STATE OF LOCAL ECONOMIC DEVELOPMENT [LED] 
                         OF ETHIOPIA 
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     REPORT                               FEBRUARY, 2016
    © United Cities and Local Governments of Africa 2016
    This publication presents the state of art of Local Economic Development 
    programs and projects it’s a national report on current
    Local Economic Development legislation and practices.
    All rights reserved. No part of this publication may be reproduced, 
    stored in a retrieval system or transmitted in any form or by any means, 
    electronic, mechanical or photocopying, recording, or otherwise without 
    the prior permission of the publisher.
    Published by United Cities and Local Governments of Africa
    22, Essâadiyne Street , Hassan
    10020, Rabat, Kingdom of Morocco
    www.uclga.org
     
    DISCLAIMER
    “The terms used 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 do not necessarily 
    reflect the opinion of United Cities and Local Governments of Africa. The analysis,
     conclusions and recommendations of this report do not necessary reflect 
    the views of the all members of United Cities and Local Governments of Africa.
     Special acknowledgments for financial support
    European Union
    llustration and graphics : Hamza Bernoussi
    All photo of this document is published under the Creative Commons License.
    (https://creativecommons.org/licenses/). All right reserved.
                                                                        ACKNOWLEDGMENTS
             This assessment report is a collective effort of the United Cities and Local Government - Africa, 
             the consultant, local authorities, the Ministry of Finance and Economic Cooperation and regional 
             bureaus and UNDP country office. The overarching coordination and support provided for the study 
             report and activity was carried out by IYAMAMA PABA SALE that the consultants are indebted to.
             Had it not been with a financial support of the UCLGA, this assessment report would have not been 
             done. Therefore, on behalf of the local government citizens and cities, the consultant would like 
             to express his sincere appreciation to the UCLGA for its valuable and meaningful support.
                                                                                          Contents
                         1.Introduction.............................................................................................................................4
                         2.National LED Enabling Environment .......................................................................................5
                         3.Local LED Enabling Environment ...........................................................................................7
                              3.1 Local Government Powers ...........................................................................................7
                              3.2 Local Government Finance ...........................................................................................8
                              3.3 Stakeholder Engagement/Business Liaison ..................................................................9
                         4.Local Economic Development [LED] Practice in Ethiopia .........................................................9
                         5. LED Practitioners, Competency Centres and Skills Availability .......................................15
                        6. Conclusion ...........................................................................................................................17
                        References ................................................................................................................................19
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                        1. Introduction
    Ethiopia is one of the world’s oldest civilization, located in the Horn of Africa and borders with the 
    Sudan and South Sudan to the west; Eritrea to the north and north - east; Djibouti and Somaliland 
    to the east; Somalia and Kenya to the south. The country has sustained a high annual growth since 
    2004 and it is among the fastest growing non-oil producing economies in Africa. It is implementing 
    the second phase of Growth and Transformation Plan (2015-2020) which aims to foster high and 
    broad based growth. The national policy seeks to strengthen public-private partnerships at regional 
    and local levels in order to stimulate investments, generate employment and create an enabling 
    environment for private sector and entrepreneurial development. National framework/ guidelines 
    for local economic development provides a single vision for LED nationally, and this vision helps to 
    clearly understand and articulate macro and micro components of policies and strategies and help 
    align the thinking of different stakeholders. Ethiopia has a number of macro and sectoral policies 
    that provide conducive environment for LED. These include the decentralization framework, the 
    urban policy, the GTP etc. 
    Though late as compared to other African countries, the Government of Ethiopia, with the support 
    of UNDP, has been implementing a multi-year programme, entitled “Local Economic Development” 
    (LED) with a pilot in seven cities of the four major regions since May 2009. With an initial UNDP’s 
    allocation of US $10 million during 2009-2012, the Ministry of Finance and Economic Development 
    (MoFED) and its Bureaus(BoFED) have been coordinating implementation of this innovative 
    approach of LED in Asella and Nekemte (Oromia region), Bahir Dar (Amhara region), Awassa and 
    Sodo (SNNPR), and Mekele and Adigrat (Tigray region). Local Economic Development (LED) with 
    the allocated regular budget of US $8,042,000 has been limited to these seven urban localities 
    since the program was in its pilot phase. LED is a learning process as there is no conventional 
    formulae for success. It has to be adapted to specific conditions and requirements and there was 
    also a need to create national consensus on the program. 
    Information generated in an assessment activity helped to take up the best practices achieved and 
    up-scaled to other additional twenty urban localities and refocused activities towards the desired 
    goals and objectives. The second generation/main LED program then started in 2012 and ended up 
    around March, 2015 claiming that it is merged with Entrepreneurship Development Program (EDP). 
    EDP is the current running program with the allocated total budget of US $3,980,045(Regular TRAC= 
    US $1,096,000and Donor (Canada) = US $2,884,045). Until now, there is no performance assessment 
    study of the Second Generation/main LED program of 2012-2015 and has no adequate data on 
    its performance level and detailed information. With its shortcomings of data sources about the 
    2012-2015 LED program closing and merger processes with EDP, this report offers an assessment of 
    the LED program in Ethiopia.
    In recognizing the importance of compiling the state of LED report of countries, the United Cities 
    Local Government – Africa, initiated a study in this regard in Ethiopia. The purpose of this study 
    was to compile the state of LED report of the country. This task was conducted through desk study 
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