahiteme, 2007). Proposed 8 ementation of de Marien’s of de Marien’s ementation . The third master plan, prepared in 1965 by Luis de by in 1965 plan, prepared master . The third 11 The quest to modernize the City of Addis Ababa continued Addis the City of The quest to modernize Marien, a French consulting team, was based upon the visions of a French Marien, of these none 2007). However, (Mahiteme, its two predecessors andfinancial of lack due to the implemented were plans three Ababa until Addis The dilapidated condition of technical capacity. of lack of the combination of the result very is, therefore, recently plans and shortfalls spatial development in resources appropriate implementation. effective theirs plans’ for and personnel required system (Pasquiali, 2015) system (Pasquiali, in the post-Italian occupation era - the period of Imperial Rule. Rule. - the period of Imperial occupation era in the post-Italian proposed urban planners foreign 1956-1966, three During British the Ababa following Addis plans for master different by the prepared plan, master model. The first planning town proposed Abercrombie, Patrick planner Sir town famous British planned neighbourhood through city development decentralized periphery in the city’s satellite towns and six units, land zones 2013) Wubneh, 1986; (Ahderom, was based on a low estimation of population growth, the second of population growth, estimation was based on a low consultancy firm Bolton British the by master plan prepared a similar plan but based on a higher proposed & Partners Hennes (Yitbarek, 2008 projection population growth The Imperial Regime (1941-1974) Imperial The cross the city were built during the period of Italian occupation occupation the period of Italian built during were the city cross 2015) (Duroyaume, 1986) km from Addis Ababa). The objectives of of objectives The Ababa). Addis from km ewed by an Ethiopian team under the the under team Ethiopian an by ewed 8km in 1974 interrupted the impl in 1974 interrupted 4

0 Fig.7Addis Ababa's development as revised byLE. De. Marien, 1966-1974 planning Urban Ababa in Addis Low density density high field Sport airport Stream Road network Administrative zone Expansion area Green Zone zone Handcraft Industrial zone Railway

he first attempt to incorporate Ethiopia into Italy’s Italy’s Ethiopia into incorporate he first attempt to was aborted colonial territories in 1896 after overseas to Prior of Adwa. at the Battle defeated Italy Ethiopia 4

plan and eventually halted the growth of the city due to nationalization of extra housesplan and eventually halted the growth of the No. 47/1975 that prohibited private and urban land, as well as Proclamation activities. building in investment into power with a so of the Derg regime Following the coming plan for Addis Ababa was revi master C.K. Polonyi. In the revised consultancy of a Hungarian Professor urban planner, which shape linear a with development megalopolis a proposed Polonyi plan, master to Nazareth (100 extended south-eastwards to and products agricultural in self-sufficient city the make to were plan this Addis Ababa’s Master Plans during the Derg Period The change of political system redevelopment of Arada centre and Churchill Road without paying much attention to paying much Road without and Churchill redevelopment of Arada centre the rest of the city (Tesfaye 1987). Legend Fig. 7 Addis Ababa’s development as revised by LE. De. Marien, 1966-1974 1966-1974 Marien, De. by LE. as revised development Ababa’s Addis 7 Fig.

the outbreak of the Second World War, Italy occupied Ethiopia occupied Ethiopia Italy War, World of the Second the outbreak years (Pankhurst, it as a colony for five in 1935 and administered planning this shorturban western occupation, 1961). During a master attempts to prepare Two introduced. practices were Le architect made: by were Ababa Addis plan for the City of in 1938. Valle and Guidi architects Corbusier in 1936 and by rejected since was by Le Corbusier The 1936 master plan sketch could and consideration into topography city’s the take not did it 1938, the 2008). In practically (Tufa, not be applied therefore the by a master plan was inspired second attempt to prepare a plan; proposed Valle and Guidi of Le Corbusier. work previous of plan, based on the layout an orthogonalthat is, broadly street Legions. This second master camps of the Roman the overnight with residential housing development plan, in addition, proposed 2007), waste (Mahiteme, and Europeans of natives segregation constructionmanagement, road and a public transportation The Italian Occupation (1935-1941) Italian The

T 1.2 9 THE STATE OF ADDIS ABABA 2017 (Yitbarek, 2008). (Yitbarek, housing toimprove thequality of lifeurbanresidents systems, drainageandroad networks, aswell ascondominium made toimprove watersupply, sanitation andwastecollection post-1991 government. Huge publicinvestments have been and provision becamethehallmark ofthe ofmodernservices of innercityareas ofcondominiumhousing andconstruction upgrading of mud (chika) houses was prohibited. Redevelopment (Mahiteme,in thecityoutskirts 2007).In the inner-cityareas, and road housing units networks, ofnew aswell asconstruction remedial measures, such as the upgrading of deteriorated housing were deplorable.In response, theEPRDF government undertook regime, thehousingandinfrastructure conditionsofthecity the Ethiopian People’s Revolutionary Democratic Front (EPRDF) By 1994,whenthe1986masterplanwasofficiallyapproved by plan contributed to uncontrolled sprawl of the city (Tufa, 2008). 1994, by whichtimeitwasout-dated(Mahiteme, 2007). Moreover,shortages. theplanwasnotofficiallyapproved until it failedtoaddress thecity’s housing,sanitationandinfrastructure (Wubneh, 2013).Theplan,however, hadonemajorshortcoming: decentralization and toprovide forthesurrounding areas services development ofurbancentres inthecity’s topromote periphery integration ofAddis Ababa withthesurrounding regions and original idea(Mahiteme, planfocusedon 2007).Thenew Italians, covering theperiod1986-2006, wasbasedonPolonyi’s beyond thefinancialmeansofgovernment. never putintopracticesinceitwasconsidered tooambitiousand master planunderprevious regimes, themegalopolisconceptwas to strengthen linkages(Ahderom, 1986). Likethe rural-urban integrating andlinkingAddis Ababa withthesurrounding towns place forpublicgatherings;and(2)megalopolisdevelopment by areas, theredevelopment particularly ofMeskel Square as a (1)development ofAddisinterventions: Ababa’s inner-city and Housing (Wubneh, 2013).Theplanproposed twomajor plan under the direction of Urban of the Ministry Development of Ethiopian plannersandarchitects in1978toprepare amaster and in1986.The Hungarian Planner C.K. Polonyi ledateam for Addis Ababa. Two different plans were proposed in1978 of landandhousingacross urbanareas 2008). (Yitbarek, income from sub-lettingofhousestoenforce afairer distribution issued in1975andoutlawed bothprivate ownership oflandand 47 “Government Ownership of Urban Landand Extra Houses” was land wasnationalized in1974.The ‘famous’ Proclamation No. Under andurban thepopularphrase‘landtotiller’allrural The Dergue Era (1974-1991) 2013) and socialdevelopment ofthenation(Wubneh, 2013;Ejigu, declared socialismasitsmajorideologytoguidetheeconomic The failure ofthe Dergue Regime totimelyimplementamaster The 1986 master plan, developed by a team of Ethiopians and The Dergue Regime alsoattempted todevelop amasterplan The Dergue Regime replaced Imperial Rule in 1974 and 12 andtransformedEthiopia’s landownership system.

1.3 H relevant facilities. Addis Ababa shares sheltersthatare oflessqualityandwithout rental prices today, ofthepeople in asignificantproportion persists (Palen, 1974). With increasing demandandhigher in recent years by theEPRDFgovernment thehousing problem severe housingcrisisinthe1970s.Despite commendable efforts develop acoherent landandhousingpolicy, thereby creating a

than owning theirdwelling. income populationshadthesoleoptionofrental housingrather on landownership. Thiscreated asituationunderwhichlow- was predominantly controlled by theeliteswhohadmonopoly Imperial Regime Land andhousingpolicyduringthe land (UN-Habitat, 2007) the 1974socialistrevolution thatabolishedprivate ownership of most ofthelandinAddis Ababa. This practicecontinued until individuals withstrong connectionstothemonarchy controlled (Giorghison theproperty &Gérard, 2007). Groups and showing thelandsize, boundaries andthenumberofbuildings Each landholderwasrequired tobeinpossessionofatitledeed government (Palen, 1974) from the withfinancialsupport constructed United States Project whichinvolvedof911low-income delivery houses housing provision mentioningistheKolfe thatisworth Housing areas of Ethiopia lived in substandard recently. housing until very surprising that an estimated 90% of the population in urban the economicelitewhocouldafford topay. It istherefore not negligible. Theyexclusively catered forhigh-incomegroups and alleviating the housing problem of low-income populations was supply during theImperial period, theircontribution towards Ababa consisted of rental units during theImperial era,some60%ofthehousingstockinAddis resources neededtoimprove andhousing.Thus, basicservices loss ofsignificant revenue deprived thecityauthorities very tributes were never registered inthemunicipality’s databank.The than tothemunicipalgovernment. Theselandtransactions and relationship asregular tributeswere paidtothelandlord rather acquired apieceoflandfrom themresembled tenant-landlord in 1975,therelationship between thelandlords andthosewho the soledistributorsofland.Until thenationalizationofland In Addis Ababa, theonlyproject focusedonlow-income Although private real estatedevelopers were involved inhousing Feudal lords engagedinrental housingdevelopment andwere of theFeudal regime allowed private landownership. related tolandholdingpolicy. Thelandtenure system duringtheImperialousing delivery Regime wasdirectly

in Addis Ababa Land andhousingpolicy 13 16 . 15 . The Imperial Regime hadfailedto

14 , suggesting that housing supply

THE STATE OF ADDIS ABABA 2017 10 ▲ Kebele house today. © Geo Kalev © Geo house today. Kebele The Dergue Regime offered incentives to encourage develop- incentives Regime offered Dergue The of these state interventions, As a result a significant increase ment of housing cooperatives to expand the housing supply. the housing supply. to expand ment of housing cooperatives for the construction land was allocated without charge Firstly, for plot size units. The maximum dwelling of owner-occupied meters during the 1975-1986 housing was 500 square cooperative 292/1986, with the adoption of Proclamation period. However, meters. Secondly, to 250 square that ceiling has been reduced given were Cooperatives subsidized. building materials were retail priority access to construction government materials from was less than 65% of enterprises at a cost which, on the average, mortgage the Construction from loans Thirdly, value. the market with households made to cooperatives were Bank and Business market earning at least ETB 250 per month substantially below rates. interest 1986 to 2007). From (Tesfaye, in housing supply was recorded alone, nearly 60,000 households were Ababa 1992, in Addis between and homes own to build their in cooperatives organized 40,539 housing units (UN-Habitat, 1975 and 1992 produced significant unfulfilled these efforts,2011). Despite however, housing persists until today as demand demand for affordable outstrips the supply. . 17 . According . According 18 The Dergue Regime, in line with its socialist ideology, took Regime, in line with its socialist ideology, Dergue The The Dergue Regime introduced new delivery housing introduced Regime systems Dergue The the decision to distribute urban land and housing equitably to introduced it objective this achieve To inhabitants. city’s the Agency for was the associations. The first two types of housing for (AARH) responsible Houses of Rental the Administration housing with a rental the administration of government-owned ETB 100. The second housing delivery fee above monthly rental Kebele by administered Housing, Rental system was the Kebele association) and fetching a (urban dwellers Administration of less than ETB 100 (Yitbarek, 2008) monthly rent and abolished private sector rental or real estate development estate development or real sector rental and abolished private The nationalization of land and private the country. throughout in a significant loss of income to former property resulted never were house owners 2013). Moreover, (Ejigu, landlords compensated for their loss of land or housing. This situation wages and salaries in was further froze as the Dergue exacerbated of power result, the purchasing 1974 despite rising inflation. As a 1985) & Jacob, households steadily declined (Kebbede Land and housing policy during the Dergue the Dergue Land and housing policy during Period controlled 93.87% (142,095 units) (2007) the kebeles controlled Tesfaye to housing stock of 151,372 in owned of the total government Ababa. Addis 11 THE STATE OF ADDIS ABABA 2017 1.4 Urban populationdemographics expected totripleby 2037(World Bank, 2015) population growth of4.89%. Ethiopia’s urbanpopulationis urban areas. This number is rising fast due to an annual urban

1889 (See Table 1). have provided estimatedpopulationnumbersforthecitysince data wasobtainedonlyin1961.However, several researchers Ababa’s populationtrends sinceitsestablishment.Thefirstcensus reach 4.7millioninhabitantsby 2030. experiencing anannualgrowth rateof3.8%andisestimatedto of Ethiopia’s totalurbanpopulation. Currently, Addis Ababa is hosts anestimated3.238millionpeople,whichisa17%share A Condominium housingconstructed inresponsetohousingdemand.© GeoKalev ▲ There isno reliable comprehensive statisticaldatatoshow Addis total population19.5%(17.5millionpeople)live in total populationisabout90millionpeople.Of the ccording totheCSAJuly 2015estimate,Ethiopia’s

charact Population anddemogr Addis Ababatoday: eristics 19 . Addis Ababa aphic (Source: AddisAbabaCityGovernment(2002),CSA(2012),Mahiteme(2007),Palen (1974)) (IN THOUSANDS, 1889-2016) TABLE 1: Year 2010 2007 1994 1984 1979 1967 1961 1960s 1935 1930s 1910 1889 ADDIS ABABAESTIMATED POPULATION (Estimated) population 3.3 million 2.7 million 2.11 million 1.42 million 1.27 million 683,530 455,490 300,000 –400,000 140,000 80,000 65,000 15,000 THE STATE OF ADDIS ABABA 2017 12 ▲ Public sanitation facility. © Geo Kalev sanitation facility. Public . 22 This population growth will put further and continued This population growth on its way to building the is well Ethiopia Fortunately, economic growth, the urban poverty incidence is on the rise the urban poverty economic growth, 2014) (UNEP, challenges and pressure on the city administration to provide provide to administration city the on pressure and challenges basic efficient and affordable services and housing in sufficient a doubling of the city capacity do so would require To quantities. implementation, in urban planning, management and effective would It the top. leadership from political supported strong by decisions to enhance prioritization of key investment also require that of the city and attract investment the competitiveness population. job opportunities for its growing generates more impacts; both on the catastrophic to plan ahead may have Failure of its citizens. economy and on the welfare for kick-startingfoundations basic policy and institutional an industrialization path that could lead to structural transformation The development. inclusive more of its economy and towards be would Ababa Addis administration of the city for priority heavily in infrastructure investing gains by to build on recent the and to continue strengthening drivers and other key growth of key municipal institutions responsiveness and effectiveness essential servicesthat deliver to the population and the (potential) business community.

. 2007-2013 . Growth rate 1994-2007 natural increase only increase natural 21 . 1984-1994 . data, the Addis Ababa population Ababa Addis the data, 1978-1984 20 . 1962-1978 . 1961-1962

4 2 6 8 0

10 Pecentae 1, an estimated 15,000 permanent Table in As shown Ababa in Addis of the significant population growth Despite rate has this annual growth however, years recent more In Between 1995 and 2000, 58% of the average growth of the of growth average the of 58% 2000, 1995 and Between

residents were believed to live in Addis Ababa around the time around Ababa Addis in to live believed were residents population argues that the city’s of establishment in 1889. Palen the Italian to 80,000 just before 1910 and grew had tripled by nearly doubled to occupation in the 1940s when this number the early than doubled again by had more 140,000 people. It 2007). 300,000 people (Mahiteme, 1960s to approximately censuses (1961, 1967, 1984, official population Furthermore, quickly, grew Ababa that the population of Addis 1994) showed the past in 1994. In accumulating to a total of 2.11 million and Ababa has decelerated in Addis two decades urban growth (2013) CSA to according stands at 3,195,000. now declined from rate has absolute terms, the population growth the the 1961-1962 period, to 3.5% over 6.9% annually over 2007-2013. The periods 1978-1984 period, to 2.1% annually in the Regime, Dergue 1978-1984 and 1984-1994 saw the from the to ruralof out people areas drove that 1984 in drought severe in 1991 government as a change in the change in cities, as well an amidst rates growth high relatively still on effects had which the 1990s and rates. Since of decelerating growth trend overall (see Figure Ababa in Addis down has slowed 2000s urban growth 1). This can also be explained in terms of the federal system cities and the deliberate that encouraged the emerging regional the rise in living cost, Furthermore, towns. of regional promotion and shortage of infrastructure the housing crisis, unemployment migration discouraging seemed to be and servicesAbaba Addis in 2013). to the capital city (Wubneh, population growth current Ababa’s Addis accelerated. The city of World the the CSA and 3.8% by rate is estimated at 3.0% by fertility steadily declined in Addis rates have (2015). Since Bank and Economic due to family planning campaigns (Finance Ababa 2009) (FEDB), Bureau Development contributes modestly to current city’s population growth. Rather, Rather, population growth. city’s contributes modestly to current the significantly contributing rural-to-urban is now migration population growth. factor to the city’s this 2015). Since Bank, city was attributed to migration (World is not supported equal socio- by fast urban population growth Sources: FEDB, 2009; World Bank, 2010, Wubneh, 2013 Bank, 2010, Wubneh, Sources: FEDB, 2009; World GROWTH RATE OF ADDIS ABABA OF ADDIS FIGURE 1: GROWTH RATE 13 THE STATE OF ADDIS ABABA 2017 1.5 E TABLE 2: The governance structure of Addis Ababa transparency andaccountabilityindecision-making. enhance citizens’ and civicengagement and promote participation byinitiatives thegovernment undertaken todateinclude: more competitive and productive. Themost significant reform for improving urbangovernance sothatcitiescanbecome and sustainabledecentralizationtocreating theconditions several initiatives demonstratingitscommitmenttoeffective strategy. In subsequentyears, thegovernment implemented document to integrate all principles of good governance in its decision-making”. interaction between thepublicsectoranddiverse stakeholdersin provision, institutions in service transparency and participatory refers to“the efficiency, effectiveness andaccountabilityofpublic concept andsubjecttointerpretation, intheEthiopian contextit and local.The1995 Federal Constitutionofficially promulgated Source: World Bank,2015, p.63 State functions(executedbyULGs) These strategydocumentscollectively emphasize theneedto • • • • The 2005 Urban Development Policy isthefirstofficial Ethiopia hasathree-tier government structure: federal,regional

separate lineofofficerswithinthecityadministration toregionalauthorities. but otherwise functions. Budgetaryapprovalofexpenditures isrequiredbythecitycouncil, over these control Regions retaindecision-makingpowers andadministrative • • • • The key functionsofthistypeare: and assigned byregionstoULGs(andWoredas,responsibilities inrural areas). Functions prescribed by federal law toregionalgovernments as their core

2014 (World Bank &CitiesAlliance,2015). The Urban Dev (2013/14–2025); and The Ethiopian Cities Pr (ULGDP) developed in2008; The Urban Local Go The 2006 Urban Good G STATE ANDMUNICIPAL FUNCTIONSOFURBANGOVERNMENTS documents. Althoughtheterm‘governance’ isabroad governance, asreflected in various policyandstrategy thiopia hasincreasingly beenimproving inensuringgood Support tomicroandsmallenterprises. Management ofpoliceandcourts; Expansion andmanagementofprimaryhealthcareservices; Expansion andmanagementofprimarysecondaryeducation;

there isa chain ofmanagement and reporting that proceeds from of Addis Ababa The governance structur elopmental Good Governance Strategy vernment Development Program overnance Package; osperity Initiative (ECPI) Urban localgovernmentdualresponsibilities e

Municipal functionsofULGs Local governance capacity management (World Bank, 2014) roadsas physicalinfrastructures,andsolidwaste transportation, such delivery responsibilities includemostinfrastructure service includingeducationandhealth.Municipal delivery social service functions are different. Accordingly, state responsibilities include municipal functions. As stated clearly, “state” and “municipal” its dualmandateasafederalcapitalwell asitsautonomous has developed anurbanlocalgovernment structure thatreflects governments atthelowest administrative structures, Addis Ababa offers regional statestheautonomytoestablishurbanlocal formed by thecityadministration,sub-city, andWoreda. arrangement is therebyand other major cities, and the structural Recently, (sub-cities) andthenKebeles asthesmallestadministrationunit. Ababa andDire Dawa are allowed toestablishlocalstructures each oftheKebele subunits(wards). However, thecitiesofAddis Woreda councilmembersare independentlyelectedtorepresent with theirown legalstatusandleadershipstructure (councils). in turn, are sub-divided into state governments. Dire Dawa, whoare bothgrantedthesameautonomylevel as An exception, however, appliestothecitiesofAddis Ababa and (Worldthe nineautonomousstatesincountry Bank, 2015). and assignedautonomyfunctionstofederalauthorities (Chaurey and Mukim, 2015) economic outcomes and helps to close regional spatial inequalities capacities among Ethiopian city authorities generates better increased autonomyalongwithimproved fiscalandother impact oflocalgovernment capacity-buildingconcludedthat andchallenges.Arecentopportunities study ontheeconomic governments (ULGs) oflargecitiessuchasAddis Ababa. state andmunicipalresponsibilities implementedby urbanlocal Based ontheEthiopian constitutionalframework that Each regional stategovernment issub-dividedintozones which, Ethiopia’s to instituteurbangovernance efforts show boththe • • • • • • • • • • • • include, amongothers: Functions whichare assigned to ULGS by regions through city proclamations

Combating soilerosion, landslidedisastersandenvironmental pollution. Bus terminalsandmarket places; Abattoirs; Marriage, birthanddeathcertificates; Maintaining vitalstatistics; Poverty reduction; Solid wastedisposalsystems; Drainage andsewerage; Road constructionandroadlights; Supply andqualityofwater, electricityandtelephoneservices; Land supplyandservicing; Housing supply; Kebeles are being replaced by Woredas in Addis Ababa Woredas - semi-independent localities 24 . The study found that cities that 23 . Table 2below breaks down THE STATE OF ADDIS ABABA 2017 14

Decentralization in Ethiopia- Decentralization in -Income Ethiopia. Statistical Agency (2013) Population Population (2013) Agency Statistical

. (1974). Housing in a developing nation: The , Part II: A Situational Analysis of Urban Local , Part opulation Affairs Coordination Sub process Finance and Economic Development Bureau. Revenue Bank. (2014). Ethiopia Local Government World Study Governance,Institutional, The Ethiopia: in Governments DC, and Fiscal Context of Local Governments. Washington, 2014. R., Mukim, M. (2015) Chaurey, UN-Habitat 2011: Condominium Housing in Ethiopia: the Nairobi, Integrated Housing Development Programme. J J. Palen, case of Addis Ababa. Land Economics, 50 (4), 428-434. & Jacob, M. (1985) Urban growth and the G. Kebbede, the smallest units of local government are Kebeles administration. Urban Bank (2015) Ethiopia Urbanization Review: World Institutions for a Middle FDRE,Central Level from projection of Ethiopia for all regions. At Woreda 2014-2017. August 2013, Addis Ababa. Images 2009. FEDB (2009) Addis Ababa Population P UNEP (2014) Building Urban Resilience: Assessing Urban Agriculture in Addis Ababa, Ethiopia. and Peri-Urban Bank. DC. World Bank, Washington, Benefits?. World -Who Kenya. housing problem in Ethiopia. Department of Geography, MA 01075 USA. College, South Hadley, Mount Holyoke Ltd. Butterworth & Co (Publishers)

15 22 24 17 20 21 23 19 16 28

The dual identity of Addis Ababa, both as a federal capital and Ababa, Addis The dual identity of an autonomous administration with equivalent status of a ‘State’, status of a ‘State’, with equivalent an autonomous administration between and responsibilities of roles contributes to a blurring structural Despite and governments. the federal and municipal must more the past two decades, a lot over institutional reforms of confusing effect of the dual mandate be done to clarify the coupled with growth, to rapid population Due Ababa. Addis the city Ababa, spatial expansion of Addis unprecedented of service end up shouldering the burden administration could administrative its financial and delivery; beyond a responsibility and adaptation of continuous review this reason, For capacity. to is required Ababa Addis of structure the urban governance the federal responsibilities between roles and flexibly delineate time city administration over Ababa and the Addis government dictate. on the ground and as the realities Concluding notes on governance Concluding notes efficiently, opening the door for rampant corruptionthe door for rampant opening root to take efficiently, of and the implementation good governance that undermines and programmes. policies, strategies (2008) Revealing Responses. Revealing (2008) roblems and prospects of housing History, Modernity, and the Making ofMaking the and Modernity, History, (2013) Addis Ababa, Ethiopia – Africa’s Africa’s – Ethiopia Ababa, Addis (2013) rogramme. Cities Without Slums Sub-Regional in Ethiopian. In: Prunier, G. and Ficquet, É.Ficquet, and G. Prunier, In: Ethiopian. in development in Ethiopia", Property Management, 25(1), development in Ethiopia", Property pp.27-53 Urban upgrading in tenantdominated inner-city settlements, in Addis Ababa, Ethiopia. Thesis for the February 2008. Trondheim, degree of philosophie doctor. of the Addis Ababa Master in the Preparation Taken of the International In: Proceedings & Present. Plan, Past Symposium on the Centenary of Addis Ababa, November 24-25, 1986. for Eastern and Southern Africa. Programme eds. Understanding Contemporary Ethiopia: Monarchy, eds. Understanding Contemporary Ethiopia: Monarchy, Revolution and the Legacy of Meles Zenawi. London: Hurst pp. 395-414. Publishers, and Objectives (1986) Basic Planning Principles Ahderom, T. (2013), AG Ejigu, UN-Habitat (2007) Situation Analysis of Informal Settlements in Addis Ababa. Addis Ababa Slum Upgrading P A. (2007) P Tesfaye, Renewal M. Wubneh, Yitbarek Elias Alemayehu, Urban an African Spatiality: Addis Ababa in Perspective Forum. diplomatic capital. Cities 35 (2015) 255-269., Ahderom, and Objectives Taken (1986) Basic Planning Principles T. & of the Addis Ababa Master Plan, Past in the Preparation of the International Symposium on Proceedings In: Present. the Centenary of Addis Ababa, November 24-25, 1986.

9 11 12 14 10 13

’s orld

Ababa: plans and realities. Journal of Ethiopian Studies, 40(1/2), 27-59. Heritage: Addis Ababa 1886-1941. Cbp: Engineering Shama Books. Capacity Building Program. M.C. (2015) Addis Ababa; End of an Era. Shama Pasquiali, Books. Addis Ababa. (2015) Addis Ababa and the Urban Duroyaume, P. Ibid; and: Tufa, D. (2008). Historical Development of Addis D. Ibid; and: Tufa, (2007) The City & Its Architectural & Gérard, D. Giroghis, F. Bank, Washington D.C. D.C. Bank, Washington 1 (1961), 2, No. Vol. History, Ababa. The Journal of African Historical Development of (2008) D. pp. 103-117; Tufa, Ethiopianof Journal realities. and Plans Ababa: Addis 41. No. ½, Special Thematic Issue on Studies, Vol. Contemporary Urban Dynamics (June-December 2008), pp. 27-59. (2007) ‘Carrying the Burden of Long-term Mahiteme, Y. Ineffective Urban Planning’ An Overview of Addis Ababa Sustainable Urban Development., Federal Democratic Republic of Ethiopia R. (1961) Menelik and the foundation of Addis Pankhurst, World Bank Group (2015) Ethiopian Urbanization Review: World Urban Institutions for a Middle-Income Ethiopia. W Ministry of Urban Development, Housing and Construction (MUDHCo). (2014) National Report on Housing and Successive Master Plans and their Implications on the papers on population and land Working Growth of the City. Acta Geographica- 7. Ethiopia, nr. use change in central Series A, No. 16, October 2007. Trondheim,

6 7 8 2 4 3 ENDNOTES CHAPTER 1 ENDNOTES 1 5 Nevertheless, Ethiopia’s local authorities continue to face continue to face local authorities Ethiopia’s Nevertheless, technological and other revenue-raising, The absence of skill, challenges. Key among them is a severe institutional capacity institutional capacity them is a severe among challenges. Key particularly personnel capable of a lack of well-trained gap, policies, strategies and development implementing urban capacity limitations, resource addition to human In programs. such as, for material resources adequate urban institutions lack urban systems. As a result, computerized instance, adequate comprehensive to execute underequipped are local governments for assets capacities lack the plans; investment infrastructure as laws and regulations, to enforce management and maintenance challenges. emerging identify to and progress monitor to as well further generate to capacity the lack governments local Urban local Moreover, and projects. to pay for programs revenues systems. authorities also lack adequate monitoring to Local Governments capacities impacts the ability of Urban basic serviceseffectively run their jurisdictions and to deliver performed poorly before reforms did significantly better in better did significantly reforms performedbefore poorly because of their newly-acquired era the post-decentralization capacities. autonomy and improved administrative 15 THE STATE OF ADDIS ABABA 2017 THE STATE OF ADDIS ABABA 2017 16 THE  ROLE OF ECONOMIC ECONOMIC ADDIS ABABA ▲ Sunny day at the International Airport of Addis Ababa. © Shutterstock 17 THE STATE OF ADDIS ABABA 2017 2.1 economic activitiesinandaround thecity. Ababa in Ethiopia’s economy as well as growing agglomeration of risingdominance of Addisurbanization, suggestingalikelyfurther simultaneously experiencinghighratesofeconomicgrowth and the overall primacyindexofAddis Ababa is24.8.Thecity Review (2015) Furthermore the recent World Bank’s Ababa’s share in GDP accounts for 29% of the total urban centers. Furthermore, Addis Ababa is,besidesmanyembassies,alsohome foremploymentopportunity creation andtechnologytransfer. enterprises are locatedinandaround Addis Ababa, creating huge Mostperformance. oftheinternationallargeandmedium-size have significantlycontributedtothecity’s overall economic and industrial zonethe international airport development, projects, suchascondominiumhousing,theLightRail Transit, and communication,infinancialservices. the country’s inreal urbanjobs,particularly estate,information force isemployed inAddis Ababa andthecityishometo68%of urban employment andunemployment(CSA2015 survey

A According totheState ofEthiopian Cities 2015report The implementationofpubliclyfinancedmegaurban Light RailTransit aroundMexicoSquare,AddisAbaba.©Geo Kalev ▲ its importance inthedomesticeconomy.its importance Based onthe individuals and foreign direct investment hasenhanced ddis Ababa’s attractiveness tobusinesses,companies,

Addis Ababa The economicrole of 3 shows that20%ofthecountry’s urbanlabour Ethiopia Urbanization 2 , Addis 1 ), TABLE 3: (see Table3). migrants, is significant andincreasing to rural-urban particularly cities as Adama, Bahirsuch secondary Dar, Hawassa and Mekelle, areasfrom rural tonearby urbancenters.Theattractiveness of modern communicationtechnologiesallfacilitatemigration Ababa. Rural populationpressures, improved infrastructure and higher populationgrowth rates inthesecitiesthanAddis cities, likeinsomanyotherAfricannations,isunfoldingwith challenged. A current surge in the growth of Ethiopia’s secondary geographically uneven domesticdevelopment impliedisbeing collectively create strong demandforgoodsandservices. the United Nations Economic CommissionforAfrica,which to inter-governmental organisationsliketheAfricanUnion, Source: CSA, 2014 Source: CSA, Urban centre However, Addis Ababa’s hugeurbanprimacyandthe ai a 9,1 55.6 47.6 46.6 3,040,740 191,016 60.1 52.4 Addis Ababa 262,884 Bahir Dar 212,665 Adama 273,601 Dire Dawa Hawassa Mekelle POPULATION GROWTHOFSECONDARY CITIESANDTHE PRIMATE CITY size (2014) Population 7,6 59.2 271,562 city (%) migrants inthe rural-urban Proportion of 10 years(%) over thelast growth rate population Urban 2.1 3.7 4.2 4.3 6.1 6.2 THE STATE OF ADDIS ABABA 2017 18 ▲ Booming construction sector in Addis Ababa. © Geo Kalev Ababa city Addis productivity

wing to its central geographic location, Addis Ababa Ababa wing to its central geographic location, Addis linking all the corners of Ethiopia. is on the crossroad goods and services in the country produced Most end , Addis Ababa has shown an impressive macroeconomic macroeconomic an impressive has shown Ababa , Addis 4 Following the Growth and Transformation Plan I (2011- Plan Transformation and the Growth Following performance significantly exceeding the national average or the national average performance exceeding significantly the city on data from capitals. Based those of individual regional Development Economic and Finance of Bureau administration’s up marketed in Addis Ababa. The city enjoys superior access to The city enjoys Ababa. in Addis up marketed to services,ICT compared infrastructure other and utilities roads, agglomeration effect is the economic capitals. Hence, the regional cities. Agglomeration Ethiopian to other significant as compared transport “clusters” infrastructure economies occur where cost. This economic activities and connects firms at lower Agglomeration benefits typically leads to higher productivity. the concentration of population through from also derived are and diversity the availability increasing common infrastructures, size. of labor and market 2015)

