An important component of the Ethiopian government's poverty reduction strategy is investment in skills, knowledge, and training. Investment in education represented almost one-fifth of annual public spending in 2004/05, and as such is significantly higher than that of other pro-poor sectors, such as health, transport, food security, and agriculture. To achieve its aim of providing all children with equal access to education, the Ethiopian government has paid particular attention to reducing inequalities in public education, and has achieved impressive results in educational access. Given the prominent role of education in Ethiopia's national poverty strategy, however, it is critical to evaluate whether current public expenditure patterns are pro-poor. A better understanding of the extent to which educational policies benefit the poor is urgently required in order to design more equitable and effective policy strategies.

This paper presents the findings of an analysis of the Ethiopian education sector, in order to assess pro-poor public expenditure on education since 1995/96. Unlike previous similar studies on Ethiopia, the results here present a dynamic picture of changes in benefit accrued to different sub-populations over time (rural or urban, girls or boys, residents of different regional states) at both the primary and secondary education level. The authors find that the Education Sector Development Policy has been pro-poor, pro-rural, and has significantly narrowed the gender gap at the primary school level. The authors conclude with a number of key policy challenges that will need to be addressed to make further progress towards tackling wealth, gender, and regional disparities in educational access.

Keywords: Ethiopia, education, Ethiopian poverty reduction strategy, public expenditure