Documentof The World Bank FOROFFICIAL USEONLY ReportNo. 42149-RW THE REPUBLICOF RWANDA JOINT IDA-IMF STAFFADVISORY NOTE ONTHE POVERTY REDUCTION STRATEGY January 22,2008 Poverty Reduction and Economic Management 3 Country Department Eastern Africa 2 Africa Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization. INTERNATIONALMONETARY FUNDAND INTERNATIONAL DEVELOPMENT ASSOCIATION REPUBLIC OF RWANDA Joint Staff Advisory Note of the Second Poverty Reduction Strategy Paper Economic Developmentand Poverty Reduction Strategy Prepared by the Staffs o f the International Monetary Fundand The International Development Association Approved by HughBredenkamp and Mark Plant (IMF), Obiageli K.Ezekwesili (IDA) January 22,2008 I. OVERVIEW 1. Rwanda's second Poverty Reduction Strategy Paper (PRSP)--the Economic Development and Poverty Reduction Strategy (EDPRS)--covers calendar years 2008-2012. The EDPRS builds on the strong achievements in human capital development and promotes three flagship areas to mobilize resources, and improve policy implementation and coordination across sectors. These flagship areas are: (i) sustainable growth for jobs and exports; (ii)Vision 2020 Umurenge which is a decentralized integrated rural development program to accelerate reduction in extreme poverty; and (iii)governance, which aims to build on Rwanda's reputation as a country with a low incidence and tolerance o f corruption and that has launched innovative home-grown mechanisms for conflict resolution, unity andreconciliation. This JSAN analyzes the key elements o f the EDPRS,including (i) the participatory approach; (ii) coordination; donor (iii) growth-enhancing policies; and (iv) accountability and governance. 2. Preparation of the EDPRS involved extensive consultation over a period of 18 months with a wide range of stakeholders. The national coordination mechanism involved provincial and district level steering committees with representatives from district staff, local civil society organizations and the private sector. The work of these provincial and district level committees fed into discussions of 15 sector working groups (SWG), which are now the implementation mechanism for the main EDPRS sectors: agriculture, infrastructure, social sectors, and governance. Each SWG is chaired by a lead Government institution and co-chaired by a Lead Donor. Discussion and identification o f priorities by the sector working groups was informed by the cross- sectoral themes of growth, rural development, human development and governance. Results of discussions among the sector working groups fed into the work o f a technical steering committee (TSC), which played the principal coordinating role for the EDPRS, pulling together the work o f the different SWGs, and making high level recommendations to the national steering committee (NSC) as appropriate. The NSC consisted o f Ministers and Provincial Governors which provided high-level guidance on prioritizing across sectors. 3. The Government has aimed to incorporate the lessons learned during implementationof the first PRSP (2002-2007) in the EDPRS preparationand areas of focus. Results from the evaluation noted the need to: (i) strengthen the focus on the productive sectors (particularly infrastructure and agriculture) and the enabling environment for growth, and emphasized the importance o f distributional issues, considering that the distribution o f growth i s likely to matter as much as the level o f growth over time; (ii) intensify capacity building (relative to the first PRSP) to facilitate increased absorption o f aid particularly at lower technical levels o f the Government; (iii) increase the engagement o f civil society and Parliament (particularly the Chamber of Deputies and the Senate Parliamentary Commissions) in the EDPRS process. For example, usingthe MTEF as a basis for wider consultation on the Government's EDPRS (both among Parliamentarians and civil society) could be an effective means o f both strengthening the MTEF process and engaging civil society in the identification o f priorities. This would promote a stronger basis for monitoring and evaluation (M&E) and accountability. 4. Over the period of the first PRSP, GDP growth averaged 5 percent per annum, lower than the average of 7.7 percent between 1998 and 2002. Inaddition, comparison o f poverty reduction rates based on the household consumption survey (EICV) between 2001 and 2005 indicated that the poverty rate had declined marginally from 60.4 percent to 56.9 percent, while the number o f poor increased from 4.82 to 5.38 million. Moreover, there was a faster decline in poverty rates in the Eastern Province. This has been driven by a rapid growth in consumption arising from: rapid growth in cereals, trade with neighboring countries and low population density. Poverty reduction in the Southern Province has been marginal or negative, despite strong growth in consumption o f 4 percent per annum. Some o f these results may be explained by the movement o f population and returning refugees since the genocide, most o f whom have been poor and in the rural areas. Results from subjective assessments o f poverty by communities indicate over half o f the households sampled felt that their income had not improved inthe past three years. 5. Overall, there has been rapid growth in the non-farm paid employment sector with an estimated increase of 200,000 new jobs created out of a total of 480,000 such jobs. The share o f the labor force working in formal employment increased from 5 to 10percent. Also, the proportion o fthe employed labor force engaged in agricultural occupations declined by 9 percent nationally to 80 percent between 2000/01 and 2005/06. Most o f this decline occurred among men, and the domestic service andretailtrade sectors absorbed most of the workers. 6. Agriculture is another key area where progresswas somewhatbelow targets in the PRSP. It is a critical sector to focus on in order to promote faster poverty reduction. The initial low level of growth was also related to the delays in adopting the Strategic Plan for Agricultural Transformation (PSTA) under PRSP-I. The PSTA has since been adopted. In the course o f the EDPRS it will be critical for Government to 2 follow through with strong implementation o f the PSTA with an emphasis on the key areas that have been a constraint to growth in the sector: improving water management, increased availability and use o f fertilizers, and greater focus on conservation and integrated soil and water management. 7. Social protectionwas not a strategic area identifiedunderthe first PRSPand therefore has suffered from a lack of strategic planning, consolidatedbudget and monitoring framework. Budget allocation to social protection related activities is substantial at about 7 percent. However, activities are disparate and not strategically defined in an overall comprehensive framework. Adoption o f a Social Protection Policy at end o f 2005 was an important step to addressing this issue, but rapid development o f a strategic plan i s now needed. 8. Deepening capacity building is an ongoing process and mechanisms are needed to strengthen the participation of civil society in designing, implementing and monitoring the EDPRS. Through its Human Capacity Development Program coordinated by the Human Resource and Institutional Capacity Development Agency (HIDA), the Government continues to support efforts to build its implementation capacity, and will draw on experience and lessons learned so far inits scaled up effort to address this issue under the EDPRS. In the case o f engagement o f civil society and Parliament, a policy on civil society that partly addresses this issue was recently drafted. At national level, several initiatives are underway such as the Governance Framework, the Millennium Challenge Corporation and the creation o f independent think tanks to improve harmonization with regard to assessment o f governance in Rwanda. The establishment o f a political party forum and o f the Rwanda Civil Society Platform will help to reinforce free political competition. 9. In terms of gender, Rwanda has the highest proportion of female parliamentarians in the world at 49 percent. However, violence against women remains a problem and often goes unreported and therefore unpunished. There are also problems with the Land Law whereby women who are not legally married have no entitlementto their husband's land. Efforts through communities to encourage couples to legalize their marriage are bearing fruit. However, local mechanisms will be needed to deal with the issue o f violence against women. Also, although net primary enrollment rates are now slightly higher for girls (87 percent) than boys (85 percent), girls still lag behindboys incompletion rates andon exam scores. Gender disparities emerge after the thirdgrade and inupper secondary andhigher education. 10. The focus of the EDPRS on increased economic growth and poverty reduction with greater efficiency in tackling the problem of extreme poverty is appropriate. However, as with the last JSAN for the PRSP-I, staff emphasize the need to have a comprehensive reporting system on the state o f rural development, particularly given the increased focus on this area under the EDPRS. 3 11. MACROECONOMIC AND FINANCIAL MANAGEMENT 11. The macroeconomic framework is based on an ambitious acceleration of economic growth. Real GDP is projected to grow on average by 7.6 percent a year between 2007 and 2012. This i s ambitious considering an average annual growth o f 5.4 percent between 2000 and 2006. Staffs' own projection o f growth i s somewhat lower at 6 percent. Correspondingly, exports are projected to increase by a high 15 percent a year. Investment in energy, infrastructure, and agriculture i s expected to increase, but most growth-enhancing effects o f this investment are likely to become evident after 2012. The ambitious projections inthe EDPRS leave little room for adverse exogenous shocks. 12. The overallfiscal stance should not underminemacroeconomicstability over the next few years. Public investment is planned to be a key driver, inducing private investment, and i s projected to reach 10 percent o f GDP in 2009 and then remain unchanged as a percent o f GDP, while public current expenditure is projected to decline as a percent o f GDP. The combined net effect is that total fiscal spending would decline by about 2 percent of GDP until 2012. This fiscal path should not create greater challenges to the macroeconomic stability than the increase in fiscal spending that has already occurred during the last few years. Nevertheless, the ministry o f finance and the central bank need to continue working closely together to contain fiscal pressures. The aim should be to maintain debt at sustainable levels, and avoid rekindling inflation, depleting reserves, and crowding out o f private sector growth. The required coordination o f fiscal and monetary policies would become even more critical in the event that economic growth were to fall short o fprojections. 13. AchievingRwanda'sdevelopmentobjectiveswill requirestrong mobilization of resources, beyondthose currentlyidentified.The planned expenditure path is driven by the Government's conservative assessment o f forthcoming aid flows and would require hard-to-achieve spending prioritization, considering likely spillovers from the investmentprogram, pressures on the wage bill, and increasingtransfers to the provinces and districts. This underscores Rwanda's dependence on additional foreign grants. Furthermore, the EDPRS does not project an increase in the revenue-to-GDP ratio; aiming for more ambitious revenue targets would be important to reduce Rwanda's dependence on aid over the long term. 14. The long-termdebt sustainabilitywarrants close monitoring. Staffs' estimates o f the financing plan are less optimistic than the EDPRS. To complement current and projected donor commitments, the Government estimates an additional financing requirement o f Rwf 352 billion (about US$660 million) over five years or about US$130 million a year. Additional borrowing o f this size would rapidly worsen the medium-term outlook for debt indicators. Thus in staffs' view, the debt sustainability analysis indicates that Rwanda remains at a high risk o f debt distress. Therefore, the financing plan will require a significant scaling up o f grant financing in order to ensure debt sustainability. Staffs welcome government efforts to develop a debt management strategy (embedded in a medium-term macro framework) and the related institutions and processes, and are prepared to provide technical assistance as needed. Staffs encourage the authorities to 4 accelerate implementation of their export promotion strategy to strengthen and diversify the export base. 15. The EDPRSdoes not includecontingencyplanning.The EDPRS is intendedto be a guiding tool for the preparation of the medium-termexpenditure fiamework, annual budgets, and more detailed work plans, but it provides little guidance in the form of alternative scenarios. For contingency planning, the document could have included alternative scenarioswith lower economic growth and less external financing. Inthe case of lower economic growth, the discrepancy between annual budgets and the expenditure projections in the EDPRS i s likely to grow. Staffs note that in the face of constrained resources, Government has inthe past identifiedand prioritized spending that would take place should additional grants materialize and there is no risk to macroeconomic stability. However, to ensure that priority areas of the EDPRS are protected from potential shortfalls inresources it is recommendedthat Government formally include contingency itemsinits budget and MTEFprocess. 16. Fiscal policy needs to be based on well-prepared MTEFs and the annual budget should be aligned with the Government's medium-termplanning goals, such as the EDPRS. Staffs note with concern that the MTEF process appears to have been weakenedby government staffturnover and retrenchment. After the initial gains made in this area, strong effort is needed to reinforce capacity and move the reforms forward. Ambitious sectoral strategies could put the overall fiscal balance at risk, if they are not based on a well-defined MTEF process. To this end, staffs note that progress toward putting in place mechanisms for project appraisal and investment prioritization will be critical. Efforts along these lines are being launched in the energy, agriculture and transport sectors, and the Bank is ready to coordinate with other donors to provide technical support. 17. The problem of low capacity related to the public financial management (PFM) system persists. There is strong political will to improve the PFM system and decentralize authority, but absence of robust accounting information limits the identification of problems in budget execution, particularly for the monitoring of activities at sub-national levels. The PFM system provides the aggregated data that is neededto monitor and meet aggregate spendingtargets. However, there are a number of weaknesses in the system emerging from the public expenditure and financial accountability (PEFA) assessment, which is soon to be finalized. Although the expenditure management system can produce the disaggregated information that is needed to monitor allocation and use of resources at the program level, reports are not always produced ina timely manner.As a result, spending decisions duringthe course of the year are based on incomplete information and the final composition of expenditure out-turns at the program level deviates significantly from the originally approved budget. Low capacity in financial accounting has also led to weak internal and payroll audit systems. 18. Further prioritization and sequencing would help to improve the effectiveness of Rwanda's PFM reform initiatives. Capacity constraints continue to pose particular challenges during the implementation of the reform agenda, and limit the 5 amount o f technical assistance that the Government can effectively receive. Effective coordination o f donor funded initiatives is important for the realization o f the reform agenda. Staffs encourage the authorities to establish a more systematic mechanism to guide the following: analysis o f problems; identification and review o f short/medium/long-term objectives of the reforms; examination o f sequencing and cross- cutting issues; promotion o f linkage with other parallel reforms; and addressing capacity constraints. Effectively coordinated and monitored reforms will enhance understanding among stakeholders, increase ownership o fthe reforms, andtherefore improvethe chance o f achieving the intended result. 111. STRATEGICPILLARSOFTHEEDPRS Growthfor Jobs and Exports 19. The EDPRS analyzes the factors that have been most bindingto growth and based on this prioritizes four key areas to: (i)develop skills and capacity for productive employment; (ii) improve economic infrastructure; (iii) promote science and technology; and (iv) deepen and strengthenthe financial sector. It also makes particular note o f the needto link these areas to efforts to raise agricultural productivity and ensure food security, increase the contribution o f the manufacturing sector to growth, and increase opportunities in the service sector. As over 80 percent o f the population i s currently engaged in the agriculture sector, Government's strategic approach under the EDPRS is job creation in the nonagricultural sectors as an important means o f drawing labor out o f subsistence and agriculture production. 20. The emphasis of the EDPRS on improvingthe availability of skilled labor is appropriate. However, it will be important to ensure that programs cover the skills needed not only in the rapidly growing service sectors but also include measures to improve the capacity of farmers to engage inhigher valued added production and exports. Inaddition, implementationo fthe Strategic Planfor Agricultural Transformation(PSTA) i s critical and the medium-term expenditure framework should be strengthened to ensure it reflects available resources and trade-offs. Staffs commend the Government on the progress made in promulgation o f the land law, and stress the need to step up land registration and titling, particularly in the rural areas. Inthis regard, staffs note the work to pilot titling systems that has beenlaunched with assistance from DFID. 21. Staffs also commend the Government on increasingthe quality of nine year basic education, strengthening Technical and Vocational Education and Training (TVET), and improving the quality of tertiary education. The effectiveness and complementarities o f reforms in these areas would be greatly facilitated by the formulation o f an overall strategy on post-basic education. In addition, the proposed focus on Science, Technology, and Innovation (STI) is welcomed, and would preferably be encompassed inall levels o fpost-basic education, while basic educationwould lay the foundation to enable individuals to respond more readily to the skills and competency demands o fthe labor market. 6 22. Compared to PRSP-I, the EDPRS puts greater emphasis on improving infrastructureservices, particularlyin transport and energy and continues to stress the importance of improved agricultural productivity for growth and poverty reduction. Staffs welcome this increased focus on growth in the EDPRS compared to PRSP-I, but stress the importance o f ensuring that measures to improve infrastructure services and strengthen the financial sector should pay particular attention to the needs o f the rural sector. In urban areas, attention i s also needed to the needs o f the informal sector and the poor as it relates to transport, water, energy and services in the financial sector. The authorities' efforts to develop the financial sector, following the steps outlined in their Financial Sector Strategy, should have a positive impact on stimulating private sector investment. 23. A particular constraint to overall economic growth and private sector development has been the low level of generation and high cost of energy. To address this issue, Government will need to outline a comprehensive strategic framework. Along those lines, an agreement has been reached within the energy cluster to move to a Government led sector wide approach (SWAP). This will provide a framework for long- term sustainable financing, emphasizing public-private partnerships and prioritization o f investments. Staffs note the efforts being made by Government in these areas, and emphasize the need to ensure that policy actions in both the infrastructure and financial sectors address the needs o f the poor in the urban and informal sectors as well as in the rural areas inorder to support a higher reduction inpoverty and inequality. Vision 2020 Umurenge 24. Staffs commend the Government on the efforts made through this flagship area to ensure the poor also share in the growth benefits. Vision 2020 complements the Growth flagship area o f the EDPRS with its aim to eradicate poverty by 2020. It is a pro-poor, growth-for-job-and-exports program, which has been launched as a pilot inone o f the poorest villages in each district, in specific rural areas. The Vision 2020 balances central guidelines for growth and poverty reduction with local participatory mechanisms to ensure the best possible use o f local resources while ensuring local incentives for sustainable progress. The programs to be implemented will include public works for able bodied poor, micro-enterprise development to foster entrepreneurship and off-farm employment, greater targeted access to social services for labor poor households such as community child care centers, adult literacy and numeracy, artisan and handicraft activities. The challenge will be implementation o f this initiative in a way that does not undermine already ongoing reforms in decentralization nor diverts resources. It will be critical for implementation arrangements to be strongly coordinated and linkedto existing institutional structures and delivery mechanisms. In addition, staffs recommend establishing up front a mechanism for evaluation o f the programs to guide the scaling up o fthe program at the end o f the pilot period. Governance 25. This component focuses on strengthening relations with neighboring countries to maintain peace, promotion of unity and reconciliation among 7 Rwandans,reforms to the justice systemto upholdhumanrightsand the ruleof law and empowering citizens to participate in their own social, political and economic development. This component also covers a range o f public sector reforms including decentralization and accountability at all levels o f government, civil service capacity, strengthening public financial management and improving procurement, performance- based budgetingand increasingtransparency and predictability o f policy making. 26. Substantialimprovementsin accountabilityrelatedto service delivery in the educationand healthsectors have been achieved, alongwith strong implementation of an output-orientedMTEF. Higher education transfers to districts, on a per student basis, have helped to strengthen participation o f parent-teacher associations in the education system. In the health sector, increased delivery o f services through the performance contracting system with service providers has improved outcomes related to the use o f bed nets for malaria and assisted deliveries. Moreover, significant progress in implementing the MTEF approach has been achieved for the education and health sectors. Staffs note the substantial progress made inthe social sectors with the adoption o f an education sector wide approach (SWAP), and the recent agreement to adopt a SWAPapproach inthe healthsector. 27. Similar progress in the adoption of the MTEF is needed for the social protection sector and particularly for the infrastructure and agriculture sectors. Staffs also note progress in these areas with a recent agreement in principle among the key stakeholders to adopt a SWAP in the energy sector, and with discussion for the approach to be adopted inthe transport, and agriculture sectors. The emphasis should be on elaboration o f a well costed MTEF based on the EDPRS, reflecting available resources and trade-offs. 28. The need to build on achievements during PRSP-I in service delivery and improve capacity remains an issue to be addressed. Efforts inthe areas o f capacity building and civil service reform are critical, particularly given decentralization reforms and weak administrative capacity which is a major obstacle for the reform agenda. Reforms in the civil service to promote increased incentives and staff retention will be critical for the successful implementation o f the EDPRS. Staffs note that progress has been made since the last JSAN with the completion o fthe review o f wage structure o fthe civil service, including fringe benefits. Inaddition, functional reviews o f 6 key ministries will be completed by the beginning of 2008. These will enable the design o f incentives and a pay andretentionpolicy, and support capacity development o fthe civil service. Iv. TARGETS, INDICATORS, AND MONITORING 29. The EDPRS outlines a framework for monitoring alongwith indicatorsand targets. The indicators are generally considered to be appropriate, given the assessment o f poverty and institutional capacity. However, the link between the outcome indicators and the policy matrix needs to be made more explicit. Also, given the differences in regional poverty rates (where the Eastern region has contributed most to poverty reduction and the South the least), staffs would recommend that the monitoring framework also present indicators by regions to monitor the effectiveness o f 8 interventions. Along these lines, more work i s needed to understand the reason for the differences in poverty outcomes betweenthe Eastern region and the rest o f the country. Staffs note that the EDPRS highlightsthe role o f cross-border trade inthe East and lower population density, but more rigorous analytical work inthis area would help to improve understanding and implications for measures and targeting to accelerate poverty reduction. Staffs also commend the Government on its decision to lead the development of a Common Performance Assessment Framework (CPAF), which all budget support donors will draw from for their respective fiduciary requirements and reporting. v. CONCLUSION 30. Bank and Fund staffs believe that the EDPRS provides an adequate framework for poverty reduction in Rwanda. The strategy builds on lessons learned in implementation o f PRSP-I, primarily that a greater focus on the rural areas is needed for sustained poverty reduction. Also, Vision 2020 Umurenge has been included as a key pillar to ensure the poor also benefit from economic growth. However, issues related to capacity remain an issue for implementationo fthe EDPRS, as it did for PRSP-I. 31. The immediate risks to growth and poverty reduction are shocks related to regional conflict and unpredictable weather patterns 4.e. late rains or excessive rains, or regional droughts. Staffs note the emphasis placed on integrated water and soil management in the EDPRS. Successful implementation o f programs to improve water management and use o f improved inputs, particularly fertilizer should help mitigate this risk. However, disaster management shouldbe also strengthened given the country's susceptibility to regional droughts and floods. In terms o f regional conflicts, the main risk to Rwanda is potential shocks to imports, exports and related inflationary pressures. This is particularly important for key imports related to energy and fuel. For example, Government would need to examine its strategic fuel reserve policy to ensure it provides adequate room to mitigate this type o f risk. 32. I n view of the above, staffs recommend the following actions in order to strengthenimplementation of the EDPRS: 0 Furtheranalysisto explain the modestprogressinpoverty reductioncompared to the strong economic growth during the course o f the PRSP-I. This would then beusedto inform the design o fprograms andimprove targeting. 0 Continued efforts directed at buildingcapacity inthe area o f public expenditure management, particularly performance based budgeting as it pertains to the infrastructure and agriculture sectors. Progress in this area has been a key factor that contributed to the achievements inthe education and health sectors. 0 Further prioritization of public expenditures and involvement o f the private sector may be warranted givenlimited resources. 9 0 To prepare contingency plans, the staffs recommends including alternative scenarios with lower economic growth and lower external financing. A clear prioritization would also indicate programs that would have to be cut, if spending cuts were to be necessary. 33. Bank-Fundstaffs would encourage the Governmentto monitorthe long-term debt sustainability carefully and to develop and implement a strategy for debt management. Rwanda has a small export base and exogenous shocks to exports or imprudent borrowing could rapidly deteriorate the medium-term outlook for debt indicators. Developing a comprehensive debt management strategy will be a step towards ensuring debt sustainability 34. InconsideringRwanda's Economic Development andPoverty ReductionStrategy and the associated JSAN, Executive Directors may wish to consider the following issues: 0 D o Directors agree with the staffs' view that the EDPRS provides an adequate framework for poverty reduction? 0 D o Directors concur with the areas identified by staffs as priorities for strengthening implementation o fthe EDPRS? 10 The Republic of Rwanda ECONOMIC DEVELOPMENTAND POVERTY REDUCTION STRATEGY, 2008-2012 September 2007 CONTENTS CONTENTS i ACRONYMS V GLOSSARY viii EXECUTIVESUMMARY ix 1 INTRODUCTION 1 2 WHERE IS RWANDA NOW? 5 2.I Economic growth has slowed. population growth continues to be rapid and the environment is under stress.............................................................................. 5 2.2 Poverty has fallen. but needs to fall faster to meet the MDG and Vision 2020 targets ...................................................................................................................... 12 2.3 Key indicators show that health has improved substantially. but inequalities in health outcomespersist................................................................. 18 aspects of primary education are also a high priority.......................................... 2.4 Access to secondary education lags behind primary. but tackling quality 21 2.5 Governancereforms are well advanced. but much remains to be done .....24 2.6 Implications for the EDPRS ............................................................................ 28 3 WHERE DOES RWANDAWANT TO BE IN 2012? 29 3.1 Implicit targets for the Millennium Development Goals in 2012...................29 3.2 Targets for Rwanda Vision2020 ..................................................................... 35 3.3 Targets for the EDPRS in 2012 ....................................................................... 35 4 WHAT DOES RWANDA DO TO GET THERE? 47 4.1 The Growth for Jobs and Exports flagship programme ............................... 49 4.2 The Vision 2020 UmurengeFlagship Programme ......................................... 75 4.3 The Governanceflagshipprogramme ........................................................... 81 4.4 Complementarysectoral interventions to achieve the EDPRS targets .......97 5 HOW DOES RWANDAGET IT DONE ? 108 5.1 Implementation framework for the EDPRS .................................................. 108 5.2 Align individual incentives to planning priorities ....................................... 109 5.3 Extend and consolidate theprocess of decentralisation........................... 1I O 5.4 Flagship programmes will strengthen inter-sectoral coordination............112 5.5 Improve public financial management......................................................... 115 5.6 Promote greater harmonisation and alignment of donors with the EDPRS priorities................................................................................................................. 116 5.7 Assign a greater role in policy implementation to markets and the Private Sector ..................................................................................................................... 118 i 5.8 Implementation issues at sectoral level ....................................................... 179 5.9 Effective implementation requires good communication........................... 726 6 HOW MUCH WILL IT COST AND WHAT ARE THE MACROECONOMIC IMPLICATIONS? 127 6.1 EDPRScosts .................................................................................................... 127 6.2 Sector allocationofEDPRScosts ...................................................................... 130 6.3 EDPRSfinancingrequirements ........................................................................ 132 6.4 Summary ofcostsandfinancingflows ............................................................... 134 6.5 Possiblefinancingmethods ............................................................................... 135 6.6 Macroeconomicimplications . . . . ............................................................................. 737 7 HOW WILL RWANDA KNOW IT IS GETTING THERE? 141 7 I Theinstitutionalframeworkofmonitoring........................................................ . 141 7.2 The EDPRS indicator system........................................................................ 141 7.3 Implications for the statistical system ......................................................... 154 7.4 Evaluation of EDPRS interventions.............................................................. 155 APPENDIX 1:APPENDIX TO CHAPTER 1 157 APPENDIX 2: APPENDIX TO CHAPTER 2 159 REFERENCES 167 .. 11 FXGURES Figure 1.1EDPRSCoordination Mechanism..................................................................... 3 Figure 2.1 Poverty and population density ......................................................................... 9 Figure2.2 holdings in2000/01 (EICV1) and 2005/06 (EICV2) ...................................... 10 Figure2.3 Increase inCultivated Area (ha) and Yield (kg/ha), 2000-2005 (Average Percent change) ................................................................................................................. 11 Figure2.4 Changes inpoverty at regional and national level (poor people as a % o fthe population) ........................................................................................................................ 15 Figure 2.5 Gini coefficient o f inequality inthe African context....................................... 16 Figure 2.6 Food insecurity (% o f food insecure households by food economy zone ....... 18 Figure 2.7 Framework for decentralised accountability ................................................... 26 Figure4.1 Pro-poor growth anchored ingood governance .............................................. 49 Figure5.1 EDPRSand planning linkages....................................................................... 109 Figure5.2 Planning andreporting tools for implementingthe EDPRS ......................... 110 Figure 5.3 Coffee Washing Stations -a critical path analysis ....................................... 113 Figure5.4 Central Government Imihigo......................................................................... 115 Figure 6.1 Public spending to induce private investment............................................... 129 Figure6.2 Public and private investmentto achieve EDPRS targets ............................. 130 Figure 6.3 Summary debt sustainability ......................................................................... 137 Figure7.1 Indicators form a causal chain....................................................................... 143 Figure7.2 EDPRS indicators and sector logframes........................................................ 152 Figure7.3 Traffic light reports to monitor progress towards sectoral EDPRS objectives . ......................................................................................................................................... 153 TABLES Table 2.1 Trend real growth rate by activities (5-year averages inpercent) ...................... 6 Table 2.2 Poverty headcount (share ofpopulation andnumber) ...................................... 13 Table 2.3 Own distribution o fpoor by categories ............................................................ 13 Table 2.4 Major causes o fpoverty identified ................................................................... 14 Table 2.5 Childhood mortality (per 1,000 live births) and MMR (per 100,000 births).... 18 Table 3.1 Progress against RwandaVision 2020 targets and MillenniumDevelopment Goals ................................................................................................................................. 30 Table 3.2 Targets for the EDPRS in2012) ....................................................................... 45 Table 4.1 The growth diagnostic approach applied to Rwanda........................................ 51 Table 4.2 Investment climate: Key factors for foreign investors...................................... 53 Table 4.3 Infrastructure costs inRwanda compared to neighbouring countries...............54 Table 4.4 Priority Export Actions ..................................................................................... 56 Table 4.5 Summary growth flagship................................................................................. 73 Table 4.6 Summary o f the VU' flagship.......................................................................... 80 Table 4.7 Summary o f governance flagship ..................................................................... 94 Table 6.1 EDPRS costs, inbillion RWF......................................................................... 128 Table 6.2 EDPRS costs, inU S D per capita .................................................................... 128 Table 6.3 Proposed shares o f public expenditure by sector for the EDPRS period 2008- 2012 (inbillion Rwandan francs, unless otherwise indicated) ....................................... 131 ... 111 Table 6.4 Public financing of EDPRS ............................................................................ 133 Table 6.5 EDPRS costs and financing, inpercent of GDP............................................. 134 Table 6.6 EDPRS costs andfinancing, inUSDper capita ............................................. 135 Table 6.7 Possible financing methods ............................................................................ 136 Table 6.8 Selected economic and financial indicators, 2007-2012 ................................ 139 Table 7.1 EDPRS Strategic Outcome Indicators ............................................................ 145 Table 7.2 EDPRS Intermediate Indicators..................................................................... 146 Table 7.3 EDPRS SummaryPolicyMatrix .................................................................... 147 Table 7.4 EDPRS Second GenerationIndicators ........................................................... 150 iv ACRONYMS AfDB African Development Bank AIDS Acquired Immune Deficiency Syndrome ART Antiretroviral Therapy ARV Antiretroviral BCC Behaviour Change Communication BNR Banque Nationale du Rwanda CDF Community Development Fund CDLS District AIDS Committee C E M Country Economic Memorandum (World Bank) cso Civil Society Organisation D A C Development Assistance Committee DDP District Development Plan DffD Department for International Development DHS Demographic and Health Survey EDPRS Economic Development and Poverty Reduction Strategy EICV Enquzte Intkgrale sur les Conditions de Vie des Menages (Households Living Conditions Survey) EMS Expenditure Management System GoR Government o fRwanda HIDA HumanResources andInstitutional Capacity Development Agency HIM0 Haute Intensite de Main-d'Oeuvre (Labour-Intensive Public Works) HIV HumanImmunodeficiency Virus HLI Higher Learning Institutiods I C T Information and Communication Technology I M N C I IntegratedManagement of Neonatal and Childhood Illnesses IMR Infant Mortality Rate JESPOC Youth, Sports and Culture JSR Joint Sector Reviews KIST Kigali Institute o f Science and Technology M&E Monitoringand Evaluation MDG Millennium Development Goal MFIs Microfinance institutions MIFOTRA Ministryof Public Service, SkillsDevelopment, Vocational Training and Labour MINAFFET Ministryo fForeignAffairs and Cooperation MIJESPOC Ministryfor Youth, Sport andCulture MINAGRI Ministry o fAgriculture MINALOC Ministryof Local Government, Community Development and Social Affairs MINECOFIN Ministryo fFinance and Economic Planning V MINEDUC MinistryofEducation MINICOM Ministryo fCommerce, Industry, Investment Promotion, Tourism and Cooperatives MINIJUST Ministry o f Justice MININTER MinistryofInternalAffairs MINITERE Ministry o f Lands, HumanResettlement and Environmental Protection MININFRA MinistryofInfrastructure MINISTR Ministry o f Science, Technology and Scientific Research MINSANTE Ministry o fHealth M I S Management Information System MMR Maternal Mortality Rate MTEF Medium Term Expenditure Framework NAPPYE National Action PlanPromoting Youth Employment NGO Non-Governmental Organisation N I C I National Information and Communications Infrastructure NISR National Institute o f Statistics, Rwanda NPV Net present value NSS National Security Service N Y C National Youth Council OBL Organic Budget Law OCIR Cafe Rwandan Coffee Authority OECD Organisation for Economic Cooperation and Development OGMR Office de GCologie et des Mines duRwanda ORTPN Office Rwandais du Tourisme et des Parcs Nationaux OTC Over The Counter ovc Orphaned and Vulnerable Children PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PLHIV People Living With HIV (including AIDS) PMTCT Preventiono fmother to child transmission o f HIV PNV Parc National des Volcans PRSP Poverty Reduction Strategy Paper PTA Parent Teacher Association RDSF RwandaDecentralisation Strategic Framework REMA Rwanda Environment ManagementAgency RIAM Rwanda Institute o f Administration andManagement RIEPA Rwanda Investment and Export Promotion Agency RIPA Rwanda InvestmentPromotion Agency RRA Rwanda Revenue Authority RWF Rwandan Francs SFAR Student FinancingAgency o fRwanda SFB School o f Finance and Banking SME Small and Medium Enterprises STI Science, Technology and Innovation STIR Science, Technology and Innovation for Results vi SWAP Sector-Wide Approach TB Tuberculosis TIG Travaux d'InterEt Gkneral TNA Training Needs Assessment TSC Teacher Service Commission TSC Technical Steering Committee TVET Technical and Vocational Education and Training USMR Under-five MortalityRate UBPR Union des Banques Populaires du Rwanda UN UnitedNations UNCTAD UnitedNations Conference on Trade andDevelopment UNDP United Nations Development Programme USD U S Dollar VAT Value Added Tax VCT Voluntary Counselling and Testing WATSAN Water and Sanitation Sector YFC Youth Friendly Centres vii GLOSSARY Abunzi Mediators Akagari Cell Biragenda neza Ontrack Bikeneyegukurikiranwa Too early to tellheeds follow-up Gacaca Community courts Girinka One cow perpoor householdprogramme Imihigo Perforrnance contracts Ingando Solidarity camps Jumelage Twinningwith other institutions Ntibigenda neza Offtrack Tronc commun Lower secondary school level Ubudehe Community-based participatory approach Umuduguduhmidugudu Villagels Umuganda Community work Umurengehmirenge Sector/s viii EXECUTIVESUMMARY 1. Rwanda's Economic Development and Poverty Reduction Strategy (EDPRS) provides a medium term framework for achieving the country's long term development aspirations as embodied in Rwanda Vision 2020, the seven year Government o f Rwanda (GoR) programme, and the MillenniumDevelopment Goals. 2. The strategy builds on strong achievements in human capital development and promotes three flagship programmes. These flagships serve as a means to prioritise actions by the GoR, mobilise resources for development and improve policy implementationthrough more co-ordinated interventions across sectors. 3. The first flagship, Sustainable Growth for Jobs and Exports, will be driven by an ambitious, high quality public investment programme aimed at systematically reducing the operational costs o f business, increasing the capacity to innovate, and widening and strengthening the Financial Sector. This means heavy investment in "hard infrastructure" by the GoR to create strong incentives for the Private Sector to increase its investment rate in subsequent years. The second flagship, Vision 2020 Umurenge, will accelerate the rate o f poverty reduction by promoting pro-poor components o f the national growth agenda. This will be achieved by releasing the productive capacity o f the poor inrural areas through a combination of public works, promotion o f cooperatives, credit packages and direct support. Finally, the third flagship, governance provides an anchor for pro-poor growth by building on Rwanda's reputation as a country with a low incidence o f corruption and a regional comparative advantage in"soft infrastructure". 4. In order to implement the EDPRS strategy, the sectoral allocation o f public expenditure will be distributed to maintain momentum in the social sectors - education, health and water and sanitation-while also targeting agriculture, transport and Information and Communication Technology ICT, energy, housing and urban development, good governance and rule o f law, proper land use management and environmental protection. 5. In agriculture, the main programmes include the intensification o f sustainable production systems in crop cultivation and animal husbandry; building the technical and organisational capacity o f farmers; promoting commodity chains and agribusiness, and strengthening the institutional fi-amework o f the sector at central and local level. 6. Environmental and land priorities involve ecosystems, the rehabilitation o f degraded areas and strengthening newly established central and decentralised institutions. Special attention will be paid to sustainable land tenure security through the planning and management o f land registration and rational land use, soil and water conservation, reforestation, preservation o f biological diversity and adaptation and mitigation against the impact o f climate change. ix 7. Ineducation and skills development, the emphasis is on increasing the coverage and the quality o f nine year basic education, strengthening Technical and Vocational Education and Training (TVET), and improving the quality o f tertiary education. 8. The concerted effort to build scientific capacity will be based on the objectives o f knowledge acquisition, and deepening, knowledge creation through scientific research, knowledge transfer and developing a culture o f innovation, in particular, protecting intellectual property. 9. In infrastructure, the objectives are to reduce transport costs within the country and between Rwanda and the outside world, and to ensure security o f energy supplies by increasing domestic energy production from several sources. Efforts will be made to promote investment in, and the growth of, the Infomiation and Communications Technology industry. In meteorology, the aim i s to provide a wide range o f timely, highquality information to different groups o fusers. 10.The habitat sub-sector will develop planning tools for restructuring the country's settlement patterns, consistent with the rural and urban land use and environment protection schemes, and develop and implement master plans for new urban residential zones and imidugudu sites. 11. In addition to reducing the costs o f doing business, the GoR will promote competitiveness and Private Sector development through capacity buildinginitiatives, credit schemes and Business Development Services (BDS). In manufacturing, the COR will promote value addition in existing product lines in agro-processing, including coffee and tea, handicrafts and mining, and development o f new products including silk, pyrethrum, hides and skins and flowers. The CORwill also provide incentives for foreign direct investment and create industrial parks and export processing zones. 12. The Service Sector i s fundamental for the transition towards a knowledge-based society. The CORwill exploit the country's potential comparative advantages in financial services, tourism, transport and logistics. The Financial Sector will be opened up further to foreign capital, modem and dynamic management and technologies. The GoR will promote tourism opportunities by improving tourism infrastructure and services, creating more attractions, including eco-tourism and cultural sites, encouraging private sector investment, better marketing and forming regional and international links. 13. In health, the objectives are to maximise preventative health measures and build the capacity to have high quality and accessible health care services for the entire population in order to reduce malnutrition, infant and child mortality, and fertility, as well as control communicable diseases. This includes strengthening institutional capacity, increasing the quantity and quality of human resources, ensuring that health care i s accessible to all the population, increasing geographical accessibility X increasing the availability and affordability o f drugs, improving the quality o f services inthe control o f diseases and encouraging the demand for such services. 14.High population growth is a major challenge facing Rwanda. Slowing down population growth requires innovative measures, including the strengthening o f reproductive health services and family planning and ensuring free access to information, education and contraceptive services. 15. The Water and Sanitation Sector aims to ensure sustainable and integrated water resources management and development for multipurpose use including increased access for all to safe water and sanitation services. 16. In social protection, the objective i s to achieve effective and sustainable social protection for the poor and vulnerable. The sector will provide social assistance to the most needy while supporting the able-bodied to progress out o f extreme vulnerability and poverty into more sustainable means o f self-support. To achieve this, a single, coherent strategy i s being designed, andjoint funding arrangements sought, to replace the current plethora o f small programmes inthis area. 17. Special attention i s also given, in the EDPRS, to the challenges and opportunities facing young people, in order to strengthen the youth's participation in the social, economic and civic development o f Rwanda. 18. The objectives in governance include maintaining peace and security through defence against external threats and participation in peace keeping missions, preserving and strengthening good relationships with all countries, continuing to promote unity and reconciliation among Rwandans, pursuing reforms to the justice system to uphold human rights and the rule o f law, and empowering citizens to participate and own their social, political and economic development inrespect of rights and civil liberties including freedom o f expression. 19. The governance programme puts emphasis on supporting the development o f "soft infrastructure" for the Private Sector through implementing the commercial justice, business and land registration programmes, improving economic freedom, improving the regulatory and licensing environment for doing business, and promoting principles o f modem corporate governance. The programme covers a wide range o f public sector reforms which include strengthening decentralisation and enhancing accountability at all levels o f govement, enhancing Public Sector capacity, strengthening public financial management and improving procurement, institutionalising performance-based budgeting and increasing the transparency and predictability o fpolicy-making. 20. The EDPRS incorporates a number o f cross-cutting issues (CCIs) which include gender, HIV, the environment, social inclusion and youth. Wherever possible, issues relating to CCIs have been integrated into the discussion o f sectoral policies and programmes. xi 21. Experience from the first PRSP (2002-2005) showed that progress was achieved in some areas, but implementation problems held back progress in others. Measures are in place to ensure that implementation of the EDPRS proceeds more smoothly and consistently. Greater efficiency can be achieved by improving incentives to execute policy and by relaxing the constraints which prevent policies from being carried out. To this end, a variety o f measures are being implemented, including public administration reforms to promote accountability, measures aimed at achieving a closer alignment between donors and EDPRS priorities, a greater role for markets and the Private Sector, and improved monitoring systems at sectoral and district levels. 