O 2.2 The unfolding population dynamism of secondary cities may will, in the urban population growth much of Ethiopia’s Since erode Addis Ababa’s attractiveness as the preferred primary as the preferred attractiveness Ababa’s Addis erode Ababa’s not only because of Addis destination for investors, challenges but also because and environmental housing growing of the easier access to land in such secondary and tertiary cities. take place in its secondary future, cities, enhancing foreseeable of these growth the urban planning and management capacities and to urban development will be critical for orderly centres facilitate the desirable domestic geographic distribution of very is generation. The trend and employment economic growth secondary clear: Ethiopian and tertiary demonstrating cities are their potential to serve as newengines of economic and additional predominance a from shift national unfolding the under growth urban economies. productive sector to more of the agriculture of developing should be encouraged in the interest This trend even and more balanced domestic urban hierarchy a more and well-being. wealth distribution of employment, 19 THE STATE OF ADDIS ABABA 2017 Economic Development (2016) well above 29%oftheoverall GDPofEthiopian cities. In thesameyear, Addis Ababa’s GDPwas aboutETB66.3billion, estimates thatEthiopian citiesgeneratedaboutETB227.3billion. 8% ofthenationalGDP. TheState ofEthiopian Cities 2015report of aboutETB90.9billionatcurrent pricesin2015.Thisisabout GDP over thesameperiod.For instance,thecityregistered aGDP than 15%over thelastfive years; muchfasterthanthenational (2016), theGDP Source: OwncomputationbasedonBureauofFinanceandEconomicDevelopment(BoFED) FIGURE 2:SHAREOFTHEKEYECONOMICSECTORS, ADDISABABA, in favour ofmanufacturing. If the citycanreverse thecurrent sector to tempering the economic domination of the services Addis Ababa’s sector, industry followed by manufacturing. activityalsosignificantly contributedto Booming construction intermediation constitutethelargest shares, indescendingorder. (hotelsandrestaurants) andfinancial the hospitalityindustry sector,Within theservices communications, trade, transport, the urbaneconomyandthere isno signofachangingtrend. the sectorlast hasfive persistently dominated years the services sectors account for almost all of the Addis Ababa’s GDP. Over (see Figure 2). Together, (36%) (63%)andindustry theservices insecondplace sectordominates withindustry that theservices of poverty. much work tobedonecurbboththeincidenceandseverity Addis Ababa isanimprovement over previous years, there isstill is the squared poverty gap index. Although the poverty status of Poverty severity index measures inequality among the poor and it which individualsfallbelow thepoverty line(thepoverty gaps). below poverty linewhilepoverty gapindexmeasures theextentto headcount index measures the of proportion a population living severity accountfor5and1.8indexpoints,respectively. Poverty Ababa isestimatedat18.9whilethepoverty gapandpoverty 22.0 in2014.Currently, thepoverty headcount indexforAddis a declineinthepoverty indexfrom ahighof29.6in2012to Besides a high rate of economic growth, the city has also achieved 1,359 in2015atcurrent prices-higherthanthenationalaverage. capita incomehasgrown from USD788.48in2010to In addition, other data from the city’s Bureau of Finance and Currently, the cityadministrationisgivingmajoremphasis Analysis oftheeconomicstructure ofAddis Ababa reveals Percentage 2011-2015 Service share 0121 0321 2015 2014 2013 2012 2011 5 ofAddis Ababa hasgrown, onaverage, by more Industry share 6 , shows thatAddis Ababa’s per Agriculture share Source: OwncomputationbasedonCSA(2015) FIGURE 3:SECTORAL COMPOSITIONOFURBANEMPLOYMENT Per capitaincomeandtrends create sustainablejobsandimproved incomes/livelihoods. competitiveness, strengthen technologyandskillstransfer sector, itisbelieved thatthiswouldenhanceproductivity and shares withmanufacturingbecomingthedominanteconomic the sectorunsustainable. andhencemakingemployment in goodsandservices imported (Ethiopia’s biggest open market) are vulnerable to prices of from theoutsideworld.Retailers andwholesalersinMerkato do not require skills or technology and are prone to competition weak. Mosttransfer isvery sectoractivitiesinAddis Ababa service is unsustainableanditscontributiontotheskilltechnology sector.the services sector Despite itscontribution,theservices Furthermore, wholesaleandretail tradeare majoremployers in present orcreating insufficientemployment (CSA,2015). firms withhigh value-addition potentialare eitherinsufficiently scale industries.Clearly, largeandmedium-scalemanufacturing (see Figure 3). sector12% 14%,andtheconstruction 23%, communityservices the urbanjobs,whereas themanufacturingsectoraccountsfor opportunities, income and wealth. opportunities, required toassure broad-based accessby allEthiopians tojob and the associated national wealthopportunities distribution is more geographically balanceddomesticdistributionofincome Ababa isnotandcannotbetheultimategoalfor Ethiopia. Far Figure 4).Obviously, achievingmiddle-classstatusforjustAddis of growth ofthePCIispositive andsignificantlyincreasing (see can meetitsmiddle-income status goalby 2025sincethepace If itsustainsthecurrent paceofeconomicgrowth, Addis Ababa residents wasdoublethenationalaverage of USD680 in2015. domestic economy. of Addis Ababa andthelobsideddevelopment oftheEthiopian on average (see Table 4).Thisillustratestheeconomicdominance exceeds thenationalaverage butisalsogrowing by 10%annually According toCSA(2015)data Of the23%jobsin manufacturing sector, mostare in small- The average ofUSD1,364percapitaincomefor Addis Ababa The percapita income (PCI)of Addis Ababa residents notonly Trade Manufacturing Community services Construction Others Finance Government Agriculture 12% 8% 7 , tradecontributes31%of 14% 6% 4% 2% 23% 31%

THE STATE OF ADDIS ABABA 2017 20

y 931 1,011 1,143 1,257 1,364 PCI in USD 17 18 18 19 20 Average annual Average exchange rate ETB-USD owth rate of 5.2% (the current estimated estimated current (the 5.2% of rate owth national average) GDP growth rate of about 11% annually (as planned b GDP growth the city administration) gr Population

• With regard to population growth, the first scenario assumes to population growth, regard With may currently Ababa note of caution is warranted. Addis One Thus, under the most ambitious scenario, in 2025 the PCI of Scenario 2: GDP growth and lower Rapid population growth • 16,049 18,263 21,350 24,425 27,775 industrial zones to boost productivity and sustain the current the current and sustain to boost productivity industrial zones pace of growth. attracted economic boom that has Ababa’s that despite Addis rural-urban and urban-urban migrants, the surge in secondary could possibly ease some migration growth population cities’ its population growth and keep Ababa Addis away from pressure pace. The nation-wide urbanization rate is about at the current rate of about growth Ababa’s 2015) and Addis 5.2% (MUDHo importance of other (secondary3% indicates that the relative and tertiary) in absorbing new and additional urban areas very can and should be This trend urban population is growing. stimulating secondary by and tertiarydeliberately reinforced opportunities, new of the facilitation employment cities through and other infrastructure extending ICT services,by improving secondary cities interventions bring Ethiopian that would slowly extension the tertiary– and by comparable ones – to standards is multi-pronged: The aim here today. Ababa with that of Addis opportunities,income distributing spreading geographically and guiding Ababa on Addis easing migration pressures wealth, to a middle-class rather than just its capital city, Ethiopia, nation status. even its population size, urbanisation rate, but given a lower have rate of 3% (CSA, 2015) translates into growth low the relatively residents significant absolute numbers of new and additional terms of housing, services for in to be catered that will have and employment. 5: USD 3,500 (see Figure to approach is projected Ababa Addis scenario 2011-2025, in USD). This puts the growth PCI High Africa most striving to city among those cities in sub-Saharan 2025. middle-income status by achieve 2015 46,763 55,650 66,264 78,040 90,908 City GDP at City GDP at current price (in ETB millions) PCI (ETB) Average 2014 2013 PCI in USD 2,913,745 3,047,000 3,103,673 3,194,999 3,273,001 Population size Population 2012 wth rate of 3% (CSA, 2015); and an annual 2011 ADDIS ABABA CITY GDP AND PER CAPITA INCOME (PCI) CITY GDP AND PER CAPITA ADDIS ABABA Constant city GDP growth rate of about 18% annually; Constant city GDP growth gro Population of 4.25% against the USD. rate depreciation exchange 0 2011 2012 2013 2014 2015

• three The business as usual scenario is based on the above itself annually by than 10% GDP growth Although more Three basic assumptions and corresponding scenarios are scenarios are basic assumptions and corresponding Three as usual Scenario 1: Business • 800 400 Year 1,200 1,600 2,000 assumptions that: a) the city GDP growth remains at the same remains assumptions that: a) the city GDP growth or of 3%, and c) a more pace, b) a steady city population growth of the ETB against the USD. less linear depreciation momentum the current given would be a major achievement, its 18% growth it is assumed that the city could indeed repeat revenue as noted in the city’s period. However, during the GTPII of municipal many untapped sources remain study (2015), there income, besides desirable enhanced ICT and infrastructure policy interventions as will that well as facilities and investments the projected is to realise Ababa if Addis need to be activated to boost the manufacturing sector would have It growth. of for example, the establishment and development through, used to calculate the Addis Ababa PCI projections for 2025: a) for 2025: PCI projections Ababa used to calculate the Addis GDP with lower b) a rapid population growth “business as usual”; rates. population and GDP growth and c) lower rate; growth Addis Ababa PCI projection for 2025 PCI projection Ababa Addis Source: Own computation based on various sources PER CAPITA INCOME TRENDS OVER TIME FIGURE 4: PER CAPITA Source: Own computation based on CSA (2015), BoFED (2016) and National Bank of Ethiopia (NBE) (2016). on CSA (2015), BoFED (2016) and National Bank of Ethiopia Source: Own computation based TABLE 4: 4: TABLE 21 THE STATE OF ADDIS ABABA 2017 Source: Owncomputationbasedonvarioussources FIGURE 7:MODESTPCIGROWTHSCENARIO, 2011-2025,INUSD Source: Owncomputationbasedonvarioussources FIGURE 5:HIGHPCIGROWTHSCENARIO2011-2025,INUSD PCI couldbecloser toUSD1,600(seeFigure 6).Considering a realistic assumption. urban growth projection underthesecondscenarioappearstobe Addis Ababa’s populationgrowth estimate atparwiththenational for Ethiopia. In ofitscontinuingeconomicattractiveness, view various estimatescometoa5.2%urban populationgrowth rate etc.).Considering these factors, development interventions and urban-urbanmigrationpoliciesstrategicsmalltown - beinfluenced rural-urban by policies(includingmegaprojects, and migration),butthatitwillalso-andpotentiallysignificantly is notjustdriven rates by demographicfactors(deathandbirth next decade.Thisassumesthattheurbanpopulationgrowth rate cities underlietheAddis Ababa’s populationsize forecast over the an estimated11%annually. reducing the pace ofgrowth downwards from its present level to the assumptionthatcity’s GDP basewillexpandover time, administration aimsatthisgrowth targetinGTPII, basedon at anannualaverage of11%over thenext10years. Thecity 1,000 1,500 2,000 2,500 3,000 3,500 4,000 1,000 1,500 2,000 500 500 Analyses ofthe second scenarioreveal thatAddis Ababa’s 2025 The current populationgrowth estimatesforall Ethiopian The secondscenarioassumesthecity •

0 0

USD. Annual exchange ratedepreciation of4.25%againstthe 2011 2011

2012 2012

2013 2013

2014 2014

2015 2015

2016 2016 PCI inUSD 2017 PCI inUSD 2017

2018 2018

2019 2019

2020 2020 ’s GDPwouldgrow

2021 2021

2022 2022

2023 2023

2024 2024

2025 2025 FIGURE 8:VARIOUS PCISCENARIOSFORTHECITYOFADDISABABA Source: Owncomputationbasedonvarioussources FIGURE 6:LOW PCIGROWTHSCENARIO2011-2025,INUSD Source: Owncomputationfromvarioussources income couldreach about USD2,000by 2025(seeFigure 6) about 3%.Under theseassumptions,Addis Ababa’s percapita that Addis may grow atalower ratethan its present level of according totheCSA(2014).This couldleadtotheassumption terms ofpopulationsize) andare expectedtogrow even more are growing fasterthanAddis Ababa (botheconomicallyandin North, Hawassa intheSouth andBahir Dar intheNorth-East easing thepressure onAddis Ababa. Such citiesasMekelle inthe might tendtostayintheirrespective regional capitalsthereby growth rates.Rural-urban migrantsorurban-urban have an impact on Addis Ababa through lowering population cities in 4.25%. Thesurging role ofsecondary Ethiopiacould be around 2.5%;andcurrency depreciates atarateofabout annually over thenextdecade;populationgrowth ratewould income statusby 2025. likely inflationratesthisfigure maynotputthecityinmiddle- 1,000 1,500 2,000 1,000 1,500 2,000 2,500 3,000 3,500 4,000 500 500 • The third scenarioassumesthatthecityGDPgr • • Scenario 3.Lower populationGDPgrowth rates

0 0 its present level) Annual exchange rateof4.25% Population gr GDP growth rateofabout11% 2011 2011 PCI inUSD@higherpopulationgrowthrate PCI inUSD@lowerpopulationgrowthrate PCI inUSD-businessasusual 2012 2012

2013 2013

2014 2014 owth rate of 2.5% (lower growth rate than 2015 2015

2016 2016

2017 2017 PCI inUSD

2018 2018

2019 2019

2020 2020

2021 2021

2022 2022 ows by 11% 2023 2023

2024 2024

2025 2025 THE STATE OF ADDIS ABABA 2017 22

markets Labour

his section discusses the nature and structure of structure and nature the discusses section his by disaggregated trends, its and city the in employment participation labour force and activity gender, sector, Healthy economic growth is normally accompanied by by accompanied is normally economic growth Healthy to which the labour reflects the degree “activity status” The Survey (CSA Unemployment Employment Urban The CSA's action policies might be needed with Affirmative rate, as well as the size of the informal sector in Addis Ababa. Ababa. the informal sector in Addis of as the size rate, as well and gender-biased youth unemployment challenges like Specific will also be discussed. trends employment decent broad-based employment generation for the citizens and generation for the citizens employment decent broad-based steadily receives so that the workforce the productivity increasing employment diverse better wages and gets access to more management and opportunities. the other hand, proper On is a key parameter force efficient utilization of the existing labour the cases many In performance economic the in city. a of of number the by performanceand measured is city a of strength incomes and contributes sustainable jobs which, in turn, sustains level The term. long and medium the in reduction poverty to of not is a reflection however, within a city, of employment intensity of just economic performance but also of the resource redistribution. output, income distribution and wealth 2015 on the activities. Based is engaging in productive force the activity rate is computed as the survey, urban employment the total of over population of economically active percentage The above. and population aged 10 years plus not active active 63.7% of the population aged 10 years that shows same report Looking at national level. at economically active were and above of males is 71.1% and 57.2 the activity level gender differences, distinct nation-wide implying a % for females at national level, at par with men. gender bias with women not benefitting UEUS, 2015) notes that the economic activity status for major not were 38.2% remaining the while 61.8%, is Ethiopia in towns (2015), economically the CSA to According active. economically population comprises of all persons who furnish the supply active of economic goods and services.of labour for the production In the activity rate of males (70.0%) was terms of gender differences, 15.3% than of females (54.9%). The activity rate for higher by to be 60.8%, lower as of 2015 is reported Ababa the city of Addis gender big a also is There 63.7%. of estimate national the than with males accounting for 70.0% and females Ababa gap in Addis that data show labour force only 53.1% of the total. National higher a bit was 61.3%, 2013 rate in activity total economic the the highest activity was to age category, regard With than 2015. both at 86%. group, and 40-44 years in the 35-39 year registered to gender imbalance in economic activity rates in regard the city. Labour force participation in economic activities Labour force T 2.3

▲ 2014: Women sell spices in an outdoor market in Addis Ababa. © Shutterstock. outdoor market sell spices in an 2014: Women

Given these three scenarios, one can assert that Addis Ababa Ababa one can assert scenarios, that Addis these three Given of caution is warranted. An exclusive too a word here However, has a fair chance of meeting its middle-income status target by has a fair chance of meeting its middle-income status target by 8) if the aims of scenarios 1 or 3 can be realised. 2025 (see Figure the other is a bit deviant from Scenario 1 - ‘business as usual’- of about two scenarios for it portrays a very GDP growth strong will maintain such a growth think that Addis To 18% annually. the Given assumption. the next decade is a strong rate over not may the city turmoil national socio-political state of recent prospect overall The rate. growth impressive an such maintain 2025 is a fair one, assuming to meet its goal by Ababa for Addis in essential the city administration continues its investment of its the efficiency and effectiveness improves infrastructure, collection. enhances its revenue decision-making and, especially, inequality increase to significantly likely is Ababa on Addis focus and those in the remainder of the capital the residents between diminished This could alter the risk of civil unrest, of Ethiopia. rule extension, a decline in the quality of the Addis of law and, by climate. business and investment Ababa by 2025. by and the city could meet its lower middle-income status target middle-income and the city could meet its lower 23 THE STATE OF ADDIS ABABA 2017 Employment-to-population ratio 2015 Source: CSA, FIGURE 10:URBANUNEMPLOYMENT BYMAJOROCCUPATION 2013 Source: CSA, TABLE 5: at 30.5%followed occupations(20.3%). by elementary is estimated and sales employmentworkers category in the services areas and thoseinAddis Ababa. For major towns, theshare of garbage collectionetc.(14.7%) (seeFigure 9). unloading, vending, takingcare housesandhotels, ofapartment occupationssuchascleaning,loading, (16.3%) andelementary dominates (28.2%),followed by craftsandrelated trades group indicates that, in Addis and retail Ababa, work services males versus 37.9%femalesengagedinproductive activities. The datafor2015showsof asignificantgenderbiaswith59.9% there isasharpcontrastbetween maleandfemale employment. 47.9%, butstillremained thelower one. What isstrikingthat in Addis. In 2015,thefigure for Addis hadslightlyimproved to that muchmore needstobedone to expandjobopportunities low compared ornationalaverages, indicating totheurban,rural population agedtenyears andabove (CSA,2013) is measured astheratiooftotalemployed persontothetotal to which the population is engaged in productive activities. It 7.90% Figure 10compares majoroccupationalgroups inmajorurban A closerlookintothenature ofjobs by major occupational The employment-to-population ratio of Addis Ababa is relatively The employment-to-population ratiomeasures theextent 8% 6.50% Country total Urban Rural Addis Ababa 15.40% 5.50% TREND INURBANEMPLOYMENT TO POPULATION RATIO 3.60% 2.20% 0.12% 20.30% 30.50% 9920 2013 2005 1999 69.1 48.2 73 40.5 machine operators Plants and forestry andfishery Skilled agriculture, Clerical supportworkers Managers Others 6676.2 76.6 0255.5 50.2 281.6 82 4447.6 44.4 sales workers Service and Elementary occupations Crafts andrelatedtrades Technicians Professionals 8 (see Table 5). EMPLOYMENT BYGENDER(2015) FIGURE 11:ADDISABABA’SMAJOROCCUPATION OUTOFTOTAL 2015 Source: CSA, FIGURE 9:ADDISABABA’SEMPLOYMENT BYMAJOR Source: CSA, 2015 Source: CSA, entrepreneurship development programs are needed toenhance jobs. Gender empowerment suchaswomen’s interventions in overall unemployment, alsoin high-quality butparticularly clear thatwomenare represented notjustdisproportionately Fromoccupations andclericalsupport. the above dataitis andsalesworkers, elementary is higheramongservices professional andtechnicalcategories whilewomen’s share Figure 11)reveals thatmalesdominate inthemanagerial, (MSE) andmanufacturingsectors. foremploymentopportunities inthemicro andsmallenterprises of proportion technicians and professionals, thereby expanding technical/vocational education and training could increase the a production city instead of a consumption city. Enhancing have amajorimpactontheabilityofAddis Ababa tobecome people employed is also low. in the professional category This will is adesirableandviableoption.Similarly, of theproportion enhancing productivity amongtheselow-quality occupations labour or related activities. From the poverty perspective though, concerns low-skill, non-permanentjobssuchasdailymanual estimated at3.0%,10.2%and9.1%respectively. Themajority Ababa, the shares of managers, professionals and technicians are Skilled aricultureorestrandisher 10.20% Occupational classification by genderin Addis Ababa (see With regard to employment by majoroccupation inAddis 10.60% 9.10% lants andmachineoperators 6.30% Serice andsalesorkers lerical supportorkers rats andrelatedtrades lementar occupations 1.40% OCCUPATIONAL GROUP 14.70% 3% 0.20% roessionals echnicians anaers 28.20% 16.30% thers 0 Male Technicians Clerical supportworkers Managers forestry andfishery Skilled agriculture, Others Female 10 sales workers Service and Crafts andrelatedtrades Elementary occupations machine operators Plants and Professionals 1 Percentage 20 THE STATE OF ADDIS ABABA 2017 24 . 10 2015 1.0 21.20 Source: CSA, 2015 2013 1.0

24.20 Urban Ethiopia

. Applying this definition of the . Applying 9 2005 20.0 1.20 ercentae Addis Ababa 1999 2.40 .0 0 0 2 100

Evidence shows a declining trend in Ethiopia’s urban informal in Ethiopia’s trend a declining shows Evidence in defining the informal perspectives takes three The literature Percentage sector employment over time. According to CSA 2015 data, time. According over sector employment of urban informal sector had gone down the nationwide share a high of 50.6% in 2003, implying a to 27.8% in 2015 from in the economic importance of the informal sector. regression of total share that the shows 2015 data for Addis Moreover, than is about 13%; much lower urban informal employment tax measures rules and enforcement Stiff the national average. proportionsector of informal the likely cause of the reduced are Ababa. in Addis employment definition, b) behavioural definition and c) legal/ sector: a) size the number definition emphasizes institutional aspects. The size the start- per enterprise (usually less than five), of employees firms and low-tech up capital, the labour-intensity of products and Ranis, 1999) (Stewart Source: CSA, 2013; CSA, 2015 sector in the urban informal Employment TREND FIGURE 13: ADDIS ABABA UNEMPLOYMENT informal sector, a large number of formal firms in Addis Ababa Addis a large number of formal firms in informal sector, would be categorised as informal. The second definition focuses versus ‘survival firms’ on the behavioural orientation of firms: 1993) (Liedholm&Mead, entrepreneurs growth-oriented

0 10 1 20 2 0 s thers mploer omestic looking for a job, expressed as a share as a share expressed looking for a job, Apprentices Sel emploed ther emploee riate oraniation npaid amil orkers oernmnet emploee oernmnet ember o cooperaties Most recent data for 2015 shows that the percentage of that the percentage data for 2015 shows recent Most The unemployment rate is a measure of the number of people of number the of measure a is rate unemployment The CSA 2015 data (see Figure 12) revealed that the public sector 12) revealed CSA 2015 data (see Figure in total employment, self-employed of large share relatively The (see Figure 13). (see Figure the is significant and above persons in Addis unemployed Addis hand, the other On 16.8%. of about average urban rate of 21.2% of experiences a total unemployment Ababa which males accounting for 14.4% and females 28.6% (CSA, rate brings an higher unemployment 2015). The prevailing Ababa challenge for the urban economy of Addis increasing More years. in recent economic growth despite its recorded is double that of males female unemployment importantly, opportunities suggesting limited employment in the city, for women. who are both jobless and who are of share the as calculated is rate This force. labour total the of of economically the total number population over unemployed rate has always unemployment Ababa’s population. Addis active rate unemployment been higher than the urban Ethiopia’s The current available. the period for which data are throughout a seems to decline from however, rate trend, unemployment of 21.2% in 2015 low high of 37.8% in 1999 to the current State of unemployment State the skills and job intensity towards more quality occupations quality occupations more the skills and job intensity towards

for females. Ababa, in Addis employment 12% of the total a mere provided (32.2% salaried, sector accounted for 64.2% while the private of reversal This is a and 30.6% self-employed). 1.4% employers when the public sector was the situation under the past regime cities as the private in Ethiopian provider the major employment by nationalisation policies. sector was then stifled (1.4%) could indicate that of employers coupled with a small share employment. in urban small businesses play a key role self-owned small business support a case for enhancing This builds and hints in and economic growth at a further potential for job creation Enterprise and Small Micro through Ababa cities such as Addis programs. (MSE) development EMPLOYED POPULATION BY STATUS IN EMPLOYMENT BY STATUS POPULATION FIGURE 12: EMPLOYED 25 THE STATE OF ADDIS ABABA 2017 enterprises with unregulated andcompetitive markets. intensive and endogenous technology, small scale family-owned sector isoftencharacterized by easyentry, employing labour- these three research perspectives. Consequently, the informal (see Table6). 1980s and1990stodistinguish between informalandformal the legalistschoolofthought,popularized by De Soto the informalsector. Thisperspective takes the perspective of environmentemphasizes indefining thelegalandregulatory risk takerswithastrong growth motive. Thethird perspective orientedandnotrisktakers,whereas formalfirmsaresurvival According tothisdefinition, informalsectoroperatorsare largely Source: NelsonandDeBruijn,2005 TABLE 6: omlt ttsLglsau Description Legalstatus Formality status Countries usuallydefinethe informalsector by combining Informal incomeearningactivities:shoeshiners.©GeoKalev ▲ Formal Semi- formal Informal DEFINITION OFFORMAL/INFORMALBASEDONLEGALANDINSTITUTIONALCRITERIA 11 registered business Full licenseand Local authoritylicense None company, orsharecompanythatcomplywithgovernmentrulesandregulations. as asoleownership,privatelimited a registeredbusinessname,either Licensed enterpriseswith business registrationathighergovernmentlevel). complying witheitheroneofthegovernmentregulations(usuallylocallicensingwithout An activity regarding licenses,permits,certificatesandregistrationoftheactivity. for which An activitythereisa legal counterpart but thatdoes not complywithregulatorysystems 12 inthe

major transactions are stilldoneinaninformalway. enforcement asashieldagainst confiscationwhile maymerely serve in theunderground economy. Thus, registration andlicensing s enforced registration andlicensingoffirmscouldbringdown the (such asregistration andlicensing)fordefininginformality, then definition used. usesthelegal aspects For instance, ifacountry typevariessector aswelldependingon the astheintervention applied by theenterprise.Therefore, thesize ofacity'sinformal legal aspect,asize offive employees andthetypeoftechnology aspect) and a size of 10 workers as the criteria, while others use the criteria ofinformality. Some countriesusetheregistration (legal ize oftheinformalsector. However, theymaystilloperateinformally A problem emergeswhenoneusesthecombinationofthese

THE STATE OF ADDIS ABABA 2017 26 ▲ 22.2 15.4 18.2 Major Urban towns Small and Medium Enterprise (SME) in Piazza area. © Geo Kalev 13.9 12.4 13 Addis Ababa Addis Ababa’s overall achievement in creating jobs through jobs through in creating achievement overall Ababa’s Addis just for Addis but also for other Ethiopian cities. At the country cities. At but also for other Ethiopian just for Addis informal the urban 36.5% of women constitute in 2015, level, also while males account for 21.7%.These figures sector workers indicate the importance of gender-based interventions. but the city needs to strengthen is promising, MSE development MSEs and continued graduating enabling more its efforts towards small, medium and large enterprises to micro, linkages between Also, many studies indicate a sustainable labour market. create of enterprises declines as businesses grow, that female ownership to also support women action to empower calling for more of businesses. and female ownership sustained growth 36.5 21.7 27.8 Country total SHARE OF INFORMAL SECTOR EMPLOYMENT, 2015 EMPLOYMENT, SHARE OF INFORMAL SECTOR Female (%) Male (%) Total share of the informal sector Total The CSA definition of the informal sector based on the status the on based sector informal the of definition CSA The variation slight CSA data, applying the legal definition, shows of registration and licensing may underestimate the actual true and licensing may underestimate of registration to remains therefore It Ababa. of the informal sector in Addis size of the informal sector in the city would be be seen what the size Future applied. or behavioural definitions are if the sized-based studies should shed light on the true incidence of informality definitions. using these different males and females in the proportion of informal sector between the urban informal sector of Addis 7). In Table (see workers Women females account for 13.9% and males 12.4%. Ababa, dominate in informal sector participation as ownership as well This indicates of small businesses in almost all cities in Ethiopia. action is needed in informal economy supportthat affirmative not Source: CSA, 2015 TABLE 7: TABLE 27 THE STATE OF ADDIS ABABA 2017 2.4 F revenue generation. For cities, fiscal decentralization isa keytool meet itsdesired objectives, itdemands linking spendingwith decisions abouttheirexpenditure. or transferred from centralgovernment tomakeautonomous an adequate level of disposable own revenue, either raised locally outdecentralized functionseffectively,to carry theymusthave argues thatforlocalgovernments andprivate sectororganizations

expenditures tolower-level government bodies.Oates (1991) Hence, forsuchfiscaldecentralization tobeeffective and Source: AddisAbabaCityAdministrationBureauofFinanceandEconomicDevelopment(2016) BOX 1:FISCALPOWEROFTHEADDISABABACITYADMINISTRATION and responsibility ofrevenue raisingandmanagement decentralization policyinEthiopia, transferstheautonomy iscal decentralization, one of the cornerstones of 17) 16) 15) 14) 13) 12) 11) 10) 9) 8) 7) 6) 5) 4) 3) 2) 1)

Assess andcollectcapitalgainstaxonproperty situated inthecity. Assess andcollectincometaxongainsfromrentingofpatentrightswithinthecity; Levy municipaltaxesanddutiesaswellfixcollectservicechargesthereof; Fix andcollectfeesonlicensesissued,servicesdelivered,byitself; Fix andcollectroyaltyonuseofforestresourceswithinthecity; miningoperationsundertaken withinthecity; Assess andcollectincometax,royaltylandrentalsonsmall-scale Fix andcollectrentalsfromhousesotherpropertiesownedbyitself; Fix andcollectroad-user-vehicles chargeinthecity; Assess andcollectprofit,exciseturnovertaxesfrompublicenterprisesownedbyitself; executedinthecity; Assess andcollectstampdutyoncontractsagreementsaswelltitledeeds-registration Assess andcollecttaxonincomefromrentedhousesotherpropertiesinthecity; Fix andcollecturbanlandrentlevyhousetaxinthecity; Receive valueaddedtaxcollectedbythefederalgovernmentfromindividualbusinessmentradingin,andpublicenterprisesowned Assess andcollectprofit,exciseturnovertaxesfromindividualbusinessmentradinginthecity; Levy taxonincomefromagriculturalactivitieswithinthecity; Fix andcollectlandusefeewithinthecity; public enterprises; Assess andcollecttaxonincomefromemploymentwithinthecity, excludingemployeesofOromiaRegion,thefederalgovernmentand of federal

land value capture Municipal financeand 13

solicit thefederalgovernment totakeloansonitsbehalf. where itconcernsloansfrom abroad, thecitygovernment shall to sources from thefederalgovernment andalsoloans.However, activities to gain and generate revenue. It is also allowed to resort government canalsomakecontractualagreements andundertake investments, fundsinvestments, rentals anddonations.Thecity bodies underitscharge,income-generatingactivities,(joint) generation whereby thecitygovernment raisesitsrevenue from Proclamation No. 361/2003. fiscal powers 52ofthe ofthecityadministration basedonArticle the jurisdictionsofrevenue generation.Box 1below indicatesthe proclamation No. 361/2003dictatesthecity’s fiscalpower and administration forfiscaldecentralizationtobecomeeffective. fiscal powers, revenue generation,budgetpreparation and frameworksmustdefinelocalauthorities’regulatory decentralised them withtheirever-increasing expenditure demands.Legaland to helpthemmanagetheirrevenue andmatch raisingefforts The sameproclamation indicatestheboundariesfor revenue The Addis Ababa City Government’s revised charter , thecity; THE STATE OF ADDIS ABABA 2017 28 2015 1,658.72 543.54 226.90 16,975.26 2,312.86 21,761.02 . This means that the 15 External Loan External Assistance Tax Revenue Tax Municipality Revenue Non-Tax Revenue Non-Tax 2014 1,571.93 1,502.73 213.79 14,214.34 1,542.00 19,095.32 49.33 2013 353.18 1,245.78 10,435.55 1,096.19 13,227.02 Income taxes constitute the largest share in the income, in the share the largest constitute taxes Income except of the GTP years, most has declined over revenue Total of incomes, profits and capital gains. The shares of value added of The shares and capital gains. profits of incomes, of goods and services,tax on sales is 4% and 26% average, on the respectively. revenues, of total tax That is revenue. component of the tax and capital gains profit the payroll through taxing employees understandable since room for This implies business profits. is easier than taxing rental the taxation of profits, from derived enhancing revenues effortbe made in raising needs to More incomes and capital gains. components. revenue ‘under-performing’ these from revenues the city administration to matter of concern is a This 2014. for that brings mounting demand the rapid rate of urbanization given for funding of new utilities, housing and additional infrastructure, declining tax revenues, contrast to the In reduction. and poverty to attributed largely trend, an upward non-tax income shows urban land leases income and income from investment government about income constitutes investment Government in particular. urban from derived funds with revenue, non-tax total the of 66% investment government land leases nearly all (99%) of the total BoFED 2016 data to income, according non-tax revenue is basically the income from urban land leases. is basically the income from non-tax revenue 2012 1,242.90 70.67 1,142.31 25.46 7,229.14 9,748.53

2011

68.37 1,025.44 63.39 932.14 4,935.28 7,067.99 . 14 BoFED, 2016 BoFED, ;

