Ethiopian Business Review

The Riddles of Urban Safety Net Featured

For a long time, rural poverty has been a big concern in Ethiopia. Compared to rural standards, the urban population, which was estimated at over 20 million last year, might live in better conditions.  But, recently, poverty among the urban population reached a point where it can be considered a crisis. Due to this, the World Bank, in partnership with the Ethiopian government, implemented the first Urban Productive Safety Net Program last year, at a cost of USD450 million, to reduce urban poverty. EBR’s Samson Berhane evaluates the success of the program.


On June 3, 2018, the government, in the presence of the Deputy Prime Minister Demeke Mekonnen, launched the second phase of the Urban Productive Safety Net Program (UPSNP) in a grand ceremony held at Millennium Hall. With a target of lifting over 98,000 households out of poverty in 11 cities, the program, in its first round, benefited low income families, like Sinkinesh Beyene’s, through the provision of indirect as well as direct support for elders, and ill and bed ridden citizens.

The program, introduced a year ago, changed Sinkinesh’s prospects. Her life had been very challenging after she lost her job following the liquidation of the company she used to work for six years ago. “There were times I’d skip lunch or dinner,” Sinkinesh, who is in her early 50s and lives around Ras Desta Hospital in Arada District, told EBR. Now, the mother of four earns ETB1,200 on a monthly basis through the program by engaging in garbage collection. One-fifth of her monthly earnings goes into a bank account. “Nowadays, I at least manage to feed my family.” 

With the aim of tackling the spread of poverty among the urban population, it was a year ago that the government, in collaboration with the World Bank, launched the USD 450 million program, which is expected to benefit 604,000 people in five years. While two-thirds of the cost of the project will be provided by the World Bank, the rest will be covered by the government. 

Although poverty is considered primarily a rural phenomenon in Ethiopia, urban poverty is still to be a challenge since 14.8Pct of the urban population live below the poverty. On top of this income inequality is higher in urban areas, where the population is estimated around ETB20 million, than in rural areas.  

About 123,000 beneficiaries of the program across the country (63Pct of total beneficiaries), including Sinknesh, were identified through community based targeting, representatives, geographic targeting and self-selection. Considering its size, Addis encompasses three-quarters of the total 195,000 beneficiaries, whereas the rest are from 10 urban cities, including Adama, Assayita, Asossa, Dessie.

While recurrent income support is provided to elderly and disabled people in households with no-working age members, street children, homeless and beggars, those with work skills are given training, support and guidance on employment pathways, among others. Beneficiaries earnings, determined by the size of their family, ranges between ETB300 and ETB1,200. 

The daily rate paid to beneficiaries for UPSNP public works was set at ETB60 a day, for tasks such as garbage collection, riverside development, based on a study on urban wages conducted in 2015/16. The study, based on the CSA’s Urban Employment and Unemployment Survey, found that the market wage for those with primary or some secondary education converged at ETB 50 per day (noting that the construction sector is excluded as this sector pays significantly higher wages). Taking into account expected inflation between the study and the start of the UPSNP, the wage rate was set at ETB 60, for about 4-5 hours of work per day. 

Selection committees, formed under each lower administrative unit, rank households from poorest to richest and identify beneficiaries, considering housing, working conditions, physical ability and monthly income. The first phase of the program, which ran for a year until the end of April 2018, only included beneficiaries labelled by their respective committee as very poor. 

Hailu Elias (PhD), a developmental economist and lecturer at Addis Ababa University (AAU), is one of the experts who commends the initiative. “The safety net, if it is properly implemented, will have a profound impact in making economic growth benefit all members of society, stabilising consumption on an individual level,” he argues. “It will also help the government reverse the growing trend of income inequality in urban areas.” 

Studies across the globe affirm his position. Social safety net programs, which showed an increase over the past few years, greatly reduced headcount poverty and income inequality, according to study by the World Bank on 142 countries published two months ago. The study also showed that an estimated 36Pct of very poor individuals escaped extreme poverty across the globe.

Even though the program was launched as a part of the government’s urban food security and job creation strategy that aspires to support 4.7 million people across 972 cities and towns, currently it benefits only seven percent of the urban residents who live below the poverty line. 

As a result, residents like Sholla Genenew, (name changed upon request) who lives in Arada District, still lives in poverty. “While I am eligible for the program, the administration told me I have to wait for me turn,” says Sholla, who lives with her four siblings. 