22. The implementation o f the EDPRSwill require RWF 5,15 1billion over the five years 2008-2012. This amount includes public recurrent expenditure, public capital expenditure and private investment. The public component amounts to RWF 3,434 billion and represents two-thirds o f the total cost of EDPRS. The extra public financing requirement i s RWF 352 billion, equivalent to USD 700 million over 2008- 2012, or an average of USD 140million per year. 23. The EDPRS mainstreams a system o f monitoring and evaluation at national, sub- national and sectoral levels to improve Public Sector performance. This document proposes an indicator system o f four linked matrices which can be used by domestic stakeholders to monitor national development (the EDPRS), by external stakeholders to exercise accountability for grants and loans (Performance Assessment and Policy Matrix), and, to a limited extent, by sector specialists to track performance over a rollingthree year budget period (the MediumTerm Expenditure Framework). xii INTRODUCTION 1.1 Rwanda's Economic Development and Poverty Reduction Strategy (EDPRS) i s both a document and a process. As a document, the EDPRS sets out the country's objectives, priorities and major policies for the next five years (2008-2012). It provides a road map for government, development partners, the Private Sector and civil society and indicates where Rwanda wants to go, what it needs to do to get there, how it i s going to do it, what the journey i s going to cost and how it will be financed. The strategy provides a medium term framework for achieving the country's long term development goals and aspirations as embodied in Rwanda Vision 2020 (Republic o f Rwanda, 2000), the seven year Government o f Rwandaprogramme, and the MillenniumDevelopment Goals. 1.2 The EDPRS breaks with the past intwo ways. Firstly, the strategy redefines the country's priorities. Rwanda's first Poverty Reduction Strategy Paper (PRSP) coveredthe period 2002-2005. It was elaborated in a post-conflict environment where the primary emphasis was on managing a transitional period o f rehabilitation and reconstruction. Having made considerable progress during this transition, it i s time to take stock and reassess the importance o f different policy objectives. Secondly, this strategy document advocates a different way o f doing things in Rwanda. Inparticular, it makes the case for consolidating and extending the decentralisation of public spending when accompanied by robust accountability mechanisms. The EDPRS also recognises the key role o f the Private Sector inaccelerating growth inorder to reduce poverty. 1.3 The priorities o f the strategy are embodied in three flagship programmes: sustainable Growth for Jobs and Exports, Vision 2020 Umurenge and governance. The EDPRS assigns the highest priority to accelerating growth to create employment and generate exports. It will achieve this through an ambitious, highquality public investment programme aimed at reducing the operational costs o f business. This bigpushwill create strong incentives for the Private Sector to increase its investment rate in subsequent years. With two thirds o f the population aged less than twenty-five years, particular emphasis will be placed on creating jobs for young people. Vision 2020 Umurenge i s a highly decentralised integrated rural development programme designed to accelerate extreme poverty reduction inRwanda. It i s currently being piloted inthirty o f the poorest sectors (imirenge) o f the country. Governance seeks to build on Rwanda's reputation as a country with a low incidence of, and zero toleration for corruption and that has initiated innovative home-grown mechanisms for conflict resolution, unity and reconciliation. In the next five years, Rwanda plans to develop a regional comparative advantage in `soft infrastructure', that is, those aspects o f governance, such as well-defined property rights, efficient public administration, transparency and accountability in fiscal and regulatory matters. 1.4 Viewed as a process, the EDPRS has involved extensive consultation over a period o f 18 months with a wide range o f stakeholders at both central and local government levels. A national coordination structure was put in place to oversee the elaboration process (Figure 1.1). The process was led by the National Steering 1 Committee (NSC), comprised o f Ministers and Governors, which provided high-level guidance such as on how to prioritise between sectors. The NSC was supported by a Technical Steering Committee (TSC), made up o f Secretaries General, Executive Secretaries from Provinces, and representatives o f donors, civil society and the Private Sector. The TSC played the principal coordinating role for the EDPRS, pulling together the work o f the different Sector Working Groups and making high level recommendations to the National Steering Committee as appropriate. 1.5 Nineteen sector working groups (SWGs) and Cross-Cutting Issues (CCIs) teams were involved, comprising stakeholders from central and local government, donors, civil society organisations and the private sector, and organised around four clusters (Growth, Rural Development, Human Development and Governance). These clusters are an implementation mechanism to improve cross-sectoral coordination. Each SWG i s chaired by a Lead Government Institution and co-chaired by a Lead Donor. A multidisciplinary group managed the five cross-cutting issues. Appendix 1 provides details on SWG and CCI team membership. Local government engagement with EDPRS occurred through five Steering Committees (four Province plus Mairie Ville de Kigali, MVK), comprising Executive Secretaries, District Staff representatives, local civil society organisations (CSOs) and the Private Sector, each o f which was represented in each SWG. Grass-roots participation in EDPRS occurred through nation-wide consultations at the cell (akagavi) level, which were compiled at sector (umurenge) and district levels, and fed into the work o f the SWGs. 2 + Figure 1.1EDPRS Coordination Mechanism National Steering Committee Technical Steering Committee Growth Rural Human Governance Themes: development development Sector Working Agriculture Environment and Groups: husbandry management 2 t t Province and District Steering Committees 1.6 The EDPRS was elaborated in three distinct phases. The first phase involved self-evaluations o f the PRSP1 conducted by each sector working group and each District, together with an independent evaluation conducted by external consultations. Emerging priorities from these evaluations informed the 2007 budget elaboration. Inaddition, based on these assessments, each sector subsequently set higher level objectives and targets for EDPRS as well as the means o f achieving them through a logical framework exercise and a costing exercise.' Finally, each sector was required to produce a summary strategy statement, which was compiled into the EDPRS document by the Ministryo fFinance and Economic Planning, under the direction o f the Steering Committees. 1.7 The EDPRS i s set out as follows. Chapter 2 provides a summary of what Rwanda has achieved to date in terms o f recent growth performance, poverty reduction, human development and governance reform. It identifies the major challenges to be faced inthenext five years anddraws lessons from the PRSP for the EDPRS. 1.8 Chapter 3 offers a vision o f where Rwanda could be in 2012. This provides a sense o f direction for the EDPRS, while ensuringthat the vision is anchored to reality via a set o f detailed sectoral targets which have been carefully costed. 1.9 Chapter 4 explains the role of the flagship programmes as a means to prioritise actions by the GoR, mobilise resources for development and improve policy 1The logical frameworks are published inEDPRS Volume 11. 3 implementation through more co-ordinated interventions across sectors. This i s followed by a detailed description o f the sectoral and cross-cutting actions required to reach the EDPRStargets. 1.10 Chapter 5 addresses the challenges o f implementingthe strategy. It argues that the risks o f implementation failure can be reduced by providing incentives to execute policy and by relaxing the constraints which prevent policies from being carried out. Concrete proposals are made for how this could be done. 1.11 Chapter 6 answers two questions: how muchwill the EDPRScost, and how will itbefinanced? The answers are derived from amacroeconomicprogramming exercise. 1.12 Chapter 7 discusses how the EDPRS might be monitored and evaluated. An indicator system o f four linked matrices i s proposed which can be used by domestic stakeholders to monitor national development (EDPRS), by external stakeholders to exercise accountability for grants and loans (Performance Assessment and Policy Matrix), and, to a limited extent, by sector specialists to track performance over a rolling three year budget period (Medium Term Expenditure Framework). This framework i s flexible and can be shaped to accommodate reporting requirements to both domestic and international stakeholders. 4 2 WHERE I S RWANDANOW? 2.1 This chapter reviews the main features o f Rwanda's recent socio-economic performance and the lessons learnt fi-om the PRSP (2002-2005). Its purpose i s to provide a context for elaborating development policy inthe medium term. This chapter draws on the National Population and Housing Census and a variety o f household surveys.2 These include the first and second IntegratedHousehold Survey on Living Conditions (Enquete Intkgvale sur les Conditions de Vie des Mknages, EICV) (NISR, 2006, MINECOFIN, 2007b), Demographic and Health Survey (DHS) (NISR, 2005), the Comprehensive Food Security and Vulnerability Analysis (CFSVA) (NISR and World Food Programme, 2006), and Ubudehe survey data (MINECOFIN, 2007a), which records the desires and preferences o f Rwandan~.~The chapter also draws on the evaluation o f PRSPl (Evans et al., 2006, MINECOFIN, 2006) and makes international comparisons. This analysis informs the priorities and strategies o f the EDPRS which are formulated in subsequent chapters. 2,1 Economic growth has slowed,population growth continues to be rapid and the environment is under stress 2.2 Inthe aftermathofthe genocide and associated conflicts (1996-2000), real GDP grew at over 10%per year as the economy recoveredfrom a low base. This was followed by aperiod o f stabilisation (2001-2006) duringwhich real growth fell to an annual rate o f 6.4% (Table 2.1). On the demand side, growth has been driven predominantly by increases in private consumption. This i s relevant for the discussion o f poverty trends in section 2.2 because the principal poverty measure is consumption-based.4 On the supply side, there was a structural shift inthe economy as the Service Sector replaced agriculture as the major contributor to increases in output. However, agriculture (and food crops in particular), remains a major component o f GDP andprovides most employment. Household surveys are a way o f collecting representative, reliable and independent data. Household surveys help governments by: providing data for evidence-based policy-making; providing information on users and non-users o f services; setting baselines for policies; monitoring implementation; and evaluating results. 3Ubudehe i s a traditional practice and culture o f collective actionto solve community problems. It has been adoptedby the GoR as an approach to fight poverty. It i s present in 9,000 cells all over the country. The 2006 Ubudehe survey results suggest it should be a core method o fthe govemment's approach to fighting poverty because it is embedded inRwandan mindsets and i s seen as an approach that benefits the poor, primarily through increasing access to livestock, promoting social capital and unification, increasing participation inplanning and decision-making, and empowering the poor and women (MINECOFIN, 2007a). The poverty measure i s calculated from survey data on household consumption expenditure. The consumption aggregate computed inthe National Accounts i s broadly consistent with the figure which i s generated by `inflating' the survey data consumption expenditure to national level. 5 Table 2.1 Trend real growth rate by activities (5-year averages inpercent) Average annual Share o f total GDP growth 1996- 2001- 1996- 2001- 2000 2006 2000 2006 Gross Domestic Product (GDP) Agricu1ture Food crop 31.9 31.4 9.9 5.1 Export Crop 1.o 1.1 11.7 6.3 Livestock 3.O 2.2 7.8 3.5 Forestry 1.5 1.3 10.7 3.7 Fisheries 0.3 0.4 29.9 3.7 Industry Miningand quarrying Manufacturing 8.2 6.8 4.1 6.0 Of which: Food 1.5 1.7 8.1 9.1 Bcveragcs, tobacco 4.2 2.5 -4.4 4.6 Others 2.4 2.7 19.5 6.5 Electricity, gas, n'atcr 0.6 0.5 11.3 4.2 Construction 6.0 6.3 11.9 9.6 Services Wholesale & rctail trade Hotels and restaurants 0.8 0.9 25.2 6.6 Transport, storage, communication 4.8 6.0 15.5 9.4 Finance, insurance 2.6 3.5 17.7 13.3 Real estate, business services 10.3 9.6 11.2 5.0 Public administration, education, health 12.4 13.2 21.0 7.9 Other personal services 0.3 0.9 141.2 12.1 Adjustments Less: Imputed bank service charge -1.6 -1.7 4.7 9.6 Plus: VAT and other taxes on products 7.0 7.4 23.4 6.4 ource: Sational Institute of Statistics data. 2.3 Gross fixed capital formation has risen steadily as a proportion o f GDP since 1996 (see Appendix 1: Figure A2.1). Since GDP growth rates have fallen since 2000, this 6 implies that the productivity o f gross investment has declined in recent years.5 The composition o f gross investment as between the public and private sectors has also changed over time. The share o f public investment fell steadily between 1997 and 2003 before risingin2004 and 2005. The rising share o fprivate investment from the late 1990s was a result of the government's policies o f extensive privatisation and economic liberalisation. 2.4 The fiscal performance has improved over the last five years, with revenue collection growing to around 13% o f GDP in 2006.6 The domestic fiscal deficit has widened from around 2% o f GDP in 2001 to 6% in 2006.7 Priority expenditure, which allocates resources to pro-poor needs', has increased over the past five years. Rwanda has also benefited from both the Heavily IndebtedPoor Country (HIPC) and Multilateral Debt Relief (MDR) initiatives resulting in a sustainable debt position, in which the net present value o f debt to export ratio i s less than 60%. 2.5 Rwanda has experienced strong trade performance with exports growing at an average o f 12.5 YO per year since 2001 (Appendix Figure 2). Rwanda's exports reached an estimated US$152 million in 2006, more than twice the receipts generated in 2002. Coffee, tourism and tea have fuelled this growth, accounting for 60% o f the 2005 export numbers. Besides private Sector mobilisation, an important driver o f export growth has been the restructuring o f front agencies (OCIR-Cafk, OCIR-Thk, ORTPN), RIEPA (Rwanda Investment and Export Promotion Agency) and BRD.While this performance i s short o f desired targets, it provides evidence that Rwanda can generate growth when informed choices and timely action are made on specific export industries. 2.6 Due to the high capital requirements for Rwanda's development, however, import growth has been out stripping that for exports with an average increase o f 15 % over the past five years. Therefore, we have seen a widening o f the trade deficit as a percentage o f GDP from 8 % in 2001 to 12 % in 2006. Rwandan economic growth and development depends on the diversification o f its export product base in addition to the continuation o f strong growth inexports. 2.7 Although a non-traditional export sector for Rwanda, tourism has the potential to contribute significantly to the country's export base. Tourism receipts have exceeded expectations since the development o f the National Tourism Strategy and subsequent approval by Cabinet in2002. From a negligible base o f a less than US$5 million in2002, tourism receipts hit US$33 million in 2006 and are on track to exceed this figure in2007. Not only are there more international visitors coming to Rwanda, but spend per day i s also increasing, indicating a positive shift in Rwanda's base o f advantage from basic to advanced factors such as service and a full destination experience. 5Or that the incremental capital-output ratio has risen. 6National Institute o f Statistics Rwanda (NISR) GDP estimates. 7Revenue excluding grants minus current expenditure, domestically financed capital expenditure, and net lending, excluding external interest. Sourced from IMF(2007) MEFP Tables. 8There have, however, been concerns among the GoR and development partners that the present definition o f priority expenditure i s too broad and that a new classification o f expenditures thought to be more directly poverty-reducing should be instituted. 7 2.8 The slackening in GDP growth i s the result o f the expansion o f output in agriculture being constrained by several factors. Land is scarce and the use o f it i s constrained by the absence o f a well-defined land administration system and poor settlement patterns in rural areas. There is a need to contain the fragmentation and degradation o f further arable land as a result o f high pressure and soil erosion. The level o f technology i s low, infrastructure in rural areas i s inadequate and human and physical capital i s in short supply. As a result, agricultural productivity i s low which generates poor returns on private investment. 2.9 Much needs to be done to improve rural roads and energy to support growth, as corroborated by the Ubudehe survey, in which the roads network was identified as a top infrastructure priority. For example, the proportion o f roads in good condition has only risen from 4.7 to 6.4 and from 1.7 to 5% respectively, implying that large sections o f the population face immense transportation obstacles to bringproduce to markets, and more generally integrate into the national economy. The share o f public expenditure going to infrastructure i s lower than neighbouring countries. Moreover, energy remains very expensive in Rwanda, accounting for 14% o f all non-food expenditure, though the proportion i s higher for poorer households. The highcost o f energy results inalmost 80% o f the value o f fuel being obtained from biomass sources, such as firewood. 2.10 This situation is aggravated by continued rapid population growth resulting from an increase infertility combined with a decline ininfant mortality.' The ensuing rise inpopulation density has put pressure on the physical environment and induced labour migration between rural areas as well as from the countryside to the towns. A recent study found that `...the parts o f the country that are increasing their share o f the population are those that previously had a lower population density. Umutara and Kibungo, now in Eastern Province, had the smallest number o f people per square kilometre at the time o f the census (2002), and have experienced the greatest increase in population share; conversely, Ruhengeri, now largely inNorthern Province, and the City o f Kigali had high population density in 2002 and are now seeing a reduction in their share o f the overall population' (NISR, 2006). The positive association between population density and poverty incidence in Rwanda i s shown in Figure 2.1. These demographic changes are analysed insection 2.3 8 Figure 2.1 Poverty andpopulation density Jndicateurs de pression \ % Densitede popatationet pauvrete w& E I s Pait et taille de wowtation D r w t e de paputmon -- 2.I1 Natural population growth, together with ~ l i eincreased numbers o f returnees from neighbouring countries, has inevitably highlighted land administration and land use management issues as central areas o f concern for the ongoing land tenure and land use management reform process. Land reform that ensures effective administration, the rights and obligations o f land users, the introduction of legal and institutional mechanisms for land use management and dispute resolution all provide scope to improve the welfare of the poor and vulnerable groups. The new Organic Law on Land, inprinciple, strengthens women's rights to land. The redistribution o f land arising from private and state lands and pastures will likely have a positive impact on the poor. Furthermore, safeguards that provide alternative livelihood opportunities for the poor through land tenure regulation and options that encourage improved land management are being developed. 2.12 Ingeneral the proportion ofhouseholds ineach land size category has changed relatively little since 2000/01 (Figure 2.2). Two percent o f cultivating households do not own any land, so they rent, sharecrop or borrow land. Around half o f cultivating households (representing 3.6 million people in 2000/01 and 4.5 million in 2005/06) cultivate less than half a hectare. More than 60% o f households cultivate less than 0.7 ha o f land, and more than a quarter cultivate less than 0.2 ha. The standard o f living is strongly related to the size o f landholding, with those holding the least land generally being the poorest. There was a reduction in proportion o f landowners in the bottom consumption quintile and an increase inthe highest quintile. 9 Figure 2.2 holdings in 2000/01 (EICVl) and 2005/06 (EICV2) lessthan 0.2ha 0.2. to 0.7 Ha 0 7 to 5.0 Ha greaterthan 5ha Farm size category Source: MINECOFIN(2007b). 2.13 Increasing population density together with policy initiatives to improve access to agricultural technology has increased the use o f land-saving input inthe last five years. The EICV surveys show that the share o f cultivating households using organic or chemical fertiliser remains low overall (19%), but has doubled between 2000/01 and 2005/06. There has also been a substantial increase inthe share o f cultivating households that now purchase insecticide (25%) and seeds (71%). This holds for all quintile groups and all provinces (Appendix 1: Table A2.1). 2.14 By province, the largest increases in the numbers using fertiliser have been in Eastern Province (from a very low base) and Northern Province. A slightly higher proportion o f households use insecticides, but again the proportion o f households purchasing insecticides and fertiliser has more than doubled in most quintile groups and inall provinces except the City ofKigali and the Western region. There has also been a large increase in the number o f households in all quintiles and provinces purchasing sacks, packaging and similar items and this reflects the growth in the number o f producers selling some o f their output over the period. Ubudehe survey results suggest Rwandans place fertiliser and insecticide as top priorities for improving agriculture, followed by training and extension, anti-erosion and improved seeds. 10 2.15 Production o f food and cash crops increased considerably in2000-2005 (Figure 2.3). For wheat, rice, soybean and Irish potato, this was largely due to the expansion o f the area that is cultivated. Production growth for other major crops, such as maize, banana, sweet potato, vegetables and fruits, i s probably due to improved yields. Crop yields have generally increased but remain below world averages and, except for a few key staples (maize, sorghum and cassava), also remain below regional averages (Appendix 1: Table 2). There was a significant increase in the degree o f market engagement by producers: the share o f farmers reporting selling crops has increased, for all staple crops and fmit and vegetables and across all quintile groups. Figure 2.3 Increase in Cultivated Area (ha) and Yield (kg/ha), 2000-2005 (Average Percent change) 30 25 20 15 10 5 0 -$ %O\% Source: World Bank (2006). 2.16 Insome areas of agriculture, major progress was made, including strengthening o f exports, most impressively in coffee and horticulture (flowers, hiit and vegetables). There was an increase infully washed coffee from 48 tons to 3,000 tons per year between 2002 and 2006; exports o f horticulture increased some 2,750%; hides and skins exports increased from US$2.6 million to US$4.7 million. The challenge i s to extend such progress to food security crops such as sweet potatoes, beans, banana and cassava, through improved usage o f agricultural input. 2.17 The other major success story concerns livestock numbers, where the proportion o f households owning animals has increased from 60 to 71% between 2000/01 and 2005/06. This increase was reported across all income quintiles and provinces, though the middle quintile had the biggest proportionate increase and Eastern Province had the biggest cattle ownership. Livestock ownership varies by the gender o f the household head, with fewer female-headed households owning livestock than male-headed households. 11 2.18 Rising population density in rural areas has placed the physical environment under increasingstress. However, there is evidence o fwidespread and organised response to this threat o f environmental degradation. By way o f illustration, rural households are becoming increasingly involved in soil erosion control measures such as buildingradical terraces, particularly in the Northern and Western provinces o f the country, improving watershed management, and engaging inreforestationwork. In2005/06, 60% o f the rural population lived in communities that were engaged in reforestation activities, representing a large increase relative to 2000/01 for which the corresponding figure was 40% (Appendix 1: Table A2.3). For those that replanted, the average area planted also increased substantially from around four hectares per community in2000/01 to more than twelve hectares in 2005/06. The proportion o f communities that engaged inreforestation was biggest in Eastern Province, followed by Southern Province; the increase was smallest in Northern Province. The increases were o f similar magnitudes in all consumption quintiles. The increased involvement o f the rural population inreforestation i s consistent with the environmental priorities o f the Ubudehe survey which were ranked as follows: tree planting, anti-erosion measures, preventing the burning o f forests, education on the environment and caring for grazing areas. 2.19 Other initiatives to reduce environmental degradation include the widespread adoption o f improved cooking stoves inthe Western region to reduce domestic firewood consumption. Efforts have been made to rehabilitate critically degraded ecosystems such as the Rugezi wetland and Lake Kivu by planting land cover to protect wetlands against siltation. Measures have also been taken to improve the urban environment and Kigali has the reputation o fbeing one o f the cleanest cities inthe region. 2.2 Poverty has fallen, but needs to fall faster to meet the MDG and Vision 2020 targets The incidence o f consumption poverty has fallen in both rural and urban areas since 2000/01 (see Table 2.2)." The extreme poverty line represents the level o f expenditure neededto provide minimumfood requirements o f 2,100 kcalper adult per day. More than one-third o f the population i s unable to achieve this level o f consumption and consequently go hungry. The upper poverty line includes non-food requirementsand over half o f the population remains unable to provide for these basic needs. The average poor person's consumption is at about R WF 150 per day and has only increased by 2% in the past five years. Rates o f poverty reduction since 2000 have been modest and are not fast 10 EICV surveys collected detailed information on household consumption, including the consumption o f home produced items. This information i s used to quantify households' standard o f living inmonetary terms and is the basis for measuring consumption poverty. Households whose real expenditure per equivalent adult is calculated as being below the poverty line are defined as poor. People defined as poor at the upper poverty line consume less than RWF 250 per adult equivalent per day; those living inextreme poverty under the lower poverty line consume less than RWF 150. T o calculate the poverty incidence for each household, the total expenditure per annum was calculated and deflated by a regional price index for the relevant period to give real expenditure, and subsequently divided by an index o f household size to give real expenditure per equivalent adult. 12 enough to meet either the targets set in Vision 2020 or the MDGs. The total number of poor people has now increasedto five million. Over 90% ofpoor people still live inm a l areas. Table 2.2 Poverty headcount (share ofpopulation and number) Poverty headcount (share o f Numberofpoor (millions) population) EICV1 EICV2 EICV1 EICV2 Upperpoverty line Kigali 16.1% 13.o% 0.11 0.09 Other urban 46.5% 41.5% 0.29 0.36 Rural 66.1% 62.5% 4.43 4.93 National 60.4% 56.9% 4.82 5.38 Extreme poverty line Kigali 8.4% 6.3% 0.06 0.04 Other urban 28.5% 25.3% 0.18 0.22 Rural 45.7% 40.9% 3.06 3.23 National 41.3% 36.9% 3.30 3.49 Source: NISR (2006). 2.20 It is interesting to compare objective povertymeasures at the national level with subjective measures based on perceptions of poverty. One source of subjective information i s the Ubudehe survey, in which communities identified seven socioeconomic categories, into which households were asked to position themselves. The distribution of respondents by these categories i s presented in Table 2.3. Most people were in the umuhanya and umutindi categories, indicating they felt they were among the poorest. Vulnerable people were identified, in order o f greatest destitution, as widows, landless, sick, the elderly and child-headed households. Table 2.3 Own distribution ofpoor by categories Share o frespondents(%) Destitute Umuhanya 18.0 Poorest Urnutindi nvakuiva 52.5 13 Umutindi 9.8 Umukene 7.1 Utishoboye 4.8 umukenewifashije 1.1 Abandi 6.8 Total 1100.0 2.21 Major causes o f poverty identified by Ubudehe survey respondents were lack o f land, poor soils, unpredictable weather and lack of livestock (Table 2.4). Exit strategies out ofpoverty were identified as paid employment, commerce and livestock. Over half of the households sampled felt that their income or livelihood had not improved in the past three years. Principal activities to be undertaken in future Ubudehe work were identified inthe areasofas livestockrearing, agriculture, smallbusiness, water androads. Table2.4Major causes ofpoverty identi3ed Share o f respondents ("76) Lack o f land (Kutagira isambu) 49.5 Poor soils (Ubutaka butera) 10.9 Drought/weather (Izuba ryinshi) 8.7 Lack of livestock (Kutagira itungo) 6.5 Ignorance (Ubujiji) 4.3 Inadequate infrastructure (Ibikorwa remezo bidahagije) 3.O Inadequate technology (Ikoranahuhanga ridahagije) 1.7 Sickness (Uburwayi) 1.7 Polygamy (Ubuhavike) 1.2 Lack o f access to water (Kubura amazi) 1.1 Populationpressure (Ubwiyongere bw'abatuvage) 0.7 Others(1zindi) 10.6 Total 100.0 Source: MINECOFIN(2007a). 2.22 At the regional level, changes in poverty varied. The poverty headcount fell significantly in Eastern Province and declined by smaller amounts in Northern Province and in the City o f Kigali. However, poverty in Southern Province did not change significantly, which i s a cause for concern since the South i s now the poorest province (Figure 2.4 and Appendix 1: Table A2.4). Calculations show that 68% o f the total reduction o f poverty in the country was accounted for by poverty reduction in Eastern Province. 14 Figure 2.4 Changes in poverty at regional and national level (poor people as a % of the population) 80.0 70.0 60 0 50.0 40.0 30 0 20.0 10.0 0.0 Kigali Soufhern province Western province Noithern province Eastern province National /OEICV1IEIcq Source: NISR(2006). 2.23 A comparison o f consumption growth with rates of poverty reduction by province indicates significant differences in rates o f transmission o f growth to poverty reduction (Appendix 1: Figure A2.3). Rapid poverty reduction in Eastern Province i s mainly due to fast overall consumption growth (over 6% per annum). This may be for several reasons, including poor initial conditions due to the drought in 2000/01, the fast growth o f cereals over the period, trade with neighbouring countries and low population density. Poverty reduction in Northern Province has been high despite limited growth (1% per annum). Poverty reduction in Southern Province has been marginal or negative despite strong growth (4% per annum). Growth didnot benefit the poor there. 2.24 Inequality, as measured by the Gini coefficient,'' rose from an already large 0.47 to 0.51 over the period. This i s very high by international standards: Kenya i s the only country in the East African Community to have higher inequality (Figure 2.5). The pattern o f inequality change varied by location, rising inrural areas and falling inurban. 'IThe Gini Coefficient measures how concentrated incomes are among the population o f an economy: the higher the Gini, the more concentrated incomes are among a few people. The Gini ranges between 0 (indicating income i s distributed equally between all people) and 1 (indicating all income inthe economy accrues to one person). 15 In Southern Province, there was a surge in inequality: consumption growth was driven entirely by rising incomes o f the rich, while real incomes o f the poorest 60% o f the population fell (Appendix 1: FigureA2.4). Figure 2.5 Gini coefficient of inequality in the African context Highinequality 0.55 0.50 0.45 irce: World Bank PovcalNet data base. 2.25 An increase in productive employment is the main transmission mechanism linking economic growth to reduced poverty, so it is important to examine recent trends in the Rwandan labour market. An estimated 600,000 new jobs were created between 2000101 and 2005/06. There i s also rapid growth innon-farm paid employment, with an increase o f an estimated 200,000 new jobs created, out o f a total o f 480,000 such jobs. The share o f the labour force working in formal employment increased from 5% to 10% over the same period. The share o f the labour force now working in the monetised economy, receiving wage payments or cash income, was 26% in2005/06 or an estimated 1.25 million people o f working age between 15 and 70. Young people and women more often perform unpaid work than men. 2.26 There has been diversification o f household income sources as the proportion o f the employed labour force engaged in agricultural occupations fell by 9% nationally to 80% between 2000/01 and 2005/06, with most o f the decline occurring among men. The domestic service and retail trade sectors have absorbed most o f these workers. 2.27 However, the situation analysis has identified skills challenges in all sectors o f the economy: modern agriculture requires professional and technical expertise associated 16 with extension services; manufacturing and services need a variety o f technical expertise; and a modem Public Sector requires the capacity to lead the transformation envisaged in Rwanda's Vision 2020. 2.28 According to the EICV results, levels o f declared unemployment12 are very low inRwanda, but under-employment is high.Itis particularly evident infarmingjobs, with independent farm workers and their families spendingonly three or four hours a day on their work, and those working in waged farm jobs working four to five hours per day on average. This indicates scope for increasing labour productivity inthe Farming Sector. 2.29 Evidence from the EICV survey shows that the incidence o f poverty i s highest inhouseholds whose mainsource ofincome is agriculturalwage labour. In2005/06, 91% o f such households lived below the poverty line which i s a similar proportion to that in 2000/01. Households which depend on combining self-employment in agriculture with agricultural wage labour are not much better off, as 82% o f this group live in poverty. This is a cause for concern because the proportion o f individuals aged 15 and above whose main job i s agricultural wage labour doubled from 4% in 2000/01 to 8% in 2005/06. Such a development reflects the acute shortage o f land in many areas and the lack o f rural non-farm employment opportunities. This occupational group is likely to continue increasingits share o fthe agricultural labour force inthe mediumterm. 2.30 The most deprivedsubgroup o fthose who dependon agriculturalwage labour is household heads and spouses who have worked inthesejobs for longperiods. Nearly half these individuals (41%), which include many widows, are among the poorest 20% o f the EICV2 sample. They constitute the core o f extreme poverty in Rwanda. By contrast, orphans are almost twice as likely to be inthe wealthiest quintile as people under the age o f 21 who have one or bothparents still alive. 2.31 Vulnerable households (headed by women, widows and children) represent 43% o f all households (against 51% five years ago) and are concentrated in rural areas (Appendix 1: Table A2.5). Poverty levels among these vulnerable groups fell, showing some support for the effectiveness o f policies designed to reach the most vulnerable in society. However, poverty among vulnerable households i s around 60% and higher than average, indicating that vulnerability remains a serious concern. 2.32 According to the Comprehensive Food Security and Vulnerability Analysis, 52% o f households are food insecure or vulnerable (NISR and World Food Programme, 2006). Food insecurity is found all over the country but tends to be concentrated in the Western and Southern provinces (Figure 2.6). It i s highest among agricultural labourers and those with `marginal livelihoods' including those dependent on social transfers and female-headed households. l2 Defined as those members o f the labour force without work inthe monthbefore the EICV survey. 17 Figure 2.6 Food insecurity (96 of food insecure households byfood economy zone 1Q- 16- 23 - 26 - 31 - 36 - Source: NISR and World FoodProgramme (2006). 2.3 Key indicators show that health has improved substantially, but inequalities in health outcomespersist. 2.33 Good progress was made in improving the health status o f the general population between 2000 and 2005. The infant mortality rate (IMR) declined by 19.6%, the under-five mortality rate (USMR) fell by 22.4% and the maternal mortality rate (MMR)decreasedby 29.9% (Table 2.5). However, the IMRandU5MRare now at 1992 1eve1s.l~ Table 2.5 Childhood mortality (per 1,000 live births) and MMR (per 100,000 births) Source: NISR(2005). Note: *data not available. 131992 is the date of the earliest Demographical HealthSurvey (DHS). The MMR in2005 cannot be compared to that in 1992, owing to a change inthe DHS methodology in2000. 18 2.34 There are, however, large differentials inhealth outcomes across Rwanda. Rural rates o f mortality remain over one and a half times those in urban areas and the gap has not narrowed over time. U5MR is highest in Eastern Province at nearly one-in-four children (233/1,000) and lowest in City o f Kigali at one-in-eight children (124 in 1,000). Southern, Western and Northern provinces have similar rates o f mortality (around 170 in 1,000). 2.35 Furthermore, there exist large variations inthe IMR and the U5MRbetweenthe lowest and highest wealth quintiles o f the population. The infant mortality rate i s 56% higher and the under-five mortality rate i s 73% higher in the poorest quintile compared with the richest quintile. Narrowing this gap requires integrated and special policy measures. 2.36 As regards reproductive health, the total fertility rate (TFR) rose from 5.8 children per woman in2000 to 6.1 children in2005. This level o f fertility i s much higher than any o f the fertility assumptions used for population projections in Rwanda.14 The TFR o f 6.1 maybe compared to women's desired fertility level o f4.3 children and men's desired fertility o f 4.0. The gap between actual and desired fertility suggests an unmet demandfor family planning. This is confirmedby an increase between 2000 and 2005 in the proportion o f married women expressing a need for contraception, while the proportion o fwomen indicating that they wanted no more children rose from 33% to 42% over the same period. The use o f modern contraceptive technology increased from 4% to 10% among married women between 2000 and 2005, but it remains below the 1992 level of 13%. 2.37 Among those married women not currently using contraception and not planning to use it inthe future, the views o f husbanddpartners on birth control were less important than the women's own preferences, including opposition based on religious conviction. However, it i s encouraging that 59% o f couples included in the DHS survey have the same opinion and approve o f family planning. Family planning outreach programmes need to be improved as only 3% o f women who are not using contraception were visited by a family planning field worker in the last 12 months and only 7% had discussed family planning at a health facility. 2.38 An examination o frecent trends inchildnutrition reveals amixedpicture. Three measures o f children's nutrition status are presented here. Children who experience chronic malnutrition are short for their age and suffer from stunting. This condition i s considered irreversible after the age o f two and i s therefore considered a measure o f long term nutritional status. The incidence o f stunting rose from 42 to 45% in 2000-2005 (Appendix 1: Table A2.7) and is highest in Northern Province (52%) followed by the West (47%). In contrast, nutritional indicators which are more sensitive to short term fluctuations (wasting and underweight) improved over the period (from 7% to 4% and from 25% to 23%, respectively). A possible reason for this could be that the increase in 1436me Recensement General D e L a PopulationEt D e L'habitat DuRwanda Au 15 Aout 2002; Perspectives Et Prospectives Demographiques. 19 under-five survival means that stunted children who would previously have died are now recorded inthe sample. 2.39 Access to, and use o f health and health-related services has improved in some areas, but not in others. 75% o f people now live within 5 km o f a health centre and 56% o f nurses are inrural areas. Improved access i s reflected inprogress inmaternal and child health care. For example, 95% o f women o f reproductive age inRwanda who have ever been pregnant received antenatal care during their last pregnancy. But needs remain very high (for example, less than 50% of health centres fulfil staffing requirements) and are expandingfast due to rapidpopulationgrowth. 2.40 Immunisation coverage has stalled since 2000, with the percentage o f children receiving all vaccines remaining at 75%, though falling in urban areas (Appendix 1: Table A2.8). Sustained sensitisation campaigns in the rural areas may explain why rural rates o f immunisation are now higher than urban. 2.41 HIV prevalence is estimated at 3% o f adults. A national campaign was conducted to reduce perceptions about the stigma o f HIV and the accompanying discrimination and there are now 234 health centres with Voluntary Counselling and Testing (VCT), and treatment o f PLHIV has increased (72% o f pregnant PLHIV are estimated to receive a complete course o f ARVs). However, concern remains in several areas including: low condom utilisation among youth and groups at higher risk o f HIV exposure, the rural versus urban ratio o f HIV prevalence and increasing transmission amongst married couples and the cultural norms associated with this. Thus, Rwandamust strive to take the necessary precautionary steps now so that increasing rates o f infection do not erode the impressive gains made inthe last five years. 2.42 Over 80% o f diseases that afflict Rwandans are waterborne, so access to safe water i s a precondition for improving environmental and personal health. The number o f people with access to safe water increased between 2000 and 2005, but there was no change in the proportion o f households having access to safe water (64%), and nor was there any reduction in the average distance a household had to travel to fetch safe water (0.5 km). The latter i s an important indirect indicator o f women's welfare since it i s usually women who collect water for the household. The EICV2 survey found that, o f all public services, Rwandans are least satisfied with access to drinking water (only 50% express satisfaction), while the results o f the Ubudehe survey suggest Rwandans would rank water access as highest priority in infrastructure services (followed by roads, health, schools and electricity). 2.43 All quintiles reported an increase in the proportion o f households which consulted a medical practitioner between 2000 and 2005. Nevertheless, inequalities in access to health care remain. Of those individuals reporting themselves as illin EICV2, 20% o f the poorest consumption quintile saw a medical practitioner, compared with 43% o f those in the highest quintile. One factor that contributes to this difference is the proximity o f medical facilities. People in the lowest quintile live an average o f 15 minutes further away from the nearest health care centre than those in the highest 20 quintile. Similarly, poor people live an hour's walk further from the nearest district hospital than those inthe highest quintile. 2.44 Government efforts to extend health insurance coverage are bearing fruit with 38% o f the EICV2 sample included in mutual insurance schemes and a further 5% covered by other forms o f insurance. Users' evaluation o f health services appears favourable with 77% o f EICV2 user-respondents declaring they were satisfied with their nearest health care centre and 74% registering satisfaction with their district hospital. Similar results emerge from the Ubudehe survey where 60% o f respondents considered the mutual insurance scheme to be a success and 52% considered that health service delivery had greatly improved. 2.45 Improvements inthe Health Sector were assisted by a strong strategic plan from early in the PRSP period with careful targeting o f all groups o f the population, for example through the roll out o f the mutuelles health insurance scheme. However, donor alignment has remained a challenge throughout. 2.4 Access to secondary education lags behind primary, but tackling quality aspects of primary education are also a highpriority 2.46 Progress inprimary education has been strong. An advanced strategic plan and strong donor alignment appear to be critical success factors inthis sector. 2.47 As indicated in the ETCV surveys, the net primary enrolment rate increased from 74% to 86% between 2000/01 and 2005/06 (Appendix 1: Table 9); the Ministry o f Education's (MINEDUC) management information system data reports an increase innet primary enrolment from 73% to 95%15. The improvement has been seen in both urban and rural areas. Thus, the GoR is on track to achieve universal primary enrolment by 2015. This progress has been made with only small increases in the total number o f teachers, primary schools and classrooms, and i s largely due to the removal o f tuition fees. In addition, the number o f qualified primary school teachers rose by 40% over this period, which suggests that an improvement inthe quality o f education may have played a role. Indeed, conipletion and repetitionrates both improved over the period, to 42% and 17% respectively (Ministryo f Education Management Information System data). 2.48 Gender parity in net primary enrolment had already been achieved by 2000/01 and now the rate is slightly higher for girls (87%) than for boys (85%). Thus, by 2005, Rwanda has achieved the Education for All Goal o f eliminating gender disparities in primary education in terms o f attendance. However, girls are lagging behind boys in terms o f completion rates and on exam scores. Gender disparities emerge after the third grade, as well as in upper secondary schooling and higher education. The Education for 15 The difference between these data and EICV are due to methodology: MINEDUC use official projections o f population census data from NISR as the denominator in the net enrolment rate calculation. Population growth may well have been higher than projected in these estimates. When NISR revise their populationprojections upwards the model can be updated accordingly. 21 All Goal also emphasises the need not only for girls to be present in school, but also for attention to be paid to their needs inrelation to teaching and learning practices, curricula and the safety o f the school environment. The girls' education policy includes a school campaign to encourage girls' performance in school as well as remedial classes during vacations. 2.49 Both EICV survey results show that primary enrolment rates increase with household income, so large disparities in school attendance still exist across the income distribution. In the richest consumption quintile, 92% o f primary-age students attend primary school, as compared to 79% o f those inthe lowest quintile. However, this gap o f 13 percentage points is smaller than the 19% gap observed in2000/01. This indicates that enrolment rates have risen faster among students inthe lowest income group than among those inthe highest income group. 2.50 Children o f primary age not living with a relative and not formally the ward o f the household head are the least likely to go to primary school. Full orphans, who have lost both parents, have a lower enrolment rate than children who have at least one parent alive. This finding presents a puzzle to policy-makers since it was shown previously that full orphans are most likely to be found living inthe wealthiest households. The special education policy and strategy will aim to improve primary enrolment among orphans and other vulnerable groups. 2.51 There i s little difference in primary enrolment between children who have one or both parents still living. Membership o f a household headed by a female, including widows, does not reduce the likelihood o f enrolment. However, more research i s needed to determine whether girls and boys from female-headed households drop out sooner and perform less well. 2.52 Satisfaction with primary schools among households who use them is high. Almost four out o f every five households are satisfied with the service they provide, and one-third reported observing an improvement in the twelve months preceding the EICV2 survey. These findings are confirmed by the results o f the Ubudehe survey inwhich 70% o f respondents considered that the delivery o f primary education had improved greatly in the last three years. Educationalpriorities identified by Ubudehewere ranked as follows: more classrooms, more kindergarten schools, more qualified teachers, higher salaries for teachers and access to adult education. Citizen Report Cards reported satisfaction with primary education, but also pointed to serious problems with teacher absenteeism. This needs to be addressed to improve further repetition and drop-out rates. Specifically, more research i s needed to determine trends in school leaving for girls and boys every year from grade 1 to grade 6, and the reasons for school leaving for each gender. 2.53 A priority objective o f Rwanda's recent education policy has been to increase secondary school enrolment, so that all children complete nine years o f basic education: six years at primary school plus three years at lower secondary level (tronc commun). This is critical for enabling the country to achieve its goal o f becoming a knowledge- based and technology-driven society. No school fees are charged at state primary schools 22 and this policy was recently extended to the first three years o f secondary school. The effects o f this policy change are not seen in the EICV2 data because the survey was carried out before secondary school fees were abolished. 2.54 Only a small fiaction o f children enter or complete secondary education (Appendix 1: Table A2.9). In order to achieve its educational objectives at secondary level, the GoR increased the number o fteachers by 40%, the number o f qualified teachers by 45% and the number o f schools by 47% between 2000/01 and 2005/06. Expansion at the tvonc commun level has been mostly through the Public Sector, whereas at upper secondary level there has been a strong component o f growth among the providers o f private schooling. The effect o f this expansion on school attendance has been modest. Over the same period, net secondary school enrolment rose from 7 to 10%. The rate i s now slightly higher for boys (10.6%) than for girls (9.5%), which reverses the situation observed in2000/01. It i s strikingthat the increased use o f qualified teachers (which may proxy for improved educational quality) had little effect on attendance. This may be due to the slow growth o f classrooms andbecause at the time o f the EICV2 survey, secondary schools were still charging enrolment fees for the tvonc commun. 