2011 2012 2013 2014 2015 structure Revenue and performance

Percentage

his section reviews revenue structure and expenditure and expenditure structure revenue his section reviews the city administration. A closer look at of the trends of the city administration sources actual key revenue CITY ADMINISTRATION REVENUE, GTP I PERIOD (ETB MILLIONS AT CURRENT PRICES) AT REVENUE, I PERIOD (ETB MILLIONS GTP CITY ADMINISTRATION

External Loan External Assistance Municipality Revenue Non-Tax Revenue Non-Tax Tax Revenue Tax Total Revenue Revenue Total The data shows that tax revenues constitute the major share constitute the major share revenues that tax The data shows of the revenue collected through the GTP period. The city collected through of the revenue efforts the tax base, awareness of broadening administration’s trustbuilding, enhancing accountability and born fruits. have of the . depicts the share sources of major revenue 14: Share Figure that, on shows It period. the first GTP over sources key revenue taxation from is derived revenue 63% of the average, the five-year reveals that, over the last GTP period (see Table 8), the total Table the last GTP period (see that, over reveals on average) 208% (41.6% an impressive by has increased revenue increased total revenue terms, however, real in nominal terms. In price level since the overall average), 126% (25.2% on by during the same period price index (CPI) consumer by (measured about 82% by has increased Source: Addis Ababa City Administration TABLE 8: TABLE Source: Own computation based on BoFED data FIGURE 14: SHARE OF MAJOR REVENUE SOURCES

T 2.5 29 THE STATE OF ADDIS ABABA 2017 municipalities around theworld–are difficulttoadminister taxes notesthatproperty further –akeyrevenue source formany exploit theexistingrevenue potentialfrom sources. The report incentives togenerateown revenues andoftendonotfully municipalities often have‘own few source’ revenues, lack weak compared tothatofthefederalgovernment. Secondly, expenditure demandsforanumberofreasons. developed countries face greater challenges in financing their Municipality revenue new revenues.new towardsefforts exploring innovative ideas on generating from urban landleasescouldjeopardize theadministration’s the nextsection.Lastly, excessive dependenceonincomederived consequences for, amongothers,housingsupply, asdiscussed in rocketing urban landpriceshave unintendedandoftensevere political factorsattachedtolandavailability. Furthermore, sky supply enoughlandtothemarket. There are alsocomplex a numberoffactorssuchasthecapacitysub-citiesto resource in Addis Ababa while the value of leases is subject to this single-source income is not sustainable. Land is a limited land leasesgrew by 57%onaverage. But excessive reliance on Firstly, therevenue baseoflocalgovernments isusually Informal incomesource, dryingandsellingspices.©GeoKalev ▲ According toUN-Habitat (2009) Over the last twoyears, forexample,revenues from urban 16 , localgovernments inless-

Table 9illustratesthekeymunicipalrevenue componentsover the the cityhastoaggressively work onraisingmunicipalityrevenues. urbanization ofabout3%annually(according toCSA,2015), expenditures.number ofitsdiscretionary With acurrent rateof revenue itcollected,municipalityrevenue stillremains vitalfora an exception tothis.AlthoughAddis Ababa canretain thestate and regional government andhave topasson).Addis Ababa is the taxcomponentsthatcitiescollectonbehalfoffederal extent towhichacityadministrationcanfinanceitself(besides revenue andexpenditure management. if localgovernments are provided withappropriate authorityon government togeneratesufficient revenue whichisonlypossible this isfrequently problematic. Therefore, itiscriticalforlocal government ideallycomesinandtransfersresources. However, collection. If therevenues ofexpenditure, fallshort thecentral andutilitiesrevenueboth forexpenditure onservices in publicfinance.Localgovernment istherefore responsible is basedonthebenefits-received orcost-recovery principle This community and the users need to pay for these services. is responsible forproviding tothelocal goodsandservices transfers are oftenalsonottransparent andpoliticised. government donottendtobestableorpredictable whilesuch if cadastres are notuptodateandthattransfersfrom central The effectiveness of municipal revenue collections reflects the In decentralized governance systems,localgovernment THE STATE OF ADDIS ABABA 2017 30 cites 18 2015 , 1,658 433 201 164 825 2015 2014 , 2013 ,

1,502 306 187 113 884 2014 2012 , 2011 , 1,245 245 188 112 685 2013 0

8,000 6,000 4,000 2,000

10,000 City Revenue per capita in in capita per Revenue City ETB of the City Development Economic Finance and of Bureau The With regard to institutional and human resource capacities, to institutional and human resource regard With is further performance attributable revenue in municipal Low the highest if per capita is among revenue Ababa’s Addis Source: Own computation based on BoFED data. IN ETB PER CAPITA FIGURE 16: ADDIS ABABA CITY REVENUE Addis Ababa because it can retain all state revenue collected, this all state revenue because it can retain Ababa Addis municipal budgetary uncertainty is worrisome. enhancement plan in its 2015 revenue Administration five major reasons for low performance in municipality revenue revenue performance in municipality reasons for low major five base, (b) resource institutional and human collection: (a) weak for charges and fees tariffs, (d) low tax base and rates, (c) low low of major debt collection and non-recovery utilities, and (e) weak investments. city administration lacks skilled personnel and Ababa’s Addis data management facilities and equipment. The city appropriate at rates set long ago and can administration collects land rents the full benefits of its agglomeration economy not reap therefore tax and rental roof economic boom. Land rents, and the recent market today’s below all well income on city-wide properties are if the city is to enhance its revenue. revision rates and need upward tariff charges on utilities and servicesto low such as water supply and solid waste management services. Although most of these utilities and services subsidised on the assumptions of pro- are rates and the been inefficient has the collection spending, poor of low application a blanket city-wide obsolete. Moreover, are to afford easily could those who subsidises also charges recovery pay more. the state to secondary the city retains compared cities. Since per capita no transfers, revenue are collected and there revenue the total over is computed as the ratio of total annual revenue 1,243 167 177 152 743 2012 2015 Share of tax revenue 2014 , for example, indicates 932 165 169 97 489 17 2011 2013 Share of Municipality Revenue 2012 2011 MUNICIPALITY REVENUE DURING GTP I (IN MILLIONS OF ETB AT CURRENT PRICE) OF ETB AT I (IN MILLIONS REVENUE DURING GTP MUNICIPALITY Municipality revenue Municipality tax revenue Municipality rent revenue Municipality service charge Sale of goods and city services

The data reveal that sales of goods and city services that sales of goods and city reveal the The data make of is to look into the trend important, however, What is more secondary and cities the state (direct the case of Ethiopia’s In Percentage largest share (about 55% on average over the last five years) the last five over (about 55% on average largest share and revenues rent Municipal municipal tax revenue. by followed indicating that these services share, lowest charges constitute the forcefully. more explored to be potential areas are 15).The share time (see Figure over shares municipality revenue while the tax revenue has been declining of municipality revenue the privilege of retaining the city did not have If is increasing. it would like other secondarystate revenue, cities in the country, to finance its expenditure Ababa for Addis been veryhave hard demands. governments regional federal and to the goes revenue tax indirect) of what it has collected on behalf of the city gets a share whereby cities to the transferred grants The level. the higher government collected because than the state revenue in most cases lower are grants. The while redistributing also considered other cities are 2015 report Cities of Ethiopian State last five years taken from the Bureau of Finance and Economic and Finance of Bureau the from taken years five last Development. Source: Own computation based on BoFED data Source: BoFED, 2016 Source: BoFED, PERIOD THE GTP REVENUE DURING FIGURE 15: THE SHARE OF MUNICIPAL TABLE 9: 9: TABLE that over the period of 2013 -2014, all other regional cities except cities except the period of 2013 -2014, all other regional that over the state less than 100% grant transfer from received Dawa Dire 22% to 68% varied from that they collected. The shares revenue the same period, 8% to 56% in 2014. Over in 2013 and from 100% a transfer grant exceeding some cities received however, with such state key problem collected. The of the state revenue adversely This predictable. clearly not are they that is transfers be the case for While this may not affects financial planning. 31 THE STATE OF ADDIS ABABA 2017 Expenditure including regional capitals,scored lessthanETB2,000. per capita exceeding ETB 4,000 while almost all other cities, Addis Ababa’s largerandstronger economygeneratedarevenue revenue percapitabasedon2013data.The showsreport that for thefive-year period2011-2015. with a40%growth rate.Figure 16illustratesrevenue percapita about 30%onaverage anditwashighestduringtheperiod2014 population size. The data reveals that revenue per capita grew by Source: BoFED FIGURE 17:SHAREOFVARIOUS EXPENDITURECOMPONENTSINADDISABABATOTAL EXPENDITURE last fouryears. Figure 17illustratesmajorexpenditure categories was more than60% of thetotaleconomyexpenditure over the economy expenditure. On average, thespendingonconstruction sectortakingthe lion’swith theconstruction share inthetotal Ababa’s expenditure in the urban economy took the highest share areas that acityemphasizes.Addis Over thedataperiodobserved, revenue raisingandexpenditures. toenhancetransparencyimportant andaccountabilityofcity It user fees,especiallyforwaterandsewerservices. isparticularly impacts onincreasing revenue generationandthecollectionof technologies together with tax reforms reportedly have positive introduction ofmoderninformationandcommunication cited asthemostimpedingfactor. Education andtraining, accountability andtransparency. Capacityconstraintsare usually to enforce tax-lawsandrevenue collection,aswell astocreate on themunicipality’s institutionaland humanresources capacity the costsisinfluenced by anumberoffactors. It isdependent received. Theextenttowhichmunicipalitiescanactually recover provided shouldbepaidforonthebasisofbenefits services housingandhealth. social services, recreation and culture, planning and economic development, disposal), protection (includingpolicingandfire protection), (including water, sewerageandsolidwastecollection andenvironmental services they generallyincludetransportation the functionsofmunicipalgovernments differamongcountries, The State of Ethiopian Cities2015 comparesreport city The structure ofexpenditure obviously reflects thepriority Based ontheprincipleofcost-recovery, localgovernment- UN-Habitat’s ‘Guide toMunicipal Finance’ notesthatalthough

Percentage 0121 0321 2015 2014 2013 2012 2011 FIGURE 18:SHAREOFMUNICIPALITY REVENUETO TOTAL EXPENDITURE Source: OwncomputationbasedonBoFED. Ethiopian cities hadpercapitaexpenditure below ETB1,500 According tothe2015State ofEthiopian Cities report, most capita expenditure ifcompared withEthiopia’s cities. secondary of Addisand economic importance is shown by a huge gap in per ment isreflected inthecity’s percapitaexpenditure. Theprimacy strengthen itsown municipal revenue generation. same period.Thisstrengthens theargument thatthecityneedsto revenues covered about83%ofthetotalexpenditure over the of itstotalexpenditure iscovered by themunicipalrevenue. State Actually, on the average over the past four years, only about 10% finance itsexpenditure from its own municipal revenue alone. municipality revenue isdecliningandthatAddis Ababa cannot revenue tototalexpenditure. Thedata reveals thattheshare of Figure 18shows thetrend fortheshare ofAddis Ababa’s municipal revenue is one indicator of a city’s strength and competitiveness. expenditures. Theabilitytofinance theexpenditures from its own what extentthemunicipalitycangeneraterevenues foritsown rankedfirstandsecond respectively.services “municipality”ranks thelowest whiletheeconomyandsocial and their share. The datamakesclear that expenditure on

Addis Ababa’s boomingeconomyandinfrastructure develop- With regard to revenue andexpenditure, thekeyquestionisto Percentage 10 15 20 0 5 2012 Share ofMunicipalityRevenue toTotal Expenditure 2013 Municipality Social Economic General service Administration and 2014 2015 THE STATE OF ADDIS ABABA 2017 32 2015 , , 2014 , Capital Expenditure , 2013 , , Recurrent Expenditure Recurrent 2012 , , The data, as expected, shows that capital expenditure by far that capital expenditure The data, as expected, shows , , , , , ETB MILLIONS) EXPENDITURE (IN CAPITAL VS. FIGURE 20: RECURRENT on BoFED. Source: Own computation based positive multiplier effect in the long run. Figure 20 shows the 20 shows Figure long the in effect multiplier run. positive types. pattern of both expenditure road on The huge expenditure expenditure. recurrent exceeds trend constructionthe Although this. of manifestation one is productivity- the long-term and justifiable from is positive the city point of view, investment enhancing infrastructure recurrent sustainable way of financing its needs to seek a more reach could in infrastructure time investment expenses. Also, over a saturation point when further benefits will become investment analysis to the costs. This demands careful marginal in relation of the true of economic and social benefits vis-à-vis the costs the city. that draws capital from investment infrastructure 2015 2014 2013 2012 0 An increase in expenditure per capita requires an increase an increase per capita requires in expenditure An increase Another category component concerns the of expenditure 2,500 5,000 7,500 10,000 over the period 2012-2014 while that of Addis exceeded ETB exceeded the period 2012-2014 while that of Addis over 19). (see Figure 4,000 on the average city expenses. increased the to finance capita per in revenue Addis of growth overall the in trend positive a is there Although per capita, any fall in municipality revenue city revenue Ababa’s sustainable growth. city’s for could be a hurdle expenses or capital amounts the city has spent on recurrent to perceived are While both these expenditures investments. is assumed to enhance capital expenditure support city growth, productivity. its impact on long-term the urban economy through and utilities is expected to yield a in infrastructure Investment Source: Own computation based on various sources Source: Own computation based EXPENDITURE IN ETB FIGURE 19: PER CAPITA 33 THE STATE OF ADDIS ABABA 2017 2.6 T

authorities todetermine ataxlevywithoutanappropriate taxbase. to establishunder manycircumstances andmakesithard forthe attributable toaninfrastructure investment. Thisproves difficult basic problem isdeterminingwhatthe real gaininlandvalue is a contentiousissueformany reasons inmanycountries.The application ofbettermentlevies, andsuchlevieshave become investments. 30-60%) of the gain in land value attributable to infrastructure gains inlandvalue. Landowners are taxed afixed (i.e. proportion the landvalue isbasedonimposingaone-timetaxorcharge Peterson infrastructure investment. One suchmechanism,according to on nettingtheadditionallandvalue created through urban However, several questions remain unanswered withthe Cleared landinAddisAbababeforeoutleasing. ©GeoKalev ▲ The principleofland value capture therefore isbased infrastructure investments would add value to the land. he concept of landvalue capture emphasizes that urban 19 (2008),isbettermentlevies.Thismethodofcapturing

opportunities challenges and Land value capture: inventory oflandassets/registration offixedinventory system property are spread over awidearea asopposedtoaspecificurbanlocality. could be jeopardiseddelivering infrastructure services as resources willingness ofpayingbetterment levies,buttheeffectiveness of This methodmightbeacceptable politicallyandincreases the without delineation of a specific location inanurban area. the cityresidents payan‘acceptable’ feeforthecityinfrastructure areprivate partnerships notsostrong. municipality hastotalcontrol over theland,albeitthatpublic- This approach couldbeconsidered for Addis Ababa, where the the other, theprivate sectorhasbenefited through the process. has improved itsinfrastructure andbetterurbanutilities;on which value has increased. On the one hand, the municipality its debtwiththeproceeds ofeithersellingorby leasingtheland land itobtainedfrom themunicipality. The corporation repays against theland as collateral tofinance theinfrastructure onthe private development corporationwhich,inturn,canborrow owned, themunicipalitytypicallytransferslandtoapublic- For countrieslikeChina,forinstance,where landispublicly investment andcapture thegainsthrough landsales/landlease. sector owns the landitcaninternalize thebenefits ofpublic public landsales.According toPeterson (2008),ifthepublic The keyquestion withland value capture iswhether an Another approach tobetterment fees isappliedinBogota,where, In many advanced nations value capturing is realised through THE STATE OF ADDIS ABABA 2017 34 ▲ Construction under way in Addis Ababa. © Geo Kalev expectations of future land price increases. Secondly, land sales land sales Secondly, land price increases. expectations of future The entity that and accountability. often lack transparency is a has legal title to the land could be corrupted unless there obtained from public accounting system on revenue transparent up land prices could drive public authorities land lease. Finally, could This market. the to leases land of supply the restricting by municipal be a deliberate act or could be an outcome of low supply timely and adequate an provide to capacity institutional repercussions negative have way would leasing. Either for of land on the local economy and hurt urban development. According to a city administration land management report to a city administration land management report According idea that cities a novel is generally capture Although land value exists for the city. For a city administration to yield good land For exists for the city. (or put) in place updated property it must have capture, value of land value land use plans, estimate the market registration, Against this among others. of land valuation, a process through is at an infant stage. Ababa Addis background, is an established systems of land banking (2016), although there is still in its early of land, property registration and counting parcels and accurately facilitate estimating stages and would not effectively that accrues urban infrastructure the value to land through comprehensive This is worrisome since clear, investments. can yield importantmunicipal and updated land registration income. That is especially critical since it can facilitate meeting with associated demands financial utilities and infrastructure the GIS-based technologies various rapid urbanization. Fortunately, and updated comprehensive make the establishment of a clear, the significantly less cumbersome than before urban land register of these new availability technologies. urban Firstly, many hurdles. are to, in practice there must resort transaction could indicate and current volatile are land markets The municipality has to a bubble and not a sustainable source. land leases for in utilizing the money obtained from be careful becoming dependent and avoid in infrastructure investment optimistic unrealistically on it as an operating budget or have 35 THE STATE OF ADDIS ABABA 2017 2.7 T

that wouldenablethemtosustaintheirincomeandstrive to saturation ofthesector. packages TheMSEs mayneedsupport sectorprovidesthe construction sustainableemployment after roles in this important regard. A remaining question is whether government condominiumhousingprojects mighthave played (16%) (seeFigure boomand 21).Thehousingconstruction by about54%,followed (16%)andmanufacturing by services in incomeinequalityover thelastdecade. Micro andsmallenterprisedevelopment Agency (2016) total of730,902jobs,according totheAddis Ababa Development jobsora created 482,078permanentand248,824temporary During the last GTP period alone,the city administration has development programs have beenintenseover thelastdecade. the Gini-coefficient todecline0.342in2015.TheMSE started from 0.353in1996to0.4552005(see Table 10).After2005, inequality (measured by Gini-coefficient) whichhasbeenrising interim poverty assessmentof2016computesthetrend inincome on average. The Bureau of Finance and Economic Development experiences modestincomeinequalitydistributionofabout0.3, unemployment andenhancingequitablegrowth. Addis Ababa development wouldbringeconomicgrowth through reducing development ofMSEs.It isbasedonthenotionthatMSE objective isderivedcity administration.Thisthroughvery the development hasbeenaguidingprincipleintheAddis Ababa investment inEthiopia. The construction sectortakesthelion’sThe construction share ofMSEjobscreated Sustaining economicgrowth through afocusonlocaleconomy enterprises (MSEs)andthetrends offoreign direct ofkeysectorssuchasthemicro andsmall performance his sectiondiscussesenablingbusinessenvironments,

20 . This might have partly contributedtoadecline . Thismighthave partly economic growth and drivers of Competitiveness over thelast5years. enterprises, higherthanthecityadministration’s targetof831 the GTPperiod,about1,217MSEshave becomemedium-size better in graduating enterprises to the next higher level. Over linkages, technologytransfersandsubcontractingarrangements. but MSEsneedtohave nationalaswell asinternationalmarket is needed in enhancing not only the support skill and finance, medium andlargeenterpriseswouldprove useful.Government graduate tothenexthigherlevel. In thisregard MSElinkageswith FIGURE 21:PROPORTIONOFMSEJOBSCREATED BYMAJORSECTORS, Source: BoFED, Interimpovertyassessment(2016) TABLE 10:TRENDININCOMEINEQUALITYADDISABABA Source: AddisAbabaMicroandSmallEnterpriseDevelopmentAgency(2016). Year It notingthatinAddis isworth Ababa MSEshave performed 2015 2011 2005 2000 1996 2011-2015 2011-2015 Construction Manufacturing Services Urban Agriculture Trade 16% Gini coefficient 0.324 0.336 0.455 0.423 0.353 16% 8% 6% 54%

THE STATE OF ADDIS ABABA 2017 36 5 272 6325 2,080 3,600 2,274 1,995 65,929 22,082 15,585 73,248 303,577 110,182 Temporary Temporary employment 5 474 315 841 4,116 8,362 2,072 1,534 89,406 69,660 21,579 83,664 282,028 Permanent Permanent employment 212.8 2.500 863.6 186.4 383.37 1,699.9 3,998.6 2,678.9 1,059.6 9,185.4 of ETB 91,811.5 36,788.7 34,751.6 Capital in Millions 3 1 6 8 The data covering the past two decades on the origin of major the past two decades on the origin of The data covering less than half of are most countries operating projects For attraction is expected to rise due to its relatively good services to its relatively is expected to rise due attraction and for goods and services. as demand as well infrastructure, city’s The jobs or about about 83,664 permanent has created FDI inward FDI has not Inward created. total permanent jobs 30% of the as in localities in and around Ababa jobs in Addis as many created oriented FDI may be Ababa indicating Addis possibly the city, intensive. capital more (927 domination of China a strong shows FDI sources inward and (346 projects) (370), India Sudan by followed projects), FDI the last two decades. China’s over the USA (242 projects) constitutes about 20% with Ethiopia) joint ventures (excluding about 14% of operating in Ethiopia, of the number of projects projects and about 17% of total FDI created total permanent jobs and under implementation (including the pre-implementation capital makes up registered China’s terms of value, In projects). joint excluding invested about 17.32% of the total FDI value included joint ventures With with other countries. ventures up to about 21.85% of increases value FDI investment China’s closer is value investment US The value. investment total the joint excluding value to about 1.43 of the total FDI investment to about for US increases figure the joint ventures, With ventures. 2.23% of the total FDI value. and The Italy Germany, China, with licensed total projects the into doing better in terms of getting the FDI Netherlands, performance in the proportion of This low operation in Ethiopia. to the poor enabling operation could be attributed FDI projects business environment.

th 7 3 4 7 11 26 32 72 149 38 61 19 13 6211 67 413 616 457 1,515 1,119 2,482 Based on data on Based 21 6 7

26 85 16 73 24 28 16 85 604 746 Pre- 1,716

No of projects implementation Implementation Operation

84 26 10 34 60 35 25 306 172 214 5,317 1,633

investment direct Foreign

oreign direct investment (FDI), depending on the type (FDI), depending on investment direct oreign useful to enhance employment can be of investment, increase opportunities,and thereby transfer technology Region Total . Starting a business, obtaining credit, trading across borders borders trading across a business, obtaining credit, . Starting

th Tigray Grand Total Multiregional Oromia SNNPR Somali Harari Gambella Dire Dawa Amhara B.Gumze Addis Ababa 2,718 Afar In Addis Ababa, about 1,500 FDI projects are operating, are about 1,500 FDI projects Ababa, Addis In from the Ethiopian Investment Agency (2015), Addis Ababa, as Ababa, Agency (2015), Addis Investment the Ethiopian from to other compared if could be expected, ranks first in FDI inflows 11). Table (see cities or regions Ethiopian further in the country, about 61% of the total number of FDI importance in the domestic Ababa’s consolidating Addis amount capital terms of invested economy and urban system. In invested constitutes about 37.8% of the total FDI Ababa Addis in FDI share position and future relative Ababa’s amount. Addis productivity as long as the receiving countryas the receiving as long productivity has a good a requires however, investment, Attracting capacity. absorptive and a stable macro-economy. business environment favourable the interventionsIn such conditions. can help create Policy ranks 146 Ethiopia report Business 2016 Doing Bank’s World and registering property however, were found to be critical were property however, and registering the to according Ethiopia in business doing to impediments affected inward adversely 2016. These factors have in same report Ababa. Addis and Ethiopia both into flows FDI Source: Ethiopian Investment Authority, 2016 Source: Ethiopian Investment Authority, LICENSED FDI PROJECTS BY REGION AND STATUS (1992-2016) 11: LICENSED FDI PROJECTS BY REGION AND STATUS TABLE among 189 economies surveyedamong 189 economies This is for ease of doing business. ranked in which Ethiopia the 2015 report over an improvement 148

F 2.8 37 THE STATE OF ADDIS ABABA 2017 FDI by sector Source: EthiopianInvestmentAuthority(2016) TABLE 12: Ethiopia. for enhancing FDI flows aiming at enhancing sustainability in 4.5% ofthetotalFDI(see Table 12).Clearly, there isroom clean energygeneration,healthandtourismaccountsfor only agriculture (7.3%). FDIlicensed on (15.4%) and construction dominated by manufacturing(44.0%),real estate(18.5%), consider climatechange. energy, environmental sustainabilityandinvestments thatwould include such issues as what of proportion FDI operates on clean environment. Key elementstoprobe thequalityofFDImight of economic sustainability) through its effect forexample on the economy mightinfluenceitslongtermsustainability(interms Sector It thatinward hasbeenobserved FDIinEthiopia islargely The nature offoreign direct investment thatcomesintoan Agriculture Manufacturing Mining and distribution) (Generation, transmission Electricity Education Health Hotels andrestaurants communication Tour operation, transport and consultancy services and equipment,rental Real estate,machinery including waterwelldrilling Construction contracting Others* Grand total FDIBYSECTOR (1992-2016) Total 2,343 5,317 823 121 105 296 131 984 390 32 88 4 mlmnainImplementation implementation No ofprojects 1,716 Pre- 329 773 104 266 130 35 15 41 12 8 3 2.9 T

minority investors, 7) paying taxes, 8) trading across borders, electricity, 4)registering property, 5)gettingcredit, 6)protecting permits, 3) a getting business, 2) dealing with construction the businessenvironment ofcountriesor citiesisin:1)starting 11 areas through abusiness’s lifecycle tojudge how enabling Lagos andLuanda. competitiveness report, betteronlythanDhaka, Khartoum, from intheGlobal among125citiessurveyed Cities2016 that determinesthecityranking.Addis Ababa wasranked121 political engagement. A number of indicators underlie an index human capital,informationexchange, culturalexperienceand compares cities based on an indexed score for business activities, Global Citiescompetitiveness report (2016) apply different methodologiestorank citycompetitiveness. The ,1 ,8 18152,0830,3577 28,2028 91,811.5 2,482 1,119 The World Bank inits Doing Business of 2015 report reviews 218 8 ,8 21641,9157,176 11,5921 62,166.4 1,082 488 129 32 35 66 25 99 21 6 extension, acity’s competitiveness. Avariety ofinstitutions encouraging or discouraging investment flows and, by environment isakeydeterminant he businessregulatory Operation

7 ,0. 241 18,3632 12,4317 8,700.0 276 2 1,734.6 126 8 ,9. 23213,151 12,342 6,295.2 589 6 06921,6 39,454 18,663 10,609.2 161 competitiv environment andcity Enabling business 18 54 55 65 55 1 ETB Millions Capital in 568.7 377.3 468.1 227.7 663.1 1. eness employment Permanent 2,122 1,741 3,794 1,522 815 781 10 22 , forexample, employment Temporary 1,119 2,410 5,441 327 372 490 5 st THE STATE OF ADDIS ABABA 2017 38 -1 -6 -3 -2 -1 -2 -1 +4 -0.16 +0.42 +0.02 +0.81 +0.43 +3.34 change change No change No change No change No change No change No change out of a total of 189 economies in 84 70 th 118 165 170 127 140 165 165 113 37.39 59.06 69.11 39.80 35.00 15.00 50.02 57.29 70.62 59.11 . On the other hand, there was, over the last two was, over the other hand, there . On Frontier (% points) Frontier 24 place in in 2015. th Despite lagging in many ranking areas, Ethiopia has progressed has progressed Ethiopia lagging in many ranking areas, Despite The same report compares the procedures, the time, cost and the procedures, report compares The same Starting a business in Ethiopia is clearly challenging and not a business in Ethiopia Starting business environment with a good global ranking attracts FDI, business environment earnings for that matter. exchange and foreign to construction permits, startingwith respect a business, getting (World insolvency property and resolving registering electricity, 2016) Bank, capital required to start a business in Ethiopia with the sub-Saharan with the sub-Saharan to start a business in Ethiopia capital required starting a business; a deterioration from the already poor score of poor score starting the already from a business; a deterioration 170 years, no significant change in access to credit, protection of protection no significant change in access to credit, years, contracts. and enforcing borders trading across small investors, seriously attempting to increase are Ababa and Addis Ethiopia If shown areas the lagging or stagnant score FDI flows, the inward 13. in Table reveals report (2016) Bank World time. The getting any easier over is ranked 176 that Ethiopia Doing Business 2015 Distance to 84 73 114 166 176 129 141 167 166 113 37.81 59.06 68.95 39.80 35.00 15.00 50.04 58.10 71.05 62.45 Frontier (% points) Frontier Doing Business Rank 2016Doing Business Business Rank 2015 Doing . Doing Business 2016 Distance to 23 DOING BUSINESS RANK FOR MAJOR TOPICS RANK FOR MAJOR DOING BUSINESS Resolving insolvency Enforcing contracts Paying taxes Paying Trading across borders Trading Protecting minority investors Protecting Getting credit Registering property Resolving insolvency Getting electricity Trading across borders Trading Enforcing contracts Dealing with construction permits Starting a business Dealing with construction permits Getting electricity Registering property Getting credit minority investors Protecting taxes Paying Starting a business A closer look into both relative and absolute values of the doing values and absolute A closer look into both relative business indicators for Ethiopia gives a clear picture of areas that areas of picture clear a gives Ethiopia for indicators business of Addis to enhance the competitiveness should be addressed relative a and the countryAbaba as a whole. The rankings provide the country of where stands among 189 economies measure improvements where areas to points and world the around the over that 13 reveals Table will enhance its competitiveness. of resolving only in the area has progressed Ethiopia last year, This is indeed an important matter when it comes to insolvency. global on things, other among relies, often which FDI, attracting A good of the business environment. rankings in conduciveness 9) enforcing contracts, 10) resolving insolvency and 11) labour insolvency contracts, 10) resolving 9) enforcing and ranks 189 Bank compares World The regulation. market years. various based on the ease of doing business over economies the state of doing used to analyze Comparator countries are the report this of the purpose For economy. given of a business was used to understand the data in the 2016 report most recent state of doing business in Ethiopia Source: World Bank Doing Business report, 2016 Source: World Source: World Bank Doing Business report, 2016 Source: World FRONTIER TO 14: DOING BUSINESS RANK AND DISTANCE TABLE TABLE 13: TABLE 39 THE STATE OF ADDIS ABABA 2017 Source: World BankEnterpriseSurvey, 2016 TABLE 17: Source: World BankEnterpriseSurvey, 2016 TABLE 16:CORRUPTIONINDICATORS Source: World BankDoingBusinessreport,2016) TABLE AFRICACOMPARED 15:STARTING ETHIOPIAANDSUB-SAHARAN ABUSINESS: Crime indicator Corruption indicator Indicator Percent offirmsidentifyingcrime,theftanddisorder asamajorconstraint (% ofproductvalue) Products shippedtosupplydomesticmarkets thatwerelostduetotheft If therewerelosses,averagelossesduetotheftandvandalism(%ofannualsales) Losses duetotheftandvandalismagainstthefirm(%ofannualsales) Percent offirms experiencinglossesduetotheftandvandalism If theestablishmentpaysforsecurity, averagesecuritycosts (%ofannualsales) Security costs(%ofannualsales) Percent offirms payingforsecurity Percent offirmsidentifyingthecourtssystemasamajorconstraint Percent offirmsidentifyingcorruptionasamajorconstraint Percent offirmsexpectedtogivegiftspublicofficials“togetthingsdone” Percent offirmsexpectedtogivegiftsgetawaterconnection Percent offirmsexpectedtogivegiftsgetanelectricalconnection Percent offirmsexpectedtogivegiftsgetaconstructionpermit Percent offirmsexpectedtogivegiftsgetanimportlicense Percent offirmsexpectedtogivegiftsgetanoperatinglicense Value ofgiftexpectedtosecureagovernmentcontract(%value) Percent offirmsexpectedtogivegiftssecuregovernmentcontract Percent offirmsexpectedtogivegiftsinmeetingswithtaxofficials Bribery depth(%ofpublictransactionswhereagiftorinformalpaymentwasrequested) Bribery incidence(%offirmsexperiencingatleastonebribepaymentrequest) Procedures (number) Paid-in minimumcapital(%ofincomepercapita) Cost (%ofincomepercapita) Time (days) CRIMEINDICATORS Ethiopia 138.9 76.1 19.0 11 di bb tipaSbShrnArc Allcountries Africa Sub-Saharan Ethiopia Addis Ababa di bb tipaSbShrnArc Allcountries Africa Sub-Saharan Ethiopia Addis Ababa 0627.9 20.7 30.6 22.3 51.2 17.8 23.1 20.6 55.9 25.2 19.7 17.4 19.8 22.5 26.8 19.8 20.5 28.7 . 7.5 8.3 8.2 9.4 2.3 0.5 2.6 0.6 . 2.4 0.5 3.4 1.1 0.2 0.8 6.5 1.5 1.1 0.1 0.6 4.7 1.1 0.5 355.3 53 u-aaa fiaOECDhighIncome Africa Sub-Saharan 45.1 53.4 26.8 8 16.2 23.9 17.1 37.9 26.7 25.6 29.5 19.1 31.7 18.1 19.0 25.0 2.1 16.4 22.1 64.9 1.5 7.3 1.4 4.9 2.9 14.3 21.5 14.5 31.9 16.5 16.5 23.9 15.0 28.4 13.0 13.9 17.9 19.2 19.4 55.6 1.7 9.6 4.7 3.2 8.3 0.8 4.8 0.8 3.2 1.6 THE STATE OF ADDIS ABABA 2017 40

