to long term national plan for both the Federal and regional Governments. Ownership of the planning process has made it possible to cope with the persistent lack of harmonisation and alignment of policies, procedures and programmes among various donor countries and agencies despite the Paris Declaration on aid effectiveness. Ethiopia’s Pro-poor Expenditure Pattern L. Ethiopia’s pro-poor spending is noteworthy. Official data show that, on average, over 90 percent of the Government’s capital budget is allocated to enhancing pro-poor growth and social sectors, such as agriculture, rural development and food security, roads, irrigation, water supply and sanitation, education, health and HIV/AIDS. Ethiopia’s Approach to Microfinance and Access to Markets LI. J. LII. In response to the objectives of ADLI and the need to provide access to finance to small businesses and boost self employment, Ethiopia has laid great emphasis on microfinance by ensuring that microfinance institutions are established with responsibilities covering all regions. Not only have a sizeable number of microfinance institutions been established but they have several ramifications in the regions to enable easy access by rural economic actors. Also, Ethiopia’s approach in linking markets access to development to other areas (rural roads, agriculture production, rural electrification, telecommunications) is central in achieving the objectives set in ADLI, particularly for small farmers in regional states. Overarching and Cross-cutting Issues The recurring overarching and cross-cutting issues, with wider ramification for the various dimensions of governance, which emerge from this Country Review Report on Ethiopia are highlighted below: Resolving the Ethiopian-Eritrean Conflict LIII. Civil wars have had a destructive impact on human civilisation. Apart from the immediate pain, horror, destruction, and tragic human losses, they impose substantial costs on governance. In the political sphere, they undermine the legitimacy of the state, threatening its institutions, the security of property rights, and the rule of law. In the economic realm, wars devastate the economy and inhibit development which is why violent conflict is often described as ‘development in reverse’. - 34 -