2.55 The disparity in enrolment in secondary schooling between the poorest and richest households i s greater than at the primary level, and has increased over time. In 2005/06, net secondary school enrolment among children from the highest consumption quintile was ten times higher (26%) than among children fiom the lowest quintile (2.6%). The relatively low enrolment o f children not living with a relative and not formally the ward o f the household head, which was noted at primary level, is repeated at secondary level. Membership o f a female-headed or widow-headed household has little effect on enrolment rates. However, enrolment in secondary school among full orphans is much higher than for non-orphans. This reflects the greater probability o f full orphans being found inthe top consumption quintile where enrolment rates are highest. More research i s needed to understand the disparity between this finding and the finding that full orphans have a lower primary attendance rate. However, the recent introduction o f fee-free tvonc commun should help to address these disparities. 2.56 Only 57% o f user-households expressed satisfaction with secondary schools which i s substantially less than was the case among users o f primary schools (almost 80%). Furthermore, less than one-quarter o f user-households reported improvements in secondary schools during the previous twelve months (as compared with one-third for primary schools). 2.57 The 2003 census showed that there are only 0.5% o f graduates inthe population with the African average being 4%. However, the gross enrolment rate at tertiary level is 3.2%, which is regionally comparable. The number o f students in the eighteen higher learning institutions, six o f which are publicly funded, increased from 10,000 in 2002 to 27,787 in2005. But many o f the curriculum offerings are o f a generalist nature and are in the Arts and the Humanities, with insufficient numbers jn Science and Technology. Expenditure is therefore being prioritised in the budget for science laboratories and equipment in higher learning institutions. Over 4,000 computers were distributed to 23 institutions in 2002-2005.Initiatives to develop technology for rural areas were implemented, including the creation o f the Centre for Innovation and Technology Transfer (CITT) at the Kigali Institute o f Science and Technology (KIST). Most o f the universities have introduced ICT educational programmes at undergraduate and graduate levels and subscribe to ICT-led education. 2.58 EICV2 data shows that approximately two-thirds of people aged 15 and over declare themselves to be literate. The literacy rate reported by males (70%) i s higher than that o f females (60%), and literacy in Kigali (87%) i s much more widespread than in rural areas (73%). Moreover, the overall literacy rate for 15-24 year olds i s some twelve percentage points higher than that for the population as a whole, with the difference being particularly high in rural areas. This increase does indicate improved literacy rates over time. 2.5 Governancereforms are well advanced, but much remains to be done 2.59 Major progress was achieved in governance over the PRSP period, with constitutional reform, national presidential and legislative elections in 2003, local elections in 2006, roll-out o f gacaca community courts, improved relations with the international community and neighbouring countries, and significant reductions in reported crime. Several reforms were undertaken inpublic, corporate and civic sectors by introducing new laws and new governance institutions while revamping old ones to ensure effective service delivery, better financial management, democratic governance, and low corruption. The issue o f national security was nevertheless not addressed within the PRSP, and the independent evaluation highlighted the need for the EDPRS to be comprehensive inthis respect. 2.60 Both justice and gacaca courts in particular were viewed favourably in the Ubudehe survey: 72% o f respondents considered that the justice situation was good in their cell and 80% rated the performance o f courts as good or very good. A small percentage o f households cited corruption as a problem. Although it i s probably not widespread, it is noted as an area of intervention together with enhancing people's knowledge o f laws and educating local leaders on good governance practices. 2.61 The GoR has been very active in promoting soft infrastructure, that is, an enabling environment and an efficient regulatory framework for economic activities. Reforms have included a draft law on Insurance Supervision, International Standards on Accounting and Auditing, revised investment code and restructuring o f the Rwanda Investment Promotion Agency (RIPA) into the Rwanda Investment and Export Promotion Agency (RIEPA) in 2005. The privatisation Secretariat established in 2005 identified more than 100 companies for privatisation. As o f the end o f 2006, 70 enterprises hadbeen privatised and fourteen were inthe process o fprivatisation. 2.62 Rwanda has ratified or adopted a significant number o f key international standards and codes in corporate governance, including the NEPAD Framework Document (200l), Principles o f Corporate Governance (Organisation for Economic 24 Cooperation and Development, and Commonwealth), and Codes on Industrial and Environmental Safety andHygiene o fthe World Health Organisation. 2.63 Progress was seen in terms o f improved Public Financial Management (PFM). The Organic Budget Law (OBL) was gazetted in September 2006, but capacity building i s required to ensure that the law is effectively implemented. In early 2007, the Government o f Rwanda, with the assistance o f the international auditing firm Price Waterhouse Coopers, produced the country's first set o f consolidated accounts in line with constitutional requirements. The GoR is currently developing the capacity o f the Accountant-General's office and the Finance Departments o f different budget agencies, so that it i s able to produce final accounts insubsequent years. A quarterly cash flow plan system was adopted inJanuary 2006 and this sets the spendinglimit o f budget agencies. A Single Treasury Account has been established and all government agencies are subject to a system o f zero balance drawing bank accounts. All dormant government accounts (including those o f districts) have been closed, both in central and commercial banks. In order to build capacity for public accounting and internal audits, training began in 2006 and a first set o fprofessional examinations took place, with 218 candidates on Accredited Certified Chartered Accountants (ACCA) Part 1. 2.64 The PRSP period also saw progress on decentralisation, but with fiscal decentralisation moving more slowly than the institutional framework. Recently, the process has moved more rapidly, with the revision or endorsement o f laws and policies related to decentralisation and the establishment o f the Community Development Fund (CDF) in 2002 to facilitate the flow o f funds from the centre to local governments. Transfers increased from 2.7 billion RWF in 2003/04 to 8.4 billion in 2005/06 although they were still below target). However, local governments' human resources and their leadership in the planning process need improvement, as well as information sharing mechanisms between central and local levels. 2.65 The new constitution has provided a framework for representation and participation o f citizens, bringing into existence key institutions including the two chambers of Parliament, an independentjudiciary, the Prosecutor General's Office, the National Electoral Commission, the Office o f the Ombudsman and the Office o f the Auditor-General, among others. 2.66 Regarding citizen participation, empowerment, transparency and accountability, the new constitution has provided a framework for representation and participation o f citizens in the district planning process. Several mechanisms to promote citizen empowerment, voice and accountability have been adopted (Figure 2.7). Studies to assess the effectiveness o f these various mechanisms indicate the need for harmonising these interventionswhile strengtheningtheir capacity. These mechanisms can be classified into three broad categories. There are mechanisms to promote the national voice by establishing accountability links between firstly, the citizens and national policy makers and secondly, between the citizens and local government officials. Thirdly, mechanisms to assist citizens to demand good service from service providers are being put forward. These mechanisms are complemented by a contractual performance approach between 25 services providers and local governments or national policy-makers. Furthermore, the accountability links between local governments and national policy-makers work through inspections, audits and imihigo. Figure 2.7Frameworkfor decentralised accountability Contractual education,tender procedures),JADF Source: MINALOC (2006). 2.67 At the national level, citizens participate through parliamentary elections, opinion polls and town meetings. Accountability is enforced through an independent judiciary, the National Electoral Commission, the Office o f the Ombudsman and the Auditor General's office. A number of mechanisms have been strengthened to promote accountability links between citizens and local governments, including umudugu meetings, social audits, ubudehe participatory programmes, abunzi mediators, service satisfaction surveys, imihigo reviews, debates on radio and television, the Joint Action Development Forum (JADF), and Youth and Women's Councils. The PRSP did not specifically target the relationship o f accountability between service providers and citizens, although the creation o f the Office of the Ombudsman i s important inthis regard (especially with regard to fighting corruption) and piloting o f citizen report cards offer a potential entry point. While the piloting o f citizen report cards has been rather labour intensive, this tool for assessing the performance o f service providers will become easier to use as assessmentsbecome regularised and the data can be fed into district information systems (once such systems are established). Other participatory management and monitoring activities include Mutuelles de Santk Committees, Parents-Teachers Associations (PTAs), Water Committees and Management Boards inhospitals. 2.68 In addition to this decentralised accountability framework, good governance is further strengthened by on-going improvements in at least two main areas: partnerships betweenpublic, private and civil sectors andjoint accountability arrangements to monitor and evaluate progress in good governance. Partnerships betweenpublic, private and civil sectors follow several ongoing initiatives. At local level these initiatives include the 26 JADF while, at national level, the Joint Governance Framework has been established to enable improved efficiency in joint planning, resource mobilisation, monitoring and evaluation o f governance. The twinningo fRwanda's institutions with institutions inother countries (jumelage) has become another area o f remarkable progress and will need further strengthening during the course o f the EDPRS.Finally, monitoring and evaluation of progress in good governance i s done through independent evaluations and Joint Governance Assessments carried out through the Millennium Challenge Corporation (MCC) Threshold Programme and the Joint Governance Framework. In addition, independent think tanks and institutions to conduct regular assessments on governance have been created. These include the Rwanda Governance Advisory Council and the Institute for Strategic Policy Analysis. Duringthe course o f the EDPRS, these institutions will require capacitybuildinginorder to become fully operational and effective. 2.69 Participation o f civil society in designing, implementing and monitoring the PRSP remains to be strengthened. A policy on civil society, partly addressing this issue, has been recently drafted. At national level, several initiatives, such as the Joint Governance Framework, the Millennium Challenge Corporation and the creation o f independent think tanks, are underway to improve harmonisation with regard to the assessment o f governance inRwanda. Free political competition and the independence o f the media and civil society have been reinforced through several mechanisms including the establishment o f a political party forum and o f the Rwanda Civil Society Platform. These will also continue serving the promotion o f effective partnerships between public, private sector and civil society through, among others, Joint Action Development Forums at local level and twinning programmes. 2.70 Social Protection was not a strategic area identified under the first PRSP, and has suffered from a lack o f strategic planning, a consolidated budget and a monitoring framework. Despite this, it i s estimated that between 7 and 10% o f the national budget has beenallocated to social protection related programmes over the period (e.g. funds for genocide survivors, people with disabilities) which specifically target the most vulnerable groups in Rwandan society (Social Protection Public Expenditure Review, 2006). The adoption o f a Social ProtectionPolicy at the end o f 2005 was an important step, but rapid development o f a strategic plan i s now needed. Transfers in cash and kind to vulnerable groups should be mapped and resources must be better targeted. 2.71 There has been progress on gender equality, as indicated by both girls' primary school enrolments and women's representation in parliament, where Rwanda has the highest proportion o f female parliamentarians in the world (49%). However, much remains to be done. Much violence against women, such as rape and domestic assault, goes unreported and hence unpunished. And there remain problems with the Land Law: women who are not legally married have no legal entitlement to their husband's land. Efforts by local communities with regard to encouraging couples to legalise their marriages are yielding fruits through group marriage ceremonies. The pending Violence against Women Law will need support for its implementation, particularly local mechanisms to protect women who report their husbands. 27 2.72 At the regional level, Rwanda participated in the negotiation and implementation o f peace agreements. The country also played a commendable role inthe international conference on the Great Lakes Region, and contributed to African Union and UnitedNations peace-keeping missions. This has ledto improved peace, security and stability in the region, while also improving the image o f Rwanda. These gains need to be consolidated in order to create an enabling regional and international environment for the implementationo fthe EDPRS. 2.6 Implicationsfor the EDPRS 2.73 Improvements have been seen in a number o f important areas. These include a decline in income poverty and improvements in the welfare o f some vulnerable groups. Good progress has been made in human development (health and education), but better targeting i s required. A higher proportion o f people have been able to find jobs outside the Agricultural Sector. However, faster growth inthe productive sectors, particularly in agriculture, i s still needed. The role o f the Private Sector should be better supported with various incentives to boost the economy. 2.74 Lessons from the evaluation o f the PRSP (2002-2005) suggest that the principal problems in the Public Sector relate to the implementation o f policy. For example, fertiliser needs were identified as a priority and, even though resources existed, targets were not met. Employment creation was also acknowledged as a priority, but was not sufficiently pursued. Sectors knew what to do, but were less clear as to how to do it and tended to work inisolation from each other. 2.75 This review o f Rwanda's recent socio-economic performance together with the lessons from the PRSP suggests four priorities for the EDPRS: 1. Increase economic growth by investing in infrastructure; promoting skills development and the Service Sector; mainstreaming Private Sector development and modernising agriculture by introducing improved land administration, land use management practices and adopting techniques to reduce soil erosion and 11. Slow .. enhance soil fertility. down population growth through reducing infant mortality; family planning and education outreach programmes, while also improving the quality o f ... healthcare and schooling, particularly for girls. 111 Tackle extreme poverty through improved food security and targeted schemes o f job creation and social protection. It i s particularly urgent to create new employment opportunities for young personsjust entering the labour market. iv, Ensure greater efficiency in poverty reduction through better policy implementation which includes enhanced coordination among sectors and between levels o f government; sharper prioritisation o f activities; better targeting o f services for the poor; widespread mobilisation o f the Private Sector; and the more effective use o f monitoring and evaluation mechanisms. 28 3 WHERE DOESRWANDAWANT TO BEIN2012? 3.1 The purpose o f this chapter is to outline the objectives which the country expects to achieve by the end o f the five-year EDPRS period. Defining these clear objectives i s the first step inthe elaboration o f a mediumterm development strategy. 3.2 It is useful to distinguish two sets o f policy objectives for Rwanda in 2012. Firstly, there are certain goals which are milestones on a longer journey. These include the Millennium Development Goals (MDGs) which have targets set for 2015, and the objectives o f Rwanda Vision 2020 which have targets set for 2020. Givena time path for achieving the MDGs, there will be an implicit set o f targets for 2012. However, since the EDPRS i s a mechanism for implementing Rwanda Vision 2020 in the medium term, there i s no separate set o f targets for Rwanda Vision 2020 in 2012. Secondly, there are the EDPRS goals themselves which constitute a destination in 2012. These goals include targets which differ from those o fRwanda Vision 2020 andthe MDGs. 3.1 Implicit targetsfor the Millennium Development Goals in 2012 3.3 The GoR has expressed its commitment to achieving the Millennium Development Goals. There are eight MDGs with 18 targets and 49 proposedindicatorsI6. Most o f the targets are set for 2015 against a baseline o f data gathered in 1990. 3.4 The MDGs fall into four groups. The first group includes targets defined as common levels o f performance across all countries by 2015. This i s the case for Goal 2 which refers to the achievement o f universal primary education for boys and girls, and Goal 3 which i s concerned with the elimination o f gender disparities in education. The second group i s composed o f targets defined as common proportional reductions in deprivation between 1990 and 2015 across all countries. These include halving the headcount ratio o f the consumption-poor (Goal l), the under-five mortality rate reducing by two-thirds (Goal 4) and improving maternal health (Goal 5). The third group contains targets defined as halting and reversing trends. Attaining the targets o f Goal 6 involves halting and reversing the spread o f HIV, malaria and tuberculosis by 2015. The fourth group is made up o f qualitative targets which relate to Goal 7. These are not targets in a technical sense, inthat they do not specify particular values which indicators should take by a specific date. 3.5 Rwanda's targets for the MDGs in 2015 are shown in Table 3.1 together with the implied targets for 201217. Projections for MDG target indicators in 2012 are also given with each indicator colour coded according to the likelihood o f the implied target for 2012 being reached. 16The eighth MDGrefers to the obligations o f donor partners and is omitted fiom this chapter. Assuming a linear time path from the base year to 2015. 29 r? N x cn 2m 2 '? N N t 12 7 m N N N 3 k ? ? N 10 3 9 a i 3 0 0 2 0 In d 2 2 d N In 3 0 m n?-. rr rr: *3 N I .3 a, -r - 00 0 ? 0 2 3 ? 9 m r- d d N x) N 3 d N d 4 3 m $ % .3 a, z s0 B Q\ a c d d N I m 00 0 0 4- 7 0 rr 0 vl - 0 --c 0 7 3 m rr '1 z- r- i 2 3 4 0 3 1 os N e, 5 0 - 0 n 3 % 2 rr 0m ? d i r- 0 0 0 m m in m % 0 3 0 9 N I--- - 0 3 0 3 0 in 0 hl 0 3 0 3 0 d 0 Q N m .9 d 8 N 3 N 3 3 I vr n 0 -4 m I 0 3 ? d 3 i 2 10 n m m - " ; i; t 3 + '9 N d n n 3.6 Table 3.1 indicates that Rwanda has already achieved certain o f the MDGs, such as gender equality inprimary school enrolment and reducing HIV prevalence, while the country is on track to attaining several other MDGtargets, such as preventing the rise o f malaria incidence. However, the targets for reducing consumption poverty, under-5 mortality rates and stuntingdue to child malnutrition look extremely challenging. 3.2 Targetsfor Rwanda Vision 2020 3.7 Rwanda's progress towards the targets o f Vision 2020 shows a similarly mixed picture to that o f the MDGs (see Table 3.1). The country i s on track for several indicators. These include the aggregate investment rate, the growth o f industry and services, the growth o f the urbanpopulation, the use o f chemical and organic fertilisers, literacy, life expectancy, and gender equality in tertiary education and in parliamentary representation. 3.8 However, performance has been much weaker in some other areas. Per capita income has not risen as fast as expected, and the 2020 target o fUS$900 now seems out o f reach. The national savings rate has fallen since 2000 and the number o f non-agricultural jobs i s less than half the target for 2010. Economic inequality has not decreased, and while secondary school enrolment has risen, it has reached only 25% o fthe 2010 target. 3.9 Given the highpriority assigned by Rwanda Vision 2020 to the development o f the ICT Sector, it i s a matter o f concern that not only were there no more professional and technical training centres in2006 than in2000, but that several o f the existing centres are not adequately equipped and fully operational. The admission rate to tertiary education i s also well below that required to create the knowledge base needed to accelerate the growth o f a skill-intensive Services Sector. O f greatest concern, i s the rise in the total fertility rate which implies that population growth is higher than planned. 3.3 Targetsfor the EDPRS in 2012 3.10 This review o fthe MDGandRwandaVision 2020 targets provides a context for presenting the EDPRS targets for 2012. They were set following extensive consultation with the sectors and those working on cross-cutting issues. A public expenditure scenario has been identified for the EDPRS and a corresponding set o f targets identified for each sector. Inthe EDPRS, total nominal government expenditure i s assumed to grow at 9.0% per annum between 2008 and 2012. Furthermore, the pattern o f public spending will change in2008 to benefit those sectors and sub-sectors most closely linked to the EDPRS priorities o f accelerating skill-driven growth and increasing employment. 3.11 At the sector level, the main beneficiaries are education (19.8% o f the total budget), health (9.2%), transport and TCT (7.2%), agriculture (6.9%), energy (6.1%) and water and sanitation (4.3%). A comparison between the sector shares i s given inChapter 6 (see Table 6.2). 35 3.3.1 Accelerate growth and poverty reduction 3.12 The annual GDP growth rate is planned to rise from 6.5% to 8.1% by 2012 (see Table 3.2). The exports growth i s scheduled to increase at 15% per annum compared to their current rate o f 10%. This accelerated pace o f growth will be made possible through a large increase inthe investmentrate which will rise from 15% o f GDP to 23% by 2012. Off-farm employment will increase to 30% by 2012 (as 20% o f the population reported non-agriculture as their main occupation inthe EICV2 survey). This will require creation o f approximately 600,000 new non-farm jobs by 2012 (out of a total o f approximately 1,000,000 newjobs inthe economy as a whole) over 2008-12. The effect o f this big push will be to reduce the share o f the population living in poverty from 57% to 46%, while the proportion o f those living inextreme poverty will fall from 37% to 24%. The share o f female-headed household members living in poverty will similarly decline from 60% to 48% by 2012. 3.3.2 Widen and strengthen the Financial Sector 3.13 In order to raise the investment rate by nearly 60% over five years, it will be necessary to widen and strengthen the Financial Sector in Rwanda. To this end, Private Sector credit (excluding UBPR and microfinance) i s planned to expand from 10% o f GDP in2007 to 15% in2012. At the same time, broad money as a share o f GDP, which measures financial depth, i s scheduled to rise from 20% to 22.5%. 3.3.3 Develop skills for a knowledge-based society 3.14 Inorder for Rwanda to achieve the structural economic change implied by the targets o f Vision 2020, the country must develop a wide range o f skills among the labour force ina relatively short space o f time. The current adult literacy rate is 65% o f the total population aged over 15 years (72% for males and 60% for females), up from 52% in 2000/01. The GoR commits to increasing literacy to 85% among men and 80% among women by 2012. Inprimary education, the average number o f pupils per teacher and per classroom i s scheduled to fall from 70:l to about 50:l between 2006 and 2012. This will help to reduce the rate o f double-shifting. The pupil classroom ratio i s also planned to fall to around 50:l by 2012. This should improve the learning environment in primary schools which inturn will allow the completion rate to double from 52% in2006 to 100% in2012. Irnproving educational outcomes at the primary level is a highpriority, and the target is that the proportion o f pupils who pass the final (year 6) exam with a pass mark o f above 50% will rise from 8.9% in2006 to 20% in2012. 3.15 At secondary level, the endorsed education plan targets a more gradual approach to gross enrolments, with an interim target for 2012 set at 30% for boys and girls (and 60% for 2020), while also ensuring that a higher proportion o f those who enrol finish this cycle o f their education. The completion rate for the tvonc commun is intended to double from 20% to 40%, while that for upper secondary i s planned to rise from 11% to 16%. These improvements in the coverage and quality o f primary and secondary schooling should increase the employability o f young persons entering the labour market 36 without any further educational qualifications. The Teacher Development and Management Policy will be critical to guide the targets for supply o f qualified teachers. 3.16 The gross enrolment rate in higher education i s due to increase from 3.2% to 4.5%, while quality will be enhanced by ensuring that the proportion o f teachers with appropriate qualifications inhigher education rises from less than 20% to 30%. 3.17 Expanding access to Technical and Vocational Education and Training (TVET) and ensuring existing centres are adequately equipped are o f strategic importance if Rwanda i s to become the ICT hub o f the region. Vocational training will be restructured to provide the appropriate instruments to achieve this. From the current graduate output level o f 8,250 from vocational training institutions, the total number o f graduates will reach 135,000 by 2012. Inorder to do this, instructors will be re-trained and new ones trained increasing their number to 300. Five regional vocational training centres will be established to coordinate training activities intheir respective geographical jurisdiction. 3.3.4 Promote science, technology and innovation for economic growth 3.18 Rwanda will have difficulty achieving either its poverty reduction or wealth creation objectives unless it embarks on a concerted effort to build science, technology and innovation capacity. It i s intended that, by 2012, 50% o fprimary school children will have access to one laptop per child, 100% o f primary schools will be equipped with a science corner which will promote fundamental information about science, and 70% o f secondary schools will have science laboratories to provide high quality, practical Science and Technology education. 3.19 Inhigher education the number of students enrolled in sciences is planned to increase from 21% to 30%. The proportion o f females enrolled i s intended to increase to 40% by 2012. The number o f Masters programmes in Science will increase from 80 student places per year to 200 by 2012, post-doctoral training for Ph.D. holders to 100per year and a regional scholarship programme will be established for training 500 students inRwanda from the countries involved inthe ConfederationofEast and Central African Football Associations (CECAFA) region. Research units in higher learning institutions will be reinforced with six Centres o f Excellence in Science and Technology established inthe six public institutions. Overall the number of scientists, engineers and researchers will haveincreased to 25 per 10,000 people. 3.3.5 Raise agricultural productivity and ensure food security 3.20 Agriculture accounts for over one-third o f GDP, but its average annual growth rate o f 4.8% in 2001-2006 was only half that registered in 1996-2000 (9.5%). Thus, it i s essential to increase agricultural productivity to ensure that Rwanda meets its growth target. To this end, it i s planned that the area to be protected against soil erosionwill rise from 40% o f the agricultural land area in2006 to 100% in2012. The area under irrigation will increase from 15,000 to 24,000 hectares, and o f this, the hillside area irrigated will expand from 130 hectares to 1,100 hectares. The area o f reclaimed marshland will 37 increase from 11,105 to 31,105 hectares. Agricultural intensification will be promoted with regard to both crop and livestock production. It is intended that the proportion o f rural households with livestock will rise from 71% to 85% and the main epidemic animal diseases will be eradicated (foot and mouth, contagious bovine pelurpneumonia and lampuskin diseases) or controlled (blackquarter, tuberculosis and brucellosis). Under the one cow programme, 501,572 households will be reached by 2012 from 3,500 households in 2006. The application o f inorganic mineral fertiliser will increase from 11% to 40%, and the use o f improved seedwill rise from 24% to 37%. 3.21 Basic food crop production i s scheduled to rise by 15% over the EDPRS period, while average energy intake will increase from 1,734 kcals to 2,100 kcals per persodday. The number o f farm households per extensionist i s planned to fall from 3,000 to 2,550 and the number o f farmer associations transformed into cooperatives will rise from 1,105 to 2,242. Research for development will generate at least 10 rural technologies and community innovation centres. The number o f farmers receiving agricultural credit per project will increase from 5,454 to 6,000, while total agricultural credit will rise from 3% to 7% o f all credit by 2012. 3.22 Rwanda's adoption o f an export-oriented growth strategy has implications for the Agricultural Sector which will seek to increase the unit value o f agricultural exports by improving quality and by producing new exportable products. The proportion o f tea graded as high quality will rise from 70% to 75%, while the proportion o f fully washed coffee production will increase from 10% to 100%. The export o f blue-wet hides and skins will expand from 3,183 tonnes (the figure in 2005) to 4,200 tonnes in 2012. The fraction of horticulture production exported will rise from 0.15% to 1.6%, while the area under sericulture will increase from 15 hectares to 3,000 hectares. The number o f farmers and farmers' cooperatives specialising inpriority commodity chains will treble from one to three per district and post-harvest infrastructure at national level will be increased as follows: modemmarkets (from 25 to 45), modem abattoirs (from 1to 2), storage capacity (from 100 to 670 units), ago-processing units (from 121 to 205) and cold storage units (from 1to 7). The number o f established research centers will increase from five to eight by 2012. The Rwanda Research Council will be established and the number o f researchers and technicians will respectively increase from 102 to 150 and from 65 to 300 by 2012. The budget execution rate o f the Ministry of Agriculture (MINAGRI)will rise from 90% to 96%. 3.3.6 Raise the contribution of manufacturing and services to economic development for sustainable growth 3.23 Existing manufacturing activities need to be revitalised by strengthening the drivers o f productivity, which are managerial efficiency, worker skills and the technological level o f production machinery. This will be achieved through the promotion o fBusiness Development Services. 3.24 Miningis an increasingly important source of export revenue for Rwanda. The targets inmining are to increase mineral exports by 250% from $US 38 million in2005 to 38 $US 106 millionby 2012, and increase employment from 25,000 to 37,000 o f which 20- 30% should be women. Rwanda's Hides & Skins Industry i s expected to multiply its exports receipts six times, reaching $12.6 million by 2012. Horticulture has also been identified as a priority export industry, as Rwanda is blessed with the natural climatic conditions necessary to win inhorticulture. Cumulative export receipts are forecasted for $25 million by 2010. 3.25 The case of tourism offers a model for the rest of the economy. Starting from a base of less than U S $5 million in2002, Rwanda's Tourism Sector is expected to reachU S $100 million in revenues by 2012, representing a compounded annual growth rate of over 4O%ls.An estimated cumulative 280,000 jobs will be created inthe process. 3.3.7 Managethe environmentand ensure optimalutilisationof natural resources 3.26 There are several environmental targets inthe EDPRS. Five critically degraded ecosystems will be mapped, assessed and rehabilitated from the current 50% to 80% in 2012 as part o f the Integrated Management o f Critical Ecosystems (IMCE) project. Rehabilitated ecosystems will contribute to an increase in hydro-electric power generation as in the case o f the Ntaruka station which i s presently operating below capacity due to a drastic decline in water levels within the Rugezi wetland. Restored wetlands will provide water for irrigation, and both wetlands and protected forest areas, such as Nyungwe, will promote income generation from tourism. Moreover, a land use and management master planwill be developed by 2008. 3.27 It is planned to increase the proportion o f protected areas for biodiversity preservation from 8% to 10% in 2012. Forest and agro-forest coverage i s scheduled to increase from 20% to 23% o f total surface land area, and annual wood consumption i s due to be reduced by 30% from the 2002 figure. Soil erosion and soil fertility decline will be reducedby 24% over the EDPRS period. Inmining, the targets are to increase mineral exports by 250% and increase employment from 25,000 to 37,000 o f which 20-30% o f those employed should be women. 3.3.8 Buildeconomic infrastructure 3.28 Infrastructure consists o f five sub-sectors: transport, energy, habitat, ICT and meteorology. In the transport sub-sector, the Ministry o f Infrastructure (MININFRA) plans to have trained 100 staff and to have started at least five major projects by 2012. The classified road network will be rehabilitated and maintained during the EDPRS, so that 31% o f the network is in good condition by 2012 and 75% o f district roads rehabilitated. Inthe energy sub-sector, 200,000 households will have access to electricity by 2012 compared to 70,000 households at present, and it is planned that power will be suppliedto 300 administrative centres and service delivery points, 1,000 schools, and 180 health centres. The total capacity will increase from the present 45MW to 130MW by l8"Rwanda Tourism Economic Impact Model", ORTPN, June 2002. 39 2012 mainly through the generation o f 50MW more o f hydro-electric power, while Lake Kivu methane gas reserves will come on stream and generate 25MW o f energy. The electricity coverage o f institutions providing social and administrative services will rise from 50% to 80% (1,000 primary schools, 180 health centres, and 300 office sectors). The government will create an enabling environment that can support companies servicing the Energy Sector and will train 300 professionals to ensure that the new generating capacity is adequately maintained. 3.29 Inthe areaofhabitat andpublic assets management, emphasiswill beputonthe planning and development o f improved rural and urban human settlements consistent with the contemplated sustainable land use and environment protection schemes. Eleven city master plans will be prepared (making thirteen in total) by 2012. 5,700 imidugudu sites will be constructed, in addition to the existing 5,486, and 10,000 hectares o f land provided with services for housing. Seven districts with the worst living conditions will be restructured and their inhabitants relocated to better houses endowed with basic services. Government institutions will be provided with adequate accommodation, in alignment with the needfor delivering quick andhighquality services. 3.30 Inthe ICT sub-sector, 300 telecentres for the whole country are scheduled andit i s planned that telecommunications access costs will fall from RWF 120 to RWF 60 per minute. As a result, it i s intended that access to communications services will rise from 4% to 12% by 2012. In the meteorology sub-sector, the number o f functioning weather stations will be increased from 4 to 150, so that by 2012, reliable weather forecasting i s available to the whole country. In addition, capacity-building o f meteorologists will be enhanced so that they will be able to provide meteorological services in support o f sustainable development. In this respect, MININFRA plans to have 75 well trained meteorological personnel. 3.3.9 Improvehealthstatus and slow downpopulationgrowth 3.31 Several targets o f the Health Sector, such as reducing infant and maternal mortality, are covered by the MDGs or Rwanda Vision 2020. This section describes a summary set o f additional EDPRS targets drawn from the Health Sector logframe which are not included in Tables 3.1 or 3.2. Between 2008 and 2012, at the level o f health outcomes, it i s planned to reduce the total fertility rate from 6.1 to 4.5 children per woman, and to reduce HIV incidence among 15-24 year old men and women from 1% to 0.5%. The incidence o f chronic malnutrition (stunting) among the under-fives is planned to fall from 45% to 35%, while the prevalence o f anaemia among women aged 15- 49 is scheduled to decrease from 33% to 20%. 3.32 It is planned that the percentage o f the population living within one hour o f a functioning health centre will rise from 58% to 70%, and the proportion o f health centres and hospitals equipped to provide a comprehensive preventive and curative health care package covering family planning, nutrition and infectious diseases will increase from 45% to 70%. The proportion o f children sleeping under insecticide treated bed nets (ITNs) is planned to rise fi-om 16% to 90%, while the corresponding proportion for 40 pregnant women will increase from 20% to 90%. Chemioprophylaxis coverage o f pregnant women will rise from 6% to 94%. 3.33 The detection rate o f TB should increase from 45% to 65%, while the rate for those tested for HIV should rise from 60% to over 95%. The success rate for the treatment o f TB cases registered under Directly Observed Treatment Short Course (DOTS) should increase from 83% to 95%, while the success rate for treating multi-drug resistant-TB (MDR-TB) will rise from 60% to 70%. 3.34 As regards AIDS, the number o f health centres with integrated VCT and prevention o f mother to child transmission o f HIV (PMTCT) will rise from 234 to 433, while the proportion o f women accessing PMTCT programmes should increase from 28% to 50%. The targets for antiretroviral combination therapy coverage for those with advanced H N infection will rise from 55% to 80% for women, from 50% to 75% for men, and from 30% to 70% for children. 3.35 Child health will be improved by increasing the proportion o f health facilities implementing community Integrated Management o f Neonatal and Childhood Illnesses (IMNCI) programmes from 0 to 50% by 2012. Full immunisation coverage among children will increase from 61% to 85%. 3.36 Maternal health will be enhanced by increasing the proportion o f pregnant women who make at least four antenatal visits from 13% to 50%, while also ensuring that the percentage o f deliveries which take place in health centres rises from 28% to 75%. The proportion o f midwives assigned to rural areas will increase from 17% to 55%. The main family planning target i s to increase the proportion o f women in the 15-49 age group who use modern contraception; the target i s plannedto increase from 10% to 70%. 3.37 As for nutrition, the proportion of under-fives with anaemia is planned to fall from 56% to 35%, while the corresponding proportion for those underweight i s scheduled to decline from 23% to 14%. The percentage of women who are undernourished according to the Body Mass Index, i.e. BMI48.5, should fall from 20% to 13%. Environmental health and domestic hygiene will be improved by reducing the proportion o f households without access to safe drinking water from 19.5% to 5%, and the proportion without latrines from 5% to 0%. 3.38 Inorder to achieve these targets, institutional capacitymustbe strengthened and staffing levels increased at several levels. The proportion of health facilities which meet minimum staffing and equipment norms will rise from 30% to 75%. The number o f doctors per head o f population i s planned to increase from 1 in 50,000 to 1 in 20,000 by 2012. All these targets assume that the share o fhealth and health-related spending intotal public expenditure rises from 12% to 15% as per the Abuja Declaration and that per capita public health spending increases from US$11 to US$20 by 2012. 41 3.3.10 Improve water resources management and access to safe drinking water and sanitation 3.39 A high priority o f the EDPRS is to ensure sustainable and integrated water resources management and development (IWRM&D) for multipurpose use (energy production, irrigation, navigability). To this end, capacity will be developed and institutions will be built at national and trans-boundary levels, pilot sub-basin committees and Local Water Associations (LWAs) will be established in the Nyaborongo and Muvumba Basins, while IWRM&D governance and investment plans will be put inplace for the entire country by 2012. Underground and surface water master plans will also be implemented. 3.40 InChapter 2, it was shown from the EICV2 data that, although the numbers of people benefiting from access to safe water had increased, there had been no change in the proportion o f households having access to safe water between 2000 and 2005 (64%), and nor was there any reduction inthe average distance a household had to travel to fetch safe water (0.5 km). Duringthe EDPRS period, the sector aims to increase the proportion o f the population accessing safe water from 64% to 86%, and the proportion with sanitation services from 38% to 65%. It i s also planned to increase the proportion o f the rural population living within 500m o f an improved water source from 64% to 85%, and to raise the proportion o f the urban population residing within 200m o f an improved water source from 69% to 100%. The number o f boreholes with hand pumps which will be constructed or rehabilitated will rise from 120 to 350. As regards sanitation, the sector plans that the proportion o f schools with latrines complying with health norms will rise from 10% to SO%, and that the corresponding proportion for rural households will increase from 38% to 65%. To achieve these goals, the sector estimates that its share o f public spending must rise from 5.4% to 7%. 3.3.1 1 Integrate and extend social protection 3.41 The sector plans to extend coverage o f vulnerable persons by social safety nets from 12% to 20%, and to ensure that 75% o f stakeholders perceive these safety nets as successful. It i s planned that 38% o f vulnerable people graduating from livelihood enhancement schemes achieve economic independence, and that 80% o f stakeholders consider the schemes successful. 3.42 With regard to social insurance, it is planned that the entire target group among the employed and self-employed i s covered by the mutuelles de santk, while 15% o f the remaining population i s included in other insurance schemes. The proportion o f districts which undertake capacity-building in social protection should rise from 30% to 85%, while the corresponding proportion among sectors will increase from 20% to 85%. 3.43 Coordination among the different public and private agencies implementing social protection programmes will be enhanced by requiring all districts to supply evidence o f consultation and hamonisation among social protection providers in their District Development Plans (DDP) by 2012. Further targets include having 55% o f 42 sectors with at least two programmes for vulnerable groups managed and funded by community-based organisations (CBOs), non-governmental organisations (NGOs) and the Private Sector. Stakeholder satisfaction is included by requiringthat at least 75% o f stakeholders report that advocacy has led to a strengthening o f laws to protect the rights o f vulnerable groups. 3.44 With regard to monitoring and evaluation, it i s planned that MIS should be regularly used to support social protection policy-making and implementation in 100% o f the departments o f the Ministry o f Local Government, Community Development and Social Affairs (MINALOC), districts and sectors. Furthermore, 90% o f civil society organisations should be regularly evaluating their own and MINALOC's social protection activities by that date. 3.3.12 Promotedecentralisation,citizenparticipationand empowerment, transparencyand accountability 3.45 Implementation o f the EDPRS will occur largely at local level, so the targets set for decentralisation, citizen participation and empowerment, transparency and accountability are o f particular significance. Incontrast with most other sectors, many o f these targets are defined with respect to citizens' opinions. Thus, it i s intended that by 2012, 100% o f survey respondents will understand the policy o f decentralisation, express satisfaction and confidence in decentralised governance, and believe that the government i s accountable and responsive to people's needs. In addition, 95% o f interviewees should report that the level o f corruption and fraud is low or non-existent, 90% should believe that elections are free and fair, 80% should be satisfied with their participation in decision-making, 75% should express trust and confidence in government and 75% should believe that the media is free and independent. It i s also expected that Rwanda's position in international rankings o f governance indicators, such as those used by the World Bank's Governance Matters and Transparency International's Corruption Perceptions Index, will have improved. 3.46 By 2012, all national laws, by-laws and regulations are expected to conform fully to the decentralisation policy and to the principles o f good governance, while virtually everyone (95%) should be satisfiedwith service delivery and local development. At this date, 80% o f districts should be achieving a minimum of 80% o f their service delivery and sustainable local development targets, while 75% o f districts are expected to meet set benchmarks for mainstreaming cross-cutting issues, such as AIDS, gender, environment and social inclusion, intheir planning and budgeting. 3.47 Resource mobilisation by local government to fund capital projects i s encouraged by several targets. By 2012, 70% o f districts are expected to allocate at least 30% o f their spendingto the development budget, while 50% o f districts should fund half o ftheir spending from locally mobilised resources. 3.48 Local autonomy is to be preserved by setting a target for 2012 that all districts should be able to report low or null levels of interference by central government in 43 previously agreed DDPs and the MTEF unless there are exceptional circumstances or opportunities. By the same date, the share o f line ministry spending on service delivery which i s decentralised to local government should have risen from 50% to SO%, while from 2008 resources allocated via the CDF should increase by an increment o f 10% o f the previous year's domestic revenue. 3.49 Women's representation on local government councils should rise from 42% to 50%, while voter turn-out should increase from 89% to 95%. Participation in umuganda activities should rise by 50% as should the revenues generated by these activities. 3.50 With regard to public financial management, it is expected that by 2012 the proportion o f districts and sectors with mechanisms inplace for public reporting on their financial performance will have increased from 30% to 75%, while the corresponding figures for those reporting on their service delivery and sectoral activities will rise from 60% to 100%. By this date, the proportion o f local government entities meeting a basic level o f compliance with standard financial management rules, regulations and practices will have doubled from 50% to 100%. 3.51 Accountability will rise as by 2012, 80% o f districts will be using performance contracts, citizen report cards and community score cards. Furthermore, the proportion o f civil society organisations satisfied with the legal framework and their regulatory environment i s due to increase from 60% to SO%, while the correspondingpercentages o f CSOs satisfied with their level o f involvement insocio-economic development is planned to increase from 50% to 75%. 3.52 By 2012, all district, sector, cell and umudugudu leaders will have beentrained on unity and reconciliation and will have mainstreamed it intheir performance contracts. At this date, 10 MINALOC officials and 30 district officers will have beentrained inthe collection, analysis and dissemination o f information from a variety o f local sources. Socio-economic surveys will be conducted every two years in all districts to track progress inmeeting performance targets and contracts (imihigo). 3.3.13 Promotevibrant andprofessionalpublic andprivatemediato enhance citizens' voice and disseminationof publicinformation 3.53 The emergence o f an independent press and media will be encouraged by increasing the number o f journalists acquiring diplomas and certificates each year from 75 to 150, increasing the number o f training seminars for journalists in ethics from 4 to 20 per annum, increasing the number o f community radio stations from 3 to 10, and increasing the number o f regional information centres from 13 to 30. The proportion o f local leaders incharge o f information at cell and village (urnudugudu) levels to be trained annually will rise from 20% to 80%. 3.54 The strengthening o f media institutions by putting inplace one media centre in each district will facilitate open access to information on public affairs, decisions and opportunities, and facilitate campaigning for changes to legislation. Modem equipment 44 for journalistic work and media monitoring will be acquired. In addition, the use o f ICT in media enterprises is planned to increase from 30% to 80% and the number of media clubs in secondary schools will increase from 120to 360. 