4.8 4.7 8.3 10.9 5.0 8.4 11.7 4.6 9.7 14.4 36.8 25.7 21.8 30.5 85.9 22.7 83.5 86.7 34.6 36.8 78.7 14.4 19.1 46.4 75.8 11.6 25.3 71.4 214.2 205.1 30 32.8 3.2 2.9 0.87.8 0.8 8.7 0.3 0.3 7.5 7.8 20.0 20.3 13.6 16.4 92.282.9 92.6 34.2 85.8 16.912.3 32.8 82.6 15.1 12.9 83.3 301.8 296.2 Addis Ababa Addis Ababa Ethiopia Sub-Saharan Africa All countries Addis Ababa, on the other hand, has a competitive advantage advantage competitive has a on the other hand, Ababa, Addis Provision of loan/credit to firms is a key factor contributing to firms is a key factor of loan/credit Provision is one of the key elements for private provision Infrastructure in the crime indicator (see Table 17) with a relatively low score score low 17) with a relatively Table in the crime indicator (see as theft and well as in security costs, theft and vandalism, and global African average to sub-Saharan compared disorder attributes that many African are and security Safety standards. emphasize needs to Ababa cities lack and that the city of Addis when seeking to as an important advantage competitive attract FDI. credit firstly, of reasons: a number for city competitiveness to with a potential in newprojects helps firms invest expansion purchase to firms allows credit Secondly, workers. more hire to that technology and then adopt new of production methods edge, enabling them to a competitive could lead them towards This is why banks need of the market. share garner a greater servicesfinancial and credit at need in firms to provide to Addis in indicates that firms 18 above Table considerable ease. sub- to average compared challenges of getting loans face severe Ababa needs to Addis African firms. A typical firm in Saharan about 301% of the loan amount to banks bring collateral valued and this makes it difficult for many businesses to access financial only about 13.6% of firms has Ababa services. Addis As a result only and banks from capital working their for finance getting purposes according by banks for investment financed 12.3% are (2016) enterprise survey This pales report. Bank’s World to the of about 21.8% and average in comparison to the sub-Saharan 19.1% respectively. Firm competitiveness. city's a for hence and development sector and quality to the level related directly gains are productivity costs, for it has implications on productions of infrastructure, provision Ababa’s Addis technology and labour productivity. to the regional of utilities is one of the most modest compared survey (see Table 16) on corruption Table survey (see 26 . Small businesses in particulara major face . Small 25 FINANCE INDICATORS Percent of firms identifying access to finance as a major constraint of firms identifying access Percent Proportion of working capital financed by supplier credit (%) Proportion Proportion of investments financed by equity or stock sales (%) of investments financed by Proportion finance working capital of firms using banks to Percent of working capital financed by banks (%) Proportion Proportion of investments financed by supplier credit (%) of investments financed by Proportion Percent of firms with a checking or savings account a checking or savings account of firms with Percent Percent of firms with a bank loan/line of credit a bank loan/line of credit of firms with Percent (%) of loans requiring collateral Proportion amount) of collateral needed for a loan (% of the loan Value of firms not needing a loan Percent of firms whose recent loan application was rejected Percent of firms using banks to finance investments Percent (%) of investments financed internally Proportion banks (%) of investments financed by Proportion Among the four indicators of starting a business, Ethiopia Among the four indicators of starting a business, Ethiopia The World Bank (2016) Bank World The Finance indicator African average, as shown in Table 15. By all standards, Ethiopia’s Ethiopia’s all standards, 15. By Table in as shown African average, performance the sub-Saharan in starting a business is also below room for improvement. is significant there Clearly, average. of days it takes to startis better only in the number a business The paid-in African standard. to the sub-Saharan compared sub-Saharan in worst the of one is Ethiopia in capital minimum important Africa. This is the most in terms of adversely factor start to firms for easy not is a business It competitiveness. affecting the poor and requirements capital the initial because of largely weak that and so system. The financial sector is immature credit provision and loans term long with firms private to outreach its importantly, More financial servicesof various is inadequate. to required that businesses are collateral asset value the required loan the of 173% about at estimated highest, the among is bring 2013) Bank, (World Source: World Bank Enterprise Survey, 2016 Bank Enterprise Survey, Source: World TABLE 18: TABLE found that both incidence and depth of bribery worse in are Addis average. African to the sub-Saharan compared Ethiopia to construction is doing worse in corruption permits, related Ababa tax contracts and bribing of import government licenses, securing officials. A significant number of firms cite corruption as a major impediment to business expansion, implying that interventions competitiveness Ababa and Addis Ethiopian if the required are and accountability governance, good of Issues enhanced. to be is both incidence and central to bringing down are transparency depth of bribery. hurdle in accessing financial services them hurdle because banks perceive and small enterprises start most micro their Therefore, as risky. family and friends or informal operations with funding from typically starting capital is therefore necessity, By loan sharks. the latest technology, for purchasing small and does not allow Bank, 2013). affecting their competitiveness negatively (World 41 THE STATE OF ADDIS ABABA 2017 Source: World BankEnterpriseSurvey, 2016 TABLE 21:REGULATIONS ANDTAXES Source: World BankEnterpriseSurvey, 2016 TABLE 20:INNOVATION ANDCITYCOMPETITIVENESS Source: World BankEnterpriseSurvey, 2016 TABLE 19:INFRASTRUCTUREANDCITYCOMPETITIVENESS Regulations andtaxes Innovation andtechnologyindicator Infrastructure indicator Percent offirmsidentifyingbusinesslicensingandpermits asamajorconstraint Percent offirmsidentifyingtaxadministrationasamajor constraint Percent offirmsidentifyingtaxratesasamajorconstraint Days toobtainanimportlicense Days toobtainaconstruction-relatedpermit Days toobtainanoperatinglicense If therewerevisits,averagenumberofvisitsorrequiredmeetingswithtaxofficials Number ofvisitsorrequiredmeetingswithtaxofficials regulation (%) Senior managementtimespentdealingwiththerequirementsofgovernment Percent offirmswithanannualfinancialstatementreviewedbyexternalauditors Percent tointeractwithclients/suppliers offirmsusinge-mail Percent offirmshavingtheirownwebsite Percent offirmsusingtechnologylicensedfromforeigncompanies Percent offirmswithaninternationally-recognizedqualitycertification Percent offirmsidentifyingtransportationasamajorconstraint markets (%)* Proportion ofproductslosttobreakage orspoilageduringshippingtodomestic Number ofwaterinsufficienciesinatypicalmonth* Percent offirmsidentifyingelectricityasamajorconstraint Days toobtainanelectricalconnection(uponapplication) If therewereoutages,averagelossesduetoelectricaloutages(%ofannualsales) Losses duetoelectricaloutages(%ofannualsales) If therewereoutages,averagedurationofatypicalelectricaloutage(hours) Duration ofatypicalelectricaloutage(hours) Number ofelectricaloutagesinatypicalmonth Addis Ababa Ethiopia Sub-Saharan Africa Sub-Saharan Ethiopia Addis Ababa Africa Sub-Saharan Ethiopia Addis Ababa Allcountries Africa Sub-Saharan Ethiopia Addis Ababa 1. 194.3 216.8 8417.1 22.8 12.8 18.4 47.5 23.5 11.5 43.5 11.9 12.7 58.1 74.0 34.8 61.0 7.7 84.5 39.6 12.9 33.3 29.1 . 6.4 7.6 5.4 3.7 1.6 4.8 3.8 1.5 4.3 4.7 8.3 1.2 7.5 2.7 1.1 2.7 6.9 4.6 5.8 6.4 4.6 4.2 8.2 6.0 4.8 6.7 63 19.2 29.5 18.2 26.3 70.8 33.2 14.6 44.5 49.0 60.2 32.9 17.5 30.9 38.3 71 12.5 17.1 30.0 19.1 14.7 18.1 22.8 31.5 33.0 7.6 3.1 2.2 1.9 1.8 8.8 5.5 5.6 4.2 8.5 All countries All countries 49.3 72.6 45.1 14.9 17.6 9.9 2.6 1.6 1.2 1.0 4.7 2.6 4.4 2.4 6.4 THE STATE OF ADDIS ABABA 2017 42

7.5 5.9 2.8 19.0 13.8 91.3 10.8 61.2 64.2 35.8 34.4 16.0 9.0 3.9 2.9 10.2 13.8 93.2 16.3 59.0 66.1 33.9 24.2 23.0 9.88.17.5 7.7 8.9 6.0 7.5 0.6 5.9 1.3 93.5 92.9 16.563.467.9 19.2 32.1 36.7 72.9 82.5 14.2 17.5 56.7 13.5 Addis Ababa Ethiopia Sub-Saharan Africa All countries By virtue geographical location and as a result of its advantageous By The priority task for the coming decade should be for the the transaction cost importantEqually to reduce is the need foreign inputs severely hurts businesses in Addis Ababa. This This Ababa. hurts businesses in Addis inputs severely foreign coupled with poor when especially hampers competitiveness performance time needed to clear imports in the average (which and 2016) in days 16.5 to 2008 in days 14.1 from worsened has exports customs (which through time to clear direct average 2016). in days 9.8 to 2008 in days 4.3 from deteriorated has middle-income a becoming of goal national the if Therefore, countrypolicy interventions 2025 is to be achieved, would by be appropriate. of the massive investment and policy reforms undertakenthe by reforms policy and investment massive the of as the Ababa position Addis the past decade to over government economic performance over the city’s economic hub of the country, in investments Huge the past decade and half has been spectacular. drainage public transport,roads, telecommunications, electricity, legal and system, public housing, coupled with an improved unleashed the economic potential of regulatory have environment to be done. still remains more But Ababa. Addis improving by gains recent on build to administration city of municipal responsiveness and effectiveness the efficiency, The cost of doing business needs to institutions in service delivery. to facilitate access to land, undertakingbe eased by deep reforms bureaucratic eliminating as by capital, as well investable credit, tape and corruption. red expediting the degradation by associated with environmental on pollution implementation of existing laws and regulations reduce of mass transit to improvement energy efficiency, control, of green congestion and carbon emission, expanding the size the conditions for the city to and creating space in the city, socially inclusive. become more Concluding notes survey report. 27 Days to clear direct exports through customs direct exports through customs Days to clear Percent of firms exporting directly or indirectly (at least 1% of sales) of firms exporting directly or indirectly (at least 1% Percent of firms exporting directly (at least 1% of sales) Percent sales (%) of total sales that are domestic Proportion directly (%) of total sales that are exported Proportion indirectly (%) of total sales that are exported Proportion customs* Days to clear imports from origin* of firms using material inputs and/or supplies of foreign Percent origin (%)* of total inputs that are of domestic Proportion origin (%)* of total inputs that are of foreign Proportion Days of inventory of main input and trade regulations as a major constraint of firms identifying customs Percent The regulatoryvery a plays The environment important in role performs Ababa activities, Addis to trade-related regard With In innovation and technology Addis Ababa scores a low a low scores Ababa technology Addis and innovation In Trade indicator Trade competitiveness through its effect on direct and indirect costs. The costs. indirect and direct on effect its through competitiveness and regional the average within are tax indicators and regulation has contributed to a in Ethiopia tax reform Recent global values. to 2008. The percentage compared better business environment of firms identifying tax administration as a major constraint 29.1% in 2008 to only 18.4% in 2016; relatively from dropped of 26.3 % and global averages to the regional good if compared 21). Table (see and 19.2 % respectively supplies for its material on foreign poorly in its reliance Table 22) Bank surveyreport (2016) (see World inputs. The surveyed that about 63.4% of the firms depend on reveals of and global average to regional imported inputs, compared the difficulty of obtaining Given 59% and 61.2% respectively. on reliance competitiveness, product and weak currency hard comparative advantage. It has few firms with internationally It advantage. comparative regional than the quality certification; much lower recognized from licensed The number of firms using technology average. to a regional companies is only about 13 % compared foreign Table 2016 (see of 15% in of 17.5% and a world average average websites to communicate in terms of is some progress 20). There with 2008 which was only 18.0% with clients if compared (2006) Bank World the according average but there is a stark contrast in the areas of; for example; contrast in the areas is a stark but there average to obtain an electrical connection. the number of days required to obtain this takes about 217 days on average Ababa, Addis In of about average to the regional electricity connection compared 2016 Bank (World of 31.5 days 33 days and the world average in the provision enterprise survey). is also not competitive Addis for the number of basis as its score of enough water on a regular than the sub-Saharan insufficiencies in a typical month is higher as can be seen in the table above. African average Source: World Bank Enterprise Survey, 2016 Bank Enterprise Survey, Source: World TRADE LOGISTICS AND CITY COMPETITIVENESS AND CITY TRADE LOGISTICS 22: TABLE 43 THE STATE OF ADDIS ABABA 2017 9 8 7 6 5 4 3 2 1 ENDNOTES CHAPTER2 10

development vol.26,no.1,pp.61-74 and smallenterprisesindevelopingcountries.World Leidholm andMead(1998).Thedynamicsofmicro Stewart and Ranis Ababa. CSA (2013)ReportonNationalLaborforceSurvey. Addis CSA (2015)Urbanunemploymentsurvey. AddisAbaba. Poverty levelassessmentofAddisAbaba. Bureau ofFinanceandEconomicDevelopment(2016). every year)basedonthenationalMoFEC’smethodology The cityadministrationcomputesitsownGDP(City Growth andTransformation plan.AddisAbaba. Addis AbabaCityAdministration(2015)Reportonthefirst institutions foramiddleincomeEthiopia.W World Bank(2015).EthiopianUrbanizationReview:Urban of EthiopianCitiesReport.AddisAbaba. Ministry ofUrbanDevelopmentandHousing(2015).State CSA (2015)Urbanunemploymentsurvey, AddisAbaba. edu www.journals.uchicago.informal sectorinDevelopment”. (1999). “V-goods and the role of Urban (1999). “V-goods ashington D.C.

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series: Washington D.C. finance urbaninfrastructure,trendsandpolicyoptions Peterson, (2008)Unlockinglandvaluesto George.E. Administration, AddisAbaba. BoFED (2015),RevenueEnhancementplanofthecity of EthiopianCitiesReport,AddisAbaba. Ministry ofUrbanDevelopmentandHousing(2015),State UN Habitat(2009):Guidetomunicipalfinance.Nairobi. Poverty levelassessmentofAddisAbaba. Bureau ofFinanceandEconomicDevelopment(2016). countries/ET?display=graph http://data.worldbank.org/indicator/FP.CPI.TO Economic Literature,vol.37;1121. (1991).AnEssayonFiscalFederalism:Journalof Oates, E. in thethirdworld,Landon:Taurus. De Soto,H.(1989).Theotherpath:theinvisiblerevolution 593 Tanzania. Journalofinternationaldevelopment. 17, 575- of enterprisesinadevelopingeconomy-thecase andDeBruijn(2005).Thevoluntaryformalization Nelson, E.

TL.ZG/

27 2 26 2 2 23 2 25 1 4 2 0

World Bank(2006).EnterpriseSurvey. W World Bank(2016)EnterpriseSurvey. W World Bank(2013)LightManufacturinginAfrica:Targeted World Bank(2016).DoingBusinessReport.Washington Addis Ababa,thedoingbusinessreportforEthiopiais As thesamplewasentirelytaken fromthecapital are performingbesttoday Atkearney (2016)GlobalCities2016:whichglobalcities by regionandstatus.AddisAbaba. Ethiopian InvestmentAgency(2015)LicensedFDIprojects Agency (2016).ReportonGrowthandTransformation Plan Addis AbabaMicroandSmallEnterpriseDevelopment Washington D.C. policies toenhanceprivateinvestmentandcreatejobs. I. AddisAbaba. capital. a representative of the state of doingbusinessfor the potential, andwhatmakes asmart-city? D.C. , which have the best long term , whichhavethebestlongterm ashington D.C. ashington D.C.

THE STATE OF ADDIS ABABA 2017 44 ▲ Aerial view of the city of Addis Ababa. © Shutterstock 45 THE STATE OF ADDIS ABABA 2017 THE STATE OF ADDIS ABABA 2017 46 and 1 2  THE POOR apid urbanization and unprecedented population apid urbanization and unprecedented created the past decades have over growth capacity to Ababa’s Addis on enormous pressure HOUSING TO HOUSING TO has led to the growth of informal land transactions and of informal land transactions has led to the growth unplanned and squatter of proliferation alarming an to 2008). settlements (Fransen, provide affordable housing and access to basic services affordable for provide households. the low-income for especially citizenry, the and housing demand and supply of land The gap between 2015) Teshome, day (Eshete and day by is growing R ▲ 2010: Construction site in the centre of Addis Ababa. © Shutterstock 2010: Construction site in the centre of Addis Ababa. culture and sports functions; 70 years for an industry; and 60 years for commerce. Urban land leases can be acquired through 3.1 Urban planning, land and award, tender or allotment in accordance with the land grade and housing policies under the the lease benchmark price (Proclamation 721/2011)5. Despite the introduction and implementation of various EPRDF since 1991 proclamations related to the market-oriented land lease system, the approach has so far failed to expand affordable housing options to the residents of Addis Ababa of all income groups. ith the overthrow of the Dergue regime in 1991, It is not only just the very poor that are affected by the housing many aspects of their socialist policies and programs crisis; teachers, nurses and others in the ‘middle class’ are unable were quickly abandoned. The one exception was state to access affordable housing, forcing many of them to seek a controlW of land which the EPRDF maintained. In subsequent second employment just to stay afloat. Lack of a strategic and years, however, the EPRDF-led government introduced a comprehensive approach to housing policy were cited as major market-oriented approach to land holding, particularly after the factors why Ethiopia has performed poorly in terms of the introduction of a new urban land leasehold system in 19933. provision of affordable housing to the poor. Since the introduction Proclamation No. 80/1993 transformed the land tenure system of the 2005 urban development policy, however, major policy from the traditional “rent” system to a market system of long- changes can be observed. The following section discusses the term lease while forbidding the sale of freehold land. evolution of housing policy and strategies from 2002 to 2010. In 2002, the government enacted Proclamation No. 272/02 on urban landholding that reinforced the earlier 1993 Proclamation Evolution of urban housing in key policy strategies which established the market-oriented landholding system.4 In Although the housing crisis had been identified by the 2002, the government issued Proclamation No. 721/2004 which government as early as 2002 during the drafting of the first clarified the period of lease holding for different types of housing, strategic Sustainable Development and Poverty Reduction Plan, based on the type of sector or service type. For instance, there is a comprehensive approach was not presented until the adoption a 90-year land lease for applicants to land for education, health, of the 2005 Urban Development Policy white paper. Subsequent

▲ Condominium housing © Geo Kalev. THE STATE OF ADDIS ABABA2017 THE STATE

47 THE STATE OF ADDIS ABABA 2017 48 . . 6 7 70,712 1,233 Number of Housing Unit 9,379 23,182 56,333 41,763 12,145 142,802 Total 3,787 102,014 25,164 18,333 5,059 62,557 Other Regions 10/90 Low income condominium housing development20/80 Condominium housing development 24,288 40/60 Saving housing development Building on the lessons of IHDP, the first Growth and Growth the first on the lessons of IHDP, Building The 10/90 and 20/80 condominium schemes target low- and encouraged the GTP I acknowledged Furthermore, Type of project Type Transformation Plan (GTP I) introduced a slightly different mode a slightly different (GTP I) introduced Plan Transformation As an input to GTP I, the Ministry of Urban of housing delivery. a new developed housing strategy in and Housing Development offers included mechanisms the strategy also IHDP, 2009. Unlike two types through of the poor’ housing for the ‘poorest to provide of condominium housing developments. ETB 1,000 per month and the income households earning below group middle-income the schemes target 40/60 condominium households (MUDHCo, 2014). The 10/90 and 20/80 schemes a cross-subsidy and, through subsidized highly government are apartment and one-bedroom units can be studio’s strategy, price than their a pricing strategy at a lower through purchased while two- and three-bedroom prices, construction at below-cost sold for a higher price than their construction cost to units are 10/90 apartment (UN- scheme the below-cost for compensate 2011). Habitat, to sector and cooperatives the private by housing development scheme. condominium government-driven the complement 2014, a September by to a MUDHCo (2014) report, According 24). Table total of 96,233 housing units had been constructed (see spread over thirty different sites. It was alleged, however, that that It was alleged, however, sites. thirty different over spread it was, minimized limited as the condominium programme, Ababa housing shortage with at least 17.6% (Addis the city’s 2013) 2013, MoWUD Wubneh 2002, City Government, Source: MUDHCo, National report on housing and sustainable development, 2014 Source: MUDHCo, National report on housing and sustainable Plans (GTP) Transformation and Growth The I & II) HOUSING CONSTRUCTED UNDER GTP I UNDER GTP 24: HOUSING CONSTRUCTED TABLE In addition, until 2010, the IHDP created until 2010 already until 2010 already addition, until 2010, the IHDP created In 176,000 jobs in the construction industry 2011) (UN-Habitat, 5,592 12,968 31,169 23,430 7,086 80,245 Addis Ababa Commercial Studio One bedroom Two bedroom Two Three bedroom Total Total A more comprehensive policy and strategic framework on policy comprehensive A more low- and middle-income The IHDP specifically targeted at The Sustainable Development and Poverty Reduction Plan Reduction Poverty and Development Sustainable The Type of Dwelling Type housing emerged after the introduction of Ethiopia’s first of Ethiopia’s housing emerged after the introduction policy in 2005 which urban development comprehensive and Sustained for Accelerated informed the drafting of the Plan the 2006 the SPRPR, Unlike (PASDEP). Program Development to curb the challenges clearly laid out a strategy on how PASDEP Ethiopian of access to urban housing and urban land. The and large-scale launched one of the most expansive government Development Housing the Integrated public housing projects: that aimed to supply (IHDP), a multi-sectoral project Program the construction units through of condominium residential servicesinfrastructure, and job providing while also housing, opportunities. households, with the aim to clear all slums and contribute to country to become a middle-income desire 2025 by Ethiopia’s 2011). The multi-story (UN-Habitat, commercial/-residential efficient use of urban more condominiums also promote densification (Ministryspace through Urban Work and of This initially aspired program 2013). (MoWUD) Development constructingto between units housing condominium 400,000 2011b). However, 2006 and 2010 (UN-Habitat, the year 142,802 housing country-wide, only delivered the programme these, a little over 23). Of Table 2006 – 2010 (see units between Ababa, 2003 and 2010 in Addis built between 80,000 were (SDPRPP) of 2002 identified that most of the housing problems problems housing of the most that identified of 2002 (SDPRPP) to affordability related or indirectly in the country “directly are (p. open market” a house, in the construct, or rent either to buy, appropriate emphasis on the urgency of introducing 126). Despite the SDPRP enhance housing affordability, to housing standards to ease the roadmap on how strategic relevant did not offer a Ababa Addis of was the city The sole exception housing problem. was launched in 2004 as housing project’ a ‘condominium where part of its inner city upgrading development Plan for Accelerated and Sustained Development Development and Sustained for Accelerated Plan (PASDEP) Program Sustainable Development and Poverty Reduction Reduction and Poverty Development Sustainable SDPRP Plan national plans brought more clarity and strategic guidance on clarity and strategic guidance more national plans brought land and housing crisis. the to address how Source: MUDHCo, National progress report on achievements of the past year, 2014 report on achievements of the past year, Source: MUDHCo, National progress SUMMARY OF HOUSING CONSTRUCTION FROM 2006-2010 HOUSING CONSTRUCTION SUMMARY OF 23: TABLE 49 THE STATE OF ADDIS ABABA 2017 • typology Housing stockinAddis Ababa andhousing were smallcompared towhatwasplanned(see very Table 24). houses byby 2014 2020. Thetotalnumbersofhousesconstructed ofurbanresidentialconstruction housesfrom 157,070–750,000 gaps inurban houses. Specifically, GTP IIaimsatincreasing the housing development programs toreduce thedemandandsupply GTP II,whichcovers theyears 2016–2020,aimstoexpandthe houses, private real estatedevelopment, government housingfor group include: housing cooperatives, privately owned individual standards (Mathema, 2004).Housing systemsunder this delivery legal standards -thelandleaselaw aswell asbuildingcodesand private investors andby government andthatcomplies withall slums (Mathema, 2004,p.10) b) government rental housing; andc)informalsettlement private housingcooperatives andby thereal estatehousingsector; in Ethiopia: a)housingdelivered by theformalsector, i.e. by information, it ispossible tobroadly describe housing typologies existing housingtypesandtenure forms. Despite thislackof unavailable. there Likewise, is also no reliable information on comprehensive, up-to-date data on the city’s housing stock is need forurbanplanningandhousingdevelopment. However, urban land. Integrated Master Plan isaresponse to the increasing demand for andcommerce.demands forlandby The residents, industry of Addis Ababa wasinadequatetoaccommodatethemultiple city hadexperiencedover theprevious 25years. Thelimitedspace Ababa’s urbanchallengesgiven thepaceofurbangrowth thatthe planning toolswere inadequatetoaddress themyriadofAddis Development Plan (LDP).By theearly-2000s,however, these relevant urbanplanningtools,suchasastructure planandLocal Master Plan (revised in1999).Thismasterplanintroduced major objectives: bymasterplanhasthefollowing 2025.Thenew income country Zone) ofthecountry’s aspart ambitiontobecomeamiddle- Master Plan for Addis Ababa and Surrounding Oromia Special plan forAddis Ababa anditssurrounding areas (The Integrated • Formal housing refers to housing owned by individuals, As shown above, post-1991Ethiopia witnessedanincreased The Integrated Master Plan replaced theoutdated1986 • • • • • • • • master The GTPIperiod alsowitnessedtheemergence ofanew Formal sectorhousing

access to services evenly distributedacross thecity.access toservices ofadditionalhealthcentresConstruction toimpr Urban densification;and Pro non-motorized mobility; Development metropolitan centre andsub-centres; Development ofapoly Strengthened r Increased gr Addis Ababa; Impro vision ofaffordable andstandard housing; vement of wastecollectionandtreatment for een area coverage; of a mass transit systems and promotion of ural-urban linkages; 8 . centric citywithamain ove

constitutes more than30%ofthehousing stock in Addis Ababa. with mudand sticks.Asshown in Table 25, Kebele housing Kebele schemes.Theyare usuallyoflow-standard, constructed the government-owned housingunitsare administered through responsibility 2008).More oftheAARH(Yitbarek, than90%of housing with a monthly rental exceeding ETB 100 was under the monthly rental below ETB 100 was labelled ‘Kebele housing’ while of rent theseresidential unitsproduce. Hence, housing witha public housingadministered by AARHisbased ontheamount ownership ofthepopulationpreviously toparts neglected. mechanismeffectively decades. Thisdelivery provides housing supply (about25%ofthetotalhousingsupply)duringpast private cooperatives contributedsignificantlytoformalhousing allocation is based on a lottery system. allocation is based on a lottery Tesfaye (2005) which thenrequest leasedlandfrom thegovernment. Land cooperative systemgroups ofindividualsestablishcooperatives available for individualhouseholds. • • • awarded toabout2000cooperatives. and 2005,thatnumberincreased significantlyto60,000plots plots tohousingcooperatives inAddis Ababa. Between 2004 that between 1995and2002thissystemhelpeddeliver 2,049 cent) inthecityofAddis Ababa systems constitutedthelargershare ofthehousingstock(47per housing. In 2004, for example, formal sector housing delivery andthe“newly”civil servants initiated“low-cost” condominium private housing cooperatives made75to250m systemintroduced duringtheDerguedelivery regime. Post-1991 mechanisms.Ithousing delivery isacontinuationofhousing (Yitbarek, 2008) (Yitbarek, regime afternationalizationofurban landandurbanhouses AARH andKebele housingwasestablishedduringtheDergue manage andadministergovernment-owned housingunits. Kebele Administrations are thetwopublicinstitutionsthat Agency fortheAdministration ofRental Houses (AARH)and owned andmanagedby publicinstitutions.Accordingly, the housing sector. as akeyimpedimentfortheseproviders toenterintolow-cost The absenceofaffordable financehasbeenidentified mortgage offering affordable landleasearrangementsandotherincentives. private real estatedevelopment tothelow-cost housingmarket by of attempts by the Addis Ababa city administration to attract the private real estatesectorinlow costhousingpersistsinspite demand by low-income households.Thelow contributionof the real estatesectorcontributeslittletoreducing thehousing income householdsinAddis Ababa inparticular. Consequently, grown in the post-1991 period, focusing primarily on high- sector isminimal(see Table 25),thesectorhassignificantly • • • The private housingcooperative isoneofthemajorformal Government ofhousing rental housingconcerns delivery Although thehousingstockdelivered by theprivate real estate Private housingcooperatives Government rental housing Real estatehousing 12 . TheclassificationofKebele housingunitsand 9 Under theprivate housing 11 Asshown in Table 25, 2 plotsofland 10 reports THE STATE OF ADDIS ABABA 2017 50 . Slums . Slums 14 . 13 Informal settlements & slums settlements & Informal Alongside informal housing is the prevalence of sub-standard of sub-standard Alongside informal housing is the prevalence In Ethiopia, informal housing refers to residential units built residential to refers informal housing Ethiopia, In Ababa, informal settlements in the outskirts of Addis Unlike • housing units built on illegally or legally occupied land, giving land, occupied legally or illegally on built units housing Ababa, Addis of case the In slums. of proliferation the to rise often and are sub-standard houses are the majority of Kebele not conform with as slum houses since they do characterized (MUDHCo, 2014) municipal building standards on illegally-occupied land and/or without conformity to the land without conformity land and/or on illegally-occupied 2004). (Mathema, regulations system and other use or zoning informal housing may appear to convey, what the term Despite often are They quality. of terms in standard below always not is with local or adapted construction the owner-occupant built by the gradually improve the owner-occupants materials. Often, bathroom new in widows, investing time by over structure informality of housing other amenities. Therefore, and fixtures rather than lack of legality in one sense or the other, to the refers construction per se. substandard typically better servicedthose in the city are with infrastructure, to a report and garbage collection. According water electricity, about 34.1% 1996 and 2003, (2011), between UN-Habitat by Evidence was informal. Ababa of the housing supply in Addis formal land inability to deliver suggests that the government’s has quantities sufficient in and manner timely a in housing and of informal housing significantly contributed to the proliferation 2015) Bank, (World Ababa in Addis • constitute about 9% of the total housing stock in Addis Ababa. Ababa. stock in Addis constitute about 9% of the total housing settlement and slums (2005), informal Bank World to According housing Ababa Addis together constitute nearly 30% of the total 25). (see Table 9 29 20 60,000 180,000 130,000 No. of units Percentage Total Slums (disorganized, below Slums (disorganized, below standard units, on (il)legal land occupation) Informal housing units (Organized, built to standard and plots, illegal land occupation) ▲ © Geo Kalev. state housing. Public ▲ © Marjan Klosterboer. Informal shelter. Typology Source: World Bank, 2005, p.2 Bank, Source: World ADDIS ABABA INFORMAL AND SLUM HOUSING AND THEIR HOUSING AND THEIR INFORMAL AND SLUM ADDIS ABABA 25: TABLE STOCK TOTAL SHARE IN THE 51 THE STATE OF ADDIS ABABA 2017 3.2 T not sustainable. spending 30%ofincomeonhousing,letaloneahighershare, is Given theprevalence oflow incomes anddepressed wages,even adequate andaccurateinformationonhouseholdincome. is oftenimpracticalbecauseofthedifficultiesobtaining considered appropriate. A 30%maximumofhouseholdincomeforhousingcostsis is often constrained by very lowis often constrained by very earning capacity (Stone, 2006) non-housing expenditures vis-à-vistheexpendableincome.This their housingcosts(rent, repayments) purchase ormortgage and recognize thedifficultiesthathouseholdsoftenfaceinbalancing Any attempttomeasure housingaffordability, however, needsto operational definitionofwhatconstituteshousingaffordability. relative tonon-housingexpenditures (Gan andHill, 2008). oftheincomethatshouldgotowardthe proportion housingcosts According to Gan andHill (2008), the ratio approach determines approach is commonlyusedtocalculatehousingaffordability. In theAfricancontext,however, settling ona30%threshold Recently constructedcondominium housing©GeoKalev. ▲ A review ofliterature highlightsthatinmanycountriesaratio policy strategydocumentsprovide aconceptualand access to affordable housing for the poor. Ethiopia’s major he Ethiopian government iscommittedtoexpanding

Housing affordability 15 16 .

