The Emerging Regions of Ethiopia suffer from extreme poverty There is a serious lack of capacity to implement the decentralisation programme as a first step towards poverty alleviation. The main causes of this situation include (a) the absence of clear and detailed Regulations as an interpretation of national policy and law on decentralisation, to implement the assigned functions at Woreda and Kebele levels; (b) inappropriate structures and processes to deliver the most rudimentary infrastructure and services; and (c) an absence of the most basic infrastructure and services in the four regions to support socio-economic development.

This project therefore seeks to address these issues through five interventions:

1. New regulatory provisions;
2. Policy reviews;
3. Local government capacity;
4. Local development funding; and
5. Local economic development.

The new Programme Goal is to support the strengthening of Regional Governments in the four Emerging Regions to deepen democratic governance and improve service delivery, through the development of fully operational democratic, accountable and responsive regional and local/Woreda governments . The programme purpose is to support capacity development including institution and system development of regional and local governments through the integration of a set of focused initiatives, including:

• Local government capacity development at bureau (regional) and woreda (district) levels, focussing on the processes and supporting structures to: i) improve government capacity to improved delivery of basic services using all sources of funds available to the regions; ii) ensure smooth resource flows into infrastructure and services provided. This component will include technical and human resources assistance and capacity building on PEM-Public Expenditure Management (such as planning, budgeting and performance measures).
• Local development funding for basic infrastructure and services at woreda level to ensure success of planning, implementation and review of local governments, as a contribution to the public expenditure management (PEM) cycle.
• Local Economic Development (LED) from both the public investment and inclusive financing perspectives, including capacity building for LED, a communications strategy to ensure informed, participatory decision making and a Capital Development Fund, (CDF) which will allow the stakeholders secured support for selected LED projects.
• Documentation of Lessons Learned and Best Practices , as a way of influencing regional experience sharing and as a platform for replicating the successful practice achieved, particularly in local development funding mechanisms and innovations in LED and its supporting financing models.

• UNCDF has been supporting the Government of Ethiopia efforts in poverty reduction, decentralisation, infrastructure and service delivery since 1982. Initially, the major form of support focused on large-scale infrastructure delivery.
• Since 1994 UNCDF has been funding the support to decentralization in the Amhara Region through three Local Development Programmes to strengthen local government capacity to provide basic social and economic infrastructure and improve the natural resource base of local communities. The Ethiopian government has recently promulgated a new constitution favouring decentralization to regional states, which themselves have empowered authorities at even lower levels to provide services to communities ("Kebeles").
• This dialogue and partnership has been initially reflected in the implementation of two Local Development projects, the WDF – Woreda Developement Fund and the SDF – Sustainable Development Fund, ended and evaluated in 2003 to lay the foundations to a new UNCDF LDP ( Local Development Program), launched in July 2005.
• UNDP and MoFED expressed its interest in replicate the UNCDF LDF model piloted and tested in the North of Ethiopia (ANSR) to the emerging regions, which have been the last to implement decentralization from the Region to the Woreda and simply have too many rudimentary constraints in their development to effectively take advantage of the wider capacity building reforms on offer, such as PSCAP. These basic gaps and constraints must be addressed if these regions are to fulfill their roles in promoting economic and social development at the decentralized level.
• Stepping into that breach, the UNCDF program is working with communities and woredas to introduce participatory approaches to define demand for government services, and firmly establish subsidiarity in planning and allocating resources as well as in contracting authority for projects selected for financing.

• The programme will be executed by government, and supported with focused project personnel.

• The programme covers the four Emerging Regions Somali and Afar (to the east) and Benishangul-Gumuz and Gambella (to the west).
• The programme will focus on the regional, woreda (district) and kebele (village) levels of local government.

• M&E will be through government systems. It shall be seen as a counterpart to LG development plans, strategies and budgets. All councils must be able to report on all three, both in terms of intentions and results. The results – the impact of all councils’ spending (from local sources, government transfers and donors) – must be understood and made known to all. Here, it is the local system of planning and evaluation, and the information systems to support that understanding, that must be harnessed.

• Completing the capacity assessments for all four regions in order to establish targeted interventions.
• Identifying economic development potential.
• Organizing service provision for transient populations.

• Resource Mobilization