3.3.14 Support youth to participate in economic and social development 3.55 There is a lack o f baseline data for target setting with regard to youth and it is likely that targets will be set based on expectations rather than information. There i s also no clear picture of the number o f support groups and institutions for sport, youth and culture or the effectiveness o f the role they play. A baseline survey i s urgently required to establish the priorities o f youths, the range and effectiveness o f current support systems and the degree o f youth participation. This will be crucial for both the implementation and monitoring and evaluation processes to ensure resources are appropriately targeted. With regards to HIV/AIDS, the sector will focus on implementing HIV programmes to increase the condom utilisationrate among 15-24year olds from 25% to 30% for females and from 39% to 45% for males. Table 3.2 Targetsfor the EDPRSin 2012) Priority area Indicator Baseline Target 2006 2012 Growth andpoverty reduction Real GDP growth (%annual) 6.5 8.1 Export growth (% annual) 10 15 National investment (% o f GDP) 16.3 24.4 Share o fpopulation livinginpoverty (%) 57 46 Share o fpopulation living inextreme 37 24 poverty (%) Poverty incidence among people living in 60 48 female-headed households (%) Employment inagriculture (% reporting as 80 70 main occuDation) Widen and strengthen the Private Sector credit (% o f GDP) 10 15 Financial Sector Financial depth(broad money/GDP) 20 22.5 Develop skills Pupil/teacher ratio inprimary schools 70:1 47:1 Pupils/classroominprimary schools 70:1 52:1 Gross secondary school enrolment 10 30 Raise agriculturalproductivity % o f agricultural landprotected against soil 40 100 and ensure food security erosion Area under irrigation (hectares) 15,000 24,000 Use o f mineral fertiliser (kgs/ha) 11 40 Rural households with livestock (%) 71 85 Improve environmental Forestry coverage (%) 20 23.5 management 45 Reduction inannual wood consumption 8.9 6.2 (million cubic metres) Critically degraded ecosystems mapped, 50 80 assessedand rehabilitated (%) Buildinfrastructure Householdswith access to electricity 70,000 200,000 (number o f households) Electricity generation (offlon grid, MW) 45 130 ClassifiedRoadroadnetwork ingood 11 31 condition (%) ICT composite network coverage (%) 75 100 Improve health status and Infant mortality (deaths per 1,000 live 86 70 reduce slow down population births) growth Maternal mortality (deaths per 100,000 live 750 600 births) Population covered byhealth insurance 70 95 schemes (%) Women aged 15-45 usingmodern 10 70 contraceptive techniques (%) Incidenceo fHlV among 15-24year olds 1 0.5 (%I Total Fertility Rate (children per woman) 6.1 4.5 Increase access to safe Access to safe drinkingwater (% o f 64 86 drinking.water and sanitation uomlation) Strengthen governance, Share o fpopulation expressing 85 100 security and the rule o f law satisfactiodconfidence indecentralised governance ("A) 46 4 WHAT DOESRWANDADO TO GET THERE? 4.1 This chapter describes the three flagship programmes o f the EDPRS (i.e. Growth for Jobs and Exports, Vision 2020 Umurenge and Governance) to show how they are related to underlying policy priorities. This i s followed by a review o f other important cross-sectoral actions and programmes to achieve the EDPRS targets. All cross-cutting issues on gender, HIV/AIDS, the environment and social inclusion have been integrated into the sector reviews. 4.2 The flagship programmes serve as a means to prioritise actions by the GoR to progress towards the MDGs and Rwanda Vision 2020, facilitate communication, mobilise resources for development, and improve policy implementation through more co-ordinated interventions across sectors. They focus on areas o f inter-connected interventions by line ministries and their agencies that are necessary to achieve the national goals o f economic development and poverty reduction beyond the narrow ambit o f specific sectors. Thus, they provide an opportunity to make a difference compared to the impact o f the PRSP which showed the limitations o f isolated interventions. 4.3 Taken together, the flagship programmes propose a comprehensive agenda of economic growth favouring the poor, and underpinned by good governance. They also foster synergies between productive and social sectors in the EDPRS. Indeed, productive activities can hardly develop in the absence o f a healthy and educated population that involve women and youth, and support for the most vulnerable. 4.4 Not only do the flagship programmes emphasise the cross-sectoral aspects o f the nineteen sectors o f the EDPRS but also the inter-connectedness o f the flagships themselves. For instance, pro-poor growth in the Vision 2020 Umurenge Programme (VUP) takes into consideration the obstacles to growth identified inthe Growth flagship (i.e. lack o f skills, infrastructure, technology and finance) and provides client-based solutions adapted to the circumstances o f the poor in rural areas in order to accelerate poverty reduction. Whereas, the VUP focuses on specific geographic areas (Le. pilot imivenge), both the Growth and Governance flagships, as well as other important cross- sectoral actions and programmes (i.e. environment, water and sanitation, health and population, social protection, youth, and other cross-cutting issues), obviously cover the entire country. The VUP contains triggers to allow an orderly scaling-up to other imirenge upon successful completion o f the start-up phase. Both the Growth and VUP flagships foster improvements in agriculture productivity as well as manufacturing and service activities, through the imperative o f promoting off-farm employment opportunities. While both the Growth and W P flagships are expected to reduce poverty, the VUP focuses on the acceleration o f such reduction. Finally, the Governance flagship provides an essential anchor for pro-poor growth. Indeed, none o f the actions and interventions o f EDPRS can succeed without continued and strengthened good governance. 47 4.5 Sustainable development will require effective planning for poverty reduction. The EDPRS process has therefore placed particular emphasis on cross cutting issues, including social inclusion, HIV/AIDS, environment, gender and youth, in order that all sectors deliberately and actively include them intheir strategic planning. 4.6 The EDPRS cross-cutting issues have been integrated across the programmes. Gender is included because men and women experience the process o f development and the impact of policy indifferent ways. They may also have different needs and priorities. Although AIDS i s less prevalent inRwanda than inmany Sub-Saharan African countries, it still poses a potentially serious, systemic threat to economic growth and social development. Given the scarcity o f land in Rwanda, the country's dependence on the exploitation o f natural resources and its vulnerability to global climate change, assessing the environmental impact at the policy-making, implementation planning and monitoring and evaluation stages will be a key component o f the EDPRS. The economic and social dislocation o f the last two decades has compounded earlier problems o f marginality and social exclusion. For this reason, social inclusion is treated as a cross-cutting issue (CCI). Giventhe highproportion o f youth inthe population, and the challenges they have faced inthe last few decadesdueto lost schooling and childhood trauma, attentionis also given to the challenges and opportunities facing young people when the sectoral policies are outlined. 4.7 Integral to the success o f the flagship programmes, i s a rigorous monitoring and evaluation system with clear and concrete indicators for success. Chapter 7 elaborates on the monitoring and evaluation system that will be put in place to evaluate success and identify weaknesses on an ongoing basis. The chapter also gives detailed matrices o f indicators for success andpolicies that will be developed by the various sectors to support the flagship programmes. 48 Figure 4.I Pro-poor growth anchored in good governance Iiifrastructure tzcc:II`ri1iE: Environment, water & sanitation, health& population, socialprotection, youth, and cross-cutting issues 4.I The Growthfor Jobs and Exportsflagshipprogramme 4.8 The first flagship programme aims to make the Rwandanbusiness environment the most competitive in the region, thereby laying the foundations for strong private sector growth inthe future. 4.9 In the first phase, public investments are targeted to relax key constraints on growth identified through a comprehensive growth diagnostic and investment climate analysis. This revolves around a three-pronged strategy: (a) systematically reducing the operational costs o f business (including skilled labour costs) given their existing technology, (b) increasingthe private sector's capacity to innovate, and (c) widening and strengthening the Financial Sector. Public investments are expected to induce substantial private investments and foster productivity growth inthe agriculture, manufacturing and service sectors o f the economy. 4.10 In the second phase, such investments will translate into an improved productive capacity that will raise the demand for both skilled and unskilled workers and create wider employment opportunities. The way in which the planned investments during the EDPRS period will translate into job creation and reduce under-employment 49 will be made clear at the outset o f a comprehensive analysis o f the Rwandan labour market, which i s not yet completed. 4.11 Inthe thirdphase, closely linkedto the previous two phases as well as on-going progress in regional and global economic integration, the competitiveness o f Rwandan businesses will allow significant expansion o f the export base and generate sufficient foreign exchange earnings to ensure the sustainability o f development efforts and eventually eliminate the dependence on foreign aid. 4.1.1 Growth diagnostic and investment climate 4.12 The growth diagnostic approach was used to identify the obstacles to growth. This approach was pioneered by Harvard faculty members Ricardo Hausmann, Dani Rodrik and Andres Velasco who suggest identifying the one or two main obstacles to growth and focus public interventions on removing them. They further propose a systematic way o f looking at obstacles to economic growth. The common symptom o f insufficient growth lies inlow levels o fprivate investment. This canbe caused by either a low return on economic activity or the high cost o f finance. These in turn can be narrowed to more specific challenges for the economy. Finally, part o f the growth diagnostic approach i s to make an assessment o f binding constraints. The approach as applied to Rwanda and the results are presented inTable 4.1. 50 Table 4.1 Thegrowth diagnostic approach applied to Rwanda Low social returns Macro risks: financial, Low appropriability Coordination externalities Low domestic savings Bad local financc Poor intennediation Bad global finance Source: MI? COFIN based o n Hausmann et al. (2004) Note:* Highobstaclesbut alleviated once very highobstacles are tackled. 4.13 InRwanda, the growth diagnostic identifies a low return on economic activity as the main cause o f insufficient growth. This results mainly from low human capital, lack o f skills and weak infrastructure. These challenges are therefore considered as very high obstacles to economic growth and there exist numerous studies and pieces of evidence to support this assessment. Hence, the right policies for growth should revolve 51 around fostering human capital, business skills development and upgrading the infrastructure. 4.14 This does not mean that problems o f lack o f entrepreneurship and poor geography are not important. It does meanthese challenges are expected to be alleviated by building appropriate skills to release entrepreneurship and by building a regional infrastructure to turnpoor geography, that is, Rwanda being a landlockedcountry, into an opportunity, that is, a regional hub. Inother words, skills and infrastructure are first order priorities though the other challenges will be attended to. 4.15 Right next to these first order priorities, the challenges raised by weaknesses in innovation potential as well as low domestic savings can also be addressed inthe EDPRS period. It follows that the right policies for growth should also encompass science, technology and innovation policies as well as Financial Sector development. 4.16 The final high priority rests in micro risks o f doing business in Rwanda. Whereas Rwanda enjoys a good regulatory environment (including tax) and low incidence o f corruption, it suffers from poor records inregulatory, and tax, enforcement, excessive bureaucratic hurdles, and poor understanding o f business requirements inlower levels o fpublic administration. 4.17 The growth diagnostic i s strongly supported by the Investment Policy Review of Rwanda conducted by the United Nations Conference on Trade and Development (UNCTAD) as well as the Investment Guide to Rwanda by UNCTAD (2006) and the International Chamber o f Commerce (ICC). These analyses are summarised inthe matrix o f strengths, opportunities, weaknesses and threats, that is, the SWOT analysis o f the Rwandan economy, captured inTable 4.2. 52 Table 4.2 Investment climate: Keyfactors for foreign investors Source: UNCTAD (2006). 4.18 The essential strategy for the Growth flagship programme is therefore to consolidate the strengths (Le. mostly through the Governance flagship programme), turn the weaknesses into strengths (i.e. corroborate the growth diagnostic) and seize the opportunities inagriculture, manufacturing and services. 4.19 In summary, the growth diagnostic and investment climate analyses propose five sets of policy interventions for the Growth flagship: (i) develop skills and capacity for productive employment, (ii)improve the infrastructure especially energy, transport and communications, (iii)promote science, technology and innovation, and (iv) strengthen the Financial Sector. The final set o f interventions, that is, (v) improve governance to address the challenges associated with micro risks, pertains to the Governance flagship. 4.20 Opportunities exist in all three sectors o f the economy: agriculture, manufacturing and services, including tourism and financial services. Therefore, all three sectors o f the economy will benefit from the three-pronged strategy o f (a) systematically reducing the operational costs o f business (including skilled labour costs) given their existing technology, (b) increasing the private sector's capacity to innovate, and (c) strengthening the Financial Sector. 4.21 Reducing business costs i s the highest priority in the medium term because at present Rwanda has the highest transport, energy and communication costs in the region. Transport costs, as a share o f import prices, are nearly three times higher inRwanda than in Tanzania or Kenya. The unit costs of electricity generation are two and a half times higher in Rwanda than in neighbouring countries, as shown in Table 4.3. Heavy investment in infrastructure will reduce business costs by improving the quantity and 53 quality o f energy supplied to urban and rural areas, improving the transport network (roads connecting markets, bridges, airports and regional railways), expanding ICT (both provision and utilisation) and improving water infrastructure for irrigation and coffee washing stations. Table 4.3 Infrastvucture costs in Rwanda compared to neighbouring countries 4.22 Business costs will also fall as a result o f government efforts to enhance the Private Sector's capacity to innovate. Firstly, measures will be taken to help businesses screen global technology more efficiently. Many techniques and processes relevant to Rwanda already exist and are readily available. What is missingi s staff with the skills to know where and how to search for appropriate information. 4.23 Secondly, the capacity o f business to transfer technology must be strengthened. There are various channels to accomplish this; these range from encouraging foreign direct investment and facilitating licensing arrangements with overseas firms to building closer links between private firms and universities or research centres inRwanda. 4.24 Thirdly, it is necessary to support the Private Sector to adapt technology once transferred to local needs. This i s particularly important in agriculture, where variations in soil characteristics, topography and climate often require location-specific modifications to imported techniques. Fourthly, once the Private Sector has accumulated experience in identifying, transferring and adapting foreign technology, the government mustprovide an environment conducive to the creation o f new technology. This requires not only a steady supply o f well-trained graduates to business, but also a legal system which recognises and protects intellectual property rights. Consequently, the legal, regulatory, licensing and tax compliance burdens on firms should be lightened and re- shaped to encourage innovative activity to boost productivity throughout the Private Sector. 4.25 Inorder to accelerate technological change inRwanda, the Ministryof Science, Technology and Scientific Research (MINISTR), has developed a Science, Technology and Innovation for Results (STIR) programme. This programme will define institutional structures and relationships required to implement national STIR policy; these will be demand driven and responsive to development needs. A two-stage knowledge transfer programme i s also under way. The first stage involved assembling teams o f Rwandan and international experts to prepare a series o f (Science, Technology and Innovation) STI capacity-building needs assessments and action plans in agreed priority areas. These include agricultural productivity, geothermal energy and geosciences, appropriate 54 technology, food processing and food technology, clean drinking water and sanitation, and bio-hels. The second stage will involve financing and implementingspecific policies and programmes outlined in the needs assessments and action plans. These include programmes to develop coffee, silk, horticulture (flowers, vegetables, fruits), aquaculture, herbs and essential oils. 4.26 The big push delivered by a high quality public investment programme during the EDPRS period will reduce the operational costs o f doing business in Rwanda and create strong incentives for the Private Sector to increase its rate o f investment in subsequent years. Better infrastructure and access to a more skilled labour force will make Rwandamore competitive inthe context o fregional integration. 4.27 While it i s necessary to reduce the costs o f doing business, evidence suggests that cluster competitiveness and private sector development must be mainstreamed to unleash a country's growth. Fast tracking domestic private sector growth in Rwanda requires Business Development Services (BDS). In a 2002 survey of Rwandan SMEs, 64% o f respondents stated that their businesses were either "in trouble" or "struggling". In addition, a 2005 survey discovered that 90% of firms believe that BDS services are either important or very important to the health o f their firms. However, a comparison o f SME needs and BDS providers in Rwanda suggests a substantial mismatch, indicating the need for interventions by the Government and donor partners to ensure high quality BDS provision to Rwanda's private sector. The GoR will expand BDS and ensure they are demand driven and well advertised, so they respond to the needs of Rwandan SMEs and cooperatives including in rural areas, and provide longer-term support to ensure they have lasting impact. 4.28 The country recently re-assessed its position with regard to different regional economic groupings. In June 2007, Rwanda became a full member o f the East African Community (EAC) and negotiations are continuing in eleven sub-committees to bringthe country's policies into line with those o f the EAC in areas ranging from trade, finance and investment to education, agriculture and health. Rwanda will also remain a member o f the Common Market for Eastern and Southern Africa (COMESA) and the Economic Community o f the Great Lakes Countries (CEPGL).I9 4.29 Full EAC membership should allow Rwanda to exploit its comparative advantage in regional markets, as well as benefiting from ongoing global trade liberalisation which offers improved access to European, American and Asian markets. By further opening up to international trade, exports should rise andinward foreign direct investment will be encouraged, thereby reducing the share o f imported capital goods which are financed by external grants and loans. Thus, over time the main driver o f economic growth in Rwanda should pass from public investment oriented towards the private sector to export-led accumulation by the private sector. The GoR has identified concrete opportunities and prioritised actions in four industries: coffee, mining, tourism 19Rwanda has signed a bilateral framework agreement with South Africa which covers trade, investment and certain other areas of mutual interest. 55 and tea (Table 4.4). The GoR will build the institutional capacity to implement these programmes. Table4.4 Priority Export Actions !xtension servicesfor coffee farmers Jariable pricing scheme 3CIR-Cafe Nashing station capacity expansion DrivateSector Coffee Technical assistanceto washing stations 3CIR-Cafe & Partners :upping labs Dartners & Private Sector :offee MarketingAlliance 'rivate Sector Zoffee specific infrastructure I 4ININFRA Vyungwe investments-lodgeand boats ~ 3RTPN 'NV Discovery Center 3RTPN Eco-tourismadd-ons plans RACE Tourism Short term PrivateSector training PSF & Tourism Chamber Tourism college MINEDUC Tourism Chamber Capacity PSF & Private Sector Local suppliers programs Tourism Chamber Extension services for tea outgrowers MINAGRI & OCIR-The Tea factories capacity upgrades OCIR-The Tea Value addition and sales of packagedtea OCIR-The & Private Investors Support to private tea investors RIEPA Power remedial investments MININFRA Establishmentof I'Officedes Geologieset Ministry of Lands, Human des Mines (OGMR) Resettlementand Environmental Protection (MINITERE) Investment in Kigali Mineral Centre Mining MINITERE & Private Sector Mineral treatment stations OGMR & BRD Geological research program OGMR Statistics collection and dissemination 4.30 Increasing the country's growth rate i s essential to create employment opportunities for the large number o f youths who will enter the labour market inthe next five years. In 2005, two thirds of the population were aged less than 25 years, and it is 56 estimated that between 2007 and 2012 around half a million additional young people will be seeking jobs. The EDPRS provides a framework for the Private Sector to implement many o f the projects identified in the National Action Plan for Promoting Youth Employment (NAPPYE) which include the production o f both tradeable and non- tradeable goods and services. 4.1.2 Policy interventions for the Growth flagship 4.1.2.1 Develop skills and capacity for productive employment 4.31 Inorder for Rwanda to make the transition to a knowledge-based economy and society, it is essential to improve access to quality, equitable and effective education. The Education Sector has a range o f policies in place to achieve this and to ensure that the country attains the Millennium Development Goals, Education for All, and Rwanda Vision 2020. Policy and planning documents that have been developed include an Education Sector Strategic Plan (ESSP 2007-201l), a ten year education plan and a Long Term Strategy and Financial Framework (LTSFF 2007-2015). These have been endorsed by development partners. 4.32 The Education Sector will contribute towards economic growth by making education more relevant for social and economic progress. This will be achieved by the establishment o f a curriculum that imparts basic skills in traditional subjects, while also promoting social cohesion and making closer links between the content o f education and the needs of the labour market. The priority areas for the Education Sector inRwanda are to increase the coverage and quality o f nine year basic education, strengthen Technical and Vocational Education and Training (TVET) and improve the quality o f higher education. Education's contribution to poverty reduction will include promoting equal access for the most vulnerable groups in society by removing fees for the first nine years o f schooling, and an education Management Information System will be developed enabling the disaggregation o f gender indicators to ensure gender parity. District plans and strategies will be guidedby national Education Sector policies and districts are being provided with technical and financial assistance in their development. Districts will be encouraged to develop education plans that specifically include local strategies for nine year basic education, environmental and natural resource management, girls' education, TVET, school management, adult literacy and early childhood development. 4.33 At primary level, the Government aims to increase completion rates significantly by reducing the high rates o f drop out and repetition in schools. Rwanda currently has one o f the highest pupil-teacher ratios (71:1) in Sub-Saharan Africa and reducing this will be vital to improving the quality o f education in primary schools. Increased access and completion in primary schools will require increases in the civil service wage bill, as well as acceleration in the numbers o f teachers being trained in teacher training colleges. The Teacher Service Commission (TSC) has been put inplace to develop strategies for teacher motivation and retention including the set up o f teacher co-operatives. Adequate numbers o f classrooms that meet minimum quality standards will also be constructed in order to reduce class size. In primary schools the student- 57 textbook ratio will be reduced to 1:l in core subjects accompanied by the in-service training o f teachers inthe effective use o f learning materials. An ongoing programme will equip all 2,200 primary schools in the country with a science comer to promote fundamental information about science. 4.34 There will be a major expansion o f secondary education, particularly in access to the first three years o f secondary school (tronc commun). This i s necessary as Rwanda has one o f the lowest secondary enrolment rates in Sub Saharan Africa. The nine year basic education policy includes strategies to increase investment inteachers, curriculum, textbooks and classrooms. It i s a high priority to provide high quality Science and Technology teaching at secondary level in schools equipped to undertake practical lessons. The curriculum will be revised to include new subjects, such as entrepreneurial skill development, which should enhance the employability of pupils once they have left school, as well as promoting positive attitudes towards issues such as gender equity, environment, population and HIV/AIDS. Colleges o f education have now been established and will be expandedin order to increase the supply o f teachers for the tronc commun. 4.35 Inorder for Rwanda to achieve the socio-economic transformation implied by the targets o f Vision 2020, the country must quickly develop a wide range o f skills among the labour force. Equippingnew entrants to the labour force with the skills needed to operate and manage a continuous flow o f new technologies requires that measures must be taken to update the vocational educational system in order to ensure competitiveness in regional and international markets. The government recognises the essential role o f TVET in the future economic growth o f Rwanda. The TVET system aims to ensure the matching o f skills to labour market and society needs. One key initiative i s to set up a TVET board to co-ordinate all public and private stakeholders to ensure the provision o f outcomes-based TVET as well as to co-ordinate the TVET strategy with economic and district development strategies. To this end, high quality Vocational and Technical Training Centres will be established complete with a business enterprise unit which will match the students o f the schools with employment opportunities. This will also include an industrial attachment programme at all levels o f technical education. 4.36 It is important that TVET institutions become more relevant and effective, and the TVET curriculum to match the needs o f unemployedpeople more closely, especially youth. Priority areas for improving TVET include creating a merit-based approach based on recognition and rewards for quality work, establishing mechanisms to provide effective follow-up support, providing job placement services for trainees, promoting self-employment as a productive means o f earning a living, and requiring training institutions and programmes to prioritise the skills needs o f the Informal Sector and those living in poverty. Inall these areas, trainers should be sensitive to, and help meet, the specific needs o f female trainees and participants from vulnerable groups, such as Orphaned and Vulnerable Children (OVC) households. A strategic master plan for vocational education and training will be elaborated to address these issues. 58 4.37 An appropriate institutional framework for TVET will ensure continuous training which responds to the ever changing labour market demands and the flow o f new technologies. The Labour Department will be strengthened to collect and analyse labour market information regularly, guide labour administration processes and protect the national labour force from occupational hazards and exploitation. The Rwanda Workforce Development Authority (RWoDA), an Institution that i s in the establishment process, will guide workforce development through restructuring vocational training and the establishment as well as the operationalisation o f Manpower Skills and Training Councils (MSTCs) to ensure that skills produced by training Institutions respond to industrial demands. RWoDA will guide, coordinate and regulate Vocational Training in the country to provide Quality Assurance. 4.38 For Rwanda to compete effectively inthe global economy, increasing access to Higher Education is a priority. However, equally important is the need to improve the quality o f provision so graduates have the requisite transferable skills. Growth in student numbers will involve an expansion o f full and part-time programmes with the use o f ICT enabling open and distance modes o f learning. It will also mean expanding the range and diversity o f programmes, with new priority subjects identified to meet the EPDRS needs included in the curriculum. It will be ensured that graduates' skills meet labour demands and that academic staff transform their approach, consistent with a more student-centred, practically-oriented philosophy. Higher learning institutions are to place an emphasis on industrial attachment and practical work intheir courses. 4.39 The specific aims o f higher education to achieve these priorities include achieving enrolment growth and gender equity; restructuring o f academic and administrative units; ensuring the quality and relevance o f undergraduate programmes; building the capacity o f learning resources; development of post-graduate studies; capacity-building o f research and development, and innovation; capacity-building o f community services and continuing education; achieving financial sustainability; and buildingICT capacity. Key curriculum areas for growth are planned to include offerings inthe environment and sustainable development; logistics and supply chainmanagement; food science, processing and manufacture; tourism, leisure and hospitality management; engineering and design. Identification o f key skill areas demanded by the economy will be informed bythe Private Sector Working Group and the HIDA skills audit. 4.40 The National Council for Higher Education (NCHE) is operational and responsible for accreditation o f both public and private institutions. The NCHE plans to institute graduate tracer studies and a labour market analysis to outline the current situation and the projections regarding labour market demands for the future. There are also moves towards promoting efficiency o f the public higher education sector through optimising the use o f resources such as lecturers, learning materials and science laboratories. 4.41 In keeping with the need to develop Science and Technology programmes, expenditure for science laboratories and equipment is being prioritised in the budget. Loans and grants from the Student Financing Agency o f Rwanda (SFAR) will be targeted 59 to priority areas o f economic development such as science and technology. Strategies planned to improve equity through the higher education system include means testing o f student loans and grants. It is planned that from 2008, loan recovery will commence to ensure that expansion o f the universities i s financially sustainable. There i s a need for a mix o f Rwandan and international expertise inthe HLIs as i s requiredby the science and technology international plans. However, appropriate phasing out and eventual exit strategies for expatriate teachers will be put in place, so that capacity is built among Rwandan nationals to develop courses and conduct teaching and research at high levels. A full strategy will be elaborated during the EDPRS period. The Private Sector is expected to play a major role in the future expansion and quality o f higher education in Rwanda. Incentives to growth in private higher learning institutions will be through access to the Student Financing Agency o f Rwanda which funds students who plan to conduct their studies inpublic or private higher education institutions. 4.42 Rwanda has made impressive progress in improving adult literacy rates. The aim i s to continue this trend and increase adult literacy rates further as specified in the targets o f the Education Sector logframe (see Chapter 3). Furthermore, the Education Sector has launched several initiatives that address cross-cutting issues or support activities for which other sectors are responsible. These include programmes to improve hygiene in schools and increase knowledge of family planning and life skills. 4.43 Regarding gender, the country has already reached the Millennium Development Goal o f equal access for both girls and boys at the primary school level. However, girls' academic performance i s poor. Current policy aims to increase the proportion o f girls in the relevant age group sitting and passing national exams at all levels o f education. Inparticular, efforts will be made to encourage girls to study science and technology subjects. Programmes will be developed to sensitise teachers, parents and education managers to promote girls' education. Achieving this goal requires action on several fronts. School infrastructure should be made more gender-sensitive by providing separate sanitation facilities for boys and girls. More role models are needed, both inside and outside the Education Sector, for female pupils. To this end, measures will be taken to increase the number ofwomen occupying senior positions inthe educational system. 4.44 The Education Sector i s well-placed to target children at the critical age (12-18 years) to reduce transmission o f HIV. Activities will focus on developing and implementing a national AIDS and reproductive health curriculum appropriate for each educational level from primary through to university, as well as vocational training schools. Prevention activities outside the classroom will be organised by means o f peer education and engagement o f parents through Anti-AIDS clubs and community outreach. As teachers are already inshort supply, it is crucial that the educationworkforce remains healthy. An AIDS workplace programme will be implemented for all Education Sector staff and ancillary workers. 4.45 Inaddition, the sector will provide appropriate support to vulnerable children to ensure continued access to education. Inthe area o f special needs, the educational aim is to improve access and retention o f vulnerable children. These children include the 60 extreme poor, orphans, refugees, returnees, and the physically and mentally handicapped. A policy is currently under development andmethods o ftargeted assistance, such as child profiling, are being designed. Efforts will be made to increase the participation o f vulnerable groups in Parent Teacher Associations (PTAs) to ensure that school management i s inclusive and that school-based violence and abuse is eliminated. The school curriculum will be revised to be more responsive to the needs o f children with disabilities. This strategy will play a key part in achieving a net enrolment rate o f 100% at the primary level, and in increasing educational opportunities for all at secondary and higher levels o f education. 4.1.2.2 Improveeconomic infrastructure 4.46 For the whole Infrastructure Sector (which consists o f five sub-sectors: Transport, Energy, Housing, ICT and Meteorology), the global objective i s to play a cross-sectoral role, in partnership with the Private Sector to facilitate growth and to reduce the incidence of income poverty through employment generation. For this purpose, seven key areas have been identified to be addressed for the forthcoming five years: implement an appropriate institutional and legal framework; capacity-building including the improvement o f monitoring and evaluation and the management o f information systems; increase infrastructure capacity; ensure good quality service delivery; reduce costs; increase accessibility; ensure maintenance and sustainability o f infrastructure and equipment; improve safety. Main sector strategies to be implemented include: greater involvement o f private sector and decentralised entities in sector policy implementation; local community participation on a community contract basis particularly in infrastructure maintenance; the promotion o f joint regional initiatives in the context o f regional integration; and the enhancement o f capacity and sector coordination mechanisms. 4.47 The objectives o f the Transport Sub-sector are: (i)improve transport links internally and internationally; (ii) reduce and keep transport costs under control; (iii) improve the institutional framework and strengthen the capacity o f partners involved in the sector; (iv) improve road safety; (v) achieve sustainable financing o f road maintenance; and (vi) maintain the roads rehabilitated or constructed. Particular focus will be on the improvement o f the quality o f Rwanda's paved road network, building capacity in sector institutions and generating employment in rural areas through road works. Priority will be placed on maintaining and rehabilitating the road network, including feeder roads in rural areas, through enhancing the financial capacity of decentralised administrations for road maintenance. Also, alternative methods o f moving people and goods are being developed, such as the extension of the railway from Isaka in Tanzania to Kigali, an airport upgrade for Kanombe, studies for a new airport at Bugesera, and three water transport schemes2'. MININFRA i s building up its cadre o f professional staff at district and agency level to take these projects forward. 20These projects include (i) construction o f accosting quays on Lake Kivuand other lakes between the 2008-10; (ii) a shipyard onLake Kivuby 2010, and (iii) the Akagera river navigable by building making 2015. 61 4.48 The Energy Sub-sector plays a vital role with the Private Sector to facilitate growth, in the Agricultural Sector to enable value addition, in the development o f a dependable ICT Sub-sector, and in the provision o f services in the Public Sector. The goal o f the Energy Sub-sector i s to ensure security o f supplies by increasing domestic energy production from several sources (hydro-electricity, methane gas, solar power, biomass and petroleum). To meet this goal, it aims to increase access to electricity for enterprises and households; improve cost-effectiveness and reflective tariffs as well as operational efficiency o f the sector; increase energy diversification and strengthen the governance framework and institutional capacity o f the energy sub-sector. Appropriate attention should be given to specific but critical issues relating to adoption o f electricity and gas legislation, regulation and de-taxation o f renewable energy and energy efficiency imports. Efforts will be made to improve the quality and continuity o f electricity supply by improving the maintenance o f generation and transmission equipmentby fully trained staff. 4.49 By 2020, it is envisaged that 70% o f the population will be living in rural grouped settlements (imidugudu) and that the remaining 30% will reside in urban areas. The habitat sub-sector will develop a sound policy and strategy for urbanisation and imidugudu will be redesigned in a sector-wide approach which will include all the stakeholders in order to boost the sub-sector. The use o f planning tools for restructuring the country's rural and urban settlement patterns will play a pivotal role. Master plans for rural grouped settlements (imidugudu) and urbanresidential zones will be developed. The sites and zones selected will be surveyed, demarcated and sub-divided into buildingplots. These sites and zones will be provided with relevant infrastructural services. The process will involve the clearance and upgrading o funplannedurban areas. Partnerships between government and the Private Sector will be o f essence. Alongside this, the rehabilitation and construction o f state-of-the-art public buildings will be undertaken. An improved management plan will also be developed. 4.50 The objective o f the ICT Sub-sector is to promote investment in, andthe growth o f the Information and Communications Technology industry. Efforts will be made to widen access to ICT among the population, and to promote ICT for e-Governance, education and capacity-building, and for use by the private sector. To this end, the number o f telecentres will be increased substantially and the cost o f connecting to a telecommunications network will halve by 2011. It i s expected that the number o f additional jobs created each year inthe ICT Sector will rise from 7,000 in2008 to 20,000 in2012. This ambitious programme will be overseen by the regulatory authority whose institutional capacity will need strengthening over the period o fthe EDPRS. 4.51 As regards the Meteorology Sub-sector, the aim is to provide a wide range o f timely, high quality weather and climate information and products in support o f sustainable development. This will require the development and implementation o f a sound policy and strategy that supports a major rehabilitation o f existing terrestrial weather stations; sets in place efficient telecommunications systems; modernises data processing and forecasting systems, ensures the timely acquisition o f real time weather and remotely sensed data through investment in a long-range radar system supported by 62 trained staff, and implements the installation o f a Satellite Data Distribution System (SADIS). Additional expenditure will be required to improve the dissemination and application o f weather forecasts and other meteorological information. This i s particularly important to agriculture; livestock development; food security; road, air and maritime transport; health and public safety; building and construction industry; disaster management; water resources management among others. 4.52 Finally, the Infrastructure Sector will develop an evidenced-based AIDS action plan to ensure that a set o f appropriate measures are in place, so that the delivery o f transport infrastructure and services contribute to the HIV/AIDS response over the period 2008-2012. This will include measures to prevent HIV/AIDS at rest areas along truck corridors. Furthermore, all tender contract documents will be required to have clauses addressing HIV/AIDS and must allocate at least 0.5% o f the budget to HIV/AIDS, gender, youth and environmental protection. 4.1.2.3 Promote science, technology and innovation for economic growth 4.53 Rwanda must build science, technology and innovation capacity to promote poverty reduction and wealth creation. Rwanda's commitment to this has been emphasised by His Excellency the President Paul Kagame on several occasions. At the African Union summit January 2007, President Kagame declared that Rwanda must "apply science and technology holistically: in all levels o f education and training, in commercialising ideas, in developing business and quickening the pace o f wealth- creation and employment-generation, in enabling government to provide better services, and indeed inproviding basic tools to society at large for self and collective betterment." To implement this vision inRwanda, the Ministry o f Science, Technology and Scientific Researchwas created by the President'sOffice inMarch2006. 4.54 The National Science, Technology and Innovation Policy, approved by Cabinet inJuly 2005, recognises that an effective approach to science, technology and innovation capacity building must include policies to promote knowledge acquisition, knowledge creation, knowledge transfer and a culture o f innovation. 4.55 Acquisition and deepening o f knowledge i s an essential strategy to achieve the human development objectives set out inRwanda's Vision 2020 and the National Policy on Science, Technology and Innovation. In higher academic, technical and professional institutions, the principal actions will be to train teachers, lecturers and high level professional technicians such as engineers, architects and medical professionals. The strategy includes the development o f links with "best in field" technical and professional institutions internationally. As mentioned earlier, Vocational and Technical Training Centres will have business enterprise units to match students with employers and industrial attachment programmes. High level vocational skills for continuing professionaleducation will be developed, such as highlevel certification courses inICT. 63 4.56 To promote knowledge creation, research capability needs to be developed inall priority sectors o f the economy. The strategy includes the reinforcement o f research units in Higher Learning Institutions (HLIs) coupled with the investment in training and development o f international partnerships in high quality research to meet the development needs o f Rwanda. Specific interventions include the establishment o f a Science and Technology capacity-building fund to support research capacity-building initiatives and the establishment o f Science and Technology Centres o f Excellence in HLIs. 4.57 To promote knowledge transfer, science and technology capability needs to be reinforced in all priority sectors o f the economy to foster dissemination o f the knowledge that exists outside Rwanda, the adoption o f knowledge developed within Rwanda and to ensure that workers have the requisite skills to use new technology. To this end, this sector will work with the Education Sector to best utilise knowledge resources and with other sectors to determine their education, training and capacity-building needs with regard to Science, Technology and Innovation (STI). 4.58 The GoR has embarked on an STI capacity-building programme designed to develop practical solutions to practical problems. Potential "quick wins" include: value addition to commodity exports such as pyrethrum, tea and textiles; food processing for local (and possibly regional) consumption, including the processing o f milk and passion fmit juices; malaria control using locally manufactured long-lasting insecticide-treated bed nets; the improvement o f staple crops using for example, new maize hybrids and tissue-cultured bananas; all-weather feeder roads capable o f being maintained by local communities using identified local sources o f aggregates and micro-hydro power developed at 200-300 sites serving local communities through local grid networks. These issues are interconnected, for example, increased power generation will assist commodity processing, feeder roads will facilitate marketing and malaria control may help slow down population growth. 4.59 To promote a culture o f innovation in Science and Technology at all levels, capacity to process innovations will be promoted at national level, District Innovation Centres will be established and a National Research Fund set up to provide financial stimuli for STI activities. Skills and knowledge with regard to the use and application o f intellectualproperty will also be developed. 4.60 An enabling legal, regulatory and institutional environment needs to be created to encourage STI inRwanda. The GoR's Science, Technology and Innovation for Results (STIR) programme will define the institutional structures and relationships required to implementthe national STI policy to ensure that they are demand driven and responsive to development needs. A National Commission for Science Technology and Innovation (NCSTI) will be established as a government agency to act as a coordinating body for STI. 64 4.1.2.4 Widen and strengthenthe FinancialSector 4.61 For Rwanda to achieve accelerated economic growth driven by a high level o f investment, it i s essential that the country's financial markets are widened and strengthened. Rwanda's Financial Sector i s still relatively shallow and undiversified, and characterised by relatively high lending rates. There is extremely low insurance penetration and a scarcity o f long term debt, home mortgage financing and equity capital. The regulation and supervision o f pensions and insurance are being strengthened and the payments system developed. To tackle these problems, the GoR has adopted measures for strengthening the country's Financial Sector which were approved by Cabinet in 2006; implementation started in2007 (MINECOFIN, 2007d). 4.62 The Financial Sector strategy focuses on four areas to develop the financial system: (i) banking and access to credit, (ii) term finance and capital markets, (iii) long contractual savings regulation, and (iv) payment systems. With regard to the first area, access to bankingservices outside Kigali and the major towns i s still very limited, as the population i s mainly served by the network o f Union des Banques Populaives du Rwanda (UBPR) and a few other micro finance institutions that offer very limited financial services. In order to provide more competition, broader access to financial services, and sounder regulation o f this key institution, UBPR will be treated as a de facto commercial bank. While fully respecting the cooperative governance principles on which it i s based, up to forty o f UBPR's larger, sounder cooperative unit members with Globus computer systems will provide bank-like payments services to its members. While UBPR will be able to offer their clients most o f the services that commercial banks can offer, their much lower maximum loan size requirement will ensure that they will still lend to a large number o f clients and provide a broader range o f banking services than their clients would otherwise seek fkom commercial banks. 4.63 Microfinance institutions (MFIs) are an important part o f the financial system, so amending and enacting the draft Microfinance Law, as well as implementing the microfinance strategy, i s a priority. A microfinance umbrella organisation will be established and supported by the GoR and donors to give guidance to the industry. GoR support intraining o fMFIs and their clients as well as capacity-building will be enhanced inorder to strengthen andprofessionalise the industry.An investmentand guarantee fund will be established to ensure refinancing and access to long term finance by MFIs. Increased capital requirements for microfinance institutions, especially deposit-taking ones, will be implemented. Licensing requirements, regulation and internal controls will be strengthened. Subject to results o f a feasibility study, a mandatory stabilisation fund will be established for licensedMFIs. 4.64 While commercial banks have most o f the money available for lending in Rwanda, only about 10% o f their lending i s for housing and virtually no mortgage lending is for more than seven years. There is little long term lending other than for housing and, ifthe Banque Rwandaise de Development (BRD) is excluded, only 1.5% o f bank lending i s for agriculture. The Rwanda Housing Bank (BHR) has been viewed as the primary vehicle for financing new homes, but it cannot be a major lender because o f 65 its small size and its present commercial banking structure, which i s inappropriate for this purpose. The BHR will need to find long term sources o f financing to ensure its sustainability. Commercial banks will be assisted in developing mortgage saving accounts to mitigate the inherent problem o f a mismatch between long term mortgage loans and short term deposits. 4.65 With regard to the second area, the BRD is a primary source o f long term lending and also provides 55% of all bank lending for agriculture. However, it faces a major challenge in finding adequate long term resources for on-lending, while it i s exposed to increasing risk in its lending portfolio as the percentage o f lending to agriculture rises. The BRD will be supported to expand its developmental lending through increasing its funding sources from new equity shareholders, issuing loan-backed bonds andentering into co-financing arrangements with commercial banks. 