of therespondents spendsmore than30%oftheirincomeon 25% oftheirincomeonhousing.On theotherhand,41.3% condominium owners 48.7%spendslessthan whoparticipated, The datagathered shows from thesurvey that,outof992 of householdincomehasbeenusedtodetermineaffordability. expenditurethe householdmonthlymortgage asaproportion peoples’ own perception ofhousingaffordability. In this regard, housing affordability, hasbeenmadeinthisstudytocapture effort Source: StateofAddisAbabaSurvey, 2016 FIGURE 22:PERCEPTIONOFHOUSINGAFFORDABILITY In the absence of a nationally accepted standard to measure Not affordable Unaffordable overtime Affordable Somehow affordable 20% 15% 20% 45% THE STATE OF ADDIS ABABA 2017 52 22.80% 52% houses Kebele >45% Severe 1,140 1,807 2,385 2,633 3,581 3,798 3,902 3-Bedroom 45% 48% ‐ 4.60% 40 Burdened 950 1,728 2,280 2,523 3,426 3,633 2,732 2-Bedroom 40% Fair ‐ 5.80% , the construction for condominium housing cost 18 Yes No Have you ever fallen short of paying your mortgage? Have you ever fallen short of paying your Unaffordability of condominium housing is the major pushing Unaffordability 665 1,414 1,865 1,931 2,491 2,642 2,714 35% Good 35 DEFAULTS FIGURE 23: MORTGAGE PAYMENT 2016 Source: State of Addis Ababa Survey, in Addis Ababa has more than tripled from ETB 1,000 per square per square 1,000 ETB from tripled than has more Ababa Addis in 97). Increasing ETB 3,000 in 2014, p. meter in 2005 to over constructionmonthly into higher translate in turn, costs, of 1,181 Out mortgageowners. for condominium payments had that they 648 (52%) reported condominium unit owners, the other 23). On defaulted paying their mortgage (see Figure that they reported hand, nearly 36% condominium owners the paid off their condominium mortgagehave debts way before scheduled grace period. choose to households low-income most for factor Bank (2015) Bank ‐ 8.10% 1-Bedroom 30

17 30% ‐ 9.90% Very good Very 665 1,100 1,450 1,480 1,869 1,982 2,036 Monthly mortgage payment (ETB) Monthly mortgage payment Studio Share of housing costs (mortgage payments) in household income payments) in household costs (mortgage Share of housing <25% Excellent 25 1998 -2000 2001 2002-2003 2004 Year Round 4 Round 5 - 6 Round 7 Round 8 - 9 other sitesRound 7 (Lideta site) 2005 Round 8 -11(Lideta) 2004 2005 -2008 Rounds 1 –3 Percentage of households with Percentage 48.70% It must also be pointed out that, due to low incomes, a large incomes, a large must also be pointed out that, due to low It With increasing housing shortages, affordability is taking on housing shortages, affordability increasing With and Administration Development Housing the city’s from Data An additional factor for housing cost escalation is persistent Round Affordability mortgage. As a result, the latter are burdened and severely stressed stressed and severely burdened the latter are mortgage. As a result, 26). (Table to keep up with their monthly payments down the minimum afford majority of the urban poor can barely payment of ETB 65,000 for a studio apartment in the highly 1,184 of out Accordingly, scheme. condominium subsidized who participated in the survey, condominium unit owners current of the opinion that the condominium 528 (44%) households are is consistent This finding unaffordable. housing schemes are and Cities Alliance (2015) Bank World with those in a recent Source: Addis Ababa City Housing Development Administration Agency Source: Addis Ababa City Housing Development Administration CONDOMINIUM HOUSING UNIT MONTHLY MORTGAGE PAYMENTS MORTGAGE UNIT MONTHLY 27: CONDOMINIUM HOUSING TABLE Source: State of Addis Ababa Survey, 2016 Source: State of Addis Ababa Survey, HOUSING AFFORDABILITY MEASURED BY SHARE OF HOUSING COSTS IN HOUSEHOLD INCOME OF HOUSING COSTS MEASURED BY SHARE HOUSING AFFORDABILITY 26: TABLE report as well as the poverty level assessment report by the Addis the Addis by assessment report level poverty as the as well report price the that concluded studies Both Finance. of Bureau Ababa to housing units in the city is unaffordable of highly subsidized most residents. survey stated participants who previously new dimensions. Even changed their now have that condominium housing is affordable mind with the escalating cost of monthly mortgages. the 1,184 Of households surveyed, that condominium 228 (or 20%) reported 22). This Figure time (see over housing has become unaffordable secondaryinformation is consistent with data and findings from sources. in condominium unit prices a significant increase Agency shows 2006 and 2013. This partially the years explains the newbetween years, For instance, during these Table 27). (see unaffordability the monthly mortgage unit price that was set for a studio, one- steadily increased and three-bedroom two- bedroom, bedroom, 27). Table (see respectively 274, 260, and 214 percent 183, by World to the According years. the past couple of over inflation 53 THE STATE OF ADDIS ABABA 2017 housing afterall. ultimately theywillbeforced toregister forcondominium inner citywouldendupbeingdemolishedsoonerorlaterand, when relocated, despiteknowing thatallKebele housesinthe discussed inthe conclusionofthereport. that takesinto accountEthiopia’s condition willbe particular likeEthiopia.poor developing country A more suitableapproach A free-market approach to housing provision is not feasiblein a from thegovernmentsupport for accesstoaffordable housing. therefore, astrong casetobemadethathouseholds need external have beenlessburdened.pay theirmonthlymortgages There is, households withfinanciallycapable relatives who canhelpthem On theotherhand, topaytheirmortgage. capital oftenstruggle Households withoutfinancialorphysicalassetswithpoorsocial as well ashouseholdsmakingalivingfrom informalbusinesses. include women-headed households, elderly on a smallpension, The socialgroups mostaffected byescalatinghousingcosts Informal settlementandconstructioninAddisAbaba.©GeoKalev. ▲ compensated with Kebele house.” and relocated tenant, public with (Interview house.”forced aKebele to choose am condominium a I tohouse, afford capacity Idon’t since future; the in economic have the demolished be will houses Kebele “We all know 3.3 of Ethiopia. Citizens who applyforcondominiumhousing are financing structure thatincludes loansfrom theCentral Bank current government-led condominiumhousingstrategyuses a construction andcondominiumhousing projects only.construction lending, albeit for business to engage in mortgage started housing finance. housing cooperatives and individual homebuilders to access ranging from 10.5%to15%makingitdifficultforprivate example, between 1997and2001,interest rates were revised, of the financial part reforms introduced by thegovernment. For disappearedsubsidized mortgages inthepost-1990 periodas given priorityinsecuringbankfinancing. Moreover, formerly enterprises andgovernment-led megadevelopment schemesare peoplecanafford.that few On theotherhand,largecommercial interestcharge higher mortgage rates and demand high collaterals A More recently, however, privately-owned afew bankshave friends”. friends”. payment, Iborrowed so money and from my relatives for me to hard down- cover the “It extremely was housing finance institutions, the few that existhousing can finance institutions, thefew obstacle inEthiopia. Due tothelimitednumberof ccess toaffordable housingfinancealso remainsamajor (Interview with private landholder, relocated) landholder, private with (Interview Affordability ofmortgage 19 The THE STATE OF ADDIS ABABA 2017 54 ▲

elocation tions, and tions, (Interview with Addis Ababa . The city administration established the Land 21 Relocation, compensa the socio-economic impacts of r

“Therenewal program aimsat creating a compact also modernize It to helps the city city. for andefficientthat effectiveadheres development theto master plan.” City Administration Renewal Agency Head) Vice Relocation map within Addis Ababa's boundaries. Source: Marjan Klosterboer and Linda Zardo Relocation map within Addis Ababa's boundaries. Source: Marjan n Addis Ababa, nearly 80% of the inner city areas are defined are nearly 80% of the inner city areas Ababa, n Addis dilapidated and lacking 70% of the houses are as slum. Nearly services.basic facilities and urban infrastructure The majority With the adoption of the Urban Development Policy in 2005, Policy Development the adoption of the Urban With Development, Banking and Urban Renewal project office in office project Renewal and Urban Banking Development, programs. urban renewal 2008 to implement its massive (government) owned (UN- owned (government) Kebele of these dilapidated houses are being demolished at a 2011). These inner city slums are Habitat, of new rapid pace to make way for the development and modern housing schemes. a in involved been has administration city Ababa Addis the city embraced a five-year The program. urban renewal massive a and introduced 2008-2013 the years strategic plan covering that focused on urban re-development Plan Local Development and slum renewal

I 3.4 53.2 8.3 11 27.6 . 20 Remittance Loan from informal sources support Relatives' Own saving “My daughter in Finland“My paid everything, for paid anythingI never for myself.” (Interview withprivate landholder, relocated) In addition to the subsidized government loans, a significant loans, government addition to the subsidized In required to make a down payment (e.g 10% of total cost of a to make a down required signed up in a 10/90 scheme), and the condominium if they are the from loan secured a subsidized is financed through remainder to a city administration According of Ethiopia. Bank Commercial ETB 9.2 billion was spent for building the condominium report, subsidy equivalent the additional government houses, excluding to ETB 7.2 billion. Source: State of Addis Ababa Survey, 2016 Source: State of Addis Ababa Survey, FIGURE 24: MAIN SOURCES OF HOUSING FINANCE majority of the study participants that they use a reported support and loans from saving, relatives’ combination of own payment to finance the condominium down informal sources overall and the monthly mortgage as to pay off the debts, as well 24). housing mortgage (see Figure debts 55 THE STATE OF ADDIS ABABA 2017 Source: DatacompiledfromAddisAbabaCityAdministrationRenewalAgencydatabase(2016) LANDEXPROPRIATION (HECTARE)FIGURE 25:INNER-CITY BYSUB-CITY Proclamations that 455/2005and721/2011clearlyarticulate for compensation,andcompensationmechanisms.For instance, these proclamations toclarifynotificationprocedures, eligibility compensation. In subsequentyears, were several articles addedto expropriation of landholdingsforpublicpurposesandpayment Proclamations 80/1993 and 455/2005 set outprocedures for on their tenure ownership position. In the case of Ethiopia, relocation andcompensationofdisplacedresidents depending relocated householdsisnotknown. houses (seeFigure 26).Theexact numberofuncompensated occupants and18,405(79.5%)were occupantsofpublicly-owned households. Of which4,746(20.5%)were private tenure Lideta, Kirkos, Arada,andAddis Ketema (seeFigure 25). Urban Renewal Project sites.Thistookplaceinthesub-citiesof land anddemolishedatotalof23,151dilapidatedhousesin23 2009 to2015,thecityhasexpropriated 392hectares ofinner-city compact citydevelopment (MOUDCo,2014).Accordingly, from management strategyinasustainablemannerthrough promoting is also a mechanism promoted to enhance the inner city land programme and providing It accesstobasicurbanservices. ofaffordableensuring delivery housing through theIHDP plan toimprove thelivingconditionofslumdwellers through Urban renewal involves expropriation ofland,housedemolition, The demolitionsinthesesub-cities affectedatotalof23,151 The urban ofthe citygovernment’s programrenewal ispart BOX 2:COMPENSATION MECHANISMSFORINNERCITYRELOCATEES b) a) whose landholdinghasbeenexpropriated underthisProclamation shall: Proclamationindicate: anurbanlandholder for privateinnercity compensation mechanisms 4 (a)and(b),the 8, subarticle N0.455/2005,article

in acomparabledwelling houseownedbytheurbanadministration. Be paid dwelling house;and Be provided with aplotofurban land, the sizeofwhichshallbedeterminedbytheurban Arada Kirkos Lideta Addis Ketema displacement compensation equivalent to the estimatedannual rent of the demolished dwelling house or be allowed to reside for one year 86.4 141.1 16 148.2 Source: DatacompiledfromAddisAbabaCityAdministrationRenewalAgencyDatabase(2016) FIGURE 26:NUMBEROFHOUSEHOLDSEVICTEDFROM2009-2013 Notification and relocation experience implementation ofurbanrenewal projects. to becommendedforthesesignificantimprovements inthe a process of‘learningby doing’, thecityadministrationis down anddidnotinvolve theaffectedcommunities.Through generation urban renewal programs that were essentially top These amendmentsare significantimprovements from thefirst potential relocatees inallurbanrenewal siteswere conducted. process. Consequently, massive consultative meetingswith related tonotificationandclearanceorder foradignifiedeviction dwellings.new with removal, of andtheconstruction suchastransportation the current and costsassociated costforhousingconstruction compensation provided torelocating householdsshouldmatch solutions from thecitizens through dialogue. constructive already decided, rather than agenuineattempt to illicit alternative forofficialstocommunicatewhatthe a forum government had process astopdown. Accordingly, theconsultationmeetingswere characterized the overall in the survey participated consultation questioned thesincerityofpublicmeetings.Allrelocatees who renewal schemes relocatees irrespective of their prior tenure status government structure to enhance wider acceptance of the urban Furthermore, recent proclamations incorporatedprovisions Despite efforts Despiteby thecitygovernment efforts andalocallevel BY NEIGHBORHOOD Ideta administration, tobeused for theconstruction ofa Kirkos Arada Addis Ketema Public Private

THE STATE OF ADDIS ABABA 2017 56 Rather they used were inform to us the of and what decision wasgovernments’ expected the us they how told us.from Simply, They happen. would relocation promisedalso many things take just to our land. After we came that found we all here, the meetings were lies.promised They that relocate would they us a better to place roads and and provide Afterelectricity. came we the situation here, built different. was not Roads completely were access have and did we not electricity to (…)” (Focus group(Focus participants) discussion housing for those who cannot afford mortgages. A housing for those who cannot afford Kebele Compensation to residents who were affected by urban affected who were Compensation to residents renewal programs took many forms: an offer of substitute land; programs renewal mortgages; can afford condominium housing for those who and received evictions by the total of 2,406 households affected addition, In Ababa. substitute land in the outskirts of Addis the who could afford 11,998 former public housing occupants Compensation mechanisms Not at all To some extent some To Highly AND COMPENSATION AND COMPENSATION

“Themeetings enhanceto not were participatory local development outcomes. Number of respondents respondents of Number ▲ house. © Geo Kalev. Half demolished Kebele The survey found that out of 323 relocated inner city dwellers, The surveyrelocated inner city dwellers, found that out of 323 314 were aware of the overall purpose of inner city renewal purpose of inner city renewal of the overall aware 314 were some 28% (88 households) of the relocatees However, programs. by relocation for the justifications given not convinced by were 27). Figure the officials (see Source: State of Addis Ababa Survey, 2016 Survey, Source: State of Addis Ababa ON RELOCATION JUSTIFICATION ON FIGURE 27: SATISFACTION 57 THE STATE OF ADDIS ABABA 2017 as aresult ofmultipleurbanrenewal projects. significant numberofpeoplewhohave been relocated three times its urbanrenewal project. This research hasuncovered quitea affected by future demolitionsasthecityadministrationexpands solution as they will moreKebele housing is likely a be temporary Kebele housing (see Figure 28). For the latter group, relocation to payment forcondominiumunitswere provided withalternate Another 1,523householdswhocouldnotafford topaythedown paymentsweremortgage compensatedwithcondominiumunits. Source:DatacompiledfromAddisAbabaCityAdministrationRenewalAgencyDatabase FIGURE 28:NUMBEROFHOUSEHOLDSCOMPENSATED Private landholderunabletoafford construction.©MeseretKassahun. ▲ Ideta Kirkos Arada Addis Ketema Plot ofland Kebele house Condominium landholders andpublictenants Non-transparent compensationsystemfor package given outtoindividuals. and favouritism played abigrole inthefinalcompensation market conditions.In mostcases,thesedecisionswere arbitrary the amountofcompensation without takingintoaccountcurrent powerguidelines, localauthoritieshaddiscretionary todetermine guidelines onmechanisms of compensation.In theabsenceof longbeforestarted thefederalgovernment adoptedclear The relocation of tenants under the urban projectsrenewal (Interview with of representative academia) land.” city inner expropriated auctioning through government city the gains what compensation vs. as receive relocatees what when it of injustices to comes comparing the terms in explained been often has replacement This value. compensation or the included calculating in “(…) should locationhave value been Land

THE STATE OF ADDIS ABABA 2017 58 . 2 .” 2 as for compensation 2

2 as a replacement for my 300 m2. 300 my m2. 2 as for a replacement do not deserve. not do After going through several processes, with up I ended 90 m “I filed “I when a me theycomplaint gave 75 m When I complained, the officials’ threatened that would me and theme government told sell the land lease by with good if price I refused take to it.” (Interview with a woman relocated and compensated with plots land) of (Interview with relocated woman private holder). land m expected“I get to 150 interview(An with a woman relocated from inner city) my expropriated land. However, when we came we when land. expropriated my However, I realizedhere, that the land I received was smaller. What is 90 m now have I I filedmy grievances, receive not fair I but did I wasted time.” judgment. my Private landholders are compensated with replacement land compensated with replacement landholders are Private public housing tenants proclamations, As indicated in recent smaller than the size of their original holding and received and received of their original holding smaller than the size is, alone money The property. lost for payment replacement the current house given room to build a single inadequate however, construction the consider not does also compensation The costs. inner city land; the of the expropriated location value current city inner for prices benchmark lease different uses government the land far ‘grade’ land dependent on the location, and therefore to the government’s relates This basically the actual value. below land. As a urban land holding policy that fails to commoditize the compensation law does not entertain and land location result, as compensable property interest. a facilitated purchase received payment the down who can afford any without areas expansion the in unit condominium a of housing tenants who cannot pay the down Public compensation. house or to a temporary to another Kebele relocated payment were Relatively in the near future. shelter subject to demolition renewal the benefiting from speaking, public tenants appeared accommodation alternative in so far that they received process and, lastly, security tenure with increased built, was already that Two home. own of one’s ownership the opportunity of tenure as 2

compensation. Aftercompensation. I signed and received the land get to my I went payment, compensation certificate, I wasthattold a mistake had been made during measurement and that I would promised. I getonly instead 90 m2 the 150 of year a took filedIt complaints. not I and did get any justice.local The officials me treated badly as if I was claimingsomething that I “First, I was told that I would get 150 m I was that“First, get I would 150 told The city administration established a separate institution to The city administration established a Former inner city private landholders, relocated and relocated landholders, inner city private Former tenants in government were who inner city residents Relatively, manage relocatees’ grievances. Accordingly, clear procedures clear procedures Accordingly, grievances. manage relocatees’ put in place at local mechanisms are for appeal and grievance However, sub-city and city administration level. ) level, (Woreda in a positive that their appeals did not result reported relocatees injustice with their Rather they felt faced with more response. quotes time and energy wasted for nothing. The following the landholders about complaints regarding private from are compensation determination process: Administration and outcome of grievances and outcome of grievances Administration compensated with private land, were also frequently disappointed also frequently land, were compensated with private emanates discontent Their procedures. compensation the with in compensation location value of urban land the exclusion from to improve inability as the government’s determination, as well As a service sites prior to relocation. for the resettlement many ended up spending a significant portion of their result, temporarycompensation payments on renting housing elsewhere, house, or using the residential rather than building their own their condominium units if they choose for money to improve that option instead of land. ) scheme or the AARH (kiraibetoch properties (under Kebele owned 2009 and 2015 to condominium housing, between and relocated although they complained about the timing of had done better, unfinished and that the interior of the apartments were relocation to incur forced therefore, were, in. They when they moved of the apartmentadditional costs to finish the interior units. down upfront that the high complained many Furthermore, what far beyond payment and monthly mortgage payments are paid in monthly housing expenses. they previously In 2007, the Federal Democratic Republic of Ethiopia Council Ethiopia of Republic Democratic 2007, the Federal In of 135/2007, Payment No. Regulation adopted of Ministers on Landholdings Expropriated Situated for Property Compensation out clear compensation regulation spelled . The Purposes for Public who were residents city inner However, formulas. calculation of this regulation the enactment compensated before and relocated retroactively not regulation did the newdid not benefit since recalculation of the not entitled to a are apply to them. They prior to the adoption of Regulation compensation they received 135/2007. No. 59 THE STATE OF ADDIS ABABA 2017 and subtenants Compensation toinformal innercitylandholders payment andmonthlyrecurring payments. mortgage and, secondly, affordability problems related toboththedown of the city has fewer socio-economic infrastructurethe outskirts firstly, the location of the condominium units (in most cases) in criticisms were, however, recurrently heard from the respondents: two provisions: livelihoods. In terms of securing accommodation, the RFP offers residents withoutlegaltitlewillbeassisted inmaintainingtheir Policy Framework (RFP).According to the RPF, innercity Urban LocalGovernment Development Plan andResettlement mechanisms. Thesepeopleare only mentionedinthe2008 segment ofsocietyfrom bothrelocation and compensation public purposesandpaymentofcompensationneglected this of individualhouseowners andpublichousingtenants. addition, theinnercityalsousedtoaccommodatesub-letters are nodataavailable onthenumberoftheseinformalsettlers.In settlers whooccupiedinnercitylandwithoutlegaltitle.There urban renewal program displaced significant numbers of informal b) a) The proclamations onexpropriation oflandholdingsfor In additiontoprivate landholdersandpublictenants,the Homeless familiesduetorenewalnowlivingbehindChineseconstructionofhighrisebuilding©GeoKalev. ▲

activities, lostfixed improvements onthe landtheyoccupied, are noturbanlandholders andwho,asaresult ofproject Assistance by theproject tothosedisplacedpersons who establish businessesandbusiness premises; and assisted witheasieraccesstocredit, to marketing support can betargetedinthetraining. In addition,they willbe through theMSEdevelopment program where they Pro viding job opportunities intherenewal projectviding jobopportunities area

were never invitedtothelocalgovernment consultative meetings. mechanisms did nottreat informallandholders clearly. They in relation totherelocation processes. The compensation affected by the processrenewal were never contacted orconsulted legally bindingornot. be carriedout.Hence, itisnotclearwhethertheRFPalone Hence, nootherguidelineelaborateshow theRFPprovisions can for publicpurposesandpaymentofcompensationproclamations. were inanyoftheexpropriation oflandholdings notsupported local government housingplan.Thesetwoprovisions, however, informal settlers affected by the programrenewal as per the urban shelter, whereas thesecondprovision allows forcompensationof livelihoods sothattheywillbeabletoprovide foralternative Qualitative shows data from the survey that informal settlers The first provision aimsatimproving informalsettlers by renewal) affected settler informal an with (Interview here.” stayed simply we so moneyhave else, any to rent anywhere took roof the when off. they didn’tWe out about demolishment the of my house Ifound “I have not at all, informed been programmes oftheUrban LocalGovernment” (p.19). to secure accommodationasperthehousingpoliciesand

THE STATE OF ADDIS ABABA 2017 60

and the current coverage coverage and the current 22 and Accessibility affordability of affordability basic services his study found that the city government has increasingly has increasingly his study found that the city government social basic to access dwellers’ city in enhancing invested services. secondary evidence from is ample There sources 23 Water services Water However, a tap is only as good as the water it provides and a tap is only as good as the water it provides However, Among the basic services provided in relocation areas, access areas, in relocation Among the basic services provided • that the coverage of social services has improved significantly, significantly, servicessocial of improved has coverage the that remains quality particularlyHowever, period. GTP the during with dissatisfaction of citizens’ a major challenge and the level service delivery high. remains despite the increased coverage in water services the network, coverage despite the increased The situation is worst become unreliable. supply has increasingly supply frequent with more in peri-urban areas for relocatees to water has been high in comparison to electricity, roads, roads, to water has been high in comparison to electricity, with access to transport, education. Satisfaction health and of delivery half from water is consistent with the increase by 17% in 2000 to 34% in 2010 Accessibility of basic servicesAccessibility • 2011. in urban areas is 93.7% nationwide. In Addis Ababa, water Ababa, Addis is 93.7% nationwide. In in urban areas (99.9%) with access to universal is almost services coverage 20% in 2007 to 42% in from taps increasing none-shared

T 3.5 3.5

▲ © Linda Zardo. Access to water. The overall conclusion from this in-depth study on relocation on study in-depth this from conclusion overall The relocation programs. relocation Some stayed in the demolished area in plastic shelter despite in the demolished area stayed Some the local administration. from warnings and threats frequent took their some cases, sub-letters and informal households In none of them to the city administration. However, grievances solution as a deserving for one a proper except citizen received house. a Kebele given lady with a disabled spouse who were residents city While flattering. than less is compensation and support to better their living overwhelmingly urban renewal has been plagued with many conditions, the procedure The practice has been quite disorganized, problems. bureaucratic very and left transparent genuine and for little room top-down, Policies and strategies discussions with the affected populations. 'on the go', paying scant attention to the need developed were The strategies founded on evidence-based research. to develop doing' did not sufficiently consider of 'learning by approach the transaction costs for the people affected, their livelihoods, destructionthe inevitable and over built up capital of social report valuable lessons offer generations. The findings in this for the city administration to change the manner in which the and urban renewal future municipality should plan and execute 61 THE STATE OF ADDIS ABABA 2017 • supply hassignificantlyincreased. inwaterservice reported a3to4and56-dayinterruption after relocation. Similarly, thenumberofhouseholdswho increasedreported 1 or 2-day disruptions from 24% to 31.7% afterrelocation.disruptions Thepercentage ofhouseholds who relocation. However, 360(29.2%)reported nowaterservice before disruptions their 732 (55.6%)reported nowaterservice experience priortotheirrelocation. intheresettlementinterruption areas compared torelocatees’ Source: StateofAddisAbabaSurvey, 2016 PER WEEK) FIGURE 29:WATER SERVICEDEPENDABILITY (INDAYS WITHOUTWATER made toenhanceaccesselectricityinfrastructure. According

• Percentage of households As shown inFigure participants, 29,outof1,315survey Waste andelectricity supply. ©GeoKalev. ▲ In thecityofAddis Ababa increased investments have been Electricity service No outage . . 1-2 days . Inner city/beforerelocation 3-4 days . . Resettlement area 5-6 days . . Source: StateofAddisAbabaSurvey, 2016 ELECTRICITY PERWEEK) FIGURE 30:ELECTRICITYSERVICEDEPENDABILITY (INDAYS WITHOUT (40%) before relocation to716(55.9%)inresettlement areas days, and5-7daypower outagesperweek increased from 491 Ababa. The number of households who 1-2 days, 3-4 reported phenomenon. the increased demand,power outageshave becomearegular for cookingtomodernelectricappliances.Due to Most urbanresidents have switchedfrom charcoal andwood both lighting,cookingandrefrigeration remain inadequate. of lightinghasremained relatively stable,power supplytocover supply, respectively. Althoughtheuseofelectricityasasource reported accesstometered private andmetered shared electricity Development (2016),61.8%and36.7%ofthestudyparticipants to areport by Addis Ababa Bureau ofFinance andEconomic Percentage of households Power outageshave becomearegular phenomenoninAddis No outage . . 1-2 days . Inner city/beforerelocation 3-4 days . . Resettlement area 5-6 days . THE STATE OF ADDIS ABABA 2017 62

26 91.83 78.45 55.05 97.06 94.62 77.44 56.38 98.84 Net enrolment rate (%) Net enrolment Education servicesEducation Another indicator of improved education service deliveryAnother indicator of improved is the The city of Addis Ababa’s 80% level of literacy is higher of literacy is 80% level Ababa’s Addis The city of at all levels, in enrolment achievement addition to impressive In In sum, the provision of adequate and quality waste sum, the provision In • teacher-pupil ratio. At pre-primary, primary and secondary this pre-primary, At ratio. teacher-pupil The teacher-pupil ratio for is 1:21; 1:28; and 1:21, respectively. pre-primary for primary and secondary except is up to standard which should also aim for 1:21. education level, than that in other parts of the country. Over 20% of the Addis the Addis of 20% Over partsin other than that the country. of than secondary population has more education. The level Ababa a shows of Education Bureau the city’s from 2014/2015 report with the at all levels in education coverage significant increase 2nd cycle elementary, 1st cycle rate at pre-primary, net enrolment elementary and secondary education at 78.5%, 97.1%, 91.8, and that the completion revealed report The same 55.1%, respectively. gender is 84%. The city has achieved rate at grade 5 for both sexes the elementary 2nd cycle and at 1st parity however, education, to 89% completion rate for girls after grade 5 is 79% compared suggesting a need for further on why girls investigation for boys, 28). Table do not continue after grade 5 (see in educational significant improvement the city has also shown Accordingly, accessibility. that, in turn, improved infrastructure is 21 for elementary class size secondary and 40 for the standard of school facilities, expansion increased With education. level significantly. in each class has reduced over-crowding • hazardous wastes. hazardous strengthen the capacity of small operators rather than relying on relying rather than operators small of the capacity strengthen servicescollection waste energy-intensive or capital and modern and imported heavy trucks. management services a critical challenge for the remain the and capital federal a As administration. city Ababa Addis in improvement diplomatic hub of the African continent, servicesmanagement waste and sanitation economic an both is is urgently approach A comprehensive and political imperative. management of the and needed to guide the development supported sector, and processing collection waste sanitation, enforcement institutional arrangements to ensure strong by on the services. all stakeholders who rely and compliance by As much expands, Ababa the industrial base of the city of Addis of illegal dumping to control attention is also required greater solid

of 82,596 85,644 168,241 88.95 84,963 84,766 169,729 79.45 43,184 49,793 92,978 Grade 9 -12 43,485 53,798 97,282 53.52 86,343 87,942 174,285 95.25 11-14 4-6 15-16 17-18 7-10 Age Male Female Total Male Female Total . 25 cycle cycle st nd . Although significant improvements have been have . Although significant improvements 24 cycle secondary cycle Primary cycle Primary st nd Pre-Primary Secondary 1 1 Secondary 2 2 Sanitation, sewage servicesSanitation, and dry waste management The current sewerage system of Addis Ababa has veryAbaba has Addis limited sewerage system of The current and dispose of recycle capacity to collect, sort, process, The city’s One of the most critical challenges that the city of Addis Ababa Ababa of Addis of the most critical challenges that the city One • Education level School age population capacity to receive and process waste material generated by waste material generated by and process capacity to receive constructionand industrial hospitals, households, firms (World the city is overly- & Cities Alliance, 2015). Hence, Bank to a key dependent on pit latrines and septic tanks. According current the city’s Municipality, Ababa the Addis informant from service sewage to only 10% of the system provides standardized urgency to scale up investments population, which indicates great wastes. both solid and liquid in sewage to process infrastructure limited. Improper household and industrial waste is also extremely the on negatively impact methods disposal and collection waste and Cities Alliance Bank World to According environment. city’s picking up 45-80% only capacity for (2015), the city has is confronted with is the provision of adequate and reliable of adequate and reliable with is the provision is confronted sanitation services. discussed in terms of is often Sanitation toilets and bathing access to such basic facilities as piped water, quality of life of their and cooking facilities that influence the occupants Source: Compiled from Addis Ababa City Administration Education Bureau Annual Statistical Abstract (2014/15) report City Administration Education Bureau Annual Statistical Source: Compiled from Addis Ababa and from 150 (12.2%) in the inner city to 345 (26.9%) in in the inner city to 345 (26.9%) in 150 (12.2%) and from 30). This significant increase Figure (see areas the resettlement disruption has huge social and economic in electric power of the city and business establishments consequences to residents disruptionselectricity Continued alike. have undoubtedly shall Addis of on the economic competitiveness impact significant investments, to attract capacity city’s diminishing the Ababa, badly its ability to generate its tax base and lowering weakening needed job opportunities for its residents. SCHOOL AGE POPULATION AND NET ENROLMENT FOR PRE-PRIMARY TO SECONDARY LEVELS SECONDARY TO ENROLMENT FOR PRE-PRIMARY AND NET POPULATION SCHOOL AGE 28: TABLE • achieved over the past decade, the depth of the sanitation crisis - over achieved collection of particularly access to basic toilet facilities and regular to public health. According a threat household garbage - remain estimated an Survey, Monitoring Welfare to the 2012 CSA without access to adequate are residents Ababa 72.27% of Addis of the toilet facilities because the personal hygiene infrastructure city is highly inadequate waste. The report revealed that solid waste management in the in management solid waste that revealed report The waste. enterprises micro on dependent largely is Ababa Addis of city door-to-door waste collection services. Involving that provide is an opportunitymicro-enterprises for the city administration to 63 THE STATE OF ADDIS ABABA 2017 • Source: MinistryofHealth;HealthandHealth-relatedIndicators2012/13Report,p.61 increased by 3,245 health centers and four hospitals, raising its out that,asof the 2012,national health infrastructure has facilities forhealthprofessionals. include healthposts,clinics and healthcenterstraining of lower-level areas healthfacilitiesinbothurbanandrural that Hence, nationalemphasishasbeengiven totheestablishment TABLE 31:PHARMACEUTICALRETAIL OUTLETSBYOWNERSHIP, ADDISABABA Source: MinistryofHealth,HealthandRelatedIndicators2012/13report,p.50. TABLE 30:HEALTH FACILITY TO POPULATION RATIO Source: CompiledfromAddisAbabaCityAdministrationEducationBureauAnnualStatisticalAbstract(2014/15)report. TABLE 29:PROMOTION INSCHOOLLEVELCERTIFICATE EXAMINATION AT EACHEDUCATION LEVEL the delivery ofpreventivethe delivery totheircitizens. healthcare services approach thatempowers regional governments anddistrictsin Ethiopia’s nationalhealthcare policyadvances adecentralized of acity’s abilitytoimprove thequality of lifeitsresidents. (see Table29). 1stand2ndcyclegirls fromeducationishigher secondary 1stand2ndcyclefrom programs. secondary Promotion of low at65%and57%implyinglower promotions ofstudents 2ndcycle is 1st cycle, schoolleavingcertificate andsecondary significantly lessthanboys (77%). Promotion ratesforsecondary level, thepromotion72.87%. Atofgirls(69%)is primary ulcNOOther NGO Public Pharmacy Education level • A 2012/3report prepared byofHealth the Ministry points Provision indicator isanotherimportant ofurbanhealthservices educationareThe current completionratesforprimary Health services 31 11 3,122,000 Addis Ababa Secondary 2ndcycle Secondary 1stcycle Primary education ainl8,2,0 2 :7,3 3,245 1:675,031 127 85,729,000 National ouainHospitals Population 5 Agency Governmental o ai No. Ratio No. 1 Male % ofpromotioninschoolleavingcertificate 48 29.22 77.08 :8,1 62 1:283,818 rvt oa Other Total Private 189 Health centers 27

226 centers, bringing services coveragecenters, bringingservices to62%(see Table 30). year hasonlyexpandeditshealthinfrastructure with 62health coverageservice to92%.However, Addis Ababa forthesame Ethiopians alike. forEthiopianshub forhighqualitymedical services andnon- air connectivity, Addis Ababa itselfcould become aregional With proper policy andforesight, andwithalready excellent the Gulf States andAsiain search of bettermedicaltreatment. lost asthosewhocanafford to do sogoon ‘medical tourism’ to Currently, asignificantamountofforeign exchange isbeing more inthehealthcare private sectorparticipation sector. city administration to develop policies andstrategies to encourage there isconsiderableroom forboththefederal government and forthecity’s13.71% oftheservice residents. products, as shown in Table 31. Public pharmacies only deliver private vendors dominatethedistributionofpharmaceutical Addis Ababa cityfallsbehindby 14.2%.On theotherhand, in thecityofAddis Ababa. Compared tothenationalcoverage, centres andhealthpostsaccountfor 79.4%ofhealthcoverage With demand for better health services growingWith demandforbetterhealthservices exponentially, As indicatedin Table 30,private andpublichospitals,health Female 52 36.5 69.7 ai o Ratio No. Ratio :035- 1:50,355 :6461,4 :,4 93.60% 1:5,342 16,048 1:26,416 Agency Governmental Drug store 0 Health posts G rvt Total Private NGO 0 Total - 57.45 65.72 72.87 190 care coverage Primary health 79.40% 190 28 THE STATE OF ADDIS ABABA 2017 64 35.66 109.70 675.14 After relocation After relocation mean price in ETB . .

