Ethiopia is a country of manynations, nationalities, and peoples, with a total populationof 91.7 million. Ethiopia has experienced strong economicgrowth over the past decade. Urbanization offers newopportunities in Ethiopia to improve education, health, andother public services, as more concentrated populations areeasier to reach. In this context, the Government of Ethiopia(GoE) acknowledges the important role of the urban sector inoverall economic growth and to invest in it. In thiscontext, the government introduced the urban localgovernment development program (ULGDP) in 2008 as aperformance grant to ULGs. This second ULGDP is a follow-upto the successful first phase. The current ULGDP is jointlyfunded by the government and the World Bank. The program,which will scale up the support to cover 44 cities, willprovide the highly needed investment funds to promote thecities as growth engines in the GoE's urban developmentstrategy, support the institutional capacity of all tiers ofgovernance (federal, regional and local) in urbandevelopment, and enhance the incentives of everyone involved.