4.66 As regardslongterm finance, Rwanda does not have a supplyo f capital market- based long term debt instruments, so does not have an interest rate yield curve, which i s an essential tool for valuing long term investment instruments. Moreover, the accounting and financial reporting environment based on International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) that is a prerequisite for any capital market to develop i s still largely undeveloped. Several steps will be taken to allow the emergence o f a sound and facilitating environment for long term capital transactions. These include developing legal, regulatory and operational guidelines for an Over the Counter (OTC) debt market first then eventually an OTC equity market. Both will be overseen and regulated by a Capital Markets Advisory Council. The long term debt market will be used to create a yield curve, while the GoR will increase competition among buyers o f these financial instrumentsby allowing foreign buyers and Rwandans from the diaspora to participate in the purchase o f bonds. The Accountants Bill will be enacted and implemented, so that all financial institutions, large companies, and "public" companies comply with I A S and IFRS accounting standards. The Companies Act, which already contains an appropriate regulatory environment for OTC debt and equity markets, will bepassed and implemented. 4.67 On the demand side o f the long term capital market, the Central Bank will re- issue a portion o f existingtreasury bills that represents GoR deficit financing in a mix o f one to seven year Treasury Bonds. This will create opportunities for long term investments by institutional investors like CSR and life insurance companies as well as by individuals. The possibility o f a partial guarantee to domestic institutional investors from International Financial Institutions (IFC, African Development Bank, and EIB) to mitigate credit risk over a long term horizon will also be explored. Other measures to increase the availability o f long term funds include introducing longer term home deposit savings accounts in banks, facilitating the creation o f private pension funds, and amending laws to enable pension funds and insurance companies to invest in a wider variety o f financial instruments, including in assets outside Rwanda. It will be ensured that these measures meet strict criteria. 66 4.68 With regard to the third area, which includes the regulation of non-banking financial institutions, the Rwandan Social Fund (CSR) and private insurance companies are the primary source o f the country's long term funds as well as providing a social safety net to protect the livelihood o f those that retire and those o f families whose primary income earner dies. However, regulation and supervision o f both the CSR and insurance companies need to be strengthened.The adopted Central Bank Act will enable the BNR to develop a consolidated regulation and supervision function for non-bank financial institutions (NBFI), including the CSR and other pension funds that may be established, the insurance industry, and, if and when established, leasing and finance companies. 4.69 Finally, with regard to the fourth area, an efficient payments system constitutes an essential component o f Financial Sector infrastructure. One of the highest priorities i s to elaborate a national payments strategy embracing the use o f all payments services instruments such as cheques, credit and debit cards, ATMs, and automatic salary and pension deposits. To this end, a National Payments Council will be established to develop and implement a national payments strategy. This strategy will address the development o f basic payments services targeted at the community at large, based primarily on electronic transfers. 4.70 The GoR will support the national payments system reform by i)introducing legislationrequiring all wage and salary payments by mediumand large scale enterprises, i.e., entities employing five or more staff, to be made electronically into the accounts o f financial institutions; and ii)introducing a policy whereby all national and regional government payments, be made to and received from the accounts o f financial institutions wherever feasible. Once the National Payment Strategy i s in place, an Automatic Clearing House will be implemented and its potential membership expanded beyond commercial banks to other entities who meet its agreed access criteria. 4.1.3 Opportunitiesinthree sectors ofthe economy 4.1.3.1 Raise agriculturalproductivityandensure food security 4.71 The primary objective o f the Agriculture and Animal Resources Sector i s to contribute, in a sustainable manner, to the increase and diversification o f household incomes, while ensuring food security for all the population. This sector objective i s in line with the priorities o f the Strategic Plan for the Transformation of Agriculture (PSTA). The programmes o f the PSTA form the operational framework for implementing agriculture's contribution to the EDPRS, while they are also aligned to the broader planning frameworks o f the Common African Agricultural Development Programme (CAADP) and Rwanda Vision 2020. 4.72 The sector has developed four programmes to achieve its primary objective. The first programme identifies a series o f actions to intensify and develop sustainable production systems in agriculture and animal husbandry. These include soil conservatjon measures, such as the construction and rehabilitation o f terraces and the promotion o f agro-forestry technologies for sustainable land-use. On the livestock side, the `One Cow 67 per Poor Household Programme' (girinka), introduced in 2006, and other initiatives promoting animal resources (for example, goats, poultry, pigs) aim to increase asset ownership and promote animal husbandry among the poor. All beneficiaries o f this programme are expected to practice zero grazing. Since large livestock tend to be owned by individuals and not households, it is important that women obtain the same access to this programme as men. A study planned for 2007 will provide baseline data on the gender dimension o f the programme. 4.73 Improving the genetic potential o f livestock will be achieved through importing pedigree animals and through greater use o f artificial insemination. More effective animal disease control and better extension services, including delivery o f vaccines and other veterinary services, will greatly boost livestock performance. Widening access to high quality animal feed i s necessary to raise livestock productivity andto allow greater use o f zero grazing. To this end, at least 1.5 tonnes o f improved forage seeds will be distributed annually by the national seeds service. Fisheries and bee-keeping will be supported to encourage diversification o f animal products. 4.74 Following an environmental impact assessment, marshlands will be developed for growing high value crops such as rice. Irrigation will be extended by constructing small-scale systems for hillsides and lowlands using surface irrigation, pumping and sprinkler technologies, as well as introducing water harvesting systems and other water collection techniques. Greater use o f improved seed will be encouraged by supporting the efforts o f private seed distributors and by training farmer's cooperatives in seed multiplication and utilisation. 4.75 This activity i s complemented by a strategy to increase the informed use o f organic and inorganic fertilisers. The final component in this first programme o f the Agriculture Sector is to ensure access to food by the most disadvantaged and vulnerable rural households. This will be achieved by increasing production o f key food crops coupled with the introduction o f special food security programmes in every district and conducting regular surveys on social protection and food security. These programmes should address the specific needs o f women, people living with HIV (including AIDS) (PLHIV), orphans and child-headed households. 4.76 Also, soil conservation measures such as terracing and agro-forestry should increase agricultural employment opportunities for youth in the short term if they are carried out through Labour-Intensive Public Works schemes (HIMO). In the long run, agricultural intensification and marshland development should create additional permanent jobs for the sons and daughters o f the current generation o f farmers. 4.77 The second Agricultural Sector programme focuses on building the technical and organisational capacity o f farmers. One set o f activities supports the creation and strengthening o f farmers' cooperatives, so that they can plan and implement market- oriented production, processing and marketing o f agricultural commodities. Another initiative involves working with the Private Sector to launch a decentralised extension service for all stakeholders inthe Agricultural Sector. This will include the establishment 68 o f demonstration plots at district level in collaboration with the Community Innovation Centres (CICs). Access to general agricultural education opportunities should be equal for men and women, while the specific needs o f female farmers should be met by specially designed courses on business and entrepreneurship. 4.78 Agricultural research systems will be strengthened in order to generate and disseminate technological innovations in crop and animal husbandry more widely and more rapidly. This research will be demand-driven and participatory to ensure that the results are timely and relevant to farmers. National research institutions will be encouraged to collaborate more closely, while their capacity, particularly that o f Institut des Sciences Agronomiques du Rwanda (ISAR), will be strengthened through forging closer links with external research institutions. Measures will also be taken to develop rural financial markets and increase the supply o f agricultural credit from private or public sources to both men and women. 4.79 The third programme in the Agricultural Sector aims to promote commodity chains and support the development o f agribusiness. The Government will assist the Private Sector by improving the investment climate, so that Rwandan exports are competitive inregional and world markets. This will require significant improvements in product quality which will be monitored and enforced by the Rwanda Bureau o f Standards. A related initiative aims to increase the quantity and quality of selected export products. This includes subsidising the acquisition of key agricultural input by farmers' co-operatives and facilitating access to external markets. 4.80 Each district will be encouraged to develop specialised commodity chains which make use o f locally available resources in adding value to agricultural products. This will require improvements in rural infrastructure to lower the costs of accessing markets. To this end, public investment will be directed into the construction and rehabilitation o f feeder roads. The GoR will also assist the Private Sector in establishing other necessary infrastructure for the storage, transport, and processing o f agricultural produce. 4.81 The final programme in agriculture aims to strengthen the institutional fi-amework o f the sector at central and district level. The Agricultural Sector budget will be implemented on time and effectively, while greater efforts will be made to ensure that MINAGRIand related semi-autonomous agencies are adequately staffed. The Ministry's capacity in planning, budgeting, financial management and monitoring and evaluation will be strengthened at central and district level. Measures will also be taken to increase the number o f women from disadvantaged groups who are actively involved in farmer organisations and agricultural service provision 4.82 Appropriate mechanisms and capacities will be developed for the provision o f accurate data throughout the sector on a regular basis, particularly with regard to agricultural statistics. This will include price data, as well as information relating to food security and the associated early warning system. Capacity must be built at all levels in 69 the sector to ensure that the country's agriculture policy i s implemented in all districts and i s fully integratedwith interventions executed by other sectors. 4.83 A study will be conducted to assess the impact o f AIDS on agriculture inorder to design and implement interventions in key areas. In addition, the sector will examine how to integrate PLHIV in the sector and develop programs for PLHIV at the district level. 4.1.3.2 Increase the contribution of manufacturing to economic developmentfor sustainablegrowth 4.84 The GoR regards the Manufacturing Sector as a major engine o f sustainable growth and development. Inthe long run, the main source o fjob creation inRwanda will pass from the primary to the secondary and tertiary sectors. To prepare for this transition, measures will be taken to enhance the production o f competitive and high value manufacturing goods for sale inlocal, regional and international markets. 4.85 The new Industrial Policy focuses on five main strategic objectives, namely (i) enhancement o f the performance o f the existing Manufacturing Sector and development o f industrial parks and free export zones to facilitate establishment o f new industries; (ii) development o f new product lines; (iii) promotion strategies; (iv) incentives for export foreign direct investment; and (v) promoting resource-based manufacturing. Firstly, the government will enhance the performance o f the existing Manufacturing Sector, including low-technology manufacturing such as textiles and food processing by promoting labour productivity and product quality. It will encourage companies and start up small and medium-sized enterprises (SMEs) to move up the value chain into higher value-added activities that use domestically produced input, such as leather goods production. The GoR will make a major effort to build the capacity for trade in order to enhance productivity, the quality o f exports and the ability to deal with import competition in the domestic market. This i s essential for Rwandan companies to seize new opportunities inthe COMESA andEAC trading associations. 4.86 Secondly, the GoR will also strongly promote the development o f new product lines by existing companies, cooperatives, SMEs and foreign firms, and encourage them to increase the production quality and value o f existing major export products. Many possibilities have already been identified in agro-processing and mining. The GoR will promote higher value-added activity inrural areas such as sericulture, tea, coffee washing and handicrafts for the tourist industry. 4.87 Thirdly, export promotion strategies have been designed for a number o f products. In coffee, the GoR aims to increase value addition by encouraging and supporting investment in washing stations and processing, and increase sales by improving marketing. Inthe Tea Sector, the government aims to increase production and improve marketing. Productivity on existing plantations will be improved through better input and increased supervision and support to plantations, and through the expansion o f the area o f tea plantations. Value addition will be improved by introducing more 70 profitable tea varieties and increasing the capacity o f tea factories to process all green leaves. With regard to handicrafts, the GoR will set up centres in each province to provide training and support to rural producers, identify niche markets for Rwanda, undertake handicraft marketing and promote linkages between handicrafts and other export sectors. In order to organise production and enhance local marketing, the cooperative movement will be strongly promoted and supported. 4.88 Fourthly, foreign direct investmentcan lead to the transfer o f capital, know-how and managerial skills, as well as job creation. The GoR will therefore provide incentives for foreign direct investment and establish export processing zones and industrial parks to encourage foreign companies to move into medium-technology activities, in partnership with Rwandan companies where possible. Finally, the GoR will rapidly build up modern governance structures through the streamlining and modernisation o f public organisations. 4.89 Finally, the government will focus efforts on promoting resource-based manufacturing (processed food, wood products, beverages such as coffee and tea) and low technology products (leather goods including footwear production, textiles and simple metal products). These are sectors which have been identified according to their ability to enhance income, particularly rural incomes to alleviate poverty, and that create the most jobs and contribute to state revenue. For medium and high technology production, such as machinery assembling plants, chemical production, advanced ICT and electrical appliances and pharmaceuticals, efforts will be made to mobilise foreign and local investors, particularly throughjoint ventures. 4.1.3.3 Increase opportunities in the Service Sector 4.90 The Service Sector o f the economy is diverse but fundamental for a successful transition towards a knowledge-based society. Many knowledge-based activities are linked to provision o f services. The GoR seeks to exploit the country's potential comparative advantages in financial services, ICT, tourism, transport and logistics services, health services and education services which have already contributed significantly to economic growth over the last decade. The provision o f private non- tradeable services for the domestic market i s also an opportunity that can be exploited. 4.91 The emphasis put on the widening and strengthening o f the Financial Services Sector in Rwanda i s important as the sector has been tipped to be a strong potential source o f comparative advantage inthe region. This will require further opening up o f the sector to foreign capital and modern, dynamic management and technologies. This planned opening up will bring in the required skills for the Financial Sector whose development further depends on the existence o f strong "soft infrastructure", good regulatory governance, and macro-economic stability. All these aspects are ones inwhich Rwanda compares favourably inthe region. 4.92 Tourism i s another important sector for both employment and foreign exchange earnings. The Tourism Sector has grown steadily to become the second source o f exports 71 (behind coffee but ahead o f tea and mining). Rwanda has a substantial advantage in the Tourism Sector which offers many investment opportunities. Taking Rwanda's advantages and limitations into account, the GoR has developed a strategy that focuses on high-end eco-tourism and invites investment into developing the sector. The strategy focuses on the primate product (Rwanda's unique selling proposition) and diversification with "add-on" products that can be cross-sold to tourists. Important for this type o f tourism i s the conservation o f Rwanda's natural environment and especially its national parks. The GoR will therefore promote and develop tourism which i s ecologically friendly and environmentally sustainable. It will improve planning for wildlife and national park conservation, promote research and monitoring o f wildlife, including restocking national parks with relevant wildlife, involve and engage local communities, and provide for the channelling o f tourism revenues towards the protection o f the natural resource base. In addition, the GoR will develop and promote tourism opportunities by improving tourism infrastructure and services, creating more tourist attractions and facilities in all provinces (including eco-tourism sites), increasing the marketing o f tourism and forming regional and international links. 4.93 An overarching concern is the broadening o f leadership in the Tourism Sector. ORTPN has been a huge contributor to the sector's success but Private Sector firms and the Tourism Chamber will be encouraged to increase their participation in strategy implementation. GoR will also encourage Private Sector investment inkey areas such as product development (hotels, Pave National des Volcanes (PNV) Discovery Centre, boats on Lake Kivu), joint marketing, and in cross-cutting areas such as training, access to finance and enhancing linkages with andbenefits to local communities. 4.94 While Rwanda is integrating with the EAC, it offers an ideal platform or hub between the East African and the CEPGL countries and creates an excellent opportunity for Transport and Logistic services. A target group o f potential investors exists in freight forwarding, transport and logistics companies. For instance, Danzas has decided to establish a transport hub in Kigali and Maersk has established an inland container depot inKigali to service the CEPGLmarkets. As economic infrastructuredevelops inRwanda and if a corridor can be built to ensure the success o f Rwanda as a regional hub, the freight-forwarding, transport and logistics sector is bound to grow tremendously over the medium to longterm. 4.95 Concurrently, the need inthe health and education sectors could offer important investment opportunities, if the GoR were to remove the remaining regulatory and licensing hurdles to reduce the micro risks o f private investments in these sectors. This could allow much needed expansion o f privately funded and privately provided health services, higher education services and TVET. 4.96 Beyond these major opportunities in the Service Sector, there are also many gaps interms o f the provision o f private non-tradeable services for the domestic market. This covers professional activities inurban centres, (that is, the services o f professionals, managers, office clerks, commercial and sales personnel and other skilled and unskilled 72 services) and off-farm employment in rural areas. Creating such jobs and off-farm employment opportunities are important priorities o f the GoR. 4.1.4 Summaryof the Growthfor Jobs andExportsflagship 4.97 The Growth for Jobs and Exports flagship is an on-going set o f policies and programmes across sectors that require the scaling-up o f public and private investments and further improvement over several phases. Inthe first phase, there is an urgentneed to remove the obstacles to economic growth identified in the growth diagnostic, that is, the lack o f skills, infrastructure, technology and finance. Detailed sectoral and cross-sectoral actions and programmes are essential to identify and improve the channels through which public investments induce private investments and foreign direct investment. 4.98 The next phases consist o f ensuringthat investments create the jobs required to absorb the forthcoming expansion o f the labour force. The development o f an Employment Strategy will complement the Growth flagship, once the comprehensive analysis o f the Rwandan labour market i s completed. Finally, stronger growth and employment in key identified sectors o f agriculture (i.e., coffee, tea, horticulture), manufacturing (Le., mining, food and beverage processing, construction), and services (i.e., tourism, transport and logistics, other financial and non-financial services) will expand the exports base which i s necessary to generate foreign exchange earnings for further expansion. Exports will be fLirther facilitated by on-going processes of regional and international integration. Table 4.5 Summary growthflagship Develop skills MINEDUC, and capacity for MIFOTRA, produclive MIN.4GRI, einployment MINIC0bl Systernaiically reduce the operational costs of Improve the business {including skilled labour costs) given infrastructure tbcir existing tcchnology MINIKFRA, especially MINITERE, energy, transport MINAGRI, and MINICOM communications Promote science, MINISTR, Increasc the Private Sector's capacity to technology and iniiovate MINICOM, innovation MINAGR1 73 Widen and MINECOFIN, strengthen the Widen and Strengthen the Financial Sector MINICOM Financial Sector II Promote opportunities in Direct support to agriculture, nianufacturhg MINAGRI, the three sectors and service sectors MINICOM of the cconomy Improve governance to address the Anchored ingovernance flagship challenges +all ministries associated with micro risks - - -x - - X I " x- ~ 74 4.2 The Vision 2020 Umurenge Flagship Programme 4.99 The second flagship programme, the Vision 2020 Umurenge Programme (VUP) aims to eradicate extreme poverty by 2020. This programme has key similarities with the first flagship programme with its focus on growth, job creation and exports generation. The VUP, however, starts as a pilot covering one o f the poorest Irnirenge ineach district, therefore operating solely in specific rural areas. Since the VUP's prime objective i s to release the productive capacities o f the poor and extremely poor, who comprise 56% and 37% o f the population, respectively, it can be seen as a pro-poor growth for job and exports programme. 4.100 The VUP builds on past experiences which show that "isolated" interventions by sector ministries, donors or NGOs are not sufficient to lift people out o f extreme poverty in a cost-effective and sustainable fashion. The other extreme, "integrated" development, has also shown its limits in many circumstances. One o f the main limitations of both isolated and integrated approaches has been the failure to address two o f the most important insights o f economics: (i) "resources are scarce" and (ii) "people respondto incentives." 4.101 Because resources are scarce compared to people's needs, choices must be made. When choices are made for people, for example, through centralised planning, there are risks o f not satisfying their needs or distorting local incentives; this generally leads to a waste o f resources. When choices are made by people, for example, through participatory mechanisms, these risks are alleviated but the incentives may not be compatible with the stated aim o f eradicating extreme poverty. 4.102 In order to incorporate these insights, the VUP balances central guidelines for socio-economic transformation (Le. economic growth, job creation and extreme poverty eradication) with local participatory mechanisms. This ensures the best possible use o f scarce resources while, at the same time, ensuring adequate local incentives for sustainable progress. 4.2.1 Releasing productive capacities 4.103 The VUP is designed to be implemented through three components. Firstly, the VUP revives public works but requires that they are planned and that they use community-based participatory approaches (e.g. ubudehe) to build community assets and create an off-farm employment infrastructure. These community assets could be in agriculture or livestock infrastructure or dedicated to promote off-farm manufacturing or service activities. The concept o f "public works" builds on the experience o f "haute intensite de main d'oeuvve" (HIMO) projects throughout the country and the VUP seeks to put inplace guidelines to avoid the weaknesses and abuses that have hindered HIMO projects inthe past. Since private land ownership i s widespread inRwanda, public works can take place on either public or private land (e.g. terracing). However, the assets must benefit the community at large. Indeed, when such benefits are clear, the community will 75 have the incentive to conduct the maintenance o f these community assets, thereby ensuring sustainability. 4.104 Examples o f desirable outcomes and corresponding on-farm or off-farm projects are (i) improved land productivity (e.g. building watersheds, hillside terraces, irrigation mechanisms); (ii) improved financialhusiness services at the community level (e.g. building related infrastructure); (iii) improved infrastructure for off-farm employment (e.g. building workshops, training centers, supply-chain transformation centers, storage warehouses); (iv) improved formal market infrastructure (e.g. construction o f roads, bridges, dams, energy sources); (v) improved clustered village settlement (e.g. building o f model umudugudu infrastructure); (vi) improved access to drinking and irrigation water (e.g. digging springs, shallow wells, rain water harvesting, water ponds); (vii) improved access to schools (e.g. repairing and constructing classrooms and nurseries); and (viii) improved access to health facilities (e.g. repairing and constructing health facilities). 4.105 Secondly, the VUP innovates with cooperative and small- and medium-sized enterprise development and credit packages to tackle extreme poverty as well as to foster entrepreneurship and off-farm employment opportunities; these packages are designed to make the best possible use o f scarce public resources, involve the private Financial Sector (especially microfinance institutions with local presence in pilot imivenge), and provide people with incentives and organisational capacity to improve their own productive and trading capacities. Credit packages go beyond natural resources to cover human resources (i.e. skills), entrepreneurship and off-farm employment. A credit package i s a formal contract that describes the use o f the credit in pre-specified activities. This contract i s agreed upon with the community, endorsed by the community, and approved by the VUP Management Team. It allows the bearer to benefit from the VUP Insurance Scheme (VUPIS), which will facilitate the credit approval by local microfinance institutions. 4.106 Examples o f desirable outcomes and corresponding credit packages are (i) improved land productivity (e.g. through agriculture, livestock and farmer credit packages for seeds, fertilisers, pesticides, farmer training, or technology adoption); (ii) improved savings mobilisation (e.g. through livestock, skills and management credit packages); (iii)improved off-farm employment opportunities (e.g. through skills, management, off-farm, energy, transport, skill, supply-chain management and export credit packages); (iv) improved technical and vocational skills (e.g. through skill credit packages); (v) improved formal market participation (e.g. through off-farm, energy, transport, skill, supply-chain management and export credit packages); (vi) improved village settlement density (e.g. through construction material and mortgage credit package); (vii) improved health conditions (e.g. through health credit packages); and (viii) improvedproductive capacity. 4.107 Thirdly, the VUP includes direct support to improve access to social services or to provide for landless households with no members qualifying for public works or credit packages; such unconditional support seeks to expand access to health and education as well as to encourage the development o f "appropriate" skills, handicraft, or social service 76 activities. Direct support has the same intention o f releasing the productive capacities o f individuals. It i s thought that improved targeting is possible once land owners or able bodies have been screened out and directed towards public works or credit packages. Households without labour to participate in on-farm or off-farm employment (i.e. public works projects) may require direct support to lift them out o f extreme poverty. Direct support activities are designed to provide grants to the neediest members and most vulnerable o f the community. Such support i s unconditional but beneficiaries will be expected to engage in appropriate skill acquisition activities, handicraft, and social service activities. Direct support i s intended for those unable to participate in public works and those without the productive capacity to qualify for credit packages. It includes those who do not have sufficient and reliable support from soddaughter or remittances from relatives away from the village. 4.108 Since the activities are targeted at labour poor households, they should be light in labour demand but useful at the same time to the individuals and the community. Examples o f such activities are (i) community child care centres (on public works sites); (ii)community sanitation, health and family planning classes; (iii) participation in child nutrition and growth promotion classes; (iv) participation in adult literacy or numeracy classes; and (v) participation in artisan activities and handicraft. 4.109 The selection o f public works projects or proposals for credit packages will be driven by a participatory planning process in order to promote the identification and prioritisation o f community needs (inthe case o f public works) and local agri-business as well as off-farm business and employment opportunities (inthe case o f credit packages). Hence, planning begins with the umudugudu identifying key outcomes it wishes to achieve and then developing a list o f projects or packages that will achieve these outcomes. The umudugudu committee makes recommendations on the provision o f public works or the adoption o f credit packages. These recommendations will be reviewedby the umudugudu council. Eventual approval of public works will be made by the umurenge and/or District Councils, depending on the nature o f public works. The final decision will be made by the VUP Management Team. Similarly, the umudugudu committee makes recommendations on the provision o f direct support to individual households and follows a similar approval process with the final decision being made by the VUP Management Team. 4.110 These three programme components are not necessarily mutually exclusive, for instance public works can be complemented with credit packages. In addition, a distinction i s made between a household and members o f the household. This is crucial to cater for women and youth who represent important productive capacities but may not be heads o f households. Hence, eligibility to these programmes intends to address the concerns o f women and the youth. The programme components will be implemented through a set of projects which will be designed and coordinated at umuvenge level and implemented at umudugudu level. Both programme components and projects are linked to technical specialists in sector ministries which also provide the strategic direction and prjorities. 77 4.2.2 Fostering sustainable progress 4.111 Targeting people's productive capacities and releasing their productive potential i s expected to have at least three important additional benefits. 4.112 Firstly, the VUP will encourage the creation o f off-farm employment opportunities, thereby facilitating the eventual transition to a modem knowledge-based society according to Rwanda's Vision 2020. Although, the promotion o f off-farm activities in agro-processing, manufacturing and service activities i s a priority at national level, the VUP will offer an additional unique opportunity to identify incentive mechanisms that work best in fostering such a transition at the local level. The need for off-farm activities i s obviously important due to demographic pressures and the lack o f land inRwanda, the most densely populated country inAfrica. 4.113 Secondly, the VUP will accelerate the process o f monetisation and formalisation o f the economy, thereby ensuring long term sustainability. The non-monetised and informal share o f the economy i s almost 66%. Few changes have occurred inthis respect over recent years indicating the presence o f obstacles to formalisation. The VUP will offer a uniqueopportunity to identify how legal, regulatory, licensing and tax compliance burdens are hampering the process o f formalisation in Rwanda. It i s understood that one o f the major causes o f the lack o f formalisation lies inthe high costs interms o f the time needed to understand and comply with all formal regulations. While monetisation should increase in the pilot imirenge because public works, credit packages and direct support put money directly in the pocket o f the poor and the extremely poor, the issue o f formalisation will be more difficult to tackle without improvements in local government effectiveness. 4.114 Thirdly, the VUP will facilitate the redirection o f social protection to the neediest people who are landless and unable to work, thereby rationalising and improving the effectiveness o f social protection programmes. Because the VUP focuses (at least initially) on pilot imirenge it does not substitute for nation-wide social protection programmes. (These programmes are elaborated in section 4.4.) This pilot does, however, offer the opportunity to evaluate the possibility o f enabling socially protected individuals or households to progress to appropriate productive activities. From this follows the claim that the VUP could help rationalise and improve the effectiveness o f social protection. Therefore, the VUP uses a social protection strategy which offers an additional implementation mechanism through unconditional direct support targeted at releasing the productive capacities o f the most vulnerable. 4.2.3 Initiate and implement change management 4.115 As a flagship programme, the VUP seeks to bring about changes in the efficiency o fpoverty reduction. To avoid confusion, the efficiency o fpoverty reduction i s to be distinguished from the efficiency o f service delivery, which falls under the governance flagship. The efficiency in poverty reduction seeks to ensure that economic growth rapidly translates into poverty reduction, and i s measured by the elasticity o f 78 poverty reduction with respect to real per capita consumption growth. Improving such efficiency inpoverty reductionwill require managing change inthree related areas. 4.116 Firstly, local governments will need to be assisted to coordinate the implementation o f national sector and ministry strategies. This will require taking advantage o f the Rwanda Decentralisation Strategic Framework (RDSF) and its implementationtool, the Decentralisation Implementation Programme (DIP). 4.117 Secondly, the notion o f inter-connectedness o f services across line ministries will need to be instilled. This will be achieved through a number o f mechanisms including a Rapid Response Mechanism linking staff in communities and local governments with the VUP management team in MINALOC as well as focal points in each line ministry. 4.118 Thirdly, attitudes will needto be changed throughpro-active interventions of all national sectors and ministries to accelerate the rate o f poverty reduction inRwanda. The first step towards changingperceptions and attitudes lies inthe very existence o fthe VUP as a flagship programme. As such, it ernphasises the need for a coordinated response to the problem o f extreme poverty. 4.119 As the VUP is a pilot programme, a careful, rigorous and appropriate monitoring and evaluation system will be put in place to evaluate success and identify weaknesses on an ongoing basis. Chapter 7 speaks to general principles and specific indicators that will beusedto evaluate the EDPRS. 4.120 With proper assistance, inter-connectedness and attitudes, programmes like the VUP that put money into the pockets o fthe poor andpromote formal market mechanisms will gain the favour o f all and, indeed, achieve an acceleration o fpoverty reduction. 4.2.4 Summary of the Vision 2020 UmurerzgeProgramme flagship 4.121 Table 4.4 summarises the programme components, additional benefits and areas o f change management required for the VUP. 79 Table4.6Suinmavy of the VUPflagship ~ . ~ ~ . - - 80 4.3 The Governanceflagshipprogramme 4.122 The third flagship programme is an essential complement to the two other flagship programmes which cannot succeed in the absence o f good governance. The governance programme seeks to improve governance in several areas. These include maintaining peace and security through defence against external threats and participation in peace-keeping missions, preserving and strengthening good relationships with all countries, continuing to promote unity and reconciliation among Rwandans, pursuing reforms to the justice systemto uphold human rights and the rule o f law, and empowering citizens to participate and own their social, political and economic development in respect o f rights and civil liberties. 4.123 This programme also covers a wide range o f Public Sector reforms which include expanding decentralisation and enhancing accountability at all levels o f government, enhancing Public Sector capacity, strengthening public financial management and improving procurement, implementing performance-based budgeting and increasing the transparency and predictability o f policy making. In addition, the programme puts emphasis on supporting the development o f soft infrastructure for the Private Sector through implementing the commercial justice, business and land registration programme, improving economic freedoms, the regulatory and licensing environment for doing business, and promoting principles o f modem corporate governance. 4.124 Particular focus will be placed upon the improvement o f the existing political system. This includes reforms to improve the extent o f competition in executive and legislative elections, checks and balances to eliminate excesses and ensure separation o f powers, inclusive politics to allow for free participation by all citizens inachieving peace and political representation, as well as the role o f the National Unity and Reconciliation Commission and the use o f ingando initiatives to bring about political stability, reconciliation, and sustainable security. 4.125 Political, administrative and financial accountability will be improved by focusing on the following programmes: strengthening the capacity o f the legislature to initiate, scrutinise and amend laws; scrutinising the executive and holding it to account and rigorous procedures to supervise taxation and approval o f public expenditure. There i s a need to improve the citizens' access to government information with regard to a public procurement process, the effectiveness o f the public procurement system, fiscal transparency, andmaintenance o fbudgetary discipline, among others. 4.126 Efforts will also be made to promote human rights and civil liberties. Reforms will be made to the laws governing the establishment o f Civil Society Organisations, their freedom to operate, their capacity to contribute towards policy formulation and implementation and their ability to undertake actions to complement government interventions. These reforms will also expand on existing laws and regulations affecting 81 the freedom o f the press, the freedom o f belief and the freedom o f expression o f individuals, inrespect o f human rights, gender equality and non-discrimination. 4.127 There is a need to strengthen existing institutions, laws and regulations, and practices to promote integrity and fight against corruption. These reforms include, but are not limited to, the Office o f the Ombudsman, the Office o f the Auditor-General, the National Tender Board and its decentralised affiliates, the police and other law enforcement mechanisms. 4.128 To strengthen the rule o f law, emphasis will be put on reinforcing the capacity inthe efficient administration ofJustice inorder to ensure universal andtimely accessto justice and the respect for human rights. Special attention will be given to clear gacaca cases, to clear the backlog in regular judicial cases, and strengthening o f the abunzi mediation mechanism. The incidence o f crime will be reduced through crime prevention measures and community policing initiatives. Prison conditions will be improved through income generating projects and inmate rehabilitation programmes. 4.129 Government effectiveness will be improved by strengthening the role o f imihigo, increasing the autonomy o f local governments, while ensuring that local authorities are accountable and responsive to the citizens; this in particular will be achieved through the expansion o f the decentralised accountability framework. 4.130 Existing institutions and the framework o f laws and practices with regard to corporate governance will be assessed and improved. Modern principles o f corporate governance will be promoted inall public, private and civil sectors. 4.13 1 The revision o f laws and policies facilitating the registration and operation o f the Forum o f Political Parties, the Civil Society Platform, the High Council o f the Press andthe Joint Governance Framework is ongoing and will be completed duringthe course o f the EDPRS. 4.132 In addition, capacity-building to strengthen the operation and effectiveness of independent think tanks and institutions to conduct regular assessments on governance such as the Rwanda Governance Advisory Council and the Institute for Strategic Policy Analysis will be conducted duringthe course o f the EDPRS. 4.133 Partnerships between public, private and civil sectors such as the Joint Action Development Forum and the Joint Governance Framework will be strengthened. The twinningof Rwanda's institutions with institutions inother countries Gumelage) will also be strengthened duringthe course o fthe EDPRS. 4.3.1 Security and Cooperation 4.134 Achieving the EDPRS objectives will partially depend on whether peace and security prevails in Rwanda and the region and on external contributions in the form o f official development assistance and foreign direct investment. Therefore, Rwanda will 82 endeavour to create a climate o f peace, security and stability inthe region and beyond by developing, maintaining and strengthening good relationships with all countries and by co-operating with other members o f the international community in elaborating and maintaining international law. Rwandawill project itself as a country that i s peaceful and secure, where democracy thrives and economic policies are stable and predictable. It is a state which respects humanrights, the rule o f law, and its international obligations. 4.135 The Security and Cooperation Sector will contribute to the overall goal o f the EDPRSby ensuring a safe and secure environment for all Rwandans and non-Rwandans. To achieve this, the sector has developed strategies based on the EDPRS Security and Co-operation Logframe. The Ministry o f Defence coordinates the Security and Co- operation Sector and, together with the Ministry o f Foreign Affairs and Cooperation (MINAFFET) and the National Security Service (NSS), are the core implementing and cost-sharing agencies, while the Ministry o f Internal Affairs (MININTER), MINALOC and the Ministry o f Justice (MINIJUST) will act as keypartners. 4.136 During the EDPRS period (2008-2012), the Security and Cooperation Sector will be guidedby five objectives. Firstly, the sector will develop and implement a holistic national security policy. This will involve consulting with different stakeholders, drafting the security policy, seeking nation-wide legal and constitutional approval, setting up periodic action plans and budgets, and designing and implementing a monitoring and evaluationmechanism. 4.137 Secondly, the sector will strive to enhance the capacity o f its institutions through effective training, provision o f adequate equipment and infrastructure as well as recruitment o f personnel into relevant posts. A Security Sector training needs assessment will be carried out and a training strategy as well as a recruitment and retention strategy will be developed. Specialised training centres for different categories of personnel will also be established. The recruitment and retentionrate o fpersonnel will be used as one o f the measures for the progress and effectiveness o f the Security Sector. 4.138 Thirdly, the Security and Cooperation Sector will strive to gain more trust, confidence and support o f the local population and international partners. Inso doing, the sector image will be promoted. This will in turn contribute to the creation o f an atmosphere conducive to increasing numberso f tourists, visitors andbusiness investors to Rwanda. These indicators will be gauged against UN security rating levels. More trust and confidence will encourage members o f the international community to deploy more Rwandan security personnelinto the regional and UNpeace-keeping operations. 4.139 Fourthly, this sector will strive to strengthen regional and international co- operation. This i s one reliable way o f combating and solving the problem o f armed groups and wanted criminals from foreign lands. This will be supported by encouraging the voluntary returnees o f Rwandan refugees, arresting and repatriating the most wanted criminals, combating international organised crime, especially money laundering, terrorism, cyber crime, child and human trafficking, drug trafficking, as well as ensuring an absence o f territorial violations and combating genocide ideology. 83 4.140 Other indicators to gauge success include the opening o f foreign embassies and missions in Rwanda; the opening o f embassies, missions, security liaison offices and military attachments abroad by the Government o f Rwanda, and the continued participation o f the GoR inregional and international peace-keeping operations. 4.141 Fifthly, the Security and CooperationSector will establish a strongManagement and Information System (MIS). This will provide quality and timely data to inform decision makers. Data will be collected through surveys and citizens' scorecards, which will include important security-related information. 4.142 To achieve the above objectives, there will be supportive national planning and budget allocation to various sectors in order to facilitate effective implementation o f EDPRS. Effective coordination with other sectors will also be vital to ensure that the set targets are met on time with considerable flexibility and complimentarity. 4.143 The GoR attaches vital importance to the Security and Cooperation Sector as the custodian o f national security and development. The current security working group has formulated and elaborated a Security Sector logframe, camed out a baseline study, set up a plan o f action and budgeted for the planned activities. It has also come up with recommendations on the way forward for the sector. Any overlaps or related cross- cutting issues during the implementationphase will be monitored and resolved using the monitoring and evaluation mechanism. 4.144 Furthermore, to achieve a safe and secure environment, it i s assumed that there will be no unexpected regional or international instability; there will be consistent commitment from donors as well as sufficient human and financial resources to execute the allocated budget and planned programmes. It i s also assumed that there will be adequate infrastructure inplace as well as a favourable international and regional foreign policy towards Rwanda and that other sectors inRwanda will make their contribution to a safe and secure environment. 4.145 To ensure success, there i s a need for MINECOFIN to co-ordinate and harmonise all national planning processes and to ensure that resources are made available in time to support the afore-mentioned security priorities. This will assist the Security Sector to contribute effectively to the overall goal o f the EDPRS and to attain the purpose o fthe Security Sector inthe set time period. 4.3.2 Justice, Reconciliation, Law and Order 4.146 The objective o f the Justice, Reconciliation, Law and Order (JRLO) Sector i s to strengthen the rule o f law to promote good governance and a culture o f peace. This will be achieved through interventions in the Justice, Law and Order and the Unity and Reconciliation Sub-sectors. 84 4.3.2.1 Justice, Law andOrder 4.147 There are four sets o f Justice Sub-sector interventions which contribute to the stated objective o f the sector. 4.148 The first set aims to ensure universal access to justice in Rwanda. The sector aspires to have an efficient and effective justice system that i s accessible to and affordable by all citizens, including vulnerable groups. A sector-wide study will evaluate the available capacities inthe sector and set benchmarks for a sector-wide plan to further reinforce the human and institutional capacities. The sector will emphasise the development o f a legal framework and national policy, and efficiency o f the judicial systemwill be increased through streamlining o f court procedures, reducing the average time to prosecute and rule on a case in court and by clearing the backlog o f cases. The execution o f judgments will also be improved and the full capacity o f the Law Reform Commission promoted. 4.149 To avoid hrther overburdening, the Justice Sector will further develop alternative justice mechanisms including the abunzi. The sector will also sensitise all citizens to new laws, institutional roles and where to access justice, rights and responsibilities. In order to follow up on service delivery and impact, the sector will develop an operational Management Information System (MIS) and a regular survey will be organised to measure the public perception on quality o fjustice. 4.150 Enacting a law against gender-based violence i s a pre-condition for improving access to justice by many women. Once enacted, a major popular awareness campaign will be held to secure widespread recognition that domestic violence, rape and sexual harassment are criminal offences. Implementingsuch legislation will require the training o f judicial personnel, police officers and prison staff on human rights, gender-based violence and the management o f cases involving vulnerable and disadvantaged groups. More legal professionals will be trained injuvenile justice and more mediators with the skills to recognise and treat cases o f child abuse are required. 