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ETHIOPIA DECENTRALIZATION SUPPORT ACTIVITY (DSA)


The DSA Project (Decentralization Support Activity)

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NOTE: This program ended in 2008. For a current list of programs at the Mossavar-Rahmani Center for Business & Government, click here.
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Formally known as the In-Service Training Program in Financial Management

The DSA Project is implemented by the Kennedy School of Government (Mossavar-Rahmani Center for Business & Government) and funded by Development Cooperation Ireland (DCI), the Netherlands Minister for Development Cooperation, the Government of Ethiopia, and the United States Agency for International Development (USAID).

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The DSA project provides assistance to the Government of Ethiopia's Civil Service Reform in budgets, accounts and budget planning.

Since 1992 Ethiopia has implemented one of the most ambitious decentralization programs in Africa, indeed of any developing country, by devolving authority to autonomous regions and then sub-regional governments. The Government of Ethiopia initiated a Civil Service Reform in 1996 to build the capacity to implement devolution. The DSA project started in January 1997 and supports the Civil Service Reform through technical assistance in accounting, budgeting, and expenditure planning for Ethiopia's central and eleven regional governments. The project was recently awarded a 29-month multi-million dollar extension from USAID with funding from the Netherlands Aid and Irish Aid agencies. It is slated to run through November 2007.

The DSA project is implementing financial systems that are crucial for Ethiopia to qualify for donor assistance that is desperately needed to alleviate poverty. The implementation is occurring in a difficult context, but one that reflects many of the challenges of development work in Africa. Ethiopia and Eritrea fought a war from 1998-2000. Drought and food crises revisited the country in 1999 and continue to threaten Ethiopians on an unprecedented scale with millions of people at risk of starvation. Ethiopia has the third largest number of HIV / AIDS cases in the world, and faces unrest on virtually all of its borders and within several regions. With terrorist activity increasing in the Horn of Africa, Ethiopia is viewed as a "frontline" state in the war on terror.

But even in this context, the reform of public sector financial systems can play a critical role: in improving the management of scarce resources, building the capacity of the government to deal with crises, and improving service delivery to the rural poor who make up 85 percent of the population. Ethiopia's policy of decentralization is one of the most comprehensive and radical in the world. The government's recent decision to accelerate the decentralization process is a concerted attempt to empower local communities and improve service delivery. The project is assisting the different levels of government to make this policy work by designing and installing appropriate yet efficient financial procedures and trained staff in their use. The in-service training program developed by the project has created a partnership amongst the country's management institutes and over 10,000 government staff responsible for financial management have been trained.

In addition to training government staff, the DSA project team has designed and built software to manage these new budget, accounting, and expenditure planning systems. These systems support the overall decentralization objective of the federal government and have been rolled out at the federal level across ministries and at the regional level on a pilot basis. While lacking the gloss and panache of many higher profile development projects, the DSA project has been described as "very successful" in a recent World Bank country assessment report (2002) and praised by other donor countries active in Ethiopia. The Ethiopian government itself is extremely satisfied at the assistance it has received through the project, particularly since it successfully reduced its backlog of accounts from six years to one thanks to the project's new accounting systems.

Beyond directly supporting development efforts in Ethiopia, the project provides specific lessons to other countries and donor agencies in several important areas of economic development including: I) understanding the sequence of financial reform in a decentralized system with limited capacity; 2) offering experience in reforming accounting systems from single entry/cash to double entry/modified accrual; 3) understanding the role of sector based medium term expenditure frameworks (MTEFs) in the context of spatial grants, 4) demonstrating a trajectory of reforming a line-item budget to a cost center budget; and 5) managing new modalities of donor support (budget support) in a decentralized system.

Steve Peterson, a Senior Fellow in Development at the Kennedy School of Government, has led the DSA project since its inception and is the Chief of Party. Click here for an August 2005 interview with Dr. Peterson.

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