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Amhara Regional State 2007/08 – 2015/16

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Amhara Regional State 2007/08 – 2015/16 Budget Brief Amhara Regional State 2007/08 – 2015/16 The purpose of this regional budget briefing note is to analyse the budget and expenditures that are recorded on-budget for the Amhara regional state so that it is easily understood by stakeholders, and to put forth key messages to inform policy and financial decision-making processes. The detailed analysis of the level and composition of public expenditure of selected social service sectors (education, health and nutrition, and water supply) are also presented. Audited financial accounts are presented for the years up to 2013/2014 while preliminary financial accounts have been made available for the 2014/2015 and 2015/2016 fiscal years. Key Messages • Socioeconomic profile: Apart from a small percentage of the population engaged in the services and industry sectors, nearly 84 per cent of the population resides in rural areas and is engaged in agriculture. • Poverty: Poverty is pervasive in the Amhara region with about 26.1 per cent of the population living below the nationally defined poverty line compared to 23.5 per cent for the entire country in 2016. In 2011, the Amhara region had a child poverty rate of 34 per cent. • Regional resource envelope: The Amhara region managed to finance only 21.6 per cent of its budget from its own regional sources. On average during the period 2007/08 to 2015/16, tax revenue accounted for more than 77.8 per cent of revenue generated within the region. The structure of tax revenue in the region is dominated by direct tax, and its contribution to the total tax revenue collected ranges from 86 per cent in 2010/11 to 70 per cent in 2015/16. Most of the regional revenue from direct tax is generated from payroll tax and taxes on rental income and the profits of enterprises and individuals. On the other hand, regional revenue collected from non-tax sources, mainly generated from government service fees and charges, contribute less than 5 per cent to the regional budget. • Regional expenditure: Regional spending has increased more than six times from ETB 3.8 billion in 2007/08 to about ETB 24.2 billion in 2015/16. In per capita terms, spending has increased from ETB 220 in 2007/08 to ETB 1,113 in 2014/15. In terms of allocation of expenditure across the broad categories, the largest share of the regional expenditure is allocated to finance social services (45 per cent), followed by economic services (32 per cent) and finally general services (23 per cent) in 2015/16. Close to 70 per cent of the budget was being spent on financing recurrent expenses, while the share of capital expenditure in total regional spending remains less than 30 per cent. • Expenditure aligned to pro-poor sectors: The regional government has leveraged huge resources to boost spending in pro-poor sectors. In the past nine years, the Amhara region has spent on average nearly 66 per cent of its budgetary resources on pro-poor sectors, which is close to the national average of 66.4 per cent. • Access to education services: The Amhara regional state has made impressive progress in expanding access to basic education service delivery in the past decade. Access at all levels of the education system increased at a rapid rate in line with a sharp increase in the number of teachers, schools and institutions. Despite these noted achievements, the quality of education remains a challenge in the region. Regional spending on education has increased six times from ETB 1.3 billion in 2007/08 to about ETB 7.5 billion in 2015/16, and amounts to about 31 per cent of total regional expenditure in 2015/16. • Access to health services: The Amhara region has a poor health status compared to other regions in Ethiopia. Child mortality rates in the region are among the highest in the country. Even though there have been positive developments in reducing the level of malnutrition, the region still has the highest stunting rate and is among the regions with the highest underweight rates. Approximately 12 per cent of the region’s total expenditure was spent on health care in 2015/16. • Access to safe water and improved sanitation remain key challenges in Amhara region: According to the 2011 DHS, about 47 per cent and 95.1 per cent of households in Amhara region did not have access to safe drinking water and improved sanitation facilities, respectively. The share of regional spending on water supply and sanitation services has fluctuated over the period 2007/08 to 2015/16 and was 7 per cent in 2015/16. 