4.151 The second set o f interventions focuses on eradicating genocide ideology and building a culture supportive o f the rule o f law. The sector strives to consolidate the genocide memory and sensitise all citizens to the rule o f law and humanrights in order to have a Rwanda free o f incitation to hate, violence, and discrimination. The processing o f 1994 genocide cases and related crimes will be expedited and the community services o f general interest will be made fully operational. The sector will consolidate the genocide memory and reinforce means o f assistance to genocide survivors. Special attention will be given to the monitoring and protection o f human rights in general, and those o f women, children, PLHIV and vulnerable groups in particular. An effective system for compensating victims will be established by 2010, while those convicted o f crimes will behelpedto re-integrate into society after servingtheir sentences. 4.152 The third set o f interventions aims to promote transparency and accountability. Measures will be taken to reduce corruption by reinforcing the legal framework which 85 supports anti-corruption monitoring mechanisms, as well as supporting the activities o f civil society organisations aimed at increasingtransparency and accountability. These interventions will be co-ordinated with interventions following similar objectives and conducted by MINALOC. 4.153 A fourth set o f interventions aims to ensure that law and order are maintained and enhanced. The sector shall continue to ensure the safety o f Rwandan people and their property by implementing crime prevention measures and community policing. The sector will improve prison conditions and strengthen its income generating projects and inmate rehabilitationprogrammes. 4.154 The Justice, Reconciliation, Law and Order and Security Sectors have an important role to play in both the prevention o f HIV and in mitigating its impact. Preventative measures are key factors inthese sectors as they contain populations at high risk, including those in the prison system. Rehabilitation programmes will be provided for prison inmates and will include AIDS education programmes and voluntary counselling and testing (VCT) services. To mitigate the impact of AIDS, the sector will review laws to ensure they address human rights, provide training for sector staff on key humanrights issues related to topics such as HIV and AIDS. Legal aid programmes will be created to improve the access o f vulnerable people, including those infected and affected by HIV and AIDS, to legal services. The security sector will conduct a sector- wide needs assessment by mid-2008 and this will include AIDS issues. In addition, the sector will increase the number o f security personnel accessing VCT services as a result o f awareness programmes and ensure a greater percentage o f security organisations have AIDS sensitisation campaigns by 2012. 4.3.2.2 Unity and Reconciliation 4.155 A number o f measures will be taken to reinforce mediation, unity and reconciliation mechanisms in society. These include improving formal and informal institutional arrangements supporting dispute resolution and conflict management, and establishing an early warning system for conflict prevention and management. The key challenge is the prevalence o f a genocide ideology in the country and region. The National Unity and Reconciliation Commission (NURC) will implement a multi-sectoral approach to achieve its aims. It will work with the Justice Sector to enact a law on genocide ideology. The legal environment for community-based mediation and arbitration will also be strengthened. Civic education programmes which stress the value o f living in peace, unity and reconciliation will be supported and expanded at national and local level. The education syllabus and curriculum will be revised to include unity, reconciliation, mediation and conflict management. In health, trauma and counselling centres will be active in all districts and main hospitals by 2009, and free or subsidised medical services will be provided to survivors, especially AIDS victims and vulnerable groups. 4.156 The National Unity and Reconciliation Commission will continue to disseminate the policy on unity and reconciliation and build the capacity o f public, 86 private and civil society organisations to ensure they systematically mainstreamunity and reconciliation in their programmes. The commission will establish indicators to track progress. Resolution i s also particularly important in the case o f land disputes which are widespread and are extremely challenging to resolve in ways that do not store up problems for the future. 4.157 At the local government level, the key issue is o f building trust and tolerance among and between individual citizens, ensuring greater empowerment and participation o f citizens who are recovering from a legacy o f no or partial participation in decision making and constrained access to services. Activities suggested include sensitising and training all district, sector, cell & urnudugudu leaders about unity and reconciliation, empowering districts to set up clear guidelines and principles for employment, recruitment and access to services; setting up unity clubs in all districts; facilitating the use of umuganda to discuss progress and constraints to achieving unity and reconciliation; encouraging highparticipation ingacaca courts and citizen reconciliation; and providing material and financial support to local and community initiatives promoting the culture o f peace and reconciliation through achieving higher standards o f living. 4.158 At regional and international level, the National Unity and Reconciliation Commission seeks to expand and use the infrastructure o f the Rwanda Peace and Leadership Centre and raise its profile through training on peace and civic education, conflict resolution, mediation, unity and reconciliation; research on and documentation o f best practice in governance; syllabus development; internships and regional and international exchange programmes. 4.3.3 Decentralisation, citizen participation and empowerment, transparency and accountability 4.159 The mandate o f the Decentralization, Citizen Participation and Empowerment, Transparency and Accountability Sector (DCPETA) i s to provide equitable, efficient and effective pro-poor service delivery, while promoting local development in an environment o f good governance. The sector has identified four broad areas o f intervention. 4.160 First, for Rwanda to achieve result-orienteddecentralisation, five strategic areas have been identified to guide the decentralisation policy implementation process. These are: (i) effective management and implementation o f decentralisation policy; (ii) citizen participation, transparency and accountability; (iii) efficiency and effectiveness o f local governments inlocal economic development, poverty reduction and service delivery; (iv) fiscal and financial decentralisation; and (v) monitoring, evaluation and management information systems. 4.161 MINALOC and its partners have developed the Rwanda Decentralisation Strategic Framework (RDSF) and i s about to finalise the Decentralisation Implementation Programme (DIP). These two documents will provide a harmonised and co-ordinated 87 guiding framework for all current and future interventions towards result-oriented decentralisation inRwanda. 4.162 Secondly, in the area o f citizen participation and empowerment, mechanisms and capacities for all-inclusive citizens' participation in local decision-making and governance processes will be reinforced at various levels. Particular emphasis will be placed on ensuring a voice for citizens as local government's clients, as well as for women, youth, children and disadvantaged groups. Gender sensitivity will be integrated across the systems and training programmes will be implemented.Awareness campaigns incivic education will be conducted to inform the population about electoral processes, freedom o f expression, political rights, civil liberties, duties and responsibilities. The regulatory environment o f civil society will also be improved to encourage development, partnerships with the Public Sector and its involvement in governance and socio- economic development. 4.163 Thirdly, to reinforce democratic organisational culture and framework, capacity will be developed inevery public institution as well as inthe public and private media to enhance transparency and accountability. The professionalisation o f the media will be strengthened to promote the citizens' voice, unity and reconciliation, freedom o f expression and to disseminate public information. 4.164 The promotion o f free political competition as well as an independent and engaged civil society and media will be facilitated by the establishment o f the Forum o f Political Parties, the Civil Society Platform, the High Council o f the Press, Media Associations and the Joint Governance Framework. In order to strengthen transparency and to facilitate the registration and operation o f these important institutions, there i s a need to revise laws andpolicies; such revisions are ongoing and will be completed during the course o f the EDPRS. 4.165 Fourthly, a robust monitoring and evaluation system which will effectively monitor and evaluate good governance programmes, the implementation o f decentralisation and social welfare will be established to inform decision-making. This will be linked to the Management Information Systems (MIS) developed at central and local levels o f government. Monitoring and evaluation user manuals and ICT equipment will be supplied to local governments and geographic information systems (GIS) will provide baseline data. Capacity for data collection (e.g. Citizens Report Cards and Community Score Cards), data analysis, and database management will be developed. 4.166 Inplanning and implementing its interventions, DCPETA will be mindful of cross-cutting issues. A National Commission on Children will be established together with children's forums which will meet regularly during the year. Community-based measures will be put inplace to protect vulnerable children and victims o f violence and abuse. Gender sensitivity will be integrated across the systems and training programmes will be implemented. The sector's monitoring system will collect disaggregated data relevant to the needs and concerns o f vulnerable groups to provide a basis for designing more effective public interventions to counter the lack o f social inclusion. 88 4.167 As regards gender, it is important that both men and women have equal access to accurate, timely and relevant information. This will allow them to participate fully in democratic decision-making, such as voting and contributing to planning processes, and provide them with an evidence base for evaluating government performance at local and national level. Steps will be taken to encourage women to put themselves forward for electoral office and appointed positions. A national plan o f action will be drawn up and implemented to strengthen the capacity o f women elected or appointed into decision- making positions. 4.168 Finally, DCPETA is committed to ensuring local governments meet benchmarks for HIV/AIDS indicators and activities in their district development plans, annual plans, and medium term expenditure frameworks. The sector will also work to strengthen civil society in the management o f comprehensive HIV/AIDS prevention, care, and support programmes. 4.3.4 PublicSector capacity andemploymentpromotion 4.169 The Capacity-building and Employment Promotion Sector (CBEPS) aims to strengthen Public Sector capacity to provide effective and efficient service delivery, as well as to launch initiatives leading to increased levels o f decent and economically productive employment. The sector plans activities infour areas. 4.170 Firstly, policies and legislation will be put inplace for both private and public workplaces which mandate a safe, secure and equitable work environment, while also introducing measures to ensure compliance. This will enshrine workers' and employers' rights and responsibilities in the Labour Laws and Public Service Policy, which in turn will beusedas guidance for a range o fother regulatory and procedural documents. 4.171 The sector intends to ensure good quality revisions to the Labour Law and related regulatory documents and to this end, technical assistance and capacity-building of key Ministry o f Public Service, Skills Development, Vocational Training and Labour (MIFOTRA) staff will be required. Technical support for the development o f a Public Service Policy and associated regulatory documents, including the Public Service Statute, will also be needed. It will be necessary to put inplace a Public Service Commission to monitor and support compliance with these policies and laws. It will also be important to strengthen the capacity o f labour inspectors through key input which includes increasing the number o f inspectors from thirty to sixty; providing transport to facilitate workplace visits inrural areas; providing fifteen days o f training per year for thirty inspectors to take the Certificate in Labour Administration at Rwanda Institute o f Administration and Management (RIAM) and providing a computer with a standardised database for each district labour office. 4.172 Secondly, the key to effective and efficient service delivery is to build the human, institutional and organisational capacity o f public service institutions. The sector will work in partnership with all sectors involved in capacity-building and employment 89 promotion issues, especially MINALOC, MINEDUC and the Ministry o f Health (MINSANTE) to ensure that capacity-building is responsive to the needs at all levels o f governance. The sector will also strengthen the capacity o f local training institutions to ensure cost-effective and responsive professional development o f Public Sector staff. To support this, a National Reform Co-ordination Unitwill be established. 4.173 A National Skills Audit to identify needs and ensure professional development in key areas will be carried out and the results used to develop a skills development policy and strategic plan. Support will be given to all public institutions to carry out a training needs assessment, the results o f which will be used to develop institutional training plans based on the priorities identified. These will be usedby the CBEP sector to develop a national master plan o f public service training based on priority needs. All Public Sector training will be funded through a centralised Skills Enhancement Fund which will be established and managed by MIFOTRA. Appropriate equipment will be obtained to support key CBEP sector activities and facilities will be upgraded to ensure compliance with revised policies and legislation for health and safety and equity. Local Training Institutions (LTIs) will also be strengthenedto enable them to carry out training o f Public Sector personnel at all levels; this will require technical assistance to build training capacity, develop appropriate curricula and improve their facilities. Two projects, Migration for Development in Africa (MIDA) and Transfer o f Knowledge and Technical Expertise Network (TOKTEN), will support the engagement o f the Rwandan diaspora incapacity-building for the public and private sectors within Rwanda. This will allow the Rwandan diaspora to develop harmonious relations with the mother country and to contribute to the good image o f Rwanda inthe international community. 4.174 Thirdly, in order to address the high levels o f under-employment and ensure increased levels o f economically productive employment, the sector will implement two complementary initiatives. The first i s the establishment o f a National Employment Agency with district branches which will provide information and advice to job seekers and provide contact with potential employers. The second initiative will provide access to priority high quality vocational training through the Rwandan Workforce Development Authority and its provincial and district centres. It i s important that plans for this training be done in conjunction with the Education and Private Sectors for maximum effectiveness and efficiency especially as regards the utilisation o f resources. This initiative i s aimed at increasing the number o f off-farm jobs in Rwanda. Priority will be given to the employment o f youth, women and people living with disability and to the elimination o f child labour. A child labour survey will be implemented and subsequent child labour policy formulated and implemented. 4.175 The new employment promotion interventions will require considerable capital costs with regard to establishing the National Employment Agency and thirty district branches, the Rwandan Workforce Development Authority with five Provincial Workforce Centres and upgrading the current Centre de Formation des Jeunes (CFJ) vocational centres to become District Workforce Centres targeting all Rwandans for employment. This will require construction and rehabilitation o f buildings, provision o f all equipment as well as a full complement o f staff who will be trained appropriately. A 90 strategic plan will be developed which will elaborate the orientation, higher level objectives and programmes o f these organisations. 4.176 Inadditionto training andthe establishment o femployment institutionsthat link the demand and supply sides o f the labour market, further work will be undertaken to elaborate an Employment Strategy which will identify potential sources o f job creation on the demand side, including in the Informal Sector which employs the majority o f the labour force. The strategy will include components relating to macroeconomic management, trade policies, direct employment creation through HIM0 and those relating to assisting Private Sector employment creation (micro-credit, technical assistance and export promotion, reducing regulatory burden and promoting foreign direct investment), together with supply-side measures including training. Special attention will be paid to promoting paid employment opportunities for specific groups including young people andwomen. 4.177 Fourthly, CBEPS will seek to improve the co-ordination o f activities and collaboration with partners across public and private sectors and to establish effective data collection and reporting processes to support the monitoring and evaluation o f progress. This will involve setting up a number o f teams to address capacity-building and employment promotion priorities, which might include measures to promote young entrepreneurs and increase the number o f apprenticeships. This in turn will require provision o f adequate communication equipment, including improved wireless connectivity for all staff members. An effective Management Information System will require the design o f integrated databases which link to the proposed national database to bemanagedby the National Institute o f Statistics Rwanda (NISR). The training o f CBEP staff to maintain specific sections o f the database related to their sub-sector interventions i s planned. New equipment will include upgraded computers for key staff and dedicated servers. The creation o f new posts for professional officers in the areas o f monitoring, evaluation and statistics will be requested. 4.178 The sector will monitor the gender composition o f employment in different sectors and o f jobs in different skill categories. Measures will be taken to widen the occupational choices facing women and to eliminate gender-based wage discrimination. CBEPS i s also committed to addressing A I D S in the workplace. The sector will ensure that HIV and AIDS sensitisation programmes and prevention measures are provided in both public and private enterprises with at least 60% o f enterprises providing this by 2012. In addition, the sector will work to ensure that policies and employment laws related to AIDS are developed and implemented. 4.3.5 Centre of excellence in soft infrastructure 4.179 Improving governance underpins the success o f the other two flagship programmes. For instance, one o f the objectives o f Vision 2020 Umuvenge is to increase the efficiency o f poverty reduction; this requires strengthening the capacity o f local government and accountability. Also, economic growth for jobs and exports requires the country to foster private investments and attract higher levels o f foreign direct investment 91 which will be forthcoming only ifthe business environment is made more attractive. The country's low level o f "hard infrastructure" (transport, energy, communications) makes this a challenging task which will receive highpriority. 4.180 At the same time, Rwanda is well placed to develop and exploit a potential comparative advantage in "soft infrastructure", that is, those aspects o f governance such as well-defined property rights, business-friendly regulations, efficient public administration to limit bureaucracy and micro risks, and predictability in policies which are o f most concern to private investors. These relate to corporate governance and public financial management. If Rwanda i s to become a centre o f excellence in soft infrastructure and governance in Africa, it must maintain its reputation as a country with a low incidence of, and zero tolerance for, corruption. Furthermore, it must develop a service culture in public administration where success is measured by outcomes and by citizens' satisfaction. 4.3.5.1 Corporate governance 4.181 Corporate governance i s concerned with the ethical principles, values and practices that facilitate holding the balance between economic and social goals and between individual and communal goals. The aim i s to align the interest o f individuals, corporations and society within a framework o f common good and sound governance. 4.182 The African Peer review Mechanism (APRM) Country Review Mission (2005) findings suggest that, although a regulatory framework promoting good corporate governance exists in Rwanda, together with a good legal framework for promoting the Business Sector, much still needs to be done to establish and enforce these legislative obligations and duties, as well as to update and expand them. Sensitisation campaigns on corporate governance which are underway, both at public and private initiative, will be improved. 4.183 To promote an enabling environment and effective regulatory framework for economic activities, the GoR has engaged a wide process o f reforms in the legal and judiciary domains to bring its laws and regulations into conformity with international and regional standards as the country strives to make the Private Sector the engine o f its economic growth. A number o f drafts for laws are beingprepared or already examinedby parliamentarians, including in areas such as the Investment Code, Intellectual Property Code, Microfinance and Banking Law, Environment Law and Money Laundering. Draft laws are planned in a number o f areas including Companies Act, insolvency and bankruptcy, commercial dispute resolution, competition and consumer protection. 4.184 GoR will establish an Inter-Ministerial Task Force to review the state o f implementation o f standards and codes and promote and sustain existing efforts to raise awareness o f corporate governance issues inpublic and private spheres. It will ensure that the relevant regulatory and enforcement bodies are active to enforce the laws, including Rwanda Revenue Authority (RRA), Rwanda Environment Management Agency (REMA),RwandaBureau of Standards andthe National TenderBoard. 92 4.185 Rwanda's commercial law clearly establishes the role and responsibilities of corporate boards and management. However, specific training sessions for directors and managers will be designed with the Human and Institutional Capacity Development Agency (HIDA), the National University o f Rwanda, the School o f Finance and Banking, and other Private Sector entities. A competition regime, which addresses the particular challenges posed by a small domestic market, will be designed and implemented to ensure Rwandan consumers benefit from regional and international integration. 4.3.5.2 PublicFinancial Management 4.186 The central aim o f the Reform Strategy is to modernise Rwanda's Public Financial Management (PFM) infrastructure, regulatory framework, policies and systems at central and local government levels. The final objective is to ensure that the GoR develops the overall capacity to manage and regularly report on its own budgetresources as well as utilise, account and report on aid and assistance provided by development partners in various forms. This i s in line with the principles o f direct budget support based on the strengthening o f existing institutional systems, processes and procedures. 4.187 The strategy for reform follows from a period o f diagnostic review and analysis and wide consultations with stakeholders. Improvements are being made to PFM institutions, infrastructure, systems and processes, to strengthen the legal and institutional framework, and mainstream and integrate PFM activities into the economic reform agenda. The first Public Expenditureand Financial Accountability (PEFA) Assessment i s currently under way and will be used to identify gaps, challenges and constraints then factor these into the strategy. PFMreforms are contained inthe PFMReformAction plan o f June 2006 and implemented through a multi-donor trust fund managed by the Human Resources and Institutional Capacity Development Agency (HIDA). 4.188 Specific reforms to budget policy and the management o f expenditure aim at redefining policy priorities, integrating MTEFs, focusing on developmental goals such as poverty reduction and supporting the transition to a market-oriented economy. Accounting reforms include modernisation o f the accounting function through implementation o f the new OBL, professionalisationo f accounting, rollout o f training on the iaw and regulations, and clearance o f reconciliations backlogs. Inter-Governmental Fiscal Relations, an independent unit, has been established to facilitate better decision- making at local government level. Internal audit activities include the establishment o f a separate internal audit fknction under MINECOFIN with responsibility for leading the internal audit improvement and modernisation. Parliamentary oversight assisted by a Supreme Audit Institution i s a prerequisite for an effective system o f checks and balances subject to the rule o f law. The implementation o f capacity and institutional strengthening activities will reinforce the ability o f the Auditor-General's Office to deal with its wider accountability mandate. 93 4.3.6 Summary of the Governanceflagship programme 4.189 As described above, governance operates through multiple channels, covers a wide array o f laws and policies designed by a number o f lead ministries (including MINADEF, MININTER, MINAFFET, MINALOC, MINIJUST, MININFOR, MINECOFIN, MIFOTRA, MINEDUC, MINISANTEand MINICOM) and implemented through various programmes by many agencies and local governments. With such complexity, there i s a risk o f losing sight of the importance o f specific interventions with regard to the overall goal o fpromoting good governance. 4.190 Therefore, the governance flagship programme seeks to capture all these streams o f work to foster greater co-ordination among lead ministries, agencies and local governments. It i s expected that better understanding o f the contributions o f specific interventions with regard to the overall goal o f good governance will foster greater co- ordination across the country. And the co-ordination itself will become an important contribution to further improvements ingood governance inRwanda. Table 4.7 Summary of governanceflagship 94 Empowering citizens Voice and MINALOC to participate and own accountability, their social, political government effectiveness, developnient in respect political rights, civil liberties Voice and MINALOC, decentralisation and accountability, MININFOR govxnmcnt effectiveness Voice and MINALOC levels of government government effectiveness Public Sector human Government MIFOTRA. effectiseiiess MINALOC, MINEDTJC, MINISANTE Strengthening public Government MINECOFlN financial nianagement effectiveness, (PFM) and improving control of Governnient MINECOFIN, MIFOTRA transparency Voice and All ministries, accountability, agencies, and governnient Iocal effectiveness, goveniments transparency lniplenienting the Rule of law, MINIJUST, corninercial justice, economic MINICOM business and land freedoms 95 MINIJUST freedoms, minimal enviroriment for doingbureaucracyand Proniotingprinciples Economic MINICOM ofmodemcorporate freedoms, self- regulation and ethics 96 4.4 Complementary sectoral interventions to achieve the EDPRS targets 4.4.1 Manage the environment and ensure optimal utilisation of natural resources 4.191 The Rwandan economy is primarily dependent on natural resources. Over 87% o f the population depends on subsistence agriculture for its livelihood, and more than 94% use firewood as their primary source o f energy for both domestic and industrial uses. Increasing population pressure on land and forest resources places biodiversity underthreat withpotentially adverse impacts on export revenue from tourism. 4.192 Under conditions o f extreme poverty, benefits accruing inthe future tend not to behighly valued inthe present. This fact together with an absence o f clear property rights to land and rising population density has led to the over-exploitation o f land and encroachment on fragile areas, including wetlands. This situation has potentially serious implications for national food security as well as for energy supplies, owing to the decline inwetland water levels. Interruptiono f the role played by the Rugezi wetland as a hydro-electric power source has already led to electricity supply shortages inRwanda. In this case, the cost o f fuel requiredto rungenerators to provide replacement electricity to the national power grid is around US$65,000 per day. 4.193 Developing an adequate legal, regulatory and policy framework for managing the environment is important. However, unless this is matched by the political will and sufficient resources to strengthen and build the capacity o f those institutions charged with implementing environmental policy, there will be little impact on the current situation. 4.194 Key environmental interventions in the EDPRS include the rehabilitation of degraded wetlands and other protected areas to ensure the preservation o f biological diversity. An incentive framework will be put in place to implement the National Programme for Adaptation on Climate Change (NAPA) and develop a Clean Development Mechanism, while guidelines will be developed and disseminated on the conduct o f Strategic Environment Assessments (SEAS) and Environmental Impact Assessments (EIAs). 4.195 Priorities in the area o f land management include establishing land institutions, land registration mechanisms and land use planning, through a land use and management master plan. A costed strategic roadmap for land reform will be ready by October 2007. Procedures will be developed and documented to manage existing land folders and the land database that will facilitate the nationwide implementation o f land tenure regularisation. Women's rights to land and other property will be recognised and strengthened, regardless o f their civil status, that is, whether they are single, married, divorced or widowed. 4.196 The Forestry Sector will require interventions that include designing and implementing a reforestation strategy with diverse species, as well as taking an inventory andmapping national forest resources to provide the basis for a ten year national forestry 97 plan. A joint strategy with MINAGRI will be developed to promote agro-forestry for non-wood uses, that is, for medicinal plants, honey production, wild foods, and handicraft production. 4.197 In the Mining Sector, measures will be taken to promote Private Sector participation inexploration, miningand processing, and promote value addition o f quarry products to reduce the importing o f construction materials. All potential areas o f significant mineral deposits should be mapped by 2012. The new geological surveying programmes conducted by OGMR will assist in attaining this objective which will provide valuable information to investors. Assisting cooperatives o f small miners to acquire knowledge and skills and access appropriate technology will ensure that mining strategy incorporates a pro-poor component. Programmes will be developed to train women in the skills required by the mining industry, as well as inbroader competencies relevant to environmental management. 4.198 As the environment i s a cross-cutting issue, environmental policies are being developed in close collaboration with other sectors. Land use management issues will be addressed with the Agriculture Sector to develop interventions for reducing land degradation, soil erosion and soil fertility losses. The Forestry Sector has engaged with the environment and energy sectors to limit deforestation. The Mining Sector is addressing the problem o fpotential environmental degradation from quarrying activities. 4.4.2 Improve water resources management and access to safe drinking water and sanitation 4.199 The purpose o f the Water and Sanitation Sector (WATSAN) i s to ensure sustainable and integrated water resources management and development (IWRM&D) for multipurpose use including increased access for all to safe water and sanitation services. The sector has planned activities in six areas to meet its EDPRS targets. Firstly, a set o f tasks has been identified which feed into the preparation o f a master plan for national water resources management which will be approved by 2009. These include surveying and assessing all the country's surface and ground water resources and establishing a national system for monitoring water quantity and quality. Watershed management committees will be set up across the country and the Nyabarongo and MuvumbaRivers will each have ten kilometres o f their river borders protected. 4.200 Secondly, measures will be taken to increase access to water for economic purposes. These include reviewing existing legislation to improve the regulatory framework for water use and promoting access to water for agriculture. The possibilities for expanding navigation on the country's water bodies will also be explored. Thirdly, a series o f actions are planned to improve access to safe water for domestic use. These include developing guidelines for water and sanitation planning, as well as the design, construction, operation and maintenance for public and private bodies. Initiatives will be taken to provide, supply and repair water infrastructure, such as boreholes with hand pumps. 98 4.201 Fourthly, it i s planned to improve access to sanitation services that meet hygienic standards. Measures will be taken to increase the proportion o f schools, health centres and rural households with latrines. The collection and processing o f solid waste will be extended to more households and institutions. Fifthly, human and institutional resource capacity in the Water and Sanitation Sector will be strengthened. To this end, a needs assessment will be carried out and a capacity-building plan approved by 2008. Finally, the institutional framework for policy-making, planning and implementation in this sector will be enhanced by the development o f a National Water and Sanitation Master Plan (mentioned previously) and by putting in place a results-based monitoring and evaluation system. 4.202 In planning its interventions in these six areas, the sector will be mindful of cross-cutting issues. Since it i s women who are primarily responsible for fetching water, it is important to design and implement a rural water supplyprogramme that is responsive to their needs. For example, the sector will strive to decrease the average distance to the nearest safe water source inorder to protect women andreduce their vulnerability to rape. WATSAN will also play a role in HIV prevention by providing awareness-raising programmes and condoms for its workers and by taking action to reduce the number o f days its workers are away from home. Sensitisation activities will be carried out to create awareness among the population about the links between AIDS and access to water and sanitation services. 4.4.3 Strengthen health programmes as well as slow down population growth rate 4.203 Improving health is an important goal in itself and, as a component o f human capital accumulation, it also contributes to higher incomes. Poverty and poor health are often linked in a vicious cycle. Poverty exposes households to greater health risks stemming from under nourishment, limited or no access to safe drinking water and basic sanitation, overcrowding, illiteracy, and an inability to access or utilise health care resources. Poor health reduces household savings, constrains learning ability, lowers productivity and leads to a low quality o f life. 4.204 The Health Sector has planned interventions in seven areas to allow Rwandans to break out o f this vicious cycle o f poverty and poor health. The first objective is to strengthen institutional capacity at all levels. This will be achieved by allocating and managing the financial resources o f this sector more efficiently? and by ensuring coordination between vertical disease programmes and mainstream health service delivery ina cost-effective manner. Private Sector involvement inthe provision o f health care will be encouraged and the Integrated Health Management Information System will be strengthened to allow better monitoring, supervision and evaluation. This should ensure that the National Health Accounts? Public Expenditure Review and Mid Term Expenditure Framework are institutionalised and updated annually. Having stronger management systems inplace should improve partnerships between the Public Sector, the Private Sector and the Informal Sector, incorporating community and traditional healers. 99 4.205 The second objective i s to increase the quantity and quality o f Health Sector personnel. Efforts will be made to improve the availability o f well-qualified health professionals throughout the country, particularly in rural areas. This will be done by increasing numbers o f permanent positions in the rural health facilities and recent graduates will be required to work for a minimum o f two years in rural health care facilities. To improve the performance o f health care professionals, the government will expand and strengthen the existing Performance Based Financing (PBF) system through which wage premiums are paidto healthworkers based on performance o f the facilities. 4.206 The third objective is to ensure that health care is accessible to the whole population irrespective o f their ability to pay. In order to ensure access to, and use o f health services, the sector i s putting in place sustainable ways o f helping the very poor and memberso f vulnerable groups. This is done through the community health insurance scheme, Mutuelles, where membership o f the very poor and vulnerable groups i s subsidised through the solidarity funds. Efforts are also under way to ensure that everyone is covered by health insurance with an emphasis on strengthening the community health insurance scheme. On the supply side, it i s intendedthat the number o f doctors will increase and they will be provided with appropriate medical equipment. 4.207 The fourth objective is to increase geographical accessibility to quality health care services. By 2012, the proportion o f households living within one hour from a fully functioning and equipped health care facility will be increased. In order to achieve this goal, the sector needs to increase the provision o f health services in more remote and under-served areas o f the country. In these areas, the capacity o f health centres and hospitals to provide a comprehensive preventative and care package for reproductive health, family planning, nutrition, AIDS, TB, malaria and Integrated Management o f Neonatal and Childhood Illnesses (IMNCI) will be strengthened. The Health Sector will also need to buildand rehabilitate some health facilities. 4.208 The fifth objective i s to increase the availability and affordability o f drugs, contraceptive products, vaccines and other consumables. As the utilisation o f health care facilities increases, evidence shows that the binding constraint becomes drug availability. Providing safe and effective medication, diagnostics and other commodities to patients is vital for improving the quality o f health care. Such a policy has cost-saving effects which i s the rationale for attempting to reduce the number o f out-of-stock days for all essential drugs at public health facilities. 4.209 The sixth objective i s to improve the quality o f and increase the demand for services inthe control o f diseases and alleviation o f morbidity and mortality. Drawing on available evidence relating to the effectiveness and affordability o f key health interventions, measures will be taken to address the major diseases and risks that contribute to the heavy burden o f morbidity, mortality and low productivity in Rwanda. There are six mainmeasures andthey are explainedbelow. 4.210 Strengthen reproductive health sewices andfamily planning in order to reduce maternal, infant and child mortality, lower fertility and ultimately slow population 100 growth: in order to achieve the ambitious targets in this area, the policies focus on promoting family planning, specifically on reproductive health for youth, involving men infamilyplanning, supportingcouples and individuals who decide responsibly and freely on the number and spacing o f their children, and ensuring free access to information, education and contraceptive services. Broader activities include improving maternal health through scaling up emergency obstetric and neonatal care activities, sensitising the community to what the danger signs are during pregnancy, increasing access to prenatal, delivery and postnatal care to reduce maternal and infant mortality. In addition, by community mobilisation, behavioural change communication (BCC) and gender empowerment the total fertility rate will bereduced. 4.211 Reduce the incidence of communicable diseases, by improving the prevention, care and treatment of malaria, TB and AIDS: during the time frame of the EDPRS, the GoR aims to drastically reduce the malaria fatality rate by improving malaria case management at community level, distributing insecticide-treated mosquito nets and encouraging their use by pregnant women and children, indoor spraying, applying bio- larvicide and by improving general sanitation. Measures will also be taken to ensure early case recognition followed by the appropriate response and referral. Chemioprophylaxis for pregnant women will also bepromoted. 4.212 Tuberculosis case management will also be strengthened by early case recognition with the appropriate response and referral, combined with better access to services. Directly Observed Treatment Short Course (DOTS) and STOP-TB strategies will be expanded to more people; closer links will be forged between TB and AIDS programmes, while the problem o f multi-drug resistant-tuberculosis (MDR-TB) will be addressed. 4.213 As regards AIDS, the Health Sector will ensure that HIV counselling and measures to prevent HIV transmission from mother to child are routine during prenatal and postnatal visits and circumcision of young males will be promoted inorder to reduce transmission. Screening and testing of children will be expanded. Building on the progress already made by the Treatment and Research AIDS Centre (TRAC), which has beenrecognisedby an award from the Technology inGovernment Africa (TIGA) project, the treatment, care and support o f HIV-infected and affected people will be improved. Evidence-based prevention measures will be taken to combat ignorance and disseminate knowledge about the causes o f HIV and how it can be prevented by promoting Education, Abstinence, Being faithful, and correct and consistent Condom use (EABC). Inparticular, awareness programmes will take into account the drivers of the epidemic including cultural norms, poverty and gender inequality, with a focus on target populations at higher risk of exposure, such as the armed forces and highlymobile groups among the population. 4.214 People living with HIV and young people will be at the center o f the HIV response. They have an important role to play in advocating preventative measures and promoting changes insexual behaviour, especially through peer education. The voices of PLHN can provide first hand testimonies to persuade people to alter their attitudes and 101 adopt safe strategies o f HIV prevention. Awareness programmes will provide employment opportunities empowering PLHIV and young persons who are likely to be particularly effective incommunicating health messages inthis area. Support will also be provided to widows, widowers and other groups, such as Orphaned and Vulnerable Children (OVC) and PLHIV, who have to cope with the socio-economic impact o f HIV and AIDSI 4.2 15 Decrease theprevalence of childhood diseases through IMNCI : measures are in place to scale up the implementation o f IMNCI. Major efforts will be made to strengthen community health programmes which prioritise the prevention and treatment o f diarrhoea, malaria and pneumonia and prioritise nutritional monitoring and supplementation. Efforts will be made to expand the coverage o f children who receive full vaccinations and a large scale campaign will be launched to raise awareness of diseases such as diarrhoea and promote good sanitationpractices. 4.216 Reduce the rate of chronic and acute macronutrient malnutrition and the prevalence of micronutrient deficiencies: policies to achieve this objective include the promotion o f optimal nutritional practices, including those for mothers and infants, and expanding community-based nutrition programmes. Therapeutic and supplementary feeding services for malnourished children will be strengthened, while nutritional education, care and support will be provided to PLHIV and other vulnerable groups at health facilities and at community level. Micronutrient supplements and de-worming treatment will be provided to the most vulnerable populations, including children under five, primary school pupils, pregnant and lactating women, and those on antiretroviral therapy (ART). A Nutrition Surveillance System will be established as part o f a comprehensive Food Security and Early Warning System. 4.2 17 Improve the environmental health and hygiene conditions of thepopulation: this will be achieved by increasing access to potable water to prevent water-borne diseases, and through improvements in environmental sanitation. Massive BCC and awareness campaigns will be launched to promote higher standards o f personal hygiene. Safer methods o fwaste disposal will bepromoted at community and health facilities. 4.218 Develop and implement a national mental healthprogramme: a major legacy o f the genocide i s the large number o f people suffering from trauma and other effects o f having suffered bodily harm or having witnessed others being murdered or mutilated. The number o f trauma counsellors will be increased and targeted programmes will be launched to meet the needs o f different groups, particularly children. 4.219 The seventh objective of the Health Sector is to develop accessible national training, research and reference facilities o f high quality with specialist health care services and state o f the art equipment. The Health Sector will coordinate its plans with that of the Education Sector and with STI to ensure the most effective use o f resources and to prevent duplication o f efforts. These high quality facilities will encourage people with the financial resources who usually travel abroad to use health services within the country. This objective requires that the skill base o f the country's Medical Sector be 102 further strengthenedby training more specialised medical personnel. A strategy will be formulated to develop further areas o f specialisation in Rwanda and a policy framework will be drawn up to promote clinical research on highmorbidity andmortality diseases. 4.4.4 Integrate and extend social protection 4.220 The objective o f the Social Protection Sector is to achieve effective and sustainable social protection for the poor and vulnerable, to reduce the risks to which households are subject, to mitigate the potential consequences o f those risks, and to help families that experience them to cope with the consequences. This group i s defined as all those below the poverty line inthe EICV2 (2005). To this end, a single, coherent strategy i s being designed to replace the current plethora o f small programmes in this area. The strategy will include details o f the target groups and what share they make up o f the population; details o f the forms that social assistance will take and an analysis o f risks especially regarding those who may be excluded fi-om the suggested targeting and an analysis o f changes to livelihoods in the longer term. An analysis o f the most effective and efficient ways to promote long term progression out o f poverty will also be undertaken. The strategy i s fully aligned with the MDGs and Vision 2020 at national level, while also being integrated into Vision 2020 Umuvenge at local level. It will be implemented by establishing budget lines for different vulnerable groups, and mechanisms will be set up to coordinate activities across social protection programmes and to strengthen advocacy work. More specifically, a central coordination body will be established at national level, while coordination teams will also be assembled at district and sector (umurenge) level. 4.221 Establishing a comprehensive social protection programme, including social assistance will require a feasibility study to determine vulnerability criteria, establish the number o f vulnerable people who would be eligible, assess their gender-differentiated needs and design cost-effective delivery mechanisms. After this exercise, the sector will review and strengthen the institutional framework o f social protection, put inplace a well coordinated framework for social protection dialogue between the GoR and development partners and establish a sector-wide approach or joint funding arrangements for a more coordinated and impact-focused approach. 4.222 The sector will need to review the legal and policy framework for harmonisation, simplification and improvement o f formal social insurance mechanisms, including ensuring that men and women are treated equitably. A civic education programme will be launchedto disseminate information on social insurance to workers in the formal and informal sectors. 4.223 The sector will support people who are able-bodied to progress out o f extreme vulnerability and poverty into more sustainable means o f self support through cash for work, micro-credit, income-generating activities and vocationaVentrepreneuria1 skills development. This should result in less people needingsocial assistance and more people economically active and eventually able to participate in microfinance, social insurance mechanisms (health, unemployment and pensions) and to contribute to government 103 revenue. 4.224 Success inassisting people out o f extreme poverty and vulnerability will free up Government resources to help those who are not able to help themselves and will need to receive social assistance for the long term, or at least for a minimum period. People needing long term social assistance include: the unsupported elderly, people with disabilities and people incapacitated by AIDS. Other groups may only need social assistance for a shorter period o f time such as: orphans and vulnerable children, child- headed households and historically marginalised people. Genocide survivors fall into both these categories. 4.225 In order to enable food insecure households to move into sustainable self- support, the sector will establish a range o f employment alternatives for this category o f vulnerable people and ensure that issues o f gender equity and disability are taken into account. Some people will be employed inpublic works (HIMO) and encouraged to save, so that they can access micro-credit. Others in micro-credit will receive help to start income-generatingactivities (IGA). 4.226 With respect to HlV and AIDS, support will include providing effective delivery o f a minimum package o f services to vulnerable groups including OVC and PLHIV with a strong focus on increasing the number o f OVC accessing school. The sector will identify issues that adversely affect vulnerable groups and advocate for changes in areas pertinent to those infected and affected by HIV and AIDS. These areas include land rights, land tenure, participation in governance, and access to education, health and priority infrastructure such as shelter, water and sanitation. Additional public campaigns will aim at reducing the stigma attached to and discrimination against vulnerable groups. 