The exclusion of a significant portion of the poor population living in urban areas from the program makes the initiative unfair in the eyes of beneficiaries. Particularly, in woreda 03, identified as one of the poorest areas in Addis, where Sholla resides, out of 2,750 eligible beneficiaries, only 1,850 of them are included in the initiative. 

“Considering the scope of the initiative and the budget, it is difficult to incorporate more than a million people under the program,” argues Solomon Assefa, deputy director of the Federal Urban Job Creation and Food Security Agency. “The degree of poverty is considered while selecting beneficiaries.” 

A consultant and an economist who has worked on several project, including this program with the World Bank, observes that such requirements are not sufficient to select benificaries precisely. “The fact that there is no an updated census or study to identify the poor population made the selection biased,” he says. “There is a serious problem with the identification process and there are people with a better facilities and income included under the program.

The consultant also argues the capacity of the respective woredas in monitoring and following-up the implementation of the program is weak. “From my observation, most the officers think it is just a regular funding and do not really know the motive behind the initiative.”

The Agency, mandated to implement the program at the federal level, is also aware of the selection problem 

“It is known that there are people who are included in the initiative even though   they are ineligible,” explains Solomon. “But what matters is their number relative to the total number of beneficiaries is very small.” 

During the first phase, right after the selection of the beneficiaries by the committees, the Ethiopian Development Research Institute (EDRI) was hired to validate the beneficiaries. As feared by experts, the Institute found that more than 20Pct of the registered beneficiaries in seven cities were not supposed have been included, pushing the city administration to incur more costs and repeat the identification process. 

On top of worries over the selection process, there have been concerns that little attention has been paid to innovation and skills. “Instead of making us work in one specific segment, like garbage disposal and collection, we should have been allowed to work in familiar areas,” Sinkinesh said. “While I possess handicraft skills, there has been no sufficient reason to work in garbage collection. The project does not take skill and innovation into consideration.” 

Actually, this is not the first time this issue has been raised. Other interventions, such as Small and Medium Enterprise Programs as well as the youth fund, which aimed to reduce poverty and unemployment, were also criticized for being oblivious to innovation and fostering skills. Fasil Gedion, head of the Woreda O4 Urban Job Creation and Food Security Bureau, feels the same. “Although we grouped a certain number of people to let them work in sub-sectors other than garbage collection, there is a gap in implementation, chiefly due to unavailability of land,” he says. “There is a lack of coordination among responsible public institutions.”

Without denying poor coordination, Solomon, whose institution is also a stakeholder argues otherwise. “Even though large portions of the beneficiaries who live in the capital only engage in solid garbage collection, there are also towns that performed better in other sectors such as urban farming, infrastructural development, as well as river and riverside developments,” he states, citing communities in Dessie town, who are the part of the safety net program and engaged in the construction of a road project around Segno Gebeya. 

Despite his optimism, however, out of 150 lines of work such as garbage collection, greenery, river development, urban farming and infrastructural development, less than 10 are being effectively utilized. Adding to the shortage of finance and unavailability of space, Solomon relates this to the lack of raw materials in the country. “To allow beneficiaries engage in whichever area they choose, having more raw materials is crucial, which is difficult in Ethiopia,” says Solomon, citing his institution experience when it waited for months to find brooms and gloves suppliers. “There is no private companies that have the potential to supply inputs, such as axe, broom and other materials, in bulk.” 

Until now, ETB729 million of the project cost has been utilized. The second phase of the project, which includes livelihood services, was launched with the budget of ETB2.1 billion. It is expected to support interventions that will facilitate graduation from the program and assist beneficiaries out of poverty. Yet according to Solomon, such problems will be solved in the future. “We learned a lot from the first phase in all aspects, from selection to procurement procedures. In the next phase, trainings on life-skills development, financial literacy and soft skills development would be given to beneficiaries.”

An estimated 392,000 households are expected to benefit from the second phase. Upon completion, beneficiaries will receive USD500 to help them realize their livelihood pathways. “If their plan is accepted, they can engage in whichever areas they want,” explains Solomon. “Additionally, we will arrange ways to link them with microfinance institutions.” 

But Tom Bundervoet, deputy project head of UPSNP, argues that a safety net by itself cannot be a sustainable solution to eradicate poverty. “It should be seen as one component in a broader policy to spur growth, increase job creation, and improve living standards,” he said. “A safety net is intended to improve daily life for a segment of the population that is trapped in extreme poverty and cannot participate in the labor force, and increase incomes or improve livelihoods of households that have able bodied members but are engaged in low-income earning activities.”

6th Year . July 16 - Aug 15 2018 . No.64


Samson Berhane


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