12.3.1 Flow of funds through the CWA
There are two main stages in the flow of funds from Development Partners through the CWA, which are, simply, in and out. These two stages can be broken down into six steps:
Step 1: Development Partners (DPs) establish bilateral agreements with MoFED.
Step 2: DPs inform MoFED of their annual contribution.
Step 3: DP contributions are channelled to foreign currency special accounts at the National Bank of Ethiopia for each DP.
Step 4: DPs’ contributions are transferred from each foreign special account into the Consolidated WASH Account (birr).
Step 5: MoFED disburses funds into WASH accounts established for the implementing agencies at federal and regional levels.
Step 6: On instruction from MoFED, the National Bank of Ethiopia transfers funds to the three WASH sector Ministries (MoWIE, MoH and MoE) and MoFED for federal level expenditures. The Bank also transfers funds to BoFEDs for onward transfer into accounts opened for the three WASH sector Bureaus and BoFED for regional level expenditures. Where applicable, zonal finance offices will receive funds from BoFED for WASH expenditure at zonal level. At woreda level, woreda finance offices will open a bank account to receive funds from BoFED for Woreda WASH Team expenditure, including disbursement to WASHCOs.
Figure 12.4 summarises these main steps in the flow of funds through the CWA.
To give an example of how this system operates: World Bank Ethiopia has given US$205 million to the Ethiopian government to increase the provision of water supply and sanitation services. From the total budget, US$43 million is allocated to WRDF for the construction of WASH facilities for medium-sized towns. MoFED opened a dollar account for the World Bank and received this budget, then changed this to birr and deposited in the CWA. Based on requests made through approved consolidated plans, MoFED disbursed this budget to WRDF and the other federal and regional implementers, down to woreda level.
12.3 Fund flow and channelling funds