4.227 Inorder to build capacity, cascade training programmes will be developed to support social affairs officers and civil society to deliver and monitor social assistance and other social protection programmes, such as HIMO and Ubudehe. Capacity-building includes the provision o f equipment and other facilities to social protection service providers to improve their working conditions. This process will also sensitise leaders and social protection service providers at all levels to the meaning o f unity and reconciliation inorder to show how it relates to their daily activities and practices. 4.228 The sector, in collaboration with other stakeholders, will also develop strategic plans for disaster preparedness. Risk analysis will be camed out on the impact and probability o f a range o f disaster scenarios such as floods, volcanic eruptions and a mass influx o f refugees or returnees. Mitigatory measures will be implemented where high probability and high impact are identified. All these outputs cannot be successfully delivered without putting inplace a sound institutional capacity-building programme and effective monitoring and evaluation and Management Information Systems. The latter two are discussed further in Chapter 7. 104 4.4.5 Supportyouth to participatein economic and social development 4.229 The role o f young people in the EDPRS, as makers and targets o f policy, is o f particular importance for two reasons. Firstly, since two thirds o f the population i s aged less than 25 years, the EDPRS stands or falls by the success with which it meets the challenges facing the youth o f Rwanda. Secondly, owing to the widespread economic, social and political dislocation the country has experienced, especially during the 1994 genocide, many young Rwandan citizens have been damaged by forced migration, traumatic childhood experiences and lost or interruptedschooling and parenting. 4.230 Inthis document, `youth' is defined as persons aged between 14 and 35 years, while `youth employment' refers to work undertaken by those aged between 16 and 35 years.21 In2007, almost 3.5 million persons were aged between 16 and 35 years and they made up 40% o f the population. 4.231 The first step in elaborating a youth development strategy is to acknowledge that the problems and challenges faced by different groups o f young persons vary widely. Consequently, any comprehensive strategy to promote the participation o f youth in the country's economic and social development will consist o f a portfolio o f policies and programmes, each o f which is targeted at particular groups o f young people. The table in Appendix 2 provides a summary profile o f Rwandan youth disaggregated by age group. Several target groups are identified and certain policy responses are suggested merely by way o f illustration. A more detailed discussion o f policies designed to meet the needs o f different groups o f young persons may be found in the National Action Plan Promoting Youth Employment (NAPPYE) (MIFOTRA, 2005). 4.232 The remainder o f this section outlines the strategy o f the Youth, Sports and Culture (JESPOC) sector to strengthen the youth's participation in the social, economic and civic development o f Rwanda. The sector aims to strengthen a wide range o f public, private and civil sector groups and agencies to support the youths' participation in sport, culture, income generation and life skill programmes. It will support these programmes to ensure that young people are part o f the decision-making and implementation process. This will develop their skills while building their self-esteem and self-confidence, and helpprotect them from sexually-transmitted illnesses, HIV andunwantedpregnancies. 4.233 Youth Friendly Centres (YFCs) will be a focal point at district level for the provision o f information, advice, counselling and guidance to support the youth to access a wide range o f services and opportunities available. Small-scale training programmes will also be developed. The YFCs aim is to reach out to youths at sector and cell level through the National Youth Council (NYC) structure and by establishing productive links with local, regional and national support groups and agencies. Programmes will focus on key areas o f sports, culture, employment promotion, ADS and reproductive health, life skills and management o f the environment. Opportunities for inter-generational learning will bepromoted. 21The minimumlegal age o f employment i s 16 105 4.234 Through this system JESPOC will work with youth to identify how key facilities can best be developed and protected. It will also develop district, regional and national facilities that will serve to further promote Rwandan culture and sports. It will be important to ensure effective coordination and advocacy within the JESPOC Sector and across the key sectors o f Capacity-Building and Employment Promotion, Education, Health and the Private Sector, as well as with donor agencies and NGOs. Effective data collection will enable information-based decision-making and support the monitoring and evaluationprocess. 4.235 Inorder to strengthen the support systemto enable effective implementation of Youth, Sports and Culture strategies and programmes it will be necessary to obtain technical support to manage the initial identification o f all support systems (including the Ministry for Youth, Sport and Culture, MIJESPOC), design the training needs analysis (TNA) process and instruments, carry out the TNA, as well as develop a plan for capacity-building. This will not only look at human resource capacity, but also at the institutional and organisational effectiveness o f support institutions and partners. It i s anticipated that funds will be available through the Skills Enhancement Fund for the capacity-building o f Public Sector services. The capacity-building plan will be used to mobilise fimds for institutions outside the Public Sector. 4.236 Staff will be recruited for the Youth-Friendly Centres (YFC) to enable the provision o f services for the youth. As far as possible, the current N Y C structure will be used to reach youths at sector and cell level, with members elected to the Youth Committees being given specific responsibilities for programme development. Capacity- building o f YFC staff and N Y C members and other JESPOC partners will be a major factor inthe success o f these programmes. 4.237 A range o f facilities has been identified as essential to support increased participation o f the youth. Major construction during this EDPRS period will cover memorial sites and cemeteries, stadiums, museums, cultural sites, libraries and archives based on feasibility studies; funding will be requested based on priority locations. Such constructionwill be closely linked to the HIMO schemes where Rwandanjob seekers are employed and trained while they work and will generate employment and develop essential skills. It i s intended that the youth participate inthese schemes. 4.238 Initially YFC premises will be located in currently vacant buildings until permanent premises are identified. Feasibility studies will identify where there is greatest need o f such centres. Many sports and cultural facilities will not require additional construction but will make use o f existing under-utilisedstructures and open air venues. The local district development offices will take responsibility for the development o f open air and open access sports facilities at sector level, for example, football pitches, basket ball and volley ball courts, again usingthe HIMO schemes. JESPOC will provide some incentive awards to encourage competition in setting up these facilities. It i s envisaged that the process o f programme development will be a participatory one with youth engagement in both the development o f the programme and production o f 106 materials. This will require provision o f adequate communication equipment including computers for NYCs and wireless connectivity. Technical assistance will be required to support the development o f these programmes and funds for this will be requested from government, donors andNGOs. Coordination teams will be set up at national, district and sector level to ensure effective management and implementation o f activities. 4.239 Integrated databases at all NYCs will enable the effortless exchange o f information among NYCs and support data collection processes for JESPOC. Technical assistance will be required for the database design and training o f N Y C staff to manage them effectively. NYCs will be responsible for the majority o f data collection for JESPOC monitoring and evaluation. MIJESPOC will require the creation o f new posts for monitoring and evaluation officers to manage the data collection process, carry out data analysis with staff at all levels, and generate reliable annual reports based on logframe indicators. Technical assistance will also be needed for the development o f a monitoring and evaluation framework and training o f all MIJESPOC staff. 4.240 To support and implement JESPOC initiatives, the following agencies will be established: the National Commission against Genocide, the National Academy of Culture and Languages, the Chancellery o f Heroes and National Orders, the National Library and Archives, and the National Cinema Commission. 107 5 HOW DOESRWANDA GETIT DONE ? 5.1 Among the lessons learnt from the PRSP was that while policy-makers knew what had to be done between 2002 and 2005, there were implementation weaknesses. Implementation problems occurred for several reasons. Institutional capacity was limited inmany areas. There were limitedresults-focused objectives andtargets combinedwith a weak system o f monitoring and evaluation. The contributions o f different sectors to reducing poverty, accelerating growth and attaining the MDGs were not clearly defined. As a result, there was insufficient coordination between sectors and inadequate linkage between budget lines and policy objectives. 5.2 Bearing this in mind, the risks o f implementation failure in the EDPRS will be reduced by improving incentives to execute policy and by relaxing the constraints which prevent policies horn being carried out. This chapter describes a variety o f policies for improving incentives inRwanda. The first set of policies, discussed insections 5.1 to 5.6, includes a variety o f public administration reforms designed to promote accountability. These range from decentralisation and the launch o f a multi-sectoral rural development programme (Vision 2020 Umurenge) to measures aimed at achieving a closer alignment between donors and EDPRSpriorities. 5.3 The second set o f policies, section 5.7, assigns a greater role to markets and the Private Sector in policy implementation. In this case, the challenge is to ensure that public policy at both the macroeconomic and microeconomic level i s consistent with the desired Private Sector behaviour. Section 5.8 reviews the challenges to implementation identified by Sectors and Cross-Cutting Issue Groups, and explains how these challenges will bemet. 5.4 Putting inplace `user-friendly' systems o fmonitoring and evaluation at sectoral and district level will be essential to ensure effective implementation o f the EDPRS. This will require establishing management information systems (MIS) in some sectors and simplifying or improving the MIS in others. Given the importance o f monitoring and evaluation to the successful execution o f the EDPRS, these activities are discussed at lengthinChapter 7. 5.1 Implementationframework for the EDPRS 5.5 The links between the EDPRS and other elements o f the planning system are shown inFigure 5.1. Public policies are formulated and implemented inthree dimensions simultaneously in order to drive key programmes forward, provide public services, and enhance area specific competitive advantages. EDPRSpriorities, which are set for a five year period, reflect both the long term objectives o f Rwanda Vision 2020 and government policies derived from its own agenda. Implementation o f the EDPRS has a function- based dimension via Sector Strategic Plans and Line Agency Strategies, and an area- based dimension via District Development Plans and Vision 2020 Umurenge. Both Sector Strategic Plans and District Development Plans have a five year time horizon. 108 Figure 5.1EDPRSandplanning linkages EDPRS in the planning system I Agenda Based 5.6 The Sector Strategic Plans elaborate EDPRS objectives and strategies in more detail. Similarly, the District Development Plans draw from the EDPRS and the Sector Strategies in order to balance these national priorities with local needs identified at district level. The MTEF shows how funds in the corning three years will be used to generate the required outputs. The annual budget performs a similar function over a one year period. Arriving at a realistic MTEF and annual budget requires strong procurement planning. 5.2 Align individual incentives toplanningpriorities 5.7 The MTEF and Annual Budgets serve as the basis from which ministries, districts, and other spending agencies derive annual work plans; first for each unit, and subsequently for each individual staff member working in that unit. For planning to be effective, regular reporting must occur to gauge whether efforts are yielding the desired results. The different planning tools aim to achieve ex ante compatibility o f incentives between different levels of the administrative hierarchy. This i s so that individual civil servants are motivated to achieve objectives which are consistent with high level planning priorities. These planning tools are matched to a reporting path which exacts ex 109 post accountability in the reverse direction (see Figure 5.2). In addition, it i s also important to build the capacity o f planners and put in place incentives to retain trained staff. Figure 5.2 Planning and reporting toolsfor implementing the EDPRS so 5.8 Within a Public Sector agency, individual staff report to a Unit Director, Unit Directors report to the Secretary-General, and the Secretary-General reports to the Minister. The Minister i s accountable to a broader audience for the execution o f the budget and for progress made in achieving the targets set inthe Sector Strategic Plan and the EDPRS. Effective reporting requires a `fit-for-purpose' monitoring and evaluation system at each level. This is discussed inChapter 7. 5.3 Extend and consolidate theprocess of decentralisation 5.9 Decentralisation will improve policy implementation in two ways. Firstly, by assigning responsibility for broad areas o f service delivery to local government, the pattern o f public spending should match citizens' priorities more closely. If this closer match i s achieved, then voters have a stronger incentive to demand the implementation o f policy. Secondly, by reallocating state functions from central government to the districts, accountability i s increased at local level. 110 5.10 In2005, the administrative structure ofthe country was changed. There are now four provinces, the City o f Kigali and thirty districts. Below the districts there are three further levels o f administration: sectors (imivenge) (416), cells (akagari) (2,150) and villages (imidugudu) (14,975). To date, the decentralisation process has focused on shifting responsibility to the district level. However, one o f the EDPRS flagship programmes - Vision 2020 Umuvenge - extends this process down to the sector and village levels. 5.11 Over 90% o f district government revenues comes from central government transfers. The exception i s the City of Kigali which raises around one third o f its revenues from municipal taxes and fees. Some transfers from central government are not earmarked for particular expenditures. The Community Development Fund (CDF) commits 10%of central government revenue to financing investment projects selected by the districts. CDF resources have recently been made available to assist districts to identify suitable projects to the CDF committee. Another source o f non-earmarked funds i s the Local Authority Budget Support Fund (LABSF) which commits 5% o f central government revenue to the districts. Inpractice, most LABSF resources are used to pay local staff. 5.12 All other transfers from central government are earmarked for particular types o f spending at local level. These earmarked funds accounted for around 87% o f central government transfers to districts in 2007. Some o f these funds are paid in ways which encourage local providers to improve service delivery. For example, the Ministry o f Education funds primary education through capitation (per capita) grants. So, if enrolment increases, so does the revenue o fthe school. 5.13 The introduction o f annual local government performance contracts i s the most recent initiative to increase the accountability o f local governments to central government. The local government performance contract i s an implementation device for the District Development Plan (DDP) which includes a mix o f national and local priorities. Each contract i s signed by a district mayor and the President o fRwanda. 5.14 Line ministries offer districts a choice o fperformance indicators for inclusion in District Performance Contracts (imihigo) and allow districts to set their own targets. In practice, many districts select indicators which are not on the list, and are, therefore, not closely linked to earmarked spending allocations. Work i s currently underway to achieve a closer alignment o f DDP indicators with the pattern o f local spending, so as to improve the monitoring o fthe EDPRS. 5.15 Weak systems o f financial control at local level are a major constraint on devolving further powers to the districts. One o f the key challenges facing the GoR i s the limited capacity o f budget agencies to produce regular financial and fiscal reports on revenues, expenditure, borrowing and inter-governmental fiscal resource utilisation on a regular basis. The EDPRS includes measures to strengthen these systems and to put in place a more robust accountability framework which incorporates the monitoring o f both physical outputs and financial indicators. 111 5.4 Flagship programmes will strengthen inter-sectoral coordination 5.16 A necessary condition for achieving many o f the EDPRS targets set by individual line ministries or sectors i s that other public and private agencies undertake certain complementary actions by particular dates. Figure 5.3 gives an example o f how this may occur. Improving horizontal coordination within the Public Sector is a strategic priority o f all the flagship programmes o f the EDPRS. The Growth for Jobs and Exports flagship programme stresses the interdependence of policy actions in different sectors to accelerate economic growth at national level in ways which benefit low income groups. Similarly, the effective implementation o f Vision 2020 Umurenge will require a high level o f inter-sectoral coordination at district and sub-district level to ensure maximum impact on the poorest communities. As sectors develop their strategies and plans further, inter-sectoral links and support will be elaborated. 5.17 This section highlights three areas which will be addressed by the EDPRS to strengtheninter-sectoral coordination: (i) exchanging information; (ii) buildingtrust, and (iii)strengthening accountability. The primary focus ofthis sectionis strengthening coordination among different agencies within the Public Sector, while the equally important task o f improving coordination between the public and the private sectors i s addressedinsection 5.7. 5.18 Ensuring that all those involved in implementing a particular project, programme or policy know and agree on who does what, when, and how, i s the first step towards successful coordination. Several mechanisms are inplace to promote the fullest exchange o f information among those charged with delivering the EDPRS. These include the Sector Working Groups and the groups responsible for Cross-Cutting Issues. The National Planning Forum, which includes the Directors o f Planning from all the line ministries, meets twice per year to hannonise actions for the budget and to review the District Development Plans. Where the timing o f an intervention by one organisation i s particularly crucial for other agencies, the agencies could calculate the daily joint costs to them o f the key agency failing to implementthe agreed actions bythe set date. This cost information should be made available to the key agency before implementation begins and should bepublicised more widely. 5.19 However, the exchange o f information on its own i s unlikely to guarantee successful coordination. It must be complemented by buildingtrust among the different contributors regarding what ajoint enterprise is. Trust i s essential because a line ministry must often commit resources to implement an activity at aparticular date before knowing whether necessary prior actions will be taken by partner agencies. The higher the level o f trust in an agency to deliver on time, the more willing other agencies will be to commit their own resources in a timely fashion. The EDPRS should take full advantage o f existing channels for building trust among line ministries and sectoral agencies to improve implementation. 112 Figure 5.3 Coffee Washing Stations -a criticalpath analysis One of the EDPRS targets of the Agriculture and Animal Resources Sector is to have 240 coffee washing stations (CWS) fully operational by 2012. In order to achieve this objective, it will be necessary to coordinate the activities of several public agencies as well as to link these activities to actions undertaken by the private sector. The critical path shown below indicates the chronological sequence of selected activities which must be carried out by three line ministries (MINAGRI, MININFRA, MINICOM/OCIR Cafe) in conjunction with two private firms (a construction company and the owner or operator of the CWS) to establish a fully operational coffee washing station. 1CRITICAL PATH FORA COFFEE WASHING STATION 1 Conductfeasibilitystudy - Coffeegrowerscooperative formed (to supply CWS) Improveaccess road Constructionstarts Constructionends Electncityconnected - Water connected -c Staff recruited4 Equipmentdelivered 4 At present, the pre-start-up inspection is undertaken to ensure that each CWS has a minimum capacity to process fifty tons in the season which runs from March to June. No formal operating permits are issued at present, but this is planned to in the near future. Given the number of different organisations participating in this project, the potential risks of coordination failure are high. Institutional mechanisms for reducing these risks are discussed in the section on the accountability triangle (see Figure 5.4). 113 5.20 Strengthening accountability i s the last, and most important, element required to improve inter-sectoral coordination o f the EDPRS. This will be done in two complementary ways. Firstly, all line ministries and public agencies will be required to sign formal public service agreements (central government imihigo), based on EDPRS sector priorities, which state the time-bound outputs that will be delivered in return for their budgetary allocation. Progress towards these targets will be monitored annually, as explained inChapter 7. 5.21 Whereas imihigo was launched in 2006 as a contract between District Mayors and the President o f the Republic, the idea i s to generalise it into a contract between the public and the government, which links the allocation o f public expenditure to published targets with the aim o f delivering modern, responsive public services. Thus, imihigo targets are set for services or outcomes which the government sees as key national priorities. They express the outcomes sought by the government, defining clear, long term goals to propel the country towards the achievement o f Vision 2020. 5.22 The central government imihigo will increase the accountability o f line ministries in exactly the same way as the District Performance Contracts increase the accountability o f local to central government. It aims to provide a mechanism whereby line ministries are given an incentive to think and act laterally as well as vertically. Consequently, its introduction should strengthen coordination within and between sectors. Moreover, it will help in application o f the OBL which requires budget managers to justify budget execution inthe light o f outputs that have been achieved. 5.23 Secondly, inthose cases where inter-sectoral coordination i s particularly crucial to ensure a successful outcome, the participating line ministries and other public agencies will be encouraged to sign a local level coordination agreement (LCA). This would state the reciprocal obligations o f all the participants, establish a timeline for delivery and could include the estimated costs o f implementation failure by a key agency (as explained inparagraph 5.16 above). LCAs could serve as a device for implementing Vision 2020 Umuvenge.Monitoring would be undertaken by the local Executive Secretary who would report regularly to the district or sector Joint Action Development Forum (JADF). Such agreements would have no legal force, but would nevertheless provide an informal mechanism o f horizontal accountability at local level which would provide a basis for the `accountability triangle' (Figure 5.4). 114 Figuve 5.4 Central GovernmentImihigo 1 The Accountability (Imihigo) Triangle Agency ........................................................................................................... Agency 2 I mihigo ........................................... ............................................... ............... 5.5 Improvepublicfinancial management 5.24 Effective public financial management i s important for two reasons: (i) to ensure that resources approved in the budget are allocated to implementing agencies in time to execute their programmes, and (ii) provide a fi-amework for expost financial to accountability which allows officials and elected politicians to establish where and how public hnds were spent. Progress towards Vision 2020 and MDG objectives necessitates addressing weaknesses inpublic financial management inareas such as health, education, infrastructure, water and sanitation, and agriculture. Good public financial management underpins EDPRS objectives in economic growth, poverty reduction and improved service delivery through enhanced policy-based budget management and resource allocation, accountability for results and independent audits. It also underpins good governance through improved transparency, accountability and efficient controls. Strengthening Rwanda's system o f public financial management is therefore a pre- condition for implementingcertain aspects o f the EDPRS. 5.25 The public financial management reforms are based on a number o f principles including: a process led by MINECOFIN but with strong line ministry ownership and consensus-building to reduce resistance to reform; strengthened Supreme Audit 115 Institutions and parliamentary oversight; adaptation to Rwanda's specific circumstances; support by development partners who agree on clear objectives, priorities and activities; focus on specific finance outcomes rather than a department or function; creating enabling procedures and structures first (i.e. implementation o f the Organic Law on State Finances and Property, Public Procurement Law and Financial Regulations); extracting key concepts instead o f replicating an entire system; and using training strategically to support institutional and organisational changes. 5.26 The governance structure for PFM reforms i s headed by a National Steering Committee supported by a technical secretariat. The PFM Trust Fund, a multi-donor trust fund coordinated through the HIDA, has been set up to support the National Steering Committee. The major commitments o f the fund are to build sustainable capacity for public accounting and internal audits under the Rwanda Expertise Scheme, and support coordination, monitoring and evaluation o f PFM reforms, including financing the PFM Reforms Secretariat and the National Steering Committee. The secretariat provides technical assistance to the annual public expenditure review process o f each sector and undertakes an annual evaluation o f PFM based on the Public Expenditure and Financial Accountability (PEFA) Performance Measurement Framework. Other activities supported by the PFM Trust Fund include building capacity for the reform o f the procurement system and for the Office o f the Auditor-General. 5.6 Promote greater harmonisation and alignment of donors with the EDPRSpriorities 5.27 The successful implementation o f the EDPRS will depend, to a great extent, on the continued support o f Rwanda's development partners. In recent years, donors have financed over half o f the Government's budget, and the investments foreseen in the EDPRSwill require a scaling up o faid inthe mediumterm. 5.28 The importance o f strong partnerships between the GoR and its development partners, comprising official donors, local and international NGOs, civil society and the Private Sector, cannot be underestimated. The government recognises the key role played by dialogue with its various partners, and to this end it continues to support and strengthen a number o f groups and forums aimed at enhancing the quality o f dialogue, coordination o f development activities and harmonisation o f donor assistance. 5.29 The Development PartnersCoordination Group (DPCG) is the high level forum comprised o f representatives from the GoR and development partner organisations. Founded in 2002, the group currently meets every two months, offering the GoR an opportunity to present progress in the planning and implementation o f its development programme and offering the opportunity for dialogue with and between partners on the coordination o f their assistance. The DPCG has been involved in the GoR's work on the development o f the EDPRS and Aid Policy, amongst others. 5.30 The Budget Support Harmonisation Group (BSHG) is the single forum inwhich budget support issues are discussed and negotiated, and this harmonised approach results 116 in reduced transaction costs for both donors and the government. Membership of the BSHG forms the basis o f strong partnerships between Rwanda's budget support donors. Budget support donors agree on triggers for disbursement and its timing. They undertake two reviews per year, examining the Government's performance against the EDPRS targets, budget execution, progress in the strengthening o f PFM systems, and macroeconomic stability. 5.31 Clusters and sector working groups are forums designed to facilitate in-depth dialogue between the Government and its development partners at the sector and sub- sector level, with a view to ensuring joint planning, coordination o f aid, and joint monitoring and evaluation. Clusters, which comprise representatives from multiple sector working groups, undertake an annual joint sector review, which assesses the sector's performance against the EDPRS matrices (explained in Chapter 7), with the results feeding into the EDPRS Annual Progress Report. 5.32 Inline with the Paris Declarationon Aid Effectiveness, the GoR recognises the importance o f mutual accountability in its relationships with donors, and will take steps to strengthen these reciprocal obligations through the use o f new and existing systems. Increased attention will be accorded to aid and its effectiveness in the joint sector reviews, with a view to ensuring that external assistance is coordinated in an effective manner at the sector level. 5.33 Rwanda's Aid Policy sets out a number o f areas in which the government will seek progress, both in terms o f donor policies, practices and behaviour, and the need for improvement on the government's part inits management and execution o f development programmes and projects. Key areas addressed by the policy include: (i) a statement of the GoR's preferences interms o f aid modalities, with general budget support and sector budget support givenpreference over projects; (ii) the requirementthat all aid be reported in the GoR budget and that clear alignment with strategic plans is identified; (iii) the desire on the part o f the GoR to see donors making increasing use o f its PFM systems, which in turn require further strengthening; (iv) pooling o f funds and increased use o f forms o f delegated cooperation between donors are to be encouraged; (v) donors are invited to make greater use o f their comparative advantage in the allocation o f their assistance to sectors and sub-sectors, with the GoR playing a role in guiding donors; (vi) the government will ensure a clearer division o f responsibilities between its ministries and agencies inthe negotiation andmanagement o f aid. 5.34 In the past, much donor assistance has been poorly aligned with the government's priorities, limiting the impact o f aid on poverty reduction and economic development. The Aid Policy makes specific reference to the EDPRS, requiring that all aid be aligned with the priorities set out in the document. In formulating proposals for assistance, donors are required to set out how their aid relates to the priority areas set out in the EDPRS, and they must show that this assistance fits with the interventions and activities outlined in Sector Strategic Plans or District Development Plans. Insofar as the EDPRS is the guiding framework within which budget allocations are determined, the government believes that aid given in the form o f budget support will best ensure 117 alignment, whilst reducing the transaction costs associated with project-based aid. Budget support triggers are taken from the EDPRS matrix so as to ensure complete alignment o f expenditurewith the EDPRSpriorities. 5.35 In addition to the current efforts made by some donors to harmonise their assistance, it i s anticipated that the use o f the sector-wide approach will be extended. At present, only the Education Sector makes full use o f such an approach. The SWAP is characterised by (i) leadership by the recipient government institution(s); (ii) single a comprehensive programme and budget fkamework; (iii) formalised process for donor a co-ordination and harmonisation o f donor procedures for reporting, budgeting, financial management and procurement, and (iv) efforts to increase the use of local systems for programme design and implementation, financial management, monitoring and evaluation. 5.36 It is also anticipated that all donors will seek to harmonise their missions and analytical work, with a view to further reducing the transaction costs borne by the government, and in the interests o f furtheringjoint understanding o f development issues and approaches. The GoR aims to ensure that all sectors adopt a sector-wide approach in their planning andmanagement o fdonor and government funds. 5.37 While the true benefits o f enhanced aid effectiveness can only be observed indirectly, through performance against poverty reduction and economic development objectives, the GoR has, in collaboration with its donors, set targets for a number o f aid effectiveness indicators. These are based on the mutually agreed targets set out in the Paris Declaration on Aid Effectiveness, and are formulated on the basis o f data obtained from the GoR and donors in the roll-out o f the Baseline Survey on Aid Effectiveness conducted by the Development Assistance Committee o f the Organisation for Economic Cooperation andDevelopment. 5.38 At the 2006 Annual GoR and Development Partners Meeting, Rwanda's in- country donors endorsed the survey findings and targets derived from them. Donors agreed to adopt the aggregate targets as minimum targets for performance at the donor agency level, with those donors already performing well, seeking to improve further their performance against these indicators. The GoR recognises that attaining these targets i s contingent on its own efforts as well, and to this end, it i s committed to working with its donors to ensure that the targets are met or exceeded. Follow-up surveys will be undertakenin2008 and 2010, so as to track progress against these indicators over time. 5.7 Assign a greater role in policy implementation to markets and the Private Sector 5.39 Attaining many EDPRS targets, such as those relating to crop output levels and the use o f input in agriculture, will depend in large part on the Private Sector. The government will provide an environment conducive to business by enforcing property rights, reducing infrastructure and transaction costs, correcting market failures, and being transparent in policy-making and execution, but in the end it will be the decisions o f 118 millions o f decentralised producers which will determine whether many EDPRS targets are achieved. 5.40 Consequently, it is essential that public and private sector actions are well coordinated to ensure the effective implementation o f the EDPRS. As in the case o f promoting better coordination within the Public Sector, this requires both sets o f decision-makers to share information and to trust each other. The Rwanda Economic and Social Council, an institution that was established to provide a platform for business and government stakeholders shall, through regular consultations, provide input to the processes o fpolicy-making, implementation andreview. 5.41 Unlike the Public Sector, the government cannot rely on administrative mechanisms, such as Public Service Agreements or District Performance Contracts, to enforce accountability by the Private Sector. Firms are primarily accountable to their share holders through their success in the market which serves as an effective system o f monitoring and evaluation, so long as competition i s assured. This means that civil servants in certain sectors must develop a good understanding o f how specific markets work. In particular, they need to monitor prices closely, appreciate how they are determined, and improve their knowledge o f how producers and consumers respond to price changes. Only in this way can policy-makers formulate credible projections of whether the Private Sector is behaving (or is likely to behave) inways consistent with the achievement of the EDPRS targets. 5.42 Ensuring that the Public Sector understands markets is not only important for the design and implementation o f regulatory frameworks in Rwanda to promote economic efficiency, it i s also crucial for assessing the distributive impact of price changes and formulating, if necessary, a well-informed and appropriate public policy response. It was shown in Chapter 2 that landless agricultural wage labourers have emerged as one o f the poorest groups inthe country. This means that the real agricultural wage (defined as the money wage dividedby an index o f retail consumer prices) will be closely watched as a leading indicator, or early warning signal, o f welfare among the extremely poor. 5.43 Since the EDPRS will be driven by investment-led growth with an increasing export orientation, the government must ensure that its macroeconomic policy does not force up real interest rates (thereby crowding out private investment) and that large inflows o f international development assistance do not lead to an appreciation o f the Rwandan franc (thereby reducing the profitability o fbusiness investment innew exports). 5.8 Implementation issues ut sectorul level 5.44 This section reviews the challenges to EDPRS implementation identified by particular sectors and indicates how these challenges will be met. In the Education Sector, schools, training centres and other institutions o f higher learning will increase their effectiveness in delivering quality education through a comprehensive capacity- buildingprogramme. Initially, the emphasis is on managing change and taking action to 119 improve performance. Priority areas are the strengthening of school management, improving the administration o f local education services, and developing the capacity o f the central ministry to monitor and evaluate progress in, and changes to, the delivery o f education services. 5.45 The role o f schools and districts will be the key to improving service delivery. Funds that are currently transferred to districts cover teachers' salaries, school feeding, construction and the capitation grant. The aim i s to decentralise funds further as the implementation capacity of districts, together with their monitoring and evaluation capability, are strengthened. In2007, primary schools received 2,500 R WF per child ina capitation grant to meet schools' operational costs, and an additional 1,800 RWF per child to pay for contract teachers and teachers' allowances. By 2012, the challenge i s to ensure that the Education Sector Strategic Plan i s fully funded, so that the school functioning component o f the capitation grant will increase to a target o f 6,000 RWF. The teacher component o f the capitation grant is in addition to this and will help to reduce the pupil-teacher ratio. 5.46 Inhigher education, HLIs' strategic plans will be consolidated to produce one coherent plan. Harmonisation of accreditation will be facilitated by the National Council on Higher Education. Institutions will increase their effectiveness in delivering quality education through a comprehensive capacity-building programme. As regards capacity, one o f the key challenges will be to move from institutions that have focused on knowledge transmission to that o f knowledge creation, including not just the absorption and dissemination o f existing knowledge but also ensuring that students and teachers remain up-to-date in their disciplines, advance through new research and innovate as a result o f research. Implementation will also include ensuring that the barriers to gender equity are identified and overcome. 5.47 Success inthe Education Sector will depend on sustained regional stability, and the continued support o f all development partners. Increased bilateral sector budget support, as well as fast track initiative funds, i s being used to help fill an identified financing gap. However, it appears that commitments will not be sustained over the whole EDPRS period (2008-2012) and the financing gap rises dramatically in 2009. Development partners are being encouraged to increase their levels of budget support in order to finance the sector-wide approach adopted by the Ministry of Education. Success in developing the skills that Rwanda requires will also be contingent on the way the Education Sector meets the challenge o f coordinating with all the other sectors that plan to undertake training and capacity-building initiatives. 5.48 The smooth execution o f Infrastructure Sector projects requires close coordination among several stakeholders. MINECOFIN and the donors share responsibility for mobilising the resources to finance a sector strategy which will be developed by 2008 as a SWAP. MININFRA is the lead implementing agency for the sector and has the responsibility o f coordinating the activities of other participating line ministries and public agencies. 120 5.49 The decentralisation and transfer o f MININFRA resources and responsibilities to the districts will be undertaken in two steps. In 2008, a mechanism implemented through MININFRA agencies will be put in place to provide technical support and financial advice to the districts on resource transfers. Then, a year later, this mechanism will be replaced by a system o f direct transfers to districts without any involvement of MININFRA.However, the ministry will still bewilling to respond to ad hoc requests for technical support from districts after this date. 5.50 The Private Sector will finance and execute infrastructure projects, particularly inenergy, real-estate development, ICT and habitat. This will occur through a variety o f institutional mechanisms ranging from foreign direct investment to different types o f private-public partnerships, which may include Build-Operate-Transfer (BOT) schemes. 5.51 Inorder to improve cooperation and coordinationbetween government and the Private Sector, it i s essential to build strong public-private partnerships in developing policy and plans and in undertaking jointly sponsored activities like dialogue and consensus-building in policy development. It is crucial that Ministry o f Commerce, Industry, Investment Promotion, Tourism and Cooperatives (MINICOM) works with MININFRA and private service providers to develop the appropriate infrastructure for private sector development, engages private sector institutions inthe development o f the export diversification strategy, and works with MINEDUC and educational institutions to ensure the necessary skills development. 5.52 To ensure that interventions in the Agriculture Sector are implemented correctly, it is imperative that they are introduced as a `package' and directed towards facilitation o f markets and the Private Sector. These include incentives to acquire the necessary input, extension and storage, and form farmer group organisations. Increasing access to, and distribution of, improved fertilisers and seeds through the Private Sector i s the first step towards increased productivity. Educating producers and producer groups is also necessary to create a demand for improved input.Inorder to achieve this, MINAGRI will strengthen extension services by promoting a more decentralised and privatised extension service delivery, where the government's role will be to train the trainers. MINAGRI also envisages that pilot and demonstration interventions will be replicated throughout the sector. 5.53 The Agricultural Sector strategy depends greatly on the involvement o f the Private Sector. However the Private Sector faces a number o f obstacles, notably the limitedcredit available to it. The GoR will support new product development andprovide incentives for agricultural investment to empower the Financial Sector and consequently the private sectors. MINAGRIwill also work with MININFRA to reduce transport costs for agricultural exporters. 5.54 Successful implementation o f the Justice Sector strategy will depend on the capacity o f the sector to deal with genocide cases and to successfully implement unity and reconciliation measures, the efficient and timely administration o f justice, the creation o f sound legal frameworks, adequate funding and adopting a sector-wide 121 approach. There will also have to be demonstrated commitment by development partners. A secretariat, which includes civil society organisations, has already been established to coordinate the SWAP development. The success o f this initiative will depend on the commitment o f all stakeholders, including development partners. 5.55 The first step taken to implement the sector strategy o f the Decentralisation, Citizen Participation, Empowerment, Transparency and Accountability Sector will be to carry out a stakeholder analysis in order to promote effective partnerships and help identify champions o f good governance. MINALOC is the lead ministry for this sector and i s responsible for liaising with other sectors andpublic agencies duringthe process o f decentralisation. Implementingthe governance agenda also requires the participation o f other actors such as civil society organisations, the media, political parties and the Private Sector, which either complement the government's role in service provision or serve to promote public awareness by holding the government accountable for its actions. 5.56 In the area of Capacity-Building, MIFOTRA confronts several challenges in implementing its strategy. It faces problems associated with executing the EDPRS with its current workforce, while at the same time changing its management style to one o f delegated responsibility and results-based accountability. The ministry will maintain effective communication within the sector and across sectors, while also rolling out a large-scale MIS. 5.57 The first challenge will be to manage the process o fpublic reform, implement a range o f programmes for employment promotion, and coordinate capacity-building across the Public Sector with the permanent workforce not up to its full complement. In the short term, the appointment o f a monitoring and evaluation expert and a statistician are essential. Recruitment o f additional staff with clearly designated responsibilities will reduce the workload and facilitate the effective implementation and coordination o f programmes by MIFOTRA. 5.58 The second challenge i s for the ministry to improve its operational and financial planning and prioritisation. Management must focus on a proactive results-based approach. This will empower officers and agencies to work towards specific sector targets, and hold them accountable for the delivery o f output and the achievement o f outcomes. Performance contracts will be put inplace for this purpose. 5.59 The third challenge relates to the effectiveness o f communication. There is little horizontal communication, which i s essential at both senior management and directorate level to ensure full awareness o f the interventions taking place and the progress o f outcomes. Vertical reporting also needs to be cross-departmental. Inter-sectoral partnerships are poorly coordinated and will need strengthening at both management and operational level to enable the effective sharing o f information, joint action and reduced duplication o f effort. 5.60 The fourth challenge facing MIFOTRA i s to implement two large scale M I S projects: the Integrated Payroll and Personnel Information System (IPPIS) and the 122 National Employment and Job Processing Opportunities (NEJPRO) scheme. These systems are essential to support informed decision-making within MIFOTRA and in other sectors. Implementation o f such systems requires strong project management skills, a clear understanding o f the organisational implications o f opting for IPPIS, and a restructured ICT department. 5.61 Effective implementation o f the Health strategy will require the collaboration of all stakeholders as elaborated below. To this end, each partner has been assigned specific tasks that will contribute to the achievement o f Health Sector objectives. Most key interventions will be implemented at district level, although certain capacity-building initiatives will be undertaken centrally. 5.62 The roles o f different stakeholders in implementing the EDPRS Health strategy are as follows. The Ministryo f Health takes leadership o f the Health Sector at national level. It i s responsible for formulating policies, laws and decrees, in collaboration with other stakeholders, and issues health guidelines. It mobilises resources and builds capacity at district level. The central ministry i s also responsible for managing the national health information system and for strengthening the sector's monitoring and evaluationprocesses. 5.63 Local government is responsible for ensuringthat the EDPRS Health strategy is effectively implemented.This will be done with the help o fplanning and budgeting tools, such as the Health Sector logical framework, the District Development Plans, the MTEF and operational plans. The district will ensure that barriers associated with financial and geographical access to quality health care are addressed. Particular emphasis will be put on increasing coverage o f the population covered under community health insurance (mutuelles), and building, rehabilitating, upgrading and adequately equipping health facilities within districts. Districts have a major responsibility to implement the family planning programme and to establish an efficient monitoring and evaluation system at local level. They are also charged with training health providers, appointing and supervising governance bodies and mobilising resources locally. 5.64 The sector-wide approach will serve as a framework to strengthen collaboration between the Health Sector and development partners who will participate in joint planning and in the Health Sector review. They will align their financial and technical support so as to implement the EDPRS Health strategy. Civil society organisations will work with the Health Sector to implement the Health strategy. To this end, these organisations will adopt, and seek to improve the Information Education and Communication (IEC), and Behaviour Change Communication (BCC) approaches. The Private Sector will also play a key role in delivering health care services, especially inthe prevention and cure o f major diseases, such as malaria, acute respiratory infections ( A R I s ) and AIDS. 5.65 In the Water and Sanitation Sector, central government deals with strategic issues at national level, while the districts are responsible for implementing most o f the activities. Ensuring effective coordination with other public and private agencies i s 123 particularly important for this sector, given that water and sanitation affect such broad areas o f economic and social life. These include health (in the home, clinics and hospitals), education (school sanitary facilities), infrastructure (energy and transport), and agriculture and animal husbandry (for irrigation and supporting livestock). The dense network o f interdependent links between the Water and Sanitation and other sectors will be coordinatedmore effectively duringthe EDPRSimplementation. 