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In Ethiopia, investment in rural water supply forms a major plank of the government’s poverty reduction efforts. The challenge is huge: Ethiopia’s 2008 Plan for Accelerated and Sustained Development to End Poverty (PASDEP) progress report, based on sector data, records rural water coverage at 54% and the country has the highest absolute number of people without access to improved water supply and sanitation in Sub-Saharan Africa.

To meet the challenge, the government has set ambitious targets to achieve full coverage by 2012 under its Universal Access Programme (UAP), with major investment from government, donors and (increasingly) communities. Considering the scale of the challenge, Ethiopia has made significant progress in attracting finance to the sector. At the same time, major reforms have resulted in the development of a programmatic approach to improve aid effectiveness in tandem with decentralisation.

Despite progress, however, significant obstacles remain. These obstacles can, at least in part, be explained by the nature of governance and politics in the sector, which present barriers to and opportunities for pro-poor change. Yet there is a gap in knowledge of the governance and political economy of the water supply sector in Ethiopia. This study addresses this gap by analysing the governance of the sector and by identifying some challenges associated with the political economy of sector reform.