1 1. Introduction region. The recurrence of drought that typically Socioeconomic Profile occurs in the lowland areas of the region disrupts the livelihood of people, and many are in need of Amhara regional state is located in the north emergency relief. For example, according to the western and north central part of Ethiopia. With a 2014 Ethiopia Mini Demographic and Health population of 21.1 million in 2017, Amhara is the Survey (EMDHS), nearly 14.8 per cent of the rural second most populous region (making up 22.4 households in Amhara were chronically food per cent of the Ethiopian population), (Table 1). deficient, and they were covered with the Apart from a small percentage of the population engaged in the services and industry sectors, Productive Safety Net Program (PSNP) in 2014. nearly 84 per cent of the population reside in Poverty is pervasive in the Amhara region and the rural areas and are engaged in agriculture.1 rate is higher than the national average. In 2011, Agriculture remains the dominant economic the Amhara region had a child poverty rate of 34 sector in the region. It is the major source of food, per cent.2 Based on the 2016 Household Income raw materials for local industries and export and Consumption Expenditure Survey (HICES), earnings. The region is large in terms of area and about 26.1 per cent of the population in the region endowed with a diverse agro-ecology, giving it a were below the nationally defined poverty line huge potential for production of a variety of compared to 23.5 per cent for the entire country agricultural products both for export purposes (Figure 1).3 Poverty in the rural areas is more and domestic consumption. Moreover, the water prevalent (28.8 per cent) than in the urban areas resources from Lake Tana and the rivers found in (11.6 per cent). However, the level of poverty in the region provide immense potential for the region has significantly declined from 30.5 irrigation development. per cent in 2010/11 to 26.1 per cent in 2016. The Table 1: Socioeconomic profile of Amhara region food poverty situation in the region is also critical. The region has the highest percentage of people Indicators National Amhara Total population, in millions 94.4 21.1 living in food poverty in Ethiopia, 31.3 per cent in (CSA, 2017 projection) 2016. According to the 2016 EDHS, childhood Total population under-5 13.3 2.6 malnutrition (stunting) in the region is among the years, in millions (CSA, 2017 highest in the country (46 per cent in Amhara projection) while 38 per cent in the whole country). Population growth rate 2.6 1.7 (Census, 2007), % Figure 1: People living below the national poverty line (%) Total fertility rate (EDHS, 4.6 3.7 50 2016), % 43 40.1 Coverage of PSNP, rural 10.8 14.8 40 38.8 household (EDMHS, 2014), % 38.7 38 30.5 31.3 30 33.6 26.1 29.6 20 23.5 24.8 In the Amhara region, intensive use of land to produce more food and feed for the growing 10 human and livestock population has led to 0 environmental degradation. Overgrazing, 2004/05 2010/11 2015/16 deforestation and poor agricultural practices, Poverty headcount (National) Poverty headcount (Amhara) Food poverty headcount (National) Food poverty headcount (Amhara) such as cultivation of slopes not suited to Source: National Planning Commission. September 2017. Ethiopia’s Progress agriculture, have contributed to severe soil towards Eradicating Poverty፡ an Interim Report on 2015/16 Poverty erosion, particularly in the highland parts of the Analysis Study. 1Amhara National Regional State, Bureau of Finance and Economic 3National Planning Commission. September 2017. Ethiopia’s Progress Development, Development Indicators of Amhara Region (2013/14), towards Eradicating Poverty፡ an Interim Report on 2015/16 Poverty 2013, p. 4. Analysis Study. 2 CSA, UNICEF and OPM. 2015. Child Well-Being in Ethiopia: Analysis of Child Poverty using the HCES and WMS 2011 Datasets. 2 Institutional Context and Budgetary Process The fiscal planning process in Amhara starts at the sectoral level in consultation with woreda and The Amhara region is comprised of 10 other stakeholders. The draft report is administrative zones and 169 woredas. There are consolidated by the regional Bureau of Finance three tiers of governments: regional, woreda and Economic Cooperation (BoFEC) and (district) and kebele (community level submitted to the regional cabinet. The regional administration with an average of 500 cabinet after discussing the budget with the households) each with their respective various stakeholders submits it to the regional legislative, executive and judiciary organs. The council for approval. The same process is region also has zonal administration serving as a undertaken at the woreda level. bridge between the region and woreda. The region receives non-earmarked block grants from 2. Regional Resource Envelope the federal government as a major source of its revenue which is coupled with the revenue The Amhara region aggregate resource envelope generated within the region.
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