1247 1233 1212 Food market Food .

.

Number of respondents Number of respondents to this survey question Health Health After relocation

. . Education Education . .

In sum, it is fair to say that, over the past decade, the city sum, it is fair to say that, over In Electricity area. They reportneighbourhood road conditions and the that They area. of high quality compared are area drainage in the resettlement of the other hand, high levels to inner city neighbourhoods. On on electricity and waste collection reported dissatisfaction were services, and some dissatisfaction with water services (see Figure water 1,313 survey with of those satisfied Out 31). respondents, to 38.3% after relocation. services 57.4% before from decreased satisfaction levels and waste services low Electricity also showed Likewise with 27.3% and 12.9 % respectively. after relocation, access to education and health services, although dissatisfaction is likely to diminish once the planned construction of schools, the municipality are by hospitals and water infrastructure population. As the completed to accommodate the growing stalls and established, market become more areas resettlement other services quickly and this is likely to further expanding are shops and food of basic about lack public complaints reduce other neighbourhood facilities. basic services heavily in improving administration has invested education, health and electricity, such as water, coverage, the track this respect, In residents. Ababa transport for the Addis . . 20.10 61.54 242.30

Before relocation Before relocation mean price in ETB

. collection waste Dry . Before relocation Water supply Water

. . Drainage 948 871 1161

Road condition condition Road

Number of respondents Number of respondents to this survey question Monthly expenditure on water, electricity, and transportation electricity, on water, Monthly expenditure

Percentage Water and sanitation services Water Electricity Transportation Satisfaction in basic urban servicesSatisfaction Affordability of basic urban services Affordability On the one hand, urban renewal projects are seen positively seen positively are projects the one hand, urban renewal On This study explored whether urban renewal and relocation renewal and urban whether explored study This • • by the residents relocated within the Addis Ababa metropolitan metropolitan Ababa within the Addis relocated the residents by affected the share of household income devoted to paying basic paying to devoted income household of share the affected water and waste collection, transport, and utilities (electricity, on shown As relocation. after and before fees) related security significantly on basic utilities has increased 32, expenditure Table and electricity, The mean price for water, after relocation. was ETB 20.10; ETB 61.54; relocation transportation before the survey to According and ETB 242.30 per month respectively. basic servicesparticipants, for these three the price has increased relocation, the estimated terms, after In percentage significantly. and transportation electricity, on water, monthly expenditure respectively percent, 77.4%, 78.3% and 178.6% by increased 32). (see Table Source: State of Addis Ababa Report Survey, 2016 Survey, Source: State of Addis Ababa Report Affordability and client satisfaction of basic social and client satisfaction of basic Affordability services Source: State of Addis Ababa Survey, 2016 Source: State of Addis Ababa Survey, BEFORE AND AFTER RELOCATION LEVEL FIGURE 31: SERVICE SATISFACTION MONTHLY EXPENDITURE ON BASIC SOCIAL SERVICES BEFORE AND AFTER RELOCATION BEFORE AND AFTER BASIC SOCIAL SERVICES EXPENDITURE ON MONTHLY 32: TABLE • • 65 THE STATE OF ADDIS ABABA 2017 enhanced investment strategies. city government level, complemented with better planning and will demanddeepadministrative andinstitutionalreforms atthe on thehighest‘efficiency gain’ maybethebestsolution.This medium-term, betteruseofexistinginvestment capacitybased Addis Ababa cityadministration.Therefore, and inthe short- wellinfrastructure be beyondthat may very the capacity of the This will require hugefinancialinvestmentsnewandexpanded in coverage shouldremain apriority area forthecityadministration. whileincreasingaffordability theservices ofmunicipalservices population andthebusinesssector, enhancingthequality and urban poorduetotheirlow earningcapacityandhighinflation. stillremain problematic forthevastthe services majorityofthe took power in1991.Needless tosay, qualityandaffordability of inAddis Ababaof basicservices whentheEPRDFgovernment record ofthegovernment isimpressive given thedeplorablestate Given thepaceofgrowth ofAddis Ababa, bothintermsof 2013: Streetscene-mensewingtextiles.©Shutterstock. ▲ 3.6 U

these relocatees now findthemselves worseoffthan before. shelter onthelandtheyreceived asacompensation.In asense, standards. Consequently, theyare forced tolive insub-standard dwelling ofanew that meetsthehighmunicipal construction compensated with substitute land, but unable to afford the the poorhousingcondition for someprivate tenure holders the onetheyleftbehind. accommodationismuch betterthan additional cost,theirnew outthefinishingof condominiumsthemselves at to carry relocated tocondominiumhousingunits. Even thoughtheyhave conditions ofasignificantnumberpublichousingtenants Ababa urbanrenewal process hashelpedimprove thehousing enhancing thelivingconditionsofthoseresettled. The Addis On theotherhand,renewal process has exacerbated conditions ofdilapidatedneighbourhoodsand positive outcomesintermsofimproving thephysical rban renewal andredevelopment programs have both

impacts onrelocat program's socio-economic The urbanrenewal ees

THE STATE OF ADDIS ABABA 2017 66 100 86.5 13.5 100 71 29 100 42 57.9 % 89 77 12 323 230 92 323 136 187 Frequency Frequency Most inner city residents depend on the informal economy, depend on the informal economy, inner city residents Most 187 of 323 households that participatedOut in the survey, survey those who had been Qualitative data also confirms that in Estrangement in the new neighbourhood and difference often also mention the incompatibility residents Relocated which is mostly neighbourhood based. The major urban renewal major urban which is mostly neighbourhood based. The the city far away from of satellite cities enhanced the developments displacement that compromised induced renewal Hence, centre. and the city centre. the economic ties with neighbourhoods that they could not generate income in the (57%) reported 92 households, these 323 relocated Of area. new resettlement 12 (3.7%) only and city the inner in business had their (41.3%) 88 For area. could sustain their businesses in the resettlement income provide cannot area (29.1%) the resettlement households 33). Table opportunities (see despite income sources operating informal businesses lost their resettlement efforts to sustain their economic activity in the because their income economic activities depended on a areas, and in the renewal lost neighbourhood-based clientele network process. relocation easy of living significantly hampered the ways and standard Specifically, activities. economic restarting and into blending business types the does not actually require area the resettlement business Particularly, operated in the inner city. that relocatees skills that helped their inner city informal activity appeared socio-economic different incompatible in a new and entirely environment. As a result, with the local culture. of the condominium design lifestyles. them into different condominium living forced could not regain formerly dependent on house rent Relocatees in abject now of income and these households are this source unable to meet their basic needs. poverty Economic impact Economic Total No Yes Total No Yes Total Total No Yes Categories 63.9% 82.4% 57.4% 29.4% 31.1% 42.9% 36.8% Friendship Safety and security of land Portion Basic services Means of Livelihood Location in city/accessibility Strategic location for my business Were you able to relocate and sustain your business? you able to relocate and sustain your Were Did you own a private business in your previous site? Did you own a private business Has your ability to earn income been affected by your relocation? to earn income been affected Has your ability In addition, public housing tenants who chose not to be addition, public housing tenants who chose In furtherrenewal clearly have unintended programs The urban 82% ranked that, out of 323 relocatees, show results Survey Items moved to condominiums because they could not afford the down down the not afford could because they to condominiums moved to payment and monthly mortgage been relocated payments, have quality and often too small to accommodate houses of low Kebele relocation. worse off than before the household. They too are Redevelopment a fewfor quite consequences relocatees. negative of social and economic ties that network people’s often uproots of the fact that usually neighbourhood-based. Regardless are and housing urban inner cities mostly constitute substandard the communities’ physical and social infrastructures, lack proper a vital part are and economic relationships social networks and often constitute an indispensable coping of livelihoods mechanism for survival. destruction as a major loss and, in an order of social networks strategic location for private 63.9% ranked loss of of severity, business as the second-most important damage. Lost location in ranked were the city accessibility and loss of means of livelihood 32). (see Figure and fourth respectively third Source: State of Addis Ababa Survey, 2016 Source: State of Addis Ababa Survey, RELOCATION PERCEPTIONS DUE TO FIGURE 32: LOSS Source: State of Addis Ababa Report Survey, 2016 Survey, Source: State of Addis Ababa Report IMPACT OF RELOCATION ON HOUSEHOLD ECONOMIC ACTIVITY ON HOUSEHOLD RELOCATION OF IMPACT 33: TABLE 67 THE STATE OF ADDIS ABABA 2017 Girl makingspicesinfrontofacondominium.Thedesigncondominiumhousingisoftenincompatiblewithlocalculture.©GeoK ▲ (Interview with private landholder, relocated). relocated). landholder, private with (Interview government office.” dependentam on my daughter, who at works a front in of house, now the I stall asmall with money the Iearned with to manage “I used (Focus group discussion participant).(Focus group (…) idle justsitting Some are of us buildings. for unfinished mostly guards security as now are justworking city money the in make now to are men jobless. who Many used living (…). a Women make and to sell who used (…)area do here we can nothing is there and rural like is now area the are newcomers and We over years. the we established network on informal the to based do is we used What basis. some income onway to make adaily city, we were the in “When we would a find Impact ofurbanrenewal on socialrelations death and other family circumstances (Yintiso, 2008) death and other family circumstances (Yintiso, economic and social challengessuchascelebrations, childbirth, Inner cityresidents’ socialnetworks are vitalduring particularly compensated) and relocated, landholder, private with (Interview (…). needs food our supply to enough dependentwe elder are generous sisters on two our iron(a sheet). shelter corrugated of made Now, used equipment. Now, look (…) at us house look at this We there. life household to have better used beautiful We clean. spacious and a had was Square Meskal near rent the money. using sister and The had we house my son to with live used rooms and extra “I three had ( my restaurant.” run tono and cook place floor, Mythere onlocated. fourth house is the “I can’t work from where my condominium is Interview with public tenant, relocated). relocated). tenant, public with Interview alev.

29 . Findings THE STATE OF ADDIS ABABA 2017 68 3.1 6.8 90 62 38 56.3 43.6 % 22 200 125 181 140 Frequency (An elderly(An participant the of focus group discussion). “Our development committee have members development “Our been working relentlessly make to our voice heard.relocation The area was underserviced which is contrary what to the government When received we the land, (…) promised displaced farmers The wascommittee crop it. on go back to have andmembers forth the to officewith government their own to cost get what the neighbourhood however, (…) now have we feeling to now differentcompared is much the feel friendship not I do I had relocation. before that I am with friends my (…) Although a significant number of people could not maintain Although a significant number of people relocatees do not have a social network system that they could system that they a social network not have do relocatees and for informal companionship, area on in the resettlement rely many could support. Hence, instrumental as psychosocial as well (or mutual aid community and Mahibers not maintain their Iddir veryorganizations), which are important social capital. joined new some have ones to after relocation, their social networks 34), only 38.9% managed Table (see cope with the loss. As shown Regardless areas. to join new in the resettlement social networks often establish a development type, relocatees of prior tenure committees These development committee out of necessity. to enhance that work groups’ often serve ‘interest as organized demanding local government experience by a smooth relocation Development in servicing areas. response the resettlement tenants compensated public housing committee members from with condominium with condominiums tend to work landholders’ relocated private The them. managers representing or sub- Woreda committees often liaise with former development basic services met. city administrators to make sure demands are on the administration’s satisfaction level committees’ However, response for furtherThis suggests the need on studies is very low. of relocatees, of interaction and sense of belongingness the level because of the new and the fact that the organizing social structure committee was not internally driven. development Low level of interaction 10 Moderate No Yes No Yes Response 37.5% 25.3% 0.8% 16.1% 20.3% Other fellowship group Religious Equb Mahiber Iddir What were your social interactions with your neighbours before relocation?What were your social interactions High level of interaction 289 Were you able to join a new social group in the resettlement area? you able to join a new social group in Were Have you relocated with the neighbours you lived with prior to relocation? with the neighbours you Have you relocated Unfortunately, the city’s renewal and relocation strategy failed and relocation renewal the city’s Unfortunately, addition to membership status, 289 (90%) of relocatees In

from this study confirm that membership of various social various of this study confirm that membership from inner city is social capital that sustains people. Established groups residents the much-needed social used to offer social networks organization to support individual and communal needs (see 33). Figure as inner city dwellers the importance of relocating to recognize limited options in choosing the site of their Relocatees’ a group. disruptive factor for the condominium was a major social relations’ life-long relationships majority of public housing tenants. Such units Condominium housing cannot easily be reconstructed. a lottery allocated through were system, and recipients were also consequently assigned random locations. The government used the lottery plots of land system in distributing replacement landholders, although landholders could decide the for private both cases, long sustained neighbourhood In area. resettlement could not friendships and established informal social networks survive relocation. of interaction with members that they had a high level reported because of However, relocation. of the social organization before the lotteryrelocatees (i.e. 56% out system, significant numbers of of 321 survey on this particular did not question) respondents making the relocation with their neighbours, therefore, relocate addition, some challenging. In experience more and resettlement Source: State of Addis Ababa Survey, 2016 Source: State of Addis Ababa Survey, FIGURE 33: PRIOR MEMBERSHIP IN SOCIAL ORGANIZATIONS Source: State of Addis Ababa Report Survey, 2016 Survey, Source: State of Addis Ababa Report RELOCATEES’ ABILITY TO JOIN NEW SOCIAL ORGANIZATIONS AND LEVEL OF SOCIAL INTERACTION AND NEW SOCIAL ORGANIZATIONS JOIN TO ABILITY RELOCATEES’ 34: TABLE 69 THE STATE OF ADDIS ABABA 2017 Availability offormal socialsupport compensated withlandreported that,neither Kebele norsub- tosmoothlyresettle.not supported Relocated private landholders relocated toKebele housingandremaining intheinnercitywere and compensatedwithcondominiumhousingunitsorwhether experienced due to relocation. Public housing tenants relocated withtheirpersonaleconomicandsocialcrises left tostruggle received from localauthorities.They anyformalsupport were (see. local authoritieshadmadelittleeffort Figure 34) during andafterrelocation revealed that96.0%reported that negative impactsontheirlivelihoods andsocial/communalgaps tohelprelocateesAssessment offormalsupport copewiththe through professional facilitationoftherelocation experience. handling theunintendednegative impactsoftheirresettlement social capital.Localauthoritiesshouldbetterassistrelocatees in for somerelocatees. lifestyleappeartocontributepositiveused toanew experiences relationships, as well as readiness to accept change and getting networks in theresettlement area andtheabilitytoformnew networking were Thecontinuationofpre-existing observed. of relocation, somepositive experiencesinrelation tosocial many committeemembers.In spiteofthenegative impacts the low-level response from localauthoritieshasdiscouraged development-related However, issuestheyconsiderimportant. thearea withroads, electricityandother matters likeservicing through mediating between relocatees andlocalgovernments in tohandlethedevelopmentsettlementareas ofnew trying 10 9 6 5 4 3 2 1 ENDNOTES CHAPTER3 showedThe survey thatalmostnoneofthein-depthinterviewed Undoubtedly, urbanrenewal relocations have disintegrated The role of thesecommitteesislikethataformalinstitution 8 7

Tesfaye, (2005).IllegalLandSubdivision inAddisAbaba E. Tesfaye (2007) The W (2014). Ethiopia: HousinginAddisAbaba, Mathema, A. -The IntegratedHousingDevelopmentP UN-Habitat. (2011)CondominiumHousing in Ethiopia Wubneh, M.(2013)AddisAbaba,Ethiopia- Africa’s for LeaseHoldingofUrbanLands” Proclamation 721//2011titled“A P No. 19. Holding Proclamation No.272/2002.NegaritGazeta.Year 8, FDRE Proclamation, Re- 27-53 development in Ethiopia. Property Management, 25(1), pp. Tesfaye, (2007)Thechangesandprospectsofhousing A. Housing andUrbanDevelopmentStudies of Rapid Urbanization. EburonUitgeverij BV. Institute for Fransen, J. (2008).ManagingEthiopianCitiesinanEra Fransen, J. (2008).Introduction.InvanDijk,M.P 1-9 Journal ofEconomics,Finance,andManagement,1(1),pp. and macro economic implications. American Ababa: Micro- challenges andprospectsofrealestatefinancinginAddis andT Eshete, Z.S., Nations HumanSettlementsProgramme, Nairobi diplomatic capital.Cities35(2015) orld Bank/DanishTrust Fund eshome, K.W. (2015).Performance, enactment of Urban Lands Lease enactment ofUrbanLandsLease roclamation toProvide rogramme, United rogramme, United ., and ., and

19 17 15 14 18 16 13 12 11

Bank, Washington D.C Affordability: LookingBeyondtheMedian Republic ofEthiopia Bank, Washington D.C. Alemayehu, Elias Yitbarek Report (Jan/2003-September/2006).AddisAbaba Addis AbabaCityAdministration(2006).Performance Banks such as Commercial Bank of Ethiopia and Banks suchasCommercial BankofEthiopiaand Urban Institutionsfor a Middle World BankGroup(2015)EthiopianUrbanizationReview: World BankandCitiesAlliance. Cities AllianceAnnualReport2015:without slums. Gan, Q.,andHill,R.J. (2008).MeasuringHousing Debate, 17(1),151-184. Case fortheResidualIncomeApproach.HousingP (2006).What is HousingAffordability?The Stone, M.E. Sustainable UrbanDevelopment.,FederalDemocratic (MUDHCo). (2014)NationalReportonHousingand Ministry ofUrbanDevelopment,HousingandConstruction Urban InstitutionsforaMiddle World BankGroup(2015)EthiopianUrbanization Review: degree ofphilosophiedoctor. Trondheim, February2008. settlements, inAddisAbaba,Ethiopia.Thesisforthe Urban upgradingintenantdominatedinner-city Addis Ababa city CauseandPractice: thecase ofKolfe Keranyo SubCity. (2008) Revealing Responses. (2008) Revealing Responses. Source: StateofAddisAbabaSurvey, 2016 FIGURE 34:FORMALSOCIALSUPPORTEXTENDEDTO RELOCATEES improve theirlivingsituationonceresettled. last five years norhadtheybeenconsultedonhow theycould city officialshadvisitedtheminthe resettlement areas over the

-Income Ethiopia.World -Income Ethiopia.World (Focus group discussion participant) discussion group (Focus first how living (…). see come wethem and are (…) that like let here, anything Inever heard came we After support to do business. financial to groups receive in and ourselves organize to us to encourage used they neighbourhood, here. previous our In we arrived after us visited on None officials us? or of Kebele sub-city the come Did to check they it through. making are we care“They whether officials] do[the not Formal socialsupportnotreceived Formal socialsupportreceived

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26 28 25 20 29 27 24 23 21 22

Ababa. Discussion Paper. (2009). Ethiopia:ImprovingHealthServiceDelivery, HNP Development Goals,Nairobi. Monitoring theHabitatAgendaandMillennium offering financiallendingservices. Development BankofEthiopiahavebeenparticipatingin Research Review, Vol. 24, N o.2,pp.53-77. Low- IncomeHouseholds.EasternAfricaSocial Science Displacement: TheImpactofResettlement Projects on Gebre Yintiso.(2008).UrbanDevelopment and Indicators 2012/13. Ministry ofHealth(MOH).and Related El-Saharty, S MOUDCo, (2014). (2012).Welfare MonitoringSurvey-2011,Addis CSA. UN-Habitat. (2004). Urban CSA (2012). World Bank(2015) Addis AbabaCityAdministration,Ababa. Addis Ababa2008/09-2012/13,StrategicPlanDocument, Addis AbabaCityAdministration(2008).StrategicPlanof Construction &HousingDevelopmentBureauhead Interview withtheAddisAbabaCityAdministration . Kebede, S., Dubusho,P. O., andSiadat,B. 4% Indicators Guidelines: Indicators Guidelines: 96%

THE STATE OF ADDIS ABABA 2017 70 ▲ in relocation areas. © Geo Kalev. sitting outside her house before relocation. Socializing with neighbours often gets lost Woman 71 THE STATE OF ADDIS ABABA 2017 THE STATE OF ADDIS ABABA 2017 72 IRONMENT  V THE URBAN THE URBAN EN ▲ 2015: Menelik II equestrian statue in Addis Ababa. © Shutterstock 73 THE STATE OF ADDIS ABABA 2017 4.1 U 1999) pollution removal andheatmitigation(Bolund&Hunmannar, productivity,primary stormwaterabsorptionandretention, air urban residents including providing a habitat for biodiversity, regional ecosystemsprovide functionsthatbenefit important represent aconditionsinequanonforhumanlife.Localand (such asfood,fuel,cleanwater, cleanairandhazards mitigation)

economy andthehousingmarket (Bown etal2013) decisions are takenmainlyinresponse tochangesintheagricultural residents and their future livelihoods. The city’s current land use Thiscompromises thehealthand wellbeing ofthecity services. experiencing adecrease inthecriticalfunctionsofitsecosystem and around the city. With an increasing built up area, the city is height andwidth,modifyingthelandscapelandcover in costs forcitizens andgovernment. Addis Ababa issprawlingin Patches ofurbanagriculture provideecosystemservices©GeoKalev. ▲ 1 . The absence of functional ecosystem services incurshealth . Theabsenceoffunctionalecosystemservices riverbanks) and the environmental services theyprovideriverbanks) andtheenvironmental services the city(e.g.parks, private gardens, rivers, pondsand rban ecosystems,referring toallgreen andblueareas in

equitable well-being Growth, resources and 2 . Urban 2007) not basedonalong-termenvironmental vision(Gallent &Shaw, growth and the geographical expansion of city’s boundaries are area impactsnegatively onthesupplyofenvironmental services. speed of4.5km2annually. Such arapiddecrease oftheecosystem km. This implies thatthe city is consuming theecosystems ata 2014 shows thatthebuilt-uparea increased from 134to200 economic growth. Acriticallookatthesituationsin1999and Ababa over the past15years resulting from itsdemographicand of citizens (McPhearson etal.2013) in thefuture andtoimprove long-term wellbeing theshort-and managed tomeettheneedsofurbanpopulationtodayand how ecologicalresources canbestrategicallydeveloped and a rapidlyurbanizingspacecityplannersare expectedtoconsider impacts ofclimatechangerelated hazards onthecity. Hence, in and vulnerability to droughts or floods) and worsens the likely shocks ofthewholeurbansystem(suchasfoodinsecurity ecosystems significantly weakens the resilience to stress and 2008; Xiaoetal.2013) systems, lossofbiodiversity andsoildegradation(Grimm etal. cover changeandalterationsinbiogeochemicalcycles andhydro more water, energy, food, land and housing, causing rapid land- Figures 35and36show theland-cover changeofAddis More importantly, thedownward trend inAddis Ababa’s 3 . Massive andrapidurbanization increasingly demands 4 . 5 . THE STATE OF ADDIS ABABA 2017 74 2 2 Built up area 1999: 134.0 Km Built up area 2014: 201.0 Km Source: Linda Zardo and Marcia Guambe FIGURE 36: LAND-COVER ADDIS ABABA 2014 Source: Linda Zardo and Marcia Guambe FIGURE 35: LAND-COVER ADDIS ABABA 1999 75 THE STATE OF ADDIS ABABA 2017 FIGURE 37:ECOSYSTEMSERVICESSUPPLY INADDISABABAPERSECTOR (BYESSUPPLY SCOREFROM0-10) Source: LindaZardoand MarciaGuambe ± Colfe Keranio Runoff mitigation supply (37d) Runoff mitigationsupply Air pollutionremovalsupply(37c) Carbon sequestrationsupply(37a) Addis Ketema Colfe Keranio Nifassilklafto Lideta Addis Ketema Gulele Nifassilklafto Kirkos Arada Lideta Gulele Kirkos Arada Akaki Kality Akaki Kality Bole Yeka Yeka Bole No Data 10 0 Colfe Keranio No data 10 6 3 0 Addis Ketema Nifassilklafto Lideta Gulele Colfe Keranio Kirkos Arada Addis Ketema Akaki Kality Akaki Colfe Keranio Nifassilklafto Carbon storage supply (37b) storagesupply Carbon Local climate mitigation supply(37e) Local climate Lideta Gulele Addis Ketema Kirkos Nifassilklafto Arada Bole Yeka Lideta Gulele Akaki Kality Akaki Arada Kirkos Bole Akaki Kality Akaki Yeka Bole Yeka No data 10 4 0 No data 10 9 1 0 No data 10 0 THE STATE OF ADDIS ABABA 2017 76 9.8 No data 0 2.2 2.6 . 7 and adapted to the context of Addis Ababa. and adapted to the context of Addis

The ES analyzed included: 1) carbon sequestration; 2) carbon included: 1) carbon sequestration; The ES analyzed Figure 37 shows the city mapped according to five ES supply: to five the city mapped according 37 shows Figure comparing carbon sequestration (37a), air Additionally, Ababa Addis in values supply ES the average 38 maps Figure storage, 3) air pollution removal (PM10); 4) air temperature (PM10); 4) air temperature storage, 3) air pollution removal values for McPhearson’s and 5) runoff mitigation. regulation; regulation, for air temperature adopted except these ES were the values type. Instead, since that heavily depends on the climate a taken from were Ababa in Addis regulation for air temperature study previous carbon sequestration (37a), carbon storage (37b), air pollution (37c), runoff mitigation (37d) and local climate removal these maps, it is evident that the major mitigation (37e). From Thus, it is mainly the city centre. ES supply takes place far from the largest and most healthy located outside the city where and Southeast found today: mainly in the North, ecosystems are West. a few in the (37e) mitigation climate and local (37c) removal pollution with carbon storage (37b) and runoff mitigation (37d), it ES supply to the providing emerges that not all ecosystems are removal While carbon sequestration, air pollution same extent. mainly supplied in the North, and local climate mitigation are in a more supplied carbon storage and runoff mitigation are homogeneous way within the city boundaries. carbon –namely, specific ES supply the sum of the five considering local climate mitigation, sequestration, air pollution removal, carbon storage and runoff mitigation. type. This method was applied to five ES ES type. This method was applied to five crucial for the urban et al., 1999; McPhearson (Bolund & Hunhammar, environment 2013) Yeka Bole Obviously, Obviously, Akaki Kality

. In Chicago, . In 6 Arada Kirkos Gulele Lideta Nifassilklafto Addis Ketema Colfe Keranio Ecosystems are not only an environmental matter; they also not only an environmental are Ecosystems In this report, the demand and supply of ecosystem services this report, In The The ES supply assessment was based on the land-cover. represent economic value. The presence or absence of functional presence The economic value. represent servicesecosystems and their environmental impact on the have of people (e.g. of the economy and on the wellbeing strength and absorbing cooling reduction, urban noise air purification, For 1999). Hunhammar, storm/flood water runoff) (Bolund & Barcelona instance, the air purification performedby ecosystems in costs EUR 1 million of avoided over of economic values represents 2013) and Barton, for the city (Gomez-Baggethun the cooling value of each tree corresponds to USD 15 of avoided corresponds of each tree the cooling value due to heat- air conditioning costs and hospitalization expenditures 2013) and Barton, diseases (Gomez-Baggethun related The costs and benefits of growth: An ecosystem- growth: The costs and benefits of based perspective Source: Linda Zardo and Marcia Guambe 0-10) SCORE FROM ES SUPPLY IN ADDIS ABABA (BY SERVICES SUPPLY ECOSYSTEM FIGURE 38: TOTAL even bigger costs and values are related to flood mitigation. Hence, to flood mitigation. related are bigger costs and values even significant of functional urban ecosystems represents the presence economic and health benefits, while their absence implies costs. to mapped and assessed was Ababa Addis of city the for (ES) and demand Supply or weak. strong determine whether these are next supply and demand calculated independently; were demand matches to identify where information was overlayed demand and high supply or high either low supply and where insights into This provided supply occurred. demand and low locally determined needs and can serve as an indicator of socio- identifying besides city the across inequalities environmental for intervention.priority areas et al. was adopted McPhearson by methodology developed 0 to 10 to each land-cover from which assigns an ES supply score 77 THE STATE OF ADDIS ABABA 2017 important tohighlight thatthesub-citywithlowestimportant supply residents’ low vulnerability. lowoff scenarios,whileBolehas demandscorevery becauseofits other hand, Yeka, Kirkos and AkakiKalityrepresent thebetter Lafto, Kolfe andGulele show average somewhat scores. On the population density, followed by Aradaand Lideta.Nifassilk ES. Thisismainlytheoutcomeofhighvulnerabilityand high sub-city. It shows that Addis Ketema has the highest demand for vulnerability weighted according tothepopulationdensityper the CentralStatistical Agency(CSA). of Addis Ababa 2015(forincomedetermination)anddatafrom done persub-city, by usingtwosources: Poverty Level Assessment adaptive capacityinthecaseofstress orshocks. Themappingwas These three groups are in general more vulnerable and have less Source: LindaZardoandMarciaGuambe FIGURE 39:ECOSYSTEMSERVICESDEMANDANDSUPPLY PERSUBCITY(BYESSUPPLY SCORE0-10) were identified:peoplewithlow income,children andelderly vulnerability among individuals and communities in Addis Ababa Figure 39alsoshows the overall supplyofESpersub-city. It is Figure 39shows thedemandofESby subcity. Themap shows Based ondemandanalysis,three majorcomponentsof Colfe Keranio Addis Ketema Ecosystemservicessupply Nifassilklafto Lideta Gulele Kirkos Arada Akaki Kality 10.0 7.9 4.5 3.7 2.9 2.0 0.6 0.4 0.1 0.0 Yeka Bole 8 . and Kirkos. inAddisneed forurgent interventions Ketema, Arada, Lideta and street trees. Comparisonofdemand andsupplyshows cities present more ecosystems thanks to the presence of gardens no spaceforprivate gardens orparks, whilehigh income sub- lowthose withvery income,where housingispoorandthere is sub-city. More specifically, thesub-citieswithlowest scores are most ofthetimerelated tothesocio-economic features ofthe out of10)isduetothephysicalcharacteristicssub-city, of 10)and the average scores (e.g.Bole,with a score around 3 scores (e.g. Kiros, Arada and Lideta, with scores below 1 out most urbanized sub-cities,thedifference between the lowest they present of ecosystems. a highsurface While if we zoom on that theseare thelessurbanized areas inthecityandconsequently supply. Thehighscores or Gulele and Yeka are due tothefact with thehighestscores inthecity (10 outof10)fortotalES Bole. Gulele and Yeka, ontheotherhand,show bestsituations Arada, Lideta,ColfeKeranio, Nifassilk, Lafto,AkakiKalityand and thehighestdemandisAddis Ketema followed by Kiros, Colfe Keranio Demand forecosystemservices Addis Ketema Nifassilklafto Lideta Gulele Kirkos Arada Akaki Kality 10.0 9.4 9.4 8.5 8.4 8.0 7.4 6.8 6.6 4.9 Yeka Bole

THE STATE OF ADDIS ABABA 2017 78 per  . Recurrence of flooding is flooding of Recurrence . 9

per capita. The rapid disappearance of urban green space will bring with The rapid disappearance of urban green The lack of green space also has social consequences. These are These consequences. has social also space green lack of The The threshold value of minimum green space per capita has value of minimum green The threshold  it huge transaction cost for individuals, communities and private it huge transaction cost for individuals, communities and private disappearance the that evidence is There alike. enterprises sector for 40% of the flooding and space is responsible of green 2015) (DPPC, city the in landslides built environment growth continues at a rate of 4.5 km continues at a rate of 4.5 growth built environment already costing ETB 0.21 millions per event (and expected to be costing ETB 0.21 millions per event already for emergency assistance at the city ETB 0.34 millions per year) monetary terms of average In loss per event, administration level. monetarythe highest ETB 1.21 with loss represents sub-city Yeka and expected to be ETB 2.12 millions per year, millions per event as this cannot be expressed not counting the loss of human lives, of a city. also the ‘lungs’ spaces are in monetary terms. Green top priority the sustainability agenda should be given Therefore, city administration. Ababa Addis the by satisfy stress, relieve people meet and socialize; the spaces where needs and build social bonds within their their recreational the state city where a rapidly changing communities. In respective year, consuming more and more open space while the remaining open space while the remaining and more consuming more year, polluted. more ecosystems become ever Organisation as 9m2. Addis Health World by the been defined 0.4 and the 0.9 with between poorly in this respect scores Ababa m

omoting and

want The city we

uman activities and on-going urban growth are are growth uman activities and on-going urban quality of life in terms of health, citizens’ threatening be must It and resilience. economic productivity

business as usual and keeping the on-going trends; business as usual and keeping the on-going trends; intervening in practices that can damage ecosystems; damaged ecosystems; and restoring pr the ecosystems in the city by increasing creating new green areas to enhance the supply of ES and areas new green creating to citizens. the benefit they provide

2. 3. 4. 1. Under this scenario, current growth trajectories and levels of trajectories and levels growth this scenario, current Under ▲ Leviker. Green space in the middle of Addis Ababa. © Kelly understood from the outset that sustainability has nothing to do understood from that it seeks to ensure the contrary, On with stopping growth. is compatible with social and environmental economic growth trends or actions this chapter identifies Therefore, safeguards. environmental and economic social, undesirable to lead can that rectify these to also identifies possible strategies outcomes. It this end, four possible growth Towards externalities. negative being considered: are Ababa scenarios for Addis resource consumption are assumed to continue unabated. The consumption are resource Business as usual: Keeping the on-going trend as usual: Keeping Business

H 4.2 79 THE STATE OF ADDIS ABABA 2017 Intervening inpracticesthatdamageecosystems ‘business asusual’ scenarioispursued. and decrease dramaticallytheresilience ofthecitytohazards ifa compromise thecity’s economic viability, worsen climate change have serioussocialandpsychological impactsontheresidents. the rapid disappearance of open green space as the only ‘oasis’ can poor or inadequate, of sanitation and waste management is very problems (Benjaminson etal.2012) sector isthemain culpritofthecity’s worsening air pollution from coalandwoodburningfor cooking, thetransportation the healthrisktoAddis Ababa residents. environmental degradationbelieved tocontribute upto30%of to improve andwaste management - two majorsources sewage of be addressed andavoided. Major wouldberequired interventions open space.Second, allcausesofecosystemdegradationshould of accommodating more citizens without eliminating additional take decisive actionsonmanyfronts. First, itshouldfindaway For this scenario to materialize, the city administration has to would beactively engagedinstoppingwater, air andsoilpollution. amount ofgreen spaceremains stable.Thecityadministration urban density being actively encouraged – so that the absolute Addis Ababa’s low environmental sustainabilitycan,andwill, Air pollutioninthecityisgetting worse.Besides thesmoke Under this scenario, the city would grow in height – higher Cars contributingtoairpollution©GeoKalev. ▲ 10 . Today, Addis Ababa is system are now beingseriouslyconsidered. Rapid Bus Transit System LightRail andcomplementingthenew well acknowledged byinitiatives cityauthoritiesandnew likethe Restoring thedamagedecosystems al. 2012) under Brazilian, ChineseandU.S.Astandards (Benjaminson et between fourto17timesmore pollutedthanwouldbeallowed in theriver andstreams. Thus, the project represents an important contribute toreductionwould further oreliminationofpollutants biodiversity inthegreen corridors.Theriver restoration project recreational activitiesaround therivers whilealsomaintaining can create jobsandgive new impetustothedevelopment of the pastfifteen years. in Addis Ababa priortothecity’s sprawltoperi-urban areas over and streams foragriculturalproduction –an activity widespread flooding, whileenablingcitydwellers touselandadjacentrivers of thisproject. The restoration project isexpectedto prevent restoring ninehectares over seven ofthefirstphase years aspart administration launchedariver rehabilitation project aimed at household andindustrialwastes.In 2014,however, thecity Ababa are severely degradedduetouncontrolled dumpingof restoring itsdegradedecosystems.Rivers and streams inAddis In additiontoreducing flood risk,theriver restoration project Under thisscenario,thecityadoptsaproactive approach to 11 : Theneedforexpandingthemasstransitsystemis THE STATE OF ADDIS ABABA 2017 80

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l l u n m t i o tree coverage can capture ,4 g/ 10% during traffic cover improves te ualit o air up to uring te ear p to uring te ear A more preferable scenario is based on working with nature with nature scenario is based on working preferable A more G K GC G instead of against it. At the moment, however, the emphasis the moment, however, instead of against it. At of economic is on achieving high levels of the government consequences. long-term environmental of its regardless growth on be focused will then attention achieved, is growth Once and could lead to is naive an approach Such the environment. damage, with huge consequences to environmental irreversible such risk, the creation avoiding from Apart city residents. future of new ecosystems can bring benefits to the city and also avoid some existing examples. shows 40 costs. Figure many present Increasing the ecosystems in the city Increasing opportunity for Addis Ababa to rehabilitate one aspect of its to rehabilitate Ababa opportunity for Addis due to human activity. natural capital that has stopped working social, significant have will project the out, carried successfully If benefits. economic and environmental FOR THE CITY OF NEW ECOSYSTEMS FIGURE 40: EXAMPLES 81 THE STATE OF ADDIS ABABA 2017 • Overview ofexistinginternational agreements complementary objectives: complementary sustainable development inEthiopia. and lineministries–provides topromote anopportunity ofOffice andthe Ministry Finance and Economic Development (EPA) from andwithstrong thePrime politicalsupport Minister’s (CRGE) –coordinated by theEnvironmental Protection Agency the UNFCCCSecretariat. The Climate Resilient Green Economy Adaptation Programme of Action (NAPA), submitted in 2007 to community levels. TheEPACC replaces Ethiopia’s National economy through adaptationatsectoral,regional andlocal (EPACC) isaprogram ofactiontobuildaclimateresilient sustainable citiesandclimateaction. Goals (SDGs),amongwhichgoals11and13directly address targets, includingachievement ofallSustainable Development the period2015-2020,hassethighergrowth andinvestment second Growth and Transformation Plan (GTP II), covering Change, andc)theClimateResilient Green Economy. The Plan (GTP),b)Ethiopia’s Programme ofAdaptation toClimate the stateofenvironment: a)theGrowth and Transformation Cities 2010,Box 4.9,p.165, UN-Habitat, Nairobi, 2010). different states,actorsandinterests. (See alsoThe State ofAfrican at handare complexwithdeephistoricroots andinvolve many negotiation position of the Ethiopian government, but the matters Equitable sharingofthewaterNile hasbeenacentral in theNile Basin Initiative alongwiththeotherriparianstates. to theuseofregional watersources, Ethiopia hasbeentakingpart the effectsofclimatechangehave beenundertaken. With respect limited resources, aconsistentnumberofmeasures tomitigate is visibleinEthiopia andthisisamatterofgreat concern.Despite regionally shared waterresources. Theimpactofclimatechange Ethiopia from theinternationalperspective: climatechangeand is amemberofC40andthe100Resilient Cities. Pollutants (Emelie andAnders,2013).Additionally, Addis Ababa (2000) andtheStockholm Convention onPersistent Organic Protocol onBio-safety, theConvention onBiological Diversity the Convention onBiological Diversity (1994),theCartagena Nations Framework Convention on Climate Change (1994), Convention (1994),the toCombatDesertification United change, biodiversity andpollutionthrough theUnited Nations conventions. climate Theseinclude:protocols fordesertification, Addis Ababa. Thisisclearlythecasein sectoral ministriesanddepartments. hampered by alackofcooperationandcoordination among implementation ofgoodplansandstrategiescantherefore be • ii) i) More specifically, theCRGE iscomposedofthree Ethiopia’s Programme of Adaptation to ClimateChange At thenationallevel, three majorcross-sectoral plansaddress Two environmental to matters are importance of particular Ethiopia toanumberofinternationalenvironmental isasignatory Environmental mattersare typicallymulti-sectoral.The The nationallevel: Plans andpolicies

ensuring abatement andavoidance offuture GHG fostering economic development andgro wth, • Ababa (Emelie andAnders,2013). real difference inimproving environmental managementin Addis none of the laws and regulations can be expected to make any strengthening theenforcement armoftheenvironmental agency, weakmechanisms are ornon-existent. eithervery Without these regulations are notbeingappliedbecauseenforcement developmentwhen initiatinganynew project. Unfortunately, assessment procedures are supposedtobeappliedconsistently and the2004landusepolicy(2004).Environmental impact the Environment Impact Assessment(EIA)proclamation of2002 including the1994waterpolicy, the1997environmental policy, caveat), and theSustainable LandManagement (SLM)program. with environmental mitigationandmanagementasastrong existing andplannedhydro-electric dams(includingGibe III Ethiopia (NBPE), investments incleanenergyandwindpower, Program Ethiopia (NCCSPE), theNational Biogas Program for has put into place include the National Clean Cooking Stove emission reductions. Notable examplesofprojects thattheCRGE commitment to mitigating climate change through GHG financially attractive since there is a strong global need and gas emissions(GHGs).Internationally thisispoliticallyand strengthen thecapacity ofthecityadministration inplanning climate change. iii) poorcoordination andintegration withNGOs working on with adequatecapacitytodeal withemergingcomplexissues; and thefrequent reorganization ofsectoroffices; ii)alackofstaff complexity oftheAddis Ababa CityGovernment accountability major gapstomanagingurbanecosystemsrelate toi)the authorities inAddis AbabaAccordingly, have beeninterviewed. resulting impact. inter-sectoral coordination, implementation and measuring the challenge, however, hasbeenharmonizationoftheseregulations, the Draft Green Area Management regulation. Thecritical and Ambient,Air Water Quality Control regulation; and control regulations; the Draft Industrial Effluent Emission Draft Environmental Impact Assessment (EIA) and pollution Policy andotherregulations (includingonwastewater);the Environmental Audit Regulation; theMunicipal Solid Waste management policiesandregulations. Amongtheseare the Authority (AAEPA). projects considered by theAddis Ababa Environment Protection for mainstreaming environmental mattersinallprograms and its physicalstructure planwhichrepresents point agoodentry by thenationallevel plansandstrategies.Thecityisworking on • iii) There are additionalsectoralplansandenvironmental policies, The CRGE strategyisstrongly focusedon reducing greenhouse There are programs to anumberof donor-supported For thisreport, several representatives from different local onenvironmental The cityadministrationisnotshort The environmental policiesof Addis muchguided Ababa are very The citylevel: Plans andpolicies

improving r emissions; and be, turnedintofundedprojects. on aninvestment planofover 60initiatives thatare, orcan esilience toclimatechange.Currently itbuilds

THE STATE OF ADDIS ABABA 2017 82 Basic services, and environment public health

of this report where the environmental consequences the environmental where of this report

he problems of accessibility and affordability of basic basic of affordability and accessibility of problems he discussed in section is extensively services Ababa in Addis 3.5 Figure 41 shows the links between basic services the links between 41 shows management Figure are discussed in terms of deficiency in accessibility and are the past decade, both over of basic services.Indeed, affordability city administration Ababa and the Addis the federal government Despite servicesbasic delivery. improving in heavily invested have demand and supply for the gap between progress, tremendous open space and clean transport sanitation, electricity, clean water, the beyond are investments huge since the required remains is one of the 10 Ethiopia Today, financial capacity of the city. countries in the world with the largest population lacking access and Anders, 2013). to water and sanitation (Emelie the What is more, health. and public the environment in the city, not only city threaten in the problems environmental prevailing of the population but also the rights of the health and wellbeing generation. the future

T 4.4

. 14 Increasing economic growth and attaining middle-income and attaining middle-income economic growth Increasing ▲ Zardo. City Resilience Action Planning meeting in Addis Ababa © Linda country status by 2025 might result in improvements for some country in improvements 2025 might result status by on resources pressure but might increase problems environmental emissions of pollutants, (such as water and energy) and increase typically those linked with urban traffic, transport and industrial Ethiopian and Anders, 2013). The majority of (Emelie production located in the capital, and a considerable number of industries are to discharging them prone making based close to rivers, them are practical wastes into the waterways, which calls for providing law enforcement. and ensuring environmental alternatives and implementing its various initiatives. These include the Urban the include These initiatives. various its implementing and supported the Government by Project Partnership Development Program Support Environmental of Canada and the Small-Scale partalso is 100 Resilient of the Ababa Addis supportedBelgium. by and it Foundation supported the Rockefeller Cities initiative by (CityRAP) Planning Action has implemented the City Resilience The latter is a participatory tool which in Lideta sub-city. Tool to understand risks and plan practical enables local governments UN- by developed build urban resilience, actions to progressively Risk Management, for Disaster Centre Technical and the Habitat (DiMSUR) Resilience and Urban Sustainability 83 THE STATE OF ADDIS ABABA 2017 Water distribution Source: LindaZardo FIGURE 41:INTER-LINKAGES BETWEENBASICSERVICESANDACLEANENVIRONMENT is deplorable. litres of fresh water on a daily basis through systemic losses of the Nile and its tributaries’ water, wasting 475 million discussionovertrans-boundary theuseoflimitedvolumes water-borne diseases. In addition,given thealready problematic concern thatcouldleadto the spread ofcholeraandother unsafe water. Addis Ababa’s waterisamajor publichealth Moreover, whocanonlyaccess itisthepoorinparticular would render expensive orunsafewateran issue ofthepast. simple arithmeticthatawell-maintained watersupplynetwork access unsafewaterfrom unprotected wells andrivers. It is of Addis Ababa hastobuywaterfrom shopsathighcostor dayisreachingwater pumpedintothenetwork thetaps. every in Addis Ababa’s water supply. Only 50% of the 475,000m3 of Due tofaultypipes,thereservices. are significantsystemiclosses coverage. It hasyet toimprove thedependabilityofwater What is worrying isthataround 50-55% ofthepopulation What isworrying Addis Ababa hassignificantlyimproved itswaterservice built up ENVIRONMENT BUILT UP SAFETY AND MAJOR CAUSESOFTHEBARRIERS SECURITY MANAGEMENT TRANSPORTATION DRY WASTE MANAGEMENT SEWAGE USE OFCHARCOAL DISTRIBUTION WATER

region have nowatershedauthority toeffectively managethe measures are commendable, Addis Ababa anditssurrounding the citywhichitexpectstofinish withinthree years. Whilethese three groundwater new projects in the West, East and South of Furthermore, the Water andSewage Authority isworking on systemic waterlossesfrom 50%to20% infive years time. all pipes of the network within 12 years and to reduce current 40km ofpipesannually. Theauthority expectstohave replaced Sewage Authority hasputinplaceaplantoreplace anaverage of inadequate andpoorqualitywater, the Addis Ababa Water and within andoutsideofAddis Ababa. the safetyoffoodproduced there andthehealth ofpeopleboth urban pollutionreaches thedownstream affects countryside, water drawn from polluted rivers (Kebbede, 2014) vegetables suppliedinAddis Ababa cityare irrigatedwithwaste and water-bornediseases.Some studiesindicatethat40%ofthe health, mainlyintheformofahighlevel oforganicpollutants Well aware of the various public health risks associated with Water pollution also constitutes a risk to Addis Ababa’s public BARRIERS TO THEGOALS WATER AVAILABILITY WATER POLLUTION CO SOIL POLLUTION AIR POLLUTION GREEN AREAS AVAILABILITY 2 EMISSIONS NOISE OUTDOOR INDOOR CLEAN ENVIRONMENT GOALS FORA clean water clean air clean soil clean water CLEAN WATERCLEAN CLEAN SOIL CLEAN AIR 15 . River borne THE STATE OF ADDIS ABABA 2017 84

. More landfill sites are not a not sites are landfill . More 17 In Addis Ababa, the sewage system and dry Ababa, major are Addis waste In Only 14% of the households are linked to the sewage linked system. 14% of the households are Only Program Ethiopia (NCCSPE), is underway of (NCCSPE), under the umbrella Ethiopia Program the CRGE. drivers of water (rivers in particular)Although (rivers pollution. of water and soil drivers the to address has begun taking steps government the Ethiopian and social challenges associated with municipal environmental deal of inefficiency and environmental a great remains waste, there inadequate waste management of current degradation as a result 2011) et al. (Regassa practices sustainable solution for the growing solid waste management sustainable solution for the growing for building its While the city should be commended crisis. is need for more there facility, conversion’ ‘waste-to-energy first waste collection and source’ encouragement of and support for ‘at practices. as recycling separation as well by industries into the river The discharge of liquid and solid waste vacant lots, has in general, in open fields and or, and streams impacts on the state of soil and water and puts at risk negative almost 40% of the vegetables With the health of the citizenry. fields irrigated with wastewaters, from derived consumed in Addis and health people’s threaten food in metals of concentration high waters, ground soil pollutants can reach Moreover, wellbeing. reversibility. with scarce cycle a dangerous creating Sewage and solid waste Sewage 2 . Over 70,000 . Over 16 Traditional stoves and woody biomass represent the major and woody biomass represent stoves Traditional ▲ © Linda Zardo. management and recycling. Waste Matters are particularlyworrying are Matters pollution of indoor in terms Ethiopians die annually because of indoor air pollution. Ethiopians exposed. Reducing and elderly are Especially women, children furtherwill and pollution air poor indoor the for benefits yield (SDG) 3 (reducing Goal Development help achieving Sustainable and maternal health) (Emelie child mortality and improving access to electricity supply would Anders, 2013). The increasing is there ultimately eradicate the use of woody biomass. But, building about the and awareness need for policies, incentives use of biomass. However, massive societal costs of the current Clean Cook Stove National the an encouraging initiative, source of energy for cooking, heating and lighting among low- source negative multiple has This Ababa. Addis in households income CO including deforestation, implications for the environment if we consider health impacts (SANA, 2013) consider health if we emissions and indoor pollution, to mention a few. Forests beyond beyond Forests emissions and indoor pollution, to mention a few. the urban being cut at a rapid rate to cover the city boundaries are an illegal practice. though this is now biomass demand, even Electricity or charcoal? Electricity water resources. It should be a priority that such an agency be It water resources. resources upstream established as quickly as possible to manage and the city for supply water of sustainability the to ensure and region. its surrounding 85 THE STATE OF ADDIS ABABA 2017 environment (Filaba, 2008) that are extremely difficultto remove once releasedintothe slowlydecompose or decompose very andbecome pollutants The non-biodegradablewastesare materialsthateitherdonot is considerable room for composting and biomass production. ofwhichisrecyclable.organic, aquarter Thisindicates thatthere Currently, some 60% ofthewastegenerated in thecityis Transportation andenvironment environment fasterthantheycandecompose(Filaba, 2008) they canstillbecomeapollutionproblem whenaddedtothe effects. Althoughbiodegradablewastescandecomposenaturally, and canproduce negative environmental, socialandeconomic is composedofbothbiodegradableand non-degradable materials dumped inopensites,drainagechannelsandrivers. Thiswaste are seriousquantities of pollutants,whichare causinghealth and 58,000 tonsof carbon monoxide tothecity’s airannually. These between 25,000 and 32,000 tons of hydrocarbons and 49,000 to emissions. The Addis Ababa fleetof275,500 vehiclesis releasing produce about 90% of the hydrocarbon and carbon monoxide Roughly,road transportation. 50%ofthe Addis Ababa vehicles The remaining 52%are from aviationand ‘out-of-boundary’ for 48%ofthecity’s totaltransport-related CO2emissions. Ababa’s airpollution. motor vehicle enginesthatare majorcontributors toAddis streets explainsthehighnumber of inefficientlyfunctioning et al(2012)theaverage ageof17years ofvehicles onthecity’s affectsthecity’sparticular ecosystems. According to Benjaminson in private carsingeneralandgasoline-basedpublictransportation city’s has yet to offer affordable the use of mass transportation, is collected(UNHabitat, 2008) many residents. cost ofETB1,000-3,000mightbebeyond themeansof feessincetheaverage initialconnection connection andservice networkwill belinkinghousestothesewage againstaffordable to dealwith100%ofthewastegenerated.Thenextchallenge treatment capacity. Thechallengewillbetoprovide capacity to befinishedinfive boosting years,further Addis Ababa’ssewage in thecity. andexpected TheAkakiplantisunderconstruction should beabletocover treatment 64%ofthedemandforsewage from 10,000 m3to 100,000 m3 per day and, within two years, in Akaki. The capacity ofthe Kality plant would bescaled up from the World Bank, plantisunderconstruction andanew future: a)theexistingKalityplantisbeingupgradedwithsupport treatment plantsare inthenear expectedtobeupandrunning capacity. According totheAddis Ababa Sewage Authority, two against timetoinvest incriticalinfrastructure andmanagement government recognizes theurgencyofproblem andisrushing will affect the well-being of the residents of the city. The huge economicconsequencesand,inthelong-term,increasingly on-going ecologicaldeclineofthecity. Failure todosowillhave Ababa isworrisomeandradicalmeasures are neededtoreverse the Transport andmobilitywithinAddis Ababa isresponsible As Addis Ababa andsincethe lacksadequatetransportation Only 25to 35%ofthesolidwastegeneratedinAddis Ababa In and sum, solid the waste management in of Addissewage 20 . 18 , withtheremainder being 19 .

(Gebreyes, 2014) vehiclesthe numberofnew andreducing trafficcongestion concrete goals,likeimproving better carfuelefficiency, increasing has subscribedtheGlobal Fuel Economy Initiative, whichsets at tacklingtransport-related emissions.Furthermore, thecity umbrella ofitsCRGE strategy. Theinitiative isprimarilyaimed measuresundertaking tomitigatethe emission of CO2under the in Uganda 100. pollution. In comparison,inneighbouringKenya itis600and Ethiopia, around 2,500annualdeathsare attributabletooutdoor such professionals withacompetitive compensation package. management by recruiting thebestandbrightestreward environmental planning, policyformulation and implementation tostrengthen itscapacitiesin city administrationmusttry administration’s weak humanandinstitutional capacity. The on airpollutionwillremain a challenge duetothecity is themore costeffective option. carsorinvesting duties onnew inmitigationinterventions import Ethiopian government withthequestionofwhetherlowering discourages peoplefrom replacing theiroldcars. Thisleaves the the unreasonable hightaxes vehicles imposedonnew which of oldvehicles given inusewilltakemanyyears, particularly and asthma(Gebreyes, 2014) mortality,infant respiratory lungfunctiongrowth (carcinogenic) of cityresidents isalsoconsiderable.Outdoor pollutioncauses significant. Theimpactofairpollutiononthehealthand wellbeing other citiesaround theworldindicatethateconomiccostsare economy isdifficulttoquantify precisely butexamples from Besides pollution,theeconomiccostofcongestiontourban andmobilityinitsdevelopment plan. of publictransportation the cityadministrationintegratesandprioritizes theexpansion environmentally friendlypublictransitsystemrequires that to thegrowing trafficcongestioninthecity. minibus taxisare oftenovercrowded andunsafe,contribute met by private minibusoperatorswhocriss-cross thecity. These reaches. systemis Thegapleft by theinadequatepublictransport connectivity between thetwoandcomplementtheirgeographic which willbeintegratedwiththeLightRailSystem toimprove however, aBus Rapid Transit (BRT) systemisbeingpiloted ofthecityisfinanciallyfeasible. other parts In themeantime, extensionofthissystemto andwhetherfurther in thelongrun, transit system,itistooearlytodetermineitseconomicviability Although the city has introduced its first electrified lightrail of adequateandenvironment friendlymassmobilityservices. air andaggravates theproblem. topography: avalley surrounded by mountainpeaksthattrapthe makes the air pollution situation even worse is Addis Ababa’s Health Organization standards (Benjaminson etal.,2012). What (CO) in the air in thecity is two to sixtimes higher than World environmental problems. Accordingly, levels ofcarbonmonoxide As mentionedbefore, theAddis Ababa cityadministrationis Effective implementationofexistingpoliciesandstrategies The growing demandforanefficient,affordable and The pollutionproblem in Addis Ababa isexacerbated by alack 22 . However, theactualreduction ofthenumber 21 amongothernegative impacts.In THE STATE OF ADDIS ABABA 2017 86

. Even if floodings are the risk that if floodings are . Even 25 Urban planning can be a powerful tool in achieving sustainable planning can be a powerful Urban Urban is also about building resiliency. Long-term planning system that a disaster risk management cities will have Resilient The main barriers to building urban resilience in Addis Ababa Addis resilience in The main barriers to building urban city administration is moving Ababa the Addis Summarizing, urban development and wellbeing of the citizenry. For instance, For of the citizenry. wellbeing and urban development new improving open spaces or creating actions such as through in the pollution levels can reduce sections, urban planning road the jams. This in turn not only improves city and ease traffic but city, of the the attractiveness increases health of people and of Addis of people and the resilience the health also improves actions enables planners to the spatial scale of Identifying Ababa. take better decisions. of any urban system to withstand to the ability refers resilience is Resilience hazard. possible any from quickly recover and climate or management risk disaster than broader concept a at the same time, both change adaptation and can represent, Ababa of Addis the pillars a goal to pursue and a tool to keep and strong a same coherent aims together towards developmental urban planning and is cross-sectoral resilience Urban direction. can play a crucial in fostering it, but cannot complete role resilience can only come from the ride alone. The pursuit of side, with effort the urban governance an orchestrated from and basic services,adequate infrastructure a supportive economy the disaster risk management and, of appropriate and security, planning. course, environmental preparedness disaster and inclusive combines well-functioning mechanisms in support of an besides emergency response Such mechanism infrastructure. disaster prevention effective need an integrated citywide risk assessment and infrastructure that, in turn, is further integrated in all city planning processes, including construction, land use, socio-economic, and sectoral 2015) Bank, plans (World diseases such as malaria, dengue fever and water-borne diseases and water-borne fever as malaria, dengue diseases such and dysentery. such as cholera overwhelmingly affect Addis Ababa with the inherent landslides the inherent Ababa with Addis affect overwhelmingly it is crucial on its overall for the city to work and water scarcity, to any type of shock or stress. resilience and up to date data the lack of technical capacity; reliable are in to invest resources and information; and lack of financial efforts to above, As mentioned technologies. innovative critical is part of the Ababa ongoing, as Addis such barriers are overcome and also implements the City RAP Cities Initiative 100 Resilient a resilient towards that work NGOs besides hosting several Tool, Ababa. Addis of the necessary legal and institutional Most in the right direction. in a sustainable way development frameworks to manage the city’s is only as good as their legislation and regulation in place. But are more materialise to that For implementation. and enforcement and to the institutional capacities effort is needed to strengthen and refinement. good and best practices for replication capture nation can lead the Ethiopian Ababa successful, Addis If by example. by Planning and scales of intervention for city scales of intervention and Planning resilience

. With . With limited 24

. Risks associated directly . Risks associated directly 23

esilient

climate r climate Ababa Addis a Towards

with climate change in Addis Ababa mainly consist of Ababa with climate change in Addis limate change is another significant threat to the limate change is another significant threat Ababa sustainability of Addis

▲ housing providing eco system services. © Geo Kalev of greenery between residential Patches availability of drainage servicesavailability and continued mismanagement following occur floods flash facilities, drainage water storm of in property damage, particularlyheavy rains, resulting in those Ababa, of Addis Parts and streams. located along rivers Woredas experienced repeated have Yeka, and Kolfe such as Gulele, Apart from landslides associated with flooding (DPPC, 2015). of human and material losses, flooding can also trigger outbreaks floods, which induce landslides and water scarcity. Addis Ababa is Addis scarcity. water and landslides which induce floods, caused overflows well as river and flash floods as exposed to riverine activities, and upper catchment area rainfall events extreme by watershed planning. such as land-use management or scarce residential linked with is intimately to flooding Vulnerability non-permanent on riverbanks, encroaching development construction(i.e. mud and wood), and poor drainage materials 2015) Bank, (World systems along roadways

C 4.5 87 THE STATE OF ADDIS ABABA 2017 4.6 D

to imaginehow long-termpoliciesandstrategies canbe sector offices. but alsothefrequent reorganization of Woredas/Kebeles and capacity; andmeasuringtheactualimpactofinterventions; coordination and integration; weak evaluation and monitoring Further to beaddressed shortcomings include poor institutional capacities todealwithemerging,complexenvironmental matters. These include:lackofadequatelytrainedstaffandinstitutional of thegreatest barrierstosustainable development ofthecity. stakeholders squarely identifiedinstitutional weakness asone conducted withrepresentativesdepth interviews from different In itisdifficult anenvironment ofinstitutionalshortfalls View ofAddisAbaba.©GeoKalev. ▲ between policyintentionandpracticeremains wide. In- environmental management in Addis Ababa, the gap espite the existence of numerous regulations governing

future directions Conclusions and

citizenry to avoid apossibly cataclysmicfuture.citizenry strengthened government institutionsandinvolvement ofthe strengthen itscapacityforenvironmental managementthrough challenges to be addressed. The time is now for Addis Ababa to the citywillgrow. Postponing willonlyincrease the interventions strong enforcement capacity, theenvironmental challengesfacing and Anders,2013).In theabsenceofpracticalalternatives and urbantrafficandindustrial production to transportation, (Emelie bound toincrease emissionsofpollutants; typicallythoselinked will grow exponentially. Thedrive towards industrializationis the pressure on suchresources aswaterandenergy, forinstance, can contribute. benefit from theoftenviableand realistic alternatives civil society todoitalone,governancestakeholders. Ratherthantrying will soliciting inputsfrom civilsocietyorganizationsandother Such beaddressed inefficienciescaninpart byengagingor adhere tocompliancewithenvironmental lawsandregulations. term targetsare rarely clearlyspecified,makingitdifficultto confusion ofagendas.Medium-term goals,objectives andshort- monitored. Theseinstitutionalchallengestendtocontributea governance; andtheirimpactsappropriately andcorrectly systematically implemented;becomefirmlyanchored inurban As Ethiopia by 2025, strives tobecomeamiddle-incomecountry THE STATE OF ADDIS ABABA 2017 88

roblems . School of Public Health, . School of Public R. D., & Seboka, B. B. (2011).B. B. Seboka, & R.D., rogramme (UN-HABITAT), Nairobi. rogramme (UN-HABITAT), orld Bank, Washington, DC. orld Bank, Washington, in Jimma, Southern Ethiopia. Ethiopian Journal ofin Jimma, Southern Ethiopia. Environmental Studies and Management, 1(2), 8-15. Reduction Initiatives, Ministry of Environment and Forest. Addis Ababa (ppt presentation). The scenario for Addis Ababa shows that annual temperatures will increase 0.9–1.1 °C by 2030, 1.7–2.1 °C by 2050 and 2.7–3.4 °C by 2080 above the 1961–1990 baseline temperature (UNEP 2014b). Bank (2015). City Strength, Addis Abeba, Enhancing World Urban Resilience. W Ibid. Aldershot, England. Analysis and Needs Assessment:SANA (2013). Situational IN ETHIOPIA AIR POLLUTION Ethiopia & University of Southern Addis Ababa University, California, USA. June 2013. Sundaraa, N., Regassa, in municipal solid wasteChallenges and opportunities central city, Ababa Addis of case management: The 33(3), 179-190. Ethiopia. Journal of human ecology, United Nations Profile. UN Habitat (2008) Ethiopia Urban Human Settlement P Filaba, M. A. P Management (2008). Waste Ibid. Emission Overview of Vehicular (2014). Gebreyes B. Y. Ibid.

25 19 20 22 24 16 17 18 21 23

., Torgerson G., Gebre G., Gebre G., G., ., Torgerson Anders E.Anders Environmental (2013). Ethiopia Fava, F., & Lupia, F. (2016). Insights and F. & Lupia, F., Fava, .org and Climate Change policy brief, SIDA, University ofand Climate Change policy brief, Gothenburg and Norwegian University of Life Sciences. (2004). Living with urban environmental G. Kebedde, Benjaminson R., D Shankute Ibid. G., Pulighe, and C. Emelie www.dimsur Ltd. health risks: the case of Ethiopia. Ashgate Publishing DPPC (2015). Addis Ababa City Risk Profiling Program Risk Profiling DPPC (2015). Addis Ababa City opportunities from mapping ecosystem services of urban Ecosystem green spaces and potentials in planning. Services, 22, 1-10. Report. DPPC, Addis Abeba. on Air Gallavan R. (2012). The Effect of Motor Vehicles Addis in Addis Ababa, Ethiopia: Baseline Study, Pollution Addis Ababa. Authority. Ababa Environmental Protection first, taking population density as a proxy of demand (thedemand proxy of a as density population taking first, Although pure the higher the demand). higher the density, canvalues threshold area green capita per of application ES supply for a total city, provide a broad assessment of distributed geographicallyit does not indicate how ES are Without clear of society. and across different groups are pursued and howdefinition of which aspects of equity to evaluate the impactsthey are measured, it is difficult Hence, we adopt for of policies and programs on equity. equity a need-based definition.

12 14 15 10 11 13 9

en , area ., Redman, C. ., & Hamstead, Z. A. (2013). . (1999). Ecosystem services in. (1999). Ecosystem ., & Meilby, H. (2014). Efficiency of ., & Meilby, erburg, P. H., Pontius, R. G., & Lange, M. & R. G., H., Pontius, P. erburg, Feyisa, G. L., Dons, K Feyisa, G. a demand analysis by sub city was undertak Further, Gómez-Baggethun, E., & Barton, D. N. (2013). Classifying N. (2013). Gómez-Baggethun, E., & Barton, D. Grimm, N. B., Faeth, S. H., Golubiewski, N. E S. Grimm, N. B., Faeth, P Kremer, McPhearson, T., Applying City: Mapping ecosystem services in New York a social–ecological approach in urban vacant land. Ecosystem Services, 5, 11-26. parks in mitigating urban heat island effect: An example 123, from Addis Ababa. Landscape and Urban Planning, 87-95. D. (2013). Opportunities to improve impact, integration, (2013). Opportunities to improve D. models. Current Opinion inand evaluation of land change 5(5), 452-457. Environmental Sustainability, (2007). Spatial planning D. Gallent, N., & Shaw, change M. (2008). Global Bai, X., & Briggs, J. L., J., Wu, 319(5864), 756-760,and the ecology of cities. science, (2013). J. & Wu, D., Jiang, Z.,Xiao, R., Zhang, Qi, J., Su, S., Dynamics of soil sealing and soil landscape patterns under rapid urbanization. Catena, 109, 1-12. Bolund, P., & Hunhammar, S & Hunhammar, Bolund, P., economics, 29(2), 293-301. urban areas, in Ecological V G., Brown, D. fringe, in Journal ofaction plans and the rural-urban 50(5), 617-638. Environmental Planning and management, in and valuing ecosystem services for urban planning, Ecological Economics, 86, 235-245.

6 8 3 5 ENDNOTES CHAPTER 4 CHAPTER ENDNOTES 1 2 4 7 89 THE STATE OF ADDIS ABABA 2017

THE STATE OF ADDIS ABABA 2017 90 AND  WE WANT CONCLUSIONS, CONCLUSIONS, WAY FORWARD: FORWARD: WAY RECOMMENDATIONS THE ADDIS ABABA ABABA THE ADDIS ▲ Aerial view of the city of Addis Ababa covered by a rainbow. © Shutterstock Aerial view of the city of Addis Ababa covered by a rainbow. 91 THE STATE OF ADDIS ABABA 2017 T visible afterthe adoptionofanationalurbandevelopment policy towards amore sustainablepath.This hasbeenparticularly the federalgovernment is guidingthegrowth ofAddis Ababa byenvironmental challenges,thecityadministration supported poverty andinequalityreduction andintacklingamyriadof of affordable housing, efficientwater andsanitation supply, reform.and focusedapproach toindustrializationandstructural makeover muchlinkedtothe government’s isvery determined of Addis asawhole.Thecity’s Ababa andthecountry recent since 1991have transformedtheeconomicandsocialconditions Indeed, the development strategies pursued by the EPRDF regime Ababa thanover theprevious 130years ofthecity’s existence. more progress hasbeen madeinmanagingurbanizationAddis sustainability. Ababa’s economicproductivity, liveability andenvironmental the report provides recommendations for enhancing Addis economic growth. On thebasisofindepthempiricalanalysis, the urbanenvironment anditspotentialnegative impactonfuture including housingforthepoor;andondeterioratingstateof delivery,economic development; onthestateofsocialservices urbanization inEthiopia onthedynamicsofAddis Ababa’s the present. until from itsestablishmentinthe19thcentury practices starting Ethiopian capitalcitythrough anexaminationoftheplanning 2015 :TheAfricanUnion'sheadquartersbuilding:thetallestbuildinginAddisAbaba.©Shutterstock. ▲ While enormouschallengesremain, notablyintheprovision The notesattheoutsetthat, report over thepasttwodecades, The shedslightontheimpactsof on-going rapidpace report economic structure, andthegovernance systemsofthe processes thathave shapedthedemographic,socio- his State ofAddis Ababa report highlightsthehistorical are listedbelow. number ofrecommendations covering different thematicareas with thecity’s rapidpopulationgrowth andspatialexpansion,a government ofEthiopia inaddressing thesechallengesandcoping sustainable Addis Ababa. for buildingacompetitive, inclusive, andenvironmentally ‘software’ ofeconomicandpolitical governance thatare critical commensurate withtheequallyurgentneedtostrengthen the on improving ‘hardware’ ininfrastructure hasnotbeen Theemphasis economic andpoliticalmanagementofthecity. governance inthe capacity andlimitedscopeforparticipatory duetoweak urbanplanning fallshort risks andopportunities responsive capacityofthecityadministration tobothemerging these twolevels ofgovernance are assigned. unless clearandtransparent roles andresponsibilities between Such adual mandate complicatesplanninganddecision making land are directed by bothfederalandthecityadministration. mandate whosecontrol anddecisionsregarding issuessuchas sustainable capitalcity. production, and as a culturally diverse and environmentally to transformAddis Ababa asahubofinnovation, economic demonstrate theexpressed commitmentofthecitygovernment social, economic,aswell asgovernance structure andprocesses Furthermore, subsequenturbandevelopment strategiesinthe first phaseofthe Growth and Transformation Plan (GTP-1). in 2005 and, more concretely, during the implementation of the To assisttheAddis Ababa cityadministrationandthefederal Therefore, theinstitutional and despite commendableefforts, As a seat of federal government, Addis Ababa has a dual THE STATE OF ADDIS ABABA 2017 92 ocess of starting a eneurship and local e gender sensitive. Women Women e gender sensitive. eness by improving the business climate and the improving eness by e to innovation. This requires (besides reducing (besides requires This e to innovation. baba needs to provide a credit guarantee for private private for guarantee a credit provide to needs baba

bureaucratic red tape) the promotion of trade logistics, tape) the promotion red bureaucratic and power regular (especially infrastructure effective more regulations. water supply) and easing restrictive must become mor Ababa Addis among not only disproportionately represented are engaged in low often also but they are the unemployed women as such tools empowerment Gender jobs. quality needed to are programs development entrepreneurship quality more enhance the skills and job intensity towards occupations. business, the paid-in minimum capital required and required business, the paid-in minimum capital hinder the costs. As these factors severely other related of the same should a critical review business environment, be undertaken without any delay in consultation with community and other of the business the representatives stakeholders. relevant A Addis such a purpose. enterprises or establish an institution for very in the access of only has the city scored low Not to of collateral required but the value enterprises to credit, Africa the loan ratio is one of the highest in sub-Saharan and medium enterprises (SMEs) Small globally. and even the collateral needed for a may not be able to provide guaranteeing institutions could such a case credit loan. In assurance to the banks or financial institutions provide a loan to specific firms. that provided is a need to enable entrepr There policy well-coordinated through economic development SMEs. of manufacturing the development to encourage by needed to assist their establishment efforts are Greater finance, and credit to access easing and regulations relaxing as helping them to enter the formal economy. as well more The city also needs to facilitate an environment conduciv The city needs to increase its global and regional its global and increase The city needs to competitiv direct quality foreign and high performance to attract more desired the in element key a is FDI flows. (FDI) investment job creation, of the manufacturing sector, strengthening cutting Therefore, technology transfer and innovation. critical first tape are and red regulation back bureaucracy, economic development. Ababa’s steps in furthering Addis to build an efficient, effective, the city require This may and accountable bureaucracy. responsive needs to simplify the pr Ababa Addis

• • • • • • emerging small businesses. Whereas, in principle, everyWhereas, enterprise businesses. emerging small tape red over-regulation, economy, in the formal wants to operate into the informal push many businesses access to credit and lack of can be obstacles costs and bureaucratic transaction sector where minimised. Recommendations: competitiveness the city’s A. Increase

urban economy the Improve environment and business

ddis Ababa has achieved significant economic growth economic growth significant has achieved ddis Ababa indicators macroeconomic Overall since the early 2000s. per capita have and productivity such as city GDP

Surprisingly, Addis Ababa’s revenues have not increased to the to increased not have revenues Ababa’s Addis Surprisingly, to offer an enabling failure Ababa’s Addis addressed, Unless However, for many years, the population of Addis Ababa has Ababa the population of Addis years, for many However, A

the city. the city tune the urban booming economy would suggest. Rather, faces critical financial challenges, especially in raising sufficient One expenditures. to finance the normal municipal revenues own on an out-dated budget heavily relies of the causes is that the city’s rather than, for instance, propertycharges and fees structure taxes in many other cities source revenue and rates – a significant is expenditures rising capital the city’s the world. Funding around of revenue based on state grants as the share increasingly therefore the municipality is declining. raised by to hurtis likely business environment further its already why it is Among the main reasons deteriorating labour market. is its underdeveloped destination as an investment not scoring well find it difficult to obtain start-up or system. Businesses credit new jobs. Starting fail to create expansion capital and therefore a highly by is further hampered Ababa a business in Addis Registration tape’. and debilitating ‘red cumbersome bureaucracy for instance, stifle rather than support and taxation regulations,

consistently risen over the past 15 years. The income of Addis The income of the past 15 years. consistently risen over city's The average. national the twice about is citizens Ababa's capital and its central geographic as the national initial advantage servicesand goods for demand promoted which have location city has also increasingly The GDP. contributed to its rising on municipal services, taxes from external aid generated revenues and loans. flows The quite unprecedented faster than the urban economy. grown created of the city have population and geographical expansion or attract to create huge challenges. The city has been unable of numbers sufficient manufacturing new jobs or establish fast the current Rather, businesses at the scale required. the services is largely generated by sector with economic growth attempts to jobs. Government its limited capacity to create of micro development crisis through alleviate the unemployment so far fallen shortand small enterprises have of expectations. of the manufacturing sector is one the expansion Therefore, main economic priorities with the of the city administrations’ population of the jobs to the growing aim to generate more to plan government's federal the with line in is goal This city. to a middle-income country 2025. status by upgrade Ethiopia Ababa is largely Addis manufacturing base of low The current continental and global competitiveness of its weak the result into flowing from which discourages new investments 5.1 93 THE STATE OF ADDIS ABABA 2017 Enhance budgetary andfinancialaspects B. Enhance budgetary • • • • • •

with theprevailing market rate. by developing compensationpackagescommensurate deployment andretention ofcompetenthumanresources capacity of urban local go The cityshouldenhancetheinstitutionalandfinancial take fullcontrol ofitstaxadministration. develop its own capacity (both human and financial) and its behalf(whichiscurrently thecase), thecityshould the federalrevenue andcustomsofficetocollect taxes on management, andcomputerization.Instead ofdelegating on tax administration, expenditure and public financial of theCityAdministration wouldallow trainingexperts between university institutions and theFinance Bureau on a constant basis. Establishing a permanent collaboration Addis A and ICTinfrastructure. build itscapacityincadastre records, trainedpersonnel residences) toboostcityrevenue. To dosothecityshould assessmentonphysicalbuildings(including property Addis Ababa needstointr poor atbelow-cost rates. to theurban of critical basicservices subsidise delivery population stratashouldpaypremium feestocross- regarding socialandpublichealththewell-off urban charges sothatthesebecomecostcovering. However, The cityhasto revisit and revie burden offiscaldeficit. projects thatwouldhelpthefuture generationbearthe given tothelong-termproductivity enhancinginvestment effectively andinatransparent way. Emphasis shouldbe revenues generatedfrom landleaseshouldbemanaged rising expenditure demands of the city over time. Hence, offinancingtheeverof thelandsize itmayfallshort city administration.Given the scarcity andlimitedscope source ofnon-taxrevenuethe mostimportant forthe administration systemisneeded.Landleasehasbeen generating cityrevenue, aneffective andtransparent land To sour theextentlandismostimportant income source asamatterofpriority. revenue sources andAddis Ababa shouldlookatthis taxationandleviesareworld, property amongtheleading municipal capitalexpenditures. For citiesaround the tohelpgenerateincometowardsthese properties the parcel of urban landandleviestaxation and/or rateson upgrades andupdatesitscadastralrecords, values each its own-revenue generation.Thiscanbe realised ifit infrastructur In order torespond totheincreasing demandfor baba needs to improve itsrevenue raising capacity e services, thecityneedsfirstofalltoincrease e services, oduce asystemofannual w its service feesandutility w itsservice vernance through the ce for 5.2 T Recommendations: attraction role played by theindustrialparks, etc.). (e.g. clustersorsystemofurbancentres attheregional scale, as well astobetterplanfortheirregional development implications for themassive labourforce thatisattractedby theseinvestments), them (forexample,intermsofinfrastructure andutilityprovision with thedevelopment dynamicsoftheregional capitalcitieshosting needs tobedoneharmonisethesemegaprojects andinvestments achieve amore balancedregional development. However, alotstill various regions ofthecountry, represent aconcrete mannerto linkages, development corridorsandurbanclusters. planning coherence intermsofcitygrowth patterns,urban-rural should bebrought tothecentre stagetoensure anoverall spatial between thenationalandlocalplanninglevel, whilethey plans. Regional development plansare currently themissinglinks latter includethecitystructure planand localdevelopment Regional Urban Development Plans, andtheUrban Plans. The of urbanplans:theNational Urban Development Scheme,the Law (Proclamation 574/2008)stipulatesthree hierarchical levels 7oftheUrban forall,etc.Article lack ofbasicservices Planning unintended consequences,suchasgrowing informalsettlements, which determinesitshighpopulationgrowth ratewithallother concentration ofinvestments andpeopleinthecapitalcity, out allover thecountry. Thissituationleadstoanincreased to catchupandamyriadofsmallurbansettlementsspread • • • Recent ofindustrialparks initiatives, in liketheconstruction

chain, suchasleather andagro processing. city-regionsparticular resource around aparticular value- theagglomerations of competitive industries in support strengthening linkagesto urban–urbanandurban–rural in anintegratedmannerwith dueconsideration There isaneedforplanningtheexistingurbancentres Ababa’s current primacy. of attractiveness, providing valid alternatives toAddis national territory, withtherequired and factors services and to establish a system of cities able to sustain the implementation through well-coordinated investments, national andregional their spatialplans andsupport governments are urgedtodevelop and implement In linewiththeprevious point,bothfederalandr through corridors. development/transportation andinter-linked well-distributed across thecountry different urbancentres important andpolesofattraction Ababa, by establishingasystemofcitiescomposed capital investment, businessesandpopulationinAddis recommended, A more is polycentric urbansystemofthecountry Addis citiesstriving Ababa inthecentre, secondary few fragmented andmono-centric,withamegacitylike he Ethiopian urbansystem islargelyunbalanced,

Improve regional planning hence avoiding the over-concentration of egional of

THE STATE OF ADDIS ABABA 2017 94 ersified availability of availability elocation is the only elocation: possibilities for urban upgrading elocation: possibilities for urban upgrading ental housing, housing upgrading, housing housing upgrading, ental housing, rental housing options for residents who have have who residents for options housing rental

elocating people, ensure that investments were were that investments elocating people, ensure wal projects should be done in consultation and with should be done in consultation wal projects Prior and informed consent of communities: urban and informed consent of communities: urban Prior rene as a valid Consider informal settlements upgrading to r alternative that r compensation: in the event Fair feasible option, compensation needs to be based on actual of inner city land and housing. value market r Before so that areas in the resettlement coordinated properly in addition to housing units, basic/social services and roads, electricity, sanitation, water, (e.g. infrastructure health and education facilities, transport, etc.) markets, also available. opportunitiesand job/livelihood are prior consent of the affected communities. before explored be carefully to need densification and and relocation deciding on wholesale demolition, renewal as a final option. no intention or are unable to become a home owner. no intention or are Revise the existing housing strategy to incorporate a wider incorporate a wider housing strategy to the existing Revise housing condominium than just owning range of options r units (i.e. etc.). cooperatives, the Expand housing finance: enable affordable Expand finance mechanisms for cooperatives and access to housing estate sector so that they can also contribute and the real for low- to the housing delivery efforts government of the households. and middle-income div and introduce land administration Revise tenure regimes: both at the city and federal level, land level, federal and city the at both regimes: tenure should be regulations and administration ownership better serve to reviewed residents, the needs of urban of their income levels. regardless

• The evidence from this study shows that urban renewal programs that urban this study shows The evidence from • • • • • • • in Addis Ababa have triggered important socio-economic triggered have Ababa in Addis and Social networks disruptions in the affected communities. to establish many years mutual aid associations that had taken operations. of relocation away as a result swept were and develop households to the relocated the compensations given Moreover, a completely new prices. Therefore, fair market did not follow projects renewal urban of execution and planning the to approach recommendations is needed, including the following Take into account social acceptability of urban renewal into account social acceptability of urban renewal B. Take processes

housing to access Increase

ver the past decade and with support the past decade and the federal ver from city administration has Ababa the Addis government, housing and affordable in subsidized hugely invested

Recent reports from the government confirm that the the government from reports Recent Despite these successes, however, the ‘one-size-fits-all’ the ‘one-size-fits-all’ these successes, however, Despite condominium housing scheme is at cross roads. The track record record The track roads. cross is at scheme housing condominium Enterprise Development and Housing Savings Ababa of the Addis in constructing condominium apartments and delivering has been met. rarely side, as planned targets have been on the weak scheme, condominium the entire that indicate reports Recent particularly and 20/80 options, is temporarily the 40/60 the toward allocation of sufficient budget to lack due suspended for the 40/60 of the 165,000 people registered Many project. an of owning condominium scheme will not see their dreams is estimated that 50 more any time soon. It apartment realized apartmentan who want those all before needed be would years considering the today (NB: without even Ababa in Addis In accommodated. during such a period) are population growth condominium housing strategy has short, the ‘one-size-fits-all’ in housing delivery approach diversified run its course and a more all the technical and financial problems should be sought. Given alternative condominium housing, the following surrounding recommended: actions are for its low- and middle-income residents. A housing delivery residents. and middle-income for its low- in successful been units has condominium for mechanism housing stock. As an overall quality of the city’s the increasing the programme, urban (re)development element in an integrated also contributed to stimulating the urban housing strategy has in the construction industry employment creating economy by the capacity of the construction improved and, at the same time, and financial sectors. condominium housing delivery scheme has government-led subsidies to government despite faced many challenges. Firstly, and accessible, make the newly affordable built housing units for 49.5% of the not affordable mortgages are condominiums’ than 30% of their income, more as they represent new owners used internationally to income percentage which is the standard the compensation given Secondly, estimate housing affordability. prices, market households has been far below to the relocated to contest mechanism in place for homeowners with no proper more considered not far so has strategy housing the Thirdly, that. to avoid rental housing options such as alternatives affordable high mortgage for payments excessively people into locking the reduced given Unfortunately, of their lives. the remainder not everyonebecome an can Ababa, of income in Addis levels apartment owner. Enhance housing delivery A. Enhance Recommendations Recommendations

O 5.3 95 THE STATE OF ADDIS ABABA 2017 5.4 M

B. Improve delivery basicservices A. Foster citizens’ participation Recommendations as socialinfrastructure (education andhealth)toitsresidents. (water, electricity, connection) aswell wastecollection, sewage has made tremendous to expand accessto basicservices efforts responsiveness ofpublicinstitutions. It ishence recommended to are currently underminingpublicconfidenceintheintegrityand mechanisms, theseirregular practicesfrom municipalofficials In theabsenceofstrongandaccountability anti-corruption whereparticularly itconcernsaccesstoland andbasicservices. urban governance is also threatened by a culture of corruption, propose anyalterationtowhatwasdecidedatthetop. Good culture issodominantthatlower level professional staffcannot is leftfor citizens’ This top-down participation. decision-making vanguard takingallmajordecisionswhilesomelimitedroom party democracy, amore centralisedapproach isbeingpromoted witha governanceinspired by principlesofaliberal theparticipatory governance inparticular. to hampertheoverall institutionalefficiencyandgoodurban The highstaffturnover inthepublicadministrationcontinues of theirlow wagesandlimitedcareer mobilityopportunities. institutions toretain theirmostqualifiedprofessionals because mainlyduetotheinabilityofpublic isstillobserved, delivery building andtraininginitiatives. poorservice Despite theseefforts, competence oflocalgovernment institutionsthrough capacity at strengthening thepolicyformulationandimplementation delivery.effectiveness ofmunicipal services The ULGP aimed and Housing (MUDHo), haslargelyfocusedonincreasing the Bank andimplementedbyofUrban the Ministry Development It isacknowledged thatthecity administrationofAddis Ababa • • • In theEthiopian context,despiteagenuineinterest ingetting

planning and participatory decision-makingprocesses. planning andparticipatory better engageinnercityresidents in localdevelopment Strengthen theinstitutionalset-upandpr which canallow measuringthecitizens’ satisfactionlevels. foreachsub-cityofAddis delivery Ababa, on services Establish a ‘ reinstate between citizens trust andlocalauthorities. practicesatalllevels, inorderand mitigatecorrupt to mechanisms toincrease transparency indecision-making Establish genuinebroad-based citizens Governance Program (ULGP), fundedby the World the pasttwenty years inthecontextofUrban Local uch oftheurbangovernance reform advocated over

and basicservicesdelivery Improve urbangovernance citizens report card’ system for annual feedback ’ participation ’ participation ocedures to improve thesituation,includingfollowing: to beprovided by theauthorities).Urgent actions are neededto site haskilledseveral hundreds ofpeople(exactnumbersare yet excessive amountofwasteaccumulated in theKoshe dumping the cityadministration.Recently alandslideprovoked by an Solid wastemanagementrepresents anothergreat challengefor light railtrainandthedesignofbusrapidtransitsystem. although tremendous are efforts being carried out through the the cityare satisfied by thecurrent systemcapacities, transportation waste management.Only halfoftheneededtripsperdaywithin Ababa (seetheregional planningsectionabove). toavoid thegrowingacross thecountry influxofpeopleto Addis below) andthecreation ofalternative urbanpolesofattraction development (seetheurbanplanningandenvironment section needs imperatively tobecombinedwithamore compactcity require significant improvements over the coming years. This quantity (networks) andquality(supplyreliability) ofservices water and power outages are common. In both the short, and electricity supply networks has expanded significantly, difficult formanyofthe residents. Whileconnectiontowater affordable has transport rendered the resettlement experience been relocated. Limitedaccesstowater, electricity, schoolsand fringes ofAddis Ababa where formerinner-cityresidents have infrastructure andservices. authority’s investmentdemandforbasic capacitytomeetnew currently uncontrolled horizontal citysprawlfaroutpacethe all residents. In fact,boththerapidpopulationgrowth andthe Nevertheless, thecityhasyet toprovide to qualityurbanservices • • • The cityshows deficienciesintwomajor and areas: transport difficultattheurban isparticularly The accesstobasicservices • •

generation mechanisms. in allsectorsthrough improving municipalrevenue water sources (e.g.takingadvantage ofrainwater, etc.); system, windmills,etc.); energy sources thatare environmentally friendly(e.g.solar through expandingthecity’s touse effort renewable In general, from asecurityandenvironmental perspective; Koshe dumping site needs to be closed and rehabilitated (especially foritemssuchasbottles, etc.);inaddition,the waste), recycling collectionpoints)andre-use (atprimary inorganic waste),compostproduction (usingorganic practices suchaswasteseparation(atleastorganicfrom from thehouseholdtolandfillb Re-think thewastemanagementsystemofcity of courserequires alotofinter-sectoralcoordination; sufficient and options;this reliablepublictransportation education facilities,amongothers,aswell asproviding as markets, roads, water, sanitation,electricity, healthand in addition to housing, such basic infrastructure/services administration needstoensure the timely availability of any resettlement operationiscarriedout,thecity If relocating innercityr Impro Impro ve the dependability of water services by diversifyingve thedependability of waterservices ve the dependability of electricity supply services enhance the quality of service delivery processes delivery enhance the quality of service esidents iscompulsory, before y introducing best THE STATE OF ADDIS ABABA 2017 96 e street network in network e street eness on existing policies and on existing policies eness educe travel time between home and work, home and work, time between educe travel a comprehensive risk assessment to gain insight gain to assessment risk comprehensive a e to enhance the city’s ecosystem services.ecosystem This the city’s enhance e to an urgent need to restore degraded urban natural urban degraded restore to need urgent an ernment institutions to avoid overlaps or gaps, overlaps ernment institutions to avoid oads to encourage non-motorized transport,oads to encourage non-motorized enhance city extensions areas, to avoid unpopular demolition and unpopular to avoid city extensions areas, operations and socially disruptive resettlement expensive safety and promote better traffic flows. better traffic safety and promote close to land use with residences mixed Promote to r employment energy consumption saving time and reducing thereby gas emissions. and greenhouse especially the futur in advance, Plan Assign clear responsibilities among the concerned Assign clear responsibilities gov and adaptation change climate of terms in especially greenery, and water management, mitigation actions, river the scientific Build and infrastructure. slum upgrading human institutions’ of these knowledge and technical pool. resources institutional awar Create for better implementing strategies to tackle regulations change climate and management, waste pollution, particular a develop adaptation and mitigation. In outdoor policy implementation strategy to reduce realistic by pollution, for example, (transportation-related) the use of public transport promoting and introducing too old to match and/or penalties for cars that are taxes acceptable emissions standards. and bike lanes for all urban pedestrian pavements Supply r works both ways: it adds to food production but also but production food to adds it ways: both works food transportationlower traffic jam because of reduces creation, also has spin-off benefits like job needs. It and better urban food security. urban resilience increased There is There the expansion of urban and facilitate Reintroduce agricultur Undertake change climate introduce to ways practical most the in adaptation and mitigation strategies. areas like rivers and river banks; actions for cleaning actions banks; and river like rivers areas then, required; absolutely are ecosystems these natural undertaken, could be operations putting re-greening and, when vegetation the proper attention in using cleaned avoid To riverbanks. possible, having permeable is need to there state, to their previous to redevelop areas to these among the population, assign awareness increase of informal the creation a function that avoids new areas and to establish monitoring settlements (e.g. parks) the and to preserve the community the river activities by both house polluting discharges from banks. Finally, river and controlled. be regulated and factories should

• • • • • • • • Improve urban planning and design C. Improve Tackle environmental challenges environmental B. Tackle ocesses al issues al issues

e urban planning e urban planning

and design and improv critical Tackle environment

ver the past decade, the Addis Ababa city administration Ababa the past decade, the Addis ver the of quality the to recognition significant given has policies and has adopted various It urban environment.

Urban planners need to be aware of their crucial role. to be aware planners need Urban attention needs to be paid in planning pr Specific to increasing the urban green areas; not only in absolute areas; the urban green to increasing and its the city distribution over their even but also terms communities.

• The impacts of environmental degradation are evident. are degradation The impacts of environmental efforts degradation, to tackle environmental the city’s Despite of situation environmental the critical much linked to Very is challenged Ababa of Addis addition the spatial growth In

strategies in line with Ethiopia’s national priorities. However, the national priorities. However, Ethiopia’s strategies in line with pollution, water and of air levels high space, green urban of lack waste management poor sanitation, inadequate solid and liquid vulnerability poor drainage and increasing and treatment, remain the most critical to flooding due to climate change challenges facing the city today. environmental respiratory from suffering are residents Ababa Addis Many die Many to indoor and outdoor pollution. related problems These are poor sanitation. waterborne diseases caused by from illnesses and deaths. preventable practical and effective translating policies and strategies into constraints resource human to due difficult proved has actions and institutional weaknesses. the city is facing, as with many other challenges the city as well planning and design. The city does issue of urban is the central traffic for a proper grid which allows network a road not show congestion and subsequent air pollution, and provoking flow, of public transport system such as the bus limiting the provision design has a major influence rapid transit, for example. Urban proper For instance, a on the efficiency of the whole city system. for the easy installation of basic services allows network and road drainage and such as water and energy supply, infrastructure, sewerage system, solid waste collection, etc. city. the surrounding region Oromia the of claims land the by its density at the centre This means that the city needs to increase This would expansion in the periphery. and limit its horizontal air reducing also help in terms of climate change mitigation, by transportation distances. pollution due to increased Recommendations: natural capital A. Improve

O 5.5 97 THE STATE OF ADDIS ABABA 2017 • • •

regulations andstrengthening enforcement. and goodplanning,especiallyby reviewing existingland Addis Ababa to promote a more equitable city growth Try tocontr public, openandgreen spaces. incremental enoughlandfor implementation,andreserve by maintaining aproper road gridandallowing for delivery,a more effective andequitablebasicservices Plan inan integratedwayurbanareas forpr consequences. Ababa withallitssocial,economicandenvironmental the livelihoods ofpeople,andavoid thesprawlofAddis land intheinnercity, maintaintheurbanvibrancyand upgrading b Where possible,promote in-situinformalsettlements not respected. spaces andrights-of-wayhave notbeenlaidoutorwere of peoplelivingininformalsettlementswhere public y increasing thedensityofoccupationurban ol thecurrent landspeculationdynamicsin omoting 5.6 O its capacitytomanagesocialandenvironmental challenges. would underminetheeconomiccompetitiveness ofthecity, and policydirectivesavoid that duplicationorissuingcontradictory and theAddis Ababa cityadministrationisextremely vitalto consultation andcoordination between thefederalgovernment political leadershipfrom thetopisanurgentpriority. Closer are encouraging,butmore needstobedone,andhighlevel of and toenhancetheresponsiveness ofcitygovernment institutions attempts by thecityadministrationtostrengthen urbanplanning, developments take time and cannot be done overnight. Recent old andemergingthreats. It isclearfrom thisreport thatthese institutionalcapacitytorespond to to buildupthenecessary Fifteen years isarelatively smalltimeforacity administration problems despitecapacitygapsandlimitedfinancial resources. it isfairtosaythatcityauthoritieshave triedtoaddress these administration tosolve amyriadofsocialandeconomicproblems, daily existence.In thefaceofmountingpressure onthecity indecisionmakingonmattersthataffecttheir to participate andgreater role forthecitizensof basicservices, ofAddis Ababa jobs tothegrowing young urbanpopulation,efficient provision challenges remain, notablyintheprovision ofaffordable housing, political governance ofthecityinasustainableway. of economictransformationinturnchallengestheand by 2025.Therapidpace middle-income industrializingcountry determined and focusedapproach totransformEthiopia intoa The city’s recent makeover muchlinked to theEPRDFs is very Despite enormous progress over thepastdecadeandhalf, many transformations never witnessedinahundred years. experienced tremendous economic,social,andspatial ver thepast twodecades,thecityofAddis Ababa has

Conclusions THE STATE OF ADDIS ABABA 2017 98 ▲ Aerial view of Addis Ababa. © Shutterstock. 99 THE STATE OF ADDIS ABABA 2017

Over the past twenty years, more progress has been made in managing the urbanization of Addis Ababa than over the previous 130 years of the city’s existence. The development strategies pursued since 1991 have led to tremendous economic, social and spatial transformations in Addis Ababa and the country as a whole, accelerating the evolution of this relatively young capital city from a small rural settlement into a vibrant modern metropolis today. Much of this is linked to the government’s determined and focussed approach to transform Ethiopia into a middle income industrializing country by 2025.

Despite enormous progress, challenges remain. As a result of rapid urbanization and unprecedented population growth, there is enormous pressure on Addis Ababa’s capacity to provide affordable hous- ing, sufficient job opportunities and access to basic services for the citizenry, especially for low income households. A victim of rapid unplanned urbanization has been the urban environment, as the current THE STATE OF ADDIS ABABA 2017 city growth is worsening the air, water and land quality and weakening urban ecosystems. The latter are indispensable environmental services for human life and to mitigate the impacts of climate change.

The State of Addis Ababa 2017 report is aimed at providing a comprehensive assessment of existing so- cioeconomic and environmental conditions in the city, shedding light on the impacts of on-going fast paced urbanization. The report addresses policy makers and city planners and makes bold recommen- dations on how resources can be strategically developed and managed to sustainably meet the needs of the urban population of today and the future, improve the short- and long-term wellbeing of citizens and transform Addis Ababa into the city that the citizenry wants.

HS Number: HS/033/17E ISBN Number (Series): 978-92-1-133397-8 ISBN Number (Volume): 978-92-1-132745-8

United Nations Human Settlements Programme, UN-Habitat P.O. Box 30030, Nairobi 00100, Kenya Tel: +254 20 7623 120 Fax: +254 20 7623 904 [email protected]

Printed in Nairobi, Kenya

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