5.66 A 2006 Public Expenditure Review highlighted a serious lack o f coordination among Social Protection Sector interventions. By way o f response, the sector will establish a coordination body at the central level and set up coordination teams at district and sector (umurenge) level. These coordination teams, together with community-based organisations (CBOs) and the Private Sector will support the cross-sectoral planning and implementation o f social protection programmes. These teams will also identify issues which adversely affect vulnerable groups and advocate for change. They will work closely with the Vision 2020 Umurenge Programme to ensure coherent implementation. 5.67 The Youth, Sports and Culture Sector faces several challenges to implementing their plans. Following Public Sector reform, MIJESPOC is operating with a reduced workforce even though their mandate has not been reduced. Youth is a priority for the economic development o f Rwanda and their participation in the process i s crucial. The sector has identified a range o f programmes which will be challenging to implement. However the programmes can be realised through effective partnerships with supporting groups. 5.68 Youth unemployment is a key problem and the challenge will be to develop the confidence and attitudes o f the youth so that they are proactive in the job creation process, until new initiatives such as the Rwandan Workforce Development Authority and the National Employment Agency are operational. 5.69 The sector will put in place a sound Management Information System and appoint a monitoring and evaluation officer to support the data management process. A detailed plan for monitoring and evaluation o f all JESPOC targets will be developed. This will identify the methodology and frequency o f data collection, as well as determining specific responsibilities. Youth Friendly Centres will collect data on activities at district, sector and cell level through reports and regular meetings with sector and cell outreach National Youth Council representatives, inorder to monitor the extent o f the participation o f youth in the JESPOC outreach programmes as well as other programmes initiated by local or national support groups. 5.70 The Environment i s both a sector and one o f the cross-cutting issues in the EDPRS. This implies that policy implementation must emphasise joint actions with all sectors, in particular with Agriculture, Infrastructure and Private Sector, on issues and activities that have potential impact on the environment. To this end, all projects and programmes will be subject to an Environmental Impact Assessment. Land use management issues will be addressed by developing ajoint strategy with the Agriculture Sector to design and execute interventions to reduce land degradation, soil erosion and 124 soil fertility losses and to promote the rational use o f mineral fertilisers and pesticides. The Forestry Sector is fully engaged with the Environment and Energy Sectors to limit further deforestation and promote reforestation. The Mining Sector is engaged with the Environment Sub-sectors in addressing potential environmental degradation from quarrying activities, and with the Private Sector in ensuring value addition to mineral resources inan environmentally sustainable way. 5.71 These joint inter-sectoral strategies present valuable opportunities for socially efficient resource allocation and make it more likely that priorities are comprehensively addressed using a sector-wide approach. Thus, ensuring that budget allocations are earmarked to support joint strategies for managing the environment and natural resources in all ministries will ensure that the EDPRS priorities contribute to sustainable national development. 5.72 The central government through the National Commission for FightingHIV and AIDS (CNLS) will continue to oversee AIDS policy and provide strategic leadership and technical support, while coordinating a national multi-sectoral response. Each sector will be responsible for carrying out the AIDS interventions defined intheir sector strategies at national level for meeting the targets set. Given the decentralised nature o f government, most activities will be implementedby the districts, which will include EDPRS indicators and activities in their District Development Plans and annual plans. Districts are responsible for advocating on behalf o f those infected and affected by HN and AIDS, while ensuringthat any support provided reaches their most vulnerable citizens first. 5.73 Continued capacity-building will be required to ensure that sectors (imirenge) and districts have the means to implement AIDS interventions. The CNLS, together with its partners, will continue to strengthen the District AIDS Committee (CDLS) staff and provide technical assistance to the sectors (imirenge). Civil society, public and private sector umbrella organisations will require reinforcement to provide key coordination, monitoring and evaluation, and technical assistance support to the HIV response in their respective domains. CNLS will also assist the sectors (imirenge) and districts to identify funding sources for AIDS interventions to ensure the required support is available to meet the EDPRS targets. Given the large number o f PLHIVs dependent on ARV treatment and the groups at higher risk o f contracting HIV, including orphans and vulnerable children, a reduction in funding risks halting the significant progress made towards reversing and stopping the HIV prevalence rate inRwanda. Therefore, there i s a strong need for continued support o f the HIV response and the government and donors will need to monitor the situation closely to ensure sufficient funding for the implementation o f the EDPRS HIV interventions over the entire EDPRS cycle (2008- 2012). 5.74 Implementation o f a gender-sensitive EDPRS depends on several factors. The most important is to ensure that gender issues are budgetedfor and fully integrated into sector (umurenge) and district plans from the start. Tracking gender-disaggregated data through the monitoring system will allow policy-makers to identify the differential impact o f policies and service delivery on men and women. Following a comprehensive 125 needs assessment, capacity must be strengthened to enable line ministries to carry out their designated responsibilities to implement EDPRSactions on all cross-cutting issues. 5.9 Effective implementation requires good communication 5.75 The EDPRSwill only be effective ifits messages are well understood, accepted and supported by all stakeholders, from ordinary citizens to cabinet and international partners. It will be as important to communicate throughout the implementation of the EDPRS as it was during the preparation of the strategy. Both the volume and effectiveness o f communications matter. Communicating the strategy is, and must be seen as, a shared responsibility o f many stakeholders, but the overall strategy needs monitoring to ensure that the right incentives are inplace, best practice is respected and the communication i s successful. 5.76 The EDPRS communication strategy will be elaborated over the final period o f 2007. Methods for communicating the EDPRS will include dissemination o f the document itself (including a shorter, popular version in Kinyarwanda), holding workshops and making use o f the mass media (radio, newspapers and television) especially through MININFOR and ORINFOR. Responsibility for communication will be shared betweenMINECOFIN, parliament, line ministries and foreign representation in embassies abroad. MINECOFIN will have overall responsibility for ensuring that communication i s effective. Support will be provided to ensure that all actors have adequate expertise and resources to play their roles. 126 6 HOW MUCH WILL IT COST AND WHAT ARE THE MACROECONOMIC IMPLICATIONS? 6.1 The macroeconomjc framework seeks to strengthen and consolidate achievements interms o f macroeconomic stability and socio-economic reforms as well as to support the re-balancing o f public expenditure between social and productive sectors. Inorderto achieve thetargets presented inChapter 3, the flagship programmesandcross- sectoral actions detailed in Chapter 4, and their implementation described in Chapter 5, the EDPRS will have to be supported by consistent macroeconomic policies and public expenditure programmes. 6.2 This chapter centres on public and private expenditure requiredto achieve the EDPRS targets, taking into consideration the various constraints to which the Rwandan economy i s exposed. It seeks to ensure overall consistency between programmed expenditure andthe available, committed, and expected resources. Inthe final analysis, it identifies the resources mobilisation efforts required to support adequately the EDPRS while maintaining macroeconomic stability. 6.3 Under the EDPRS, public expenditure will be organised to maintain the momentum in social sectors while targeting productive sectors to achieve the MDGs and Rwanda Vision 2020. Inparticular, productive expenditure will be targeted to (i) address skills shortages; (ii)eliminate the infrastructure backlog (including energy, water, transport, and ICT) to reduce the operational costs o f doing business in Rwanda; (iii) create the conditions under which science and technology pave the way towards knowledge-based services to become a dynamic source o f economic growth, employment and poverty reduction. In addition, efforts will be made to (iv) widen and strengthen the Financial Sector and (v) improve governance which provides an anchor for the national growth agenda and the pro-poor growth acceleration initiative o f Vision 2020 Umurenge funded through the Community Development Fund. 6.4 Public expenditure seeking to remove the obstacles to stronger growth should benefit all three sectors o f the economy: agriculture, manufacture and services. However, given the share o f employment it represents and the challenges it faces, the Agriculture Sector will be targeted to encourage and support its modernisation and to ensure it becomes a more reliable source o f export earnings. 6.1 EDPRScosts 6.5 The implementation o fthe EDPRS will require RWF 5,15 1billion over the five years 2008-2012. This amount includes public recurrent expenditure, public capital expenditure and private investments. The public component amounts to RWF 3,434 billion and represents 67% of the total cost o f EDPRS. The table below shows the annual composition o f these items. 127 Table 6.1EDPRS costs, in billion RWF 1 2008 2009 2010 2011 2012 Total Proj. Proj. Proj. 2008-12 EDPRS costs (inbillionR WF) 760 859 1,350 5,151 Public spending 550 612 839 3,434 Public recurrent expenditure 341 365 408 450 497 2,060 Public capital expenditure 209 246 342 1,374 Private investment 209 247 511 1,717 Source: MINECOFIN staff estimates and projections. 6.6 The EDPRS financial requirements assessment calls for a big push in investments to reach $140 per capita (see the UNDP's Human Development Report: Rwanda, 2007); the MDG-based public investment needs calls for $72 per capita. Although the EDPRS sets ambitious policies and programmes, the overall costs remain well below these assessments and, as a result, some o f the MDGs will not be achieved. Table 6.2 converts the EDPRS costs to USD per capita for direct comparisons. It shows investments o f $114per capita on average, and only reaching the $140 per capita target in 2012. Hence, the macroeconomic framework proposes a progressive phase-in rather than a downright big push. Had the commitments made by the G8 summit at Gleneagles in 2005 been realised, these higher amounts could have been included in the macroeconomic framework. Table 6.2EDPRS costs, in USDper capita 2008 2009 2010 2011 2012 Average Proj. Proj. Proj. Proj. Proj. 2008-12 EDPRS costs (inU S D per capita) 146 162 187 213 242 190 Public recurrent expenditure 65 69 75 82 89 76 investment 80 93 111 132 153 114 Public 40 46 50 56 61 51 Private 40 47 62 76 92 63 Source: MINECOFIN staff estimates and projections. 6.7 The primary concern o f the framework has been to propose a scaling up o f public investment, taking into consideration the associated recurrent expenditure and the absolute necessity to induce private investment (see Figure 6.1). The latter i s expected to be achieved through judicious choices of quality public investment that will (a) systematically reduce the operational costs o f business (including skilled labour costs) 128 and (b) increase the Private Sector's capacity to innovate. These are the first two prongs o f the strategy described inthe Growth flagship. Figure 6.1Public spending to induceprivate investment ~ . . ......- ... ". l.llllllllll.l. ,..,,,llllllllll _. . l.llll.llll. ..., ,,..... llll^l."."I , ~ I ,,111111111 "I- ""I^ I ~ 600 500 400 300 200 -Public recurrentexpenditures 100 Source: MINECOFIN staff estimates andprojections. 6.8 The scaling up o f public investment is expected to raise the average level of public investment from 7.5% o f GDP between 2002 and 2006 to 10% over the EDPRS period, 2008-2012. This will lead to an increase inpublic investment from $35 per capita in 2007 to $61 per capita in 2012. As already indicated this is well below the MDG recommended $72 per capita and makes it difficult to consider any lower amount without undermining the logic of the EDPRS and the requirements o f the MDGs and Rwanda Vision 2020. 6.9 Ifan alternative scenario was to be considered, it would require an increase in public investment to about 13% o f GDP to reach the above MDG standard, according to the medium scenario in the EDPRS costing exercise. This would therefore translate into higher real GDP growth up to 9% instead o f the projected average o f 7.6% between 2008 and 2012 and 8.1% in 2012, but also larger financing requirements (an additional $766 million). 129 6.10 Instead, the framework considers a boost in private investment induced by the two prongs described above, and facilitated by the thirdprong o f the strategy described in the growth flagship, that is, the widening and strengthening o f the Financial Sector in Rwanda. This i s expected to increase national savings, sustain current increases in financial intermediation, and maintain the growth o f domestic credit to the Private Sector slightly above nominal GDP growth. It is also expected that the Governance flagship, through its emphasis on mitigating micro risks of doing business, improving government effectiveness at the central and local levels, and strengthening Rwanda's comparative advantage in "soft infrastructure" in the E A C and CEPGL regions, will induce stronger domestic and foreign private investment. Finally, the Vision 2020 Urnurenge flagship will raise the absorption and the quality o finvestments inrural areas. 6.11 Insummary, animportant focus ofpublic investmentis to serve as an engine for private investment. If public investment follows the three-pronged strategy from the Growth flagship, public investment will induce strongprivate investment. Figure 6.2 Public andprivate investment to achieve EDPRS targets Leftbar Publicinvestments (inpercent ofGDP) 25.0 h#Middlebar Private investments(inpercentofGDP) kghtbar Totalinvestments (inpercent ofGDP) 20.0 i h I=.= I 5.0 * 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: MINECOFINstaff estimates and projections. 6.2 Sector aIIocationofEDPRScosts 6.12 The allocation o f public spending across sectors is described in Table 6.3. It captures the EDPRS objective o fbalancingthe social andproductive sectors. 130 Table 6.3 Proposed shares ofpublic expenditure by sectorfor the EDPRSperiod 2008- 2012 (in billion Rwandanfrancs, unless otherwise indicated) Recurrent expenditure Capital expenditure Total inbillion Share inbillion Share inbillion Share Education 11 553 26.8% 128 9.3% 681 19.8% Health and Population21 188 9.1% 127 9.3% 315 9.2% Social Protection 103 5.0% 5 0.4% 108 3.1% Employment and Capacity-building 15 0.7% 38 2.8% 53 1.5% Youth, Sport & Culture 11 0.5% 8 0.6% 19 0.6% Infrastructure 5.2% 41.6% 19.7% Transport & I C T 12 0.6% 235 17.1% 247 7.2% Habitat 12 0.6% 63 4.6% 75 2.2% Energy 13 0.6% 195 14.2% 208 6.1% Meteorology 0 0.0% 2 0.1% 2 0.1% Water and Sanitation 70 3.4% 76 5.5% 146 4.2% Productive capacities 6.4% 32.1% 16.7% Agriculture 84 4.1% 158 11.5% 242 7.0% Forestry, Land & Environment 10 0.5% 52 3.8% 62 1.8% Manufacturing, services and off-farm industry 31 17 0.8% 50 3.6% 67 1.9% Science, Technology and Innovation 18 0.9% 30 2.2% 48 1.4% Community DevelopmentFund(CDF) 3 0.1% 151 11.0% 154 4.5% Coverriarice arid Sovereignty 46.3YV 3.9% 29.4'%* Defence & Cooperation 288 14.00/0 3 0.2Yn 291 8.5'30 Justice, Reconciliation. Lam. & Order 112 6.9'1/0 29 2.140 171 5.ou/u Public administration 478 23.2'?0 20 1.5°/o 498 14.50/0 Decentralisation 47 2.3% 2 0.1% 49 1.4Yo 2,060 100.0% 1374 toO,o% 3434 fOO.0 11Education MTEF 21Excludes off-budget, private, indirect transfers 31Mostly ledby the Private Sector Sources: MINECOFINstaff estimates and projections. 6.13 The Human Development and Social Sector component absorbs 34% of the total expenditure (that is, 42% of the total recurrent expenditure and 22% o f the total capital expenditure). The Capital Development and Directly Productive Sector component represents 36% of total expenditure (respectively 12% o f total recurrent expenditure and 74% of total capital expenditure). Finally, both the Social and Productive Sector components are supported by the Governance and Sovereignty expenditure (including public debt service) which represent 29% of total expenditure (that is, 46% of total recurrent expenditure and 4% of total capital expenditure). 131 6.14 Public spending i s expected to be allocated across sectors, policies and programmes using these proportions, on average, over the EDPRS period. This provides general guidance for the elaboration o f the Medium Term Expenditure Framework (MTEF) by ministries and agencies but does not, and does not intend to, substitute for them. Current facts and circumstances will inform the MTEF and policies and tactical choices, within the general framework and priorities set in the EDPRS, will be made through annual budgets and reviewed accordingly. 6.15 In case of shortfalls in the expected financing requirements, public spending will be corrected and all sectors will be affected inproportion to their allocationprovided inTable 6.3. 6.16 Among public capital expenditure, it i s envisaged that 67% o f public investments will be implemented at the central level while about 33% will be implemented at local levels o f government. At the central level of government, public investments can further be distributed between on-going projects and new projects. On- going projects represent almost 47% o f total public investment or RWF 649 billion for the period 2008-2012, and mostly reflect commitments made prior to the EDPRS and continuing over the EDPRS period. New projects represent 20% o f total public investment or RWF 275 billion and are specifically geared toward financing the achievement o f the EDPRS targets detailed inChapter 3 (Table 3.2). At the local level o f government, all public investment i s new. Total capital expenditure for all districts should reach RWF 450 billion, or an average o f R WF 3 billion per district per year. The amount will finance DDPs and will be phased-in gradually as capacity is being built at local levels of government. These investments will also contribute toward the EDPRS targets. 63 EDPRSfinancingrequirements 6.17 Public spendingwill be financed by a combination o f domestic tax and non-tax revenues, external budgetary grants (Le. budget support), external project grants and loans (Le. project support), and external net borrowing. Domestic resources represent 50% o f the total resources required for the EDPRS. Internal net borrowing will not finance the EDPRS but will serve as a tool to (i) smooth volatility in external resources and (ii)sterilise any adverse effects o f capital inflows. 132 Table 6.4Publicfinancing of EDPRS 2008 2009 2010 2011 2012 Total Proj. Proj. Proj. Proj. Proj. 2008-12 Public share of EDPRS costs inbillionRWF 550 612 677 756 839 3,434 Financing inbillionRWF Domestic revenue(tax and non-tax) 262 297 338 385 439 1,721 External committed budgetary grants 143 156 159 158 156 772 ADB 11 14 13 13 13 Belgium 12 4 4 3 3 DBD-UK 36 32 32 32 32 EFA-FTI 25 30 32 32 32 EU 13 19 22 21 21 Germany 13 13 13 13 13 Sweden 6 6 6 6 6 World Bank 27 38 37 37 37 External projects grants & loans 0 0 0 0 0 Required additional financing inbillionRWF 145 159 181 214 244 942 Budget support 118 129 150 181 208 786 Project support 27 29 30 33 36 156 Requiredfinancing in% GDP 6.7% 6.5% 6.6% 6.9% 7.0% Required additional financing inmillionUSD $266 $294 $338 $403 $464 $ 1,765 Budget support $216 $240 $281 $341 $396 $ 1,473 Project support $ 50 $ 54 $ 57 $ 62 $ 68 $ 291 Source: MINECOFIN staff estimates andprojections. 6.18 Firstly, in so far as budget support i s concerned there i s a need for RWF 968 billion for the EDPRS period 2008-2012. External committed budgetary grants are estimated at R WF 772 billion. Most development partners provide data on commitments for two to three years ahead only. Hence, the amounts shown in the table for 2010-2012 are extrapolated from previous commitments, assuming continued support but no scaling- 133 up. These commitments fall short o f the needs, leading to a financing requirement of R WF 196 billion (equivalent to USD 369 million). 6.19 Secondly, in so far as project support i s concerned there i s a need o f RWF 746 billion for the EDPRSperiod 2008-2012. Considering the resource envelope from project donors and the current portfolio o f projects, RWF 590 billion can realistically be mobilised. This leads to a financing requirement o f RWF 156 billion (equivalent to USD 291 million). 6.20 Together, the total additional financing requirement i s RWF 352 billion (equivalent to USD 661 million) for the EDPRS period, or an average o f USD 132 millionper year, over and above the assumed commitments. 6 4 Summaryofcostsand financingflows 6.21 The following tables provide summaries o f the same information but expressed either inpercentage o f GDP (Table 6.5) or inUSDper capita (table 6.6). Table 6.5EDPRScosts andfinancing, in percent of GDP 2008 2009 2010 2011 2012 Total Proj. Proj. Proj. Proj. Proj. 2008-12 EDPRS costs (inpercent o f GDP) 35 35 37 38 39 37 Public spending 25 25 25 24 24 25 Public recurrent expenditure 16 15 15 15 14 15 Public capital expenditure 10 10 10 10 10 10 Private investment 10 10 12 13 15 12 EDPRS public financing (inpercent GDP) 25 25 25 24 24 25 Domestic sources 12 12 12 12 13 12 Domestic revenue (tax and non-tax) 12 12 12 12 13 12 Domestic borrowing 0 0 0 0 0 0 External sources 13 13 12 12 11 12 External committed budgetary grants 7 6 6 5 4 6 External projects grants & loans 0 0 0 0 0 0 Financing gap (from external sources) 7 7 7 7 7 7 Budget support 5 5 5 6 6 6 Project support 1 1 1 1 1 Source: MINECOFIN staff estimates andprojections. 134 Table 6.6EDPRS costs andfinancing, in USDper capita 2008 2009 2010 2011 2012 Total Proj. Proj. Proj. Proj. Proj. 2008-12 EDPRS costs (inU S D per capita) 146 162 187 213 242 949 Public spending 106 115 125 138 150 634 Public recurrent expenditure 65 69 75 82 89 380 Public capital expenditure 40 46 50 56 61 253 Private investment 40 47 62 76 92 316 EDPRS public financing (inU S D per capita) 106 115 125 138 150 634 Domestic sources 50 56 63 70 78 317 Domestic revenue (tax and non-tax) 50 56 63 70 78 317 Domestic borrowing 0 0 0 0 0 0 External sources 55 59 63 68 72 316 External committed budgetary grants 27 29 29 29 28 143 Externalprojects grants & loans 0 0 0 0 0 0 Financing gap (from external sources) 28 30 33 39 44 174 Budget support 23 24 28 33 37 145 Project support 5 5 6 6 6 29 Source: MINECOFIN staff estimates and projections. 6.5 PossibIefinancingmethods 6.22 The macroeconomic framework considers three financing methods: (A) with 100% grants as per the G8 commitment, (B) an extreme with 0% grants which would require resorting to borrowing externally the entire financing requirement, and (C) an intermediate with 50% grants and 50% external borrowing to cover the financing requirement. External borrowing i s likely to require mobilising new lenders which could possibly entail concessionality lower than 50%; the borrowing mechanisms assume a 35% concessionality, which would require a waiver from current international arrangements. 135 Table 6.7 PossibleJinancing methods 2008 2009 2010 2011 2012 Proj. Proj. Proj. Proj. Proj. Method A: If 100%grants External debt (inmillion USD) 546 606 661 737 824 External debt (in% o f GDP) 14% 13% 13% 13% 12% NPV external debt (inmillionUSD) 224 255 285 3 17 343 N P V external debt (inYOo f exports) 58% 57% 56% 54% 51% Method B: If0% grants and concession&--ty 35% vaiver) External debt (inmillionUSD) 813 1166 1559 2038 2589 External debt (inYOof GDP) 21% 26% 30% 35% 39% NPV external debt (inmillionUSD) 397 588 808 1070 1372 NPV external debt (in% of exports) 103% 132% 158% 182% 203% Method C: If50% grants and concessionality 359 waiver) External debt (inmillion USD) 680 886 1110 1388 1706 External debt (inYOo f GDP) 17% 20% 22% 24% 26% NPV external debt (inmillionUSD) 311 406 516 647 798 NPV external debt (in% of exports) 80% 91% 101% 110% I118% Source: MINECOFINstaff estimates and projections. 6.23 Inthese three methods, the sustainabilityindicator chosen is the least favourable for the Rwandan economy which is characterised by a relatively small export base compared to similar countries. The indicator i s calculated as the Net PresentValue (NPV) o f external debt divided by exports o f goods and services. Based on this indicator, method B displays an unsustainable evolution towards the internationally accepted threshold of 150%. Hence, method B should not be taken into consideration. Method C, on the other hand, i s an acceptable possibility and so i s method A, the most favoured one. This is illustratedinfigure 6.3. 136 Figure 6.3Summav debt sustainability 120% 100% 80% 60% 40% -Method B:If0%grants andconcessionahty35% (waiver) 20% --_* -Method C: If50% grants andconcess1onality35% (waiver) - ~~ MethodA:If100%grants 0% 2008 2009 2010 2011 2012 Source: MINECOFIN staff estimates and projections. 6.6 Macroeconomic implications 6.24 The EDPRS has been structured to ensure consistency and feasibility o f its macroeconomic underpinnings. The macroeconomic framework ensures a balance between macroeconomic stability and economic growth for jobs and exports. Inaddition, the fiscal programme does not rely on domestic borrowing leaving room for increases jn credit to the Private Sector. Inother words, care has been taken to avoid the crowding out o fthe Private Sector, which i s an essential contributor to the success o f the EDPRS. 6.25 Inflation has been an ongoing concern. As a result, monetary policy has been set relatively tightly with reserve money growth o f 14% per year on average, compared to nominal GDP growth o f 13%. Current spells o f double digit inflation will return to single digits in the coming years. This will result from both the monetary stance and public investments targeted at removing skills and infrastructure bottlenecks. Indeed, the latter will reduce the costs o f utilities and the operational costs o f doing business in Rwanda and will induce a relaxation o f structural constraints that have fuelled inflation inrecent years. 137 6.26 The export base has traditionally been relatively narrow. Public investment will increase the imports o f machinery and equipment by 15% per year on average and worsen the current account slightly. Over time, however the improved productive capacity will reduce the imports o f construction material and boost export growth to 15% per year on average. This will ease the pressure on the current account. Exports o f goods and services are expected to reach 10% o f GDP on average while imports o f goods and services are three times larger at about 30% o f GDP. The current account deficit, including grants, is estimated at 6.0% o f GDP per year on average (against 6.7% over 2002-2006) and the current account deficit, excluding grants, i s estimated at 13.3% o f GDPper year on average (against 12.6% over 2002-2006). 6.27 The nominal exchange rate i s likely to continue to appreciate slightly if external inflows materialise as projected. Such moderate nominal appreciation inconjunction with the inflation differential i s likely to induce a more pronounced real appreciation that could theoretically hamper export promotion efforts. The effective real exchange rate, however, i s expected to be stable. Moreover, given that exports are still dominated by coffee, tea, miningand tourism, the sensitivity o f the effective real exchange rate i s rather limited. 6.28 Investment quality has been limited over time. The public investments will be submitted to closer scrutiny to ensure that new investment i s targeted primarily at relieving structural constraints that penalise private sector development. All three sectors o f activity (agriculture, manufacturing and services) are likely to benefit from the improved quality o f public infrastructure. Such investment i s essential to support a stronger and balanced pro-poor growth programme. 6.29 A consequence o f fostering private investment is the need to mobilise national savings from the 2007 level o f 12.4% up to 18.4% in2012. This constitutes an important challenge but i s not excessively optimistic in consideration o f the fact that national savings were only 3.6% o f GDP in 2002 and 2003. The mobilisation efforts are not only limitedto domestic savings but also the important contributions o f the Rwandan diaspora and wealthy Rwandans who return to the country or consider it as a prime location for their investments. 6.30 The macroeconomic frameworks can be summarised through selected economic and financial indicators (see Table 6.8) stemming from the macroeconomic framework for the medium term corresponding to the EDPRS period 2008-2012, with a reference to thebase year 2007. See Table 6.8 for this summary. 138 Table 6.8Selectedeconomic andfinancial indicators, 2007-2012 2007 2008 2009 2010 2011 2012 Proj. Proj. Proj. Proj. Proj. Proj. (Annual percentage changes, unless otherwise indicated) Output andprices Real CDP growth 6.9 7.1 7.3 7.5 7.8 8.1 GDP deflator (period average) 7.7 7.3 4.8 4.8 4.8 4.6 Consumer prices (period average) 8.0 7.5 6.0 5.0 5.0 5.0 External sector Export o f G&S, f.0.b (inU.S. dollars) 15.7 15.0 15.0 L 5.0 15.0 15.0 Imports o f G&S, f.0.b (in U.S. dollars) 20.2 17.2 15.S 14.7 14.2 13.3 Government finance Revenue and grants 22.3 17.6 10.6 10.0 11.0 11.2 Revenue 9.4 15.8 13.4 13.6 13.8 I4.n Total expenditure andnet lending 31.4 10.5 11.1 10.8 11.6 10.9 Current expenditure 23.9 6.9 7.6 11.9 10.5 10.8 Capital expenditure 49.1 19.1 17.6 9.5 13.5 11.5 Money and credit Net domestic assets I/ 6.3 9.3 11.6 12.0 13.8 12.6 Domestic credit 1/ 16.7 14.9 15.2 15.7 16.3 15.8 Government I/ 3.2 0.8 1 .0 1.4 1.7 0.6 Economy 1/ 13.3 14.1 14.2 14.3 14.6 15.2 Broadmoney (M2) 13.4 15.6 15.2 I4.5 16.5 14.8 Reserve money 16.0 16.0 13.3 13.4 13.9 13.5 Velocity (GDPIM2; end of period) 5.8 5.8 5.7 5.6 5.4 5.3 (Inpercent of GDP) Nationalincome accounts National savings 12.4 13.6 14.3 16.0 17.4 18.4 Of which: public 3.2 4.6 5.2 5.1 5.3 5.4 Gross investment 18.2 19.4 20.3 22.0 23.4 24.4 Of which: public 9.4 9.7 10.1 9.9 9.9 9.8 Savings-Investment gap 4/ -5.8 -5.8 -6.0 -6.0 -6.0 -6.0 Government net savings (-deficit) -6.2 -5.I -5.0 -4.7 -4.7 -4.4 Continues next page.. . 139 2007 2008 2009 2010 2011 2012 Proj. Proj. Proj. Proj. Proj. Proj. (Inpercent ofGDP) Governmentfinance Total revenue andgrants 24.5 25.0 24.6 24.0 23.6 23.2 Total revenue (excluding grants) 12.1 12.1 12.2 12.3 12.4 12.5 Total expenditure andnet lending 26.5 25.5 25.2 24.8 24.5 24.0 Primary fiscal balance 2/ -4.3 -I.2 -5.1 -5.2 -5.2 -5.0 Domestic fiscal balance 31 -7.8 -6.9 -6.8 -6.8 -6.6 -6.2 Overall balance (payment order) After grants -2.1 -0.5 -0.6 -0.7 -0.8 -OS Before grants -14.4 -13.3 -12.9 -12.4 -12.0 -1 1.4 External sector Export o fG&S, f.0.b (inU.S. dollars) 9.8 9.7 9.9 10.0 10.1 10.1 Imports of G&S, f.0.b (inUS.dollars) -28.4 -28.9 -29.5 -29.7 -29.8 -29.5 External current account balance Includingofficial transfers -5 .s -5.8 -6.0 -6.0 -6.0 -6.0 Excluding official transfers -13.5 -13.6 -13.7 -13.5 -13.1 -12.S External debt (end o f period) 13.3 12.7 12.1 11.5 10.9 10.0 Net present value o f external debt 5.7 5.7 5.7 5.6 5.4 5.2 (inpercento fexports ofgoods and services) 57.8 58 .I 57.3 55.9 53.9 50.8 Gross reserves (inmonths o f imports o f G&S) 4.8 4.4 4.0 3.6 3.2 4.0 (Inmillions ofU.S. dollars) Overall balance o fpayments 32.7 27.2 15.1 11.2 10.5 10.1 External arrears 0.0 0.o 0.0 0.0 0.0 0.0 External financing gap 0.0 0.o 0.0 0.0 0.0 0.0 External debt (end o f period) 456.5 501.8 546.1 589.5 633.6 666.1 Gross official reserves 456.8 49'1.5 504.7 516.9 527.9 539.9 Memorandumitem: Nominal GDP (inbillions o f Rwanda francs) 1,879.4 2,159.5 2,428.4 2,736.3 3,089.5 3,495.5 Nominal GDP growth (in percent) I5.2 14.9 12.5 12.7 12.9 13.1 Domestic debt (end o fperiod; inpercent o f GDP) 13.3 12.7 12.1 11.5 10.9 10.0 Sources: MWECOFINstaffestimates andprojections. 1/ As apercent o fthe beginning-of-period stock o fbroad money. 21 Revenue excludinggrants; minus current exp. except interest due and exceptional exp.; minusdomesticallyfinanced capital exp. 3/ Revenueexcludinggrants; minus current exp. (excluding external interest), minusdomesticallyfinanced capital exp. andnet lendmg 41 Grossnational savings less gross investment, inpercent o fGDP. 140 7 HOW WILL RWANDA KNOW IT I S GETTING THERE? 7.1 Inorder to know whether the EDPRS is achieving its objectives, policy makers must be able to monitor progress and evaluate the impact o f key public actions. Monitoring involves three steps: (i) observing how a set o f indicators changes over time; (ii)analysing and drawing conclusions from those observations, and (iii) feeding those conclusions back into the policy process. Effective monitoring i s essential for improving public sector management, ensuringtransparency indecision-making, and holding policy makers to account. 7.1 T i einstitutionalframework ofmonitoring 7.2 The first step in assembling an effective monitoring system i s to establish the institutional framework. This will require a period o f debate as there is a variety o f `models' from which to choose. It i s important to devise a system which i s appropriate to Rwanda's needs as it makes the transition to a highly decentralised Public Sector. Inthe meantime, implementation will be monitored by the institutions involved in the EDPRS elaboration, including the National Steering Committee, Technical Steering Committee and Sector Working Groups. 7.3 A small group o f technicians will be required at central government level to monitor the EDPRS and evaluate the impact o f key interventions. Each sector will also ensure that they have an EDPRS monitoring and evaluation specialist. The work will include assembling and collating information on the EDPRS indicators, analysing changes in the indicators, ensuring feedback from this analysis into policy-making, and proposingmeasures to stakeholders for improving the monitoring system over time. 7.4 At the political level, monitoring and evaluation will be carried out through a single EDPRS review framework (a common Performance Monitoring and Policy Matrix, outlined below) that stresses both domestic accountability and accountability to development partners. Domestically, the EDPRS progress will be reviewed annually by the Technical and National Steering Committees through the Annual Progress Report mechanism, which will draw on the Joint Sector Reviews and District Performance Contract evaluations (imihigo),and subsequently be submitted to Cabinet and Parliament. The Joint Sector Reviews will be supported by regular Public Expenditure Reviews, Citizen Report Cards and Community Score Cards. Similarly, all stakeholders will review progress annually, through the Monitoringand Evaluation framework presented in this chapter. The system will therefore provide the basis for donor harmonisation. 7.2 TheEDPRS indicator system 7.5 Rwanda has built up several monitoring systems at national, sub-national and sectoral level. Each o f these systems i s the product o f different initiatives launched at different times. The result i s that policy-makers at national level are faced with an excessively large number o f indicators for tracking the country's development. 141 Consequently, there i s an urgent need to prioritise indicator selection and to improve coordination and connectivity between separate information systems. 7.6 This section describes the proposed structure o f the EDPRS indicator system. The framework presented here i s preliminary. The final framework will be produced in consultation with all stakeholders and published as an appendix to the EDPRS. The Intermediate Indicators and summary Policy Matrix are to be subsequently determined on an annual basis, duringthe Joint Budget Support Review. 7.2.1 Linkinginputto output and outcomes 7.7 At the national level, a single set o f four indicator matrices will be used to monitor the EDPRS, while also serving as a revised master Performance Assessment Matrix (PAM) or Performance Assessment Framework (PAF). This aims to ensure that the perspectives o f Rwandan policy makers and donors are aligned. The purpose o f the four matrices is to allow the construction o f simple causal chains linking public expenditure inthe budget to desired EDPRS output and outcomes (see Box 7.1). 7.8 The purpose o f the matrices i s not to provide full details o f indicators and policies to be adopted in each sector - this will be provided in each sector's strategy, underpinned by more detailed sector logframes. The indicators in the EDPRS Performance Monitoring and Policy Matrix are consequently only a sub-set o f the indicators contained inthe full sector logframes. To provide a manageable framework for monitoring performance, reporting to the national level is restricted to a few key indicators, but additional reporting will take place within each sector, and discussed duringthe annual Joint Sector Reviews. 142 Figure 7.1Indicatorsform a causal chain For the purposes o f EDPRS monitoring, it i s usefulto distinguishbetween four types o f indicators: input, output, outcomes and impact. The commitment o f inputbythe government through the annual budget generates certain outputs. These output provide opportunities for private individuals to consume and/or invest ingoods and services suppliedbythe government, such as schooling andhealthcare. Those individuals who take advantage o fthese opportunities, because they calculate that it i s beneficial for them to do so, generate values for outcome indicators. Finally, as a result o f consuming andor investing inthese goods and services, individuals' welfare i s enhanced. An application o fthis causal sequenceto primary education is givenbelow: OBJECTIVE: increase the coverage and quality of primary education Effect on we1fare:Iiteracy rate, 1 FinalI final year exam pass rate indicators Access to/use of services: -7-7- enrolment and completion rates Goods/services produced: 1 1 I I number of primary schools Intermediate 1 in operation indicators I I 11PhysicaVfinancialresources allocated: public spending on primary education 143 7.9 The proposedframework has the following elements: A matrix o f no more than twenty strategic outcome and impact indicators that provide a succinct overview o f progress in development and poverty reduction (Table 7.1). Most o f these indicators share three features. Firstly, they measure as closely and as directly as possible, certain key dimensions o f human welfare in a society. These include freedom from consumption poverty and bad governance, and freedom to live a long and healthy life, fulfil one's educational potential and enjoy a safe, clean and bio-diverse environment. Secondly, they are derived from data which are not available on a yearly basis. For example, the poverty headcount ratio is calculated using consumption data collected every three to five years in a living standards measurement survey or household budget survey. Thirdly, many outcome indicators are beyond the direct control o f the government, although they can be influenced indirectly by government actions (social protection). For these reasons, the outcome indicators inthe first matrix cannot, and should not, be used for the annual release o f budget support. These indicators will be used to evaluate the strategy at the end o f the EDPRS period. Inaddition, inorder to have an interimmonitoring o f the EDPRS on the poor and most vulnerable and allow changes inpolicies and strategies, national surveys will be conducted at the mid-tern (mini-DHS and mini-EICV). 0 A matrix o f no more than thirty intermediate indicators which as-emore or less directly linked to government actions, are not affected by random events, and for which relatively good data are produced annually (Table 7.2). These indicators include output and/or input which measure public interventions which are causally linked to the outcomes inthe first matrix. For example, an indicator measuring the proportion o f the vulnerable population covered by social protection measures i s one determinant o f poverty incidence, while it i s also something over which the government has some direct control. Some or all o f the intermediate indicators in the second matrix could be linked to budget support operations by the donors. 0 A matrix o f no more than thirty policy actions per year in key areas o f reform which are considered high priority for development and poverty reduction (Table 7.3). These actions should serve as the triggers for the release o fbudget support funds. 0 A matrix o f second-generation indicators which are superior to some o f those currently in use, but for which adequate data are not yet available (Table 7.4). These include indicators that could be incorporated into the EDPRS monitoring system in the future. The fourth matrix in this case will show the institution responsible for each indicator, its current status, and a date by which the data might be available. 144 Table 7.1EDPRSStrategic Outcome Indicators Indicators Base200506 1Target 2012 Data source 1Frecluencv I GDP growth rate (% per annum) 6.5 8.1 National accounts; Annual macro projections EDPRS Employment in agriculture (% reporting as 80 70 EICV Every five year main occupation) I Share o fpopulation living inpoverty (%) EICV 1Every five years 1 Share o f population living in extreme poverty EICV 1Every five years I (%I Poverty incidence among people living in EICV Every five years I female-headed households (%) Economic inequality (Gini coefficient o f EICV I Every five years 1 consumption) Infant Mortality Rate (per 1,000 live births) DHS IEvery five years I IMRinbottom wealth quintile DHS IEvery five years I Incidence o f stunting (height for age) (%) 45.0 27.2 DHS IEvery five years I Maternal Mortality Rate DHS IEvery five years 1 Total fertility rate 6.1 I 4.5 DHS IEvery five years I % o f households having access to clean 86 EICV Every fiveyears drinkingwater I 64 ~ Malaria prevalence (% o f adults in Eastern 35 28 Malaria Metrical province) Survey; Malaria Prevalence Household Survey I HIV incidence (% of adults aged 15-24) DHS IEvery five years ~ Percentage of pupils sittingnational exams in 8.9 National Examination IAnnual I primary year 6 who obtain an Council average mark of at least 50/100 (% of examinees) Share o fpopulation expressing 85 100 Select source satisfactionlconfidence in decenhalised governance (%) Proportion o f corruption cases involving Annual public funds on file which have beenresolved through prosecution or otherwise (%) Forestry coverage (%) 20 23.5 1Annual 1process 145 Table 7.2 EDPRSIntermediate Indicatovs Indicators 1Base 2005-06 1 Target 2012 Data source Frequency Gross fixed investment (% GDP) I 16.3 I 24.4 MBXCOFIN Annual Private Sector credit (% of GDP) I 10 I 15 MINECOFIN, BNR Annual % of agricultural landprotectedagainst soil erosion 40 100 Annual reports of MINAGIU and MINITERE Area under irrigation (has) 24,000 Annual reports of RADMREMAIMINAGRI % of farmhouseholdsusing Annual reportsof Annual Inorganic mineral fertilisers 10.8 40.0 RADMISAWMINAGRI Organic fertilisers 6.8 25.0 Improved seeds 3.0 20.0 Insecticides 23.9 45.0 % of livestock inintensive systems 16 60 Number of farmhouseholdsper extentionist 1 1:3,000 1 1:1,500 % of classified roadnetwork in good condition 11 31 MININFRA Number ofhouseholdswith accessto electricity 70,000 200,000 Electrogaz, MININFRA, NEDA ICT composite network coverage 75 100 RITA Primary completion rate I 52 I 125 EMIS Pupiliteacher ratio inprimary schools 70:1 47:l Grosssecondaryschool enrolment 10 30 Pupiyteacherratio insecondary schools 30:1 32:1 % of TVET students absorbedinindustry 25 75 % of women aged 15-49 years usingmodem 10 70 DHS;HMIS contraceptivetechniques % of women giving birthinhealth centres 28.2 75 % ofrural householdswithin 500 metres of animproved 86 Water Sector Strategy Annual water source Development Report % ofurban householdswithin 200 metres of an 100 improved water source I % ofpopulation living within 5 kms of a functioning 70 HMIS Annual health centre Numberof insecticide treatedbednets distributed Population Service I(PSI) annually MINISANTE % ofpopulationcoveredby health insurance I 95 HMIS, MOHandprivate 70 insurancebodies Average number of days to dealwith licences 130 70 World Bank Doing Business reuorts 146 -.-6 0 R B P 4 a Table 7.4EDPRS Second Generation Indicators i Indicators Available in I Data source Frequency I I Measure of overcrowding Experiencelperception o f corruption DIAL among poor module in household survey Malaria incidence Employment rate for graduates from TVET (YO employed within 6 months o f graduation) Number of secondary school teachers trained in science % of secondary schools connected to the internet Percentage of pupils sitting national exams in tronc cornmun year 3 who obtain an average mark of at least 50/100, disaggregated by gender (% of examinees) Percentage of pupils sitting national exams in upper secondary year 6 who obtain an average mark o f at least 501100, disaggregated by gender (% of examinees) % of classified district roads 75 MININFRA rehabilitated Land area provided with services for 10,000 housing (hectares) Note: To be finalised during consultation orocess 150 7.2.2 Usingthe EDPRSindicator systemto providean evidencebasefor policy:some examples 7.10 A monitoring system is o f little value if its indicators are not used to shape policy-making. This section describes how the EDPRS monitoring framework can be applied by using the indicators to ask, and to answer, a sequence o f policy-related questions. Intracing out this sequence o f questions and answers, the relationship between the EDPRS monitoring framework, sector logframes and other sources o f information becomes apparent. 7.11 Suppose that the GDP growth rate (an outcome indicator in Table 7.1) falls to a level below the rate projected for the EDPRS scenario o f 7.6% in 2009. In seeking to discover why this has occurred, it i s useful to look first at the aggregate investment rate (an output indicator in Table 7.2). Ifthis has also fallen, then the answer to why growth has slowed i s likely to be associated with the lower investment rate. Inthis case, EDPRS monitors should investigate whether both public and private investment rates have fallen. If the public investment rate has risen, but the private rate has fallen, then attention should focus on whether the problem i s on the demand or the supply side o f private investment. Factors which inhibit the demand for investment include higher real interest rates, an appreciation o f the Rwandan franc (for exporters) or a failure to take a policy action which reduces the transaction costs o f business or creates a more favourable business climate (see intermediate indicators in Table 7.2). On the supply side, private investmentmayhave fallen due to banks' reassessmento fthe risk to borrowers. 7.12 However, if the aggregate investment rate has not fallen, the reasons for slower growth may be found at the sectoral level. Inthis case, it i s useful to begin by comparing the performance o f agriculture with non-agriculture (Figure 7.2). If agricultural growth has declined, EDPRS monitors should examine whether both crop and livestock production have been equally affected. Suppose that livestock production has continued to grow fast, but crop production has not expanded as planned. Attention should then focus on whether more farmers are using improved seed and fertiliser (an output indicator in Table 7.2). If there is no evidence of increasing intensification of agriculture, the reasons for this may be the highrelative price o f fertiliser (a market information indicator inFigure7.2), which is inpart due to slow progress inrehabilitating national and district roads (an output indicator inthe infrastructure logframe shown inFigure 7.2), or a failure to increase the number o f extensionists per farmer (an output indicator from the Agricultural Sector logframe inFigure 7.2). 7.13 These examples show how the outcome, output and input indicators in Tables 7.1 and 7.2, together with the policy actions listed in Table 7.3 can be used to trace a causal sequence o f actions (and inactions) within the Public Sector and between the public and private sectors. Once identified, this sequence can provide an important evidence base for assessing and improving current policy. 151 Figure 7.2EDPRS indicators and sector loafvames Links between EDPRS indicators! sectoral logframes and1market information I 1 EDPRS monitoring system Agriculture 3ther sector logframe logframes Impact/outcomes outputs Inputs Oh of cultivating Relative pnce 1 Food - ehouseholdsusing of feltiliserlcmps crop mnerai feltiliser& Agric production improvedseed I GDP K m of nationail growth Ratio of No of exiensionists extensionists 4 recruited,trained& district roads to farmers equipped rehabilitated growth % of iivestock J - e inintensive system Relative price 4 of fodderllivestock Non- agric GDP growth 7.2.3 Reportingon the monitoringframework 7.14 To monitor the implementation o f the EDPRS at sector level, the different ministries will prepare a report annually outlining how they are performing against their stated objectives inthe EDPRS Performance Monitoring and Policy Matrix. These annual reports will list all stated objectives, and provide a case by case assessment on whether progress is on track to achieve each o f the targets and policies as specified inthe sectoral chapters in this EDPRS document. As the system evolves, sectors may decide to change their indicators (to utilise more readily or frequently available data or indicators that better reflect policy objectives) though this will be done inthe context o f the Joint Sector Reviews. 7.15 Information may not be available for each indicator on an annual basis. However, a ministry should still be able to provide ajudgment on whether progress is on course, based on all the actions it has undertaken. 7.16 Figure 7.3 provides an example o f a suitable format for sector reporting. The idea i s that for each key performance indicator, the sector will provide a description o f progress to-date, together with an explanation o f why performance has been limited or where progress was slow. The traffic lights in this figure visualise the information in a 152 very accessible and user fiiendly way. The traffic light colour coding rates progress: green indicates `on track', amber `too early to say', red indicates `off-track'. Essentially, it is a report card that summarises progress within the sector in a way accessible to non- technicians. Figure 7.3 Traffic light reports to monitor progress towards sectoral EDPRS objectives Indicator Progress `Traffic lights' indicator of (Examples) (Description and assessment of progress) progress Primary school net Primary school net enrolment increasedfrom enrolment 72% in 2000 to 9OU/' in 2006, and is wll on track to achieve the 100% target for 2010. The on irnck challenge is to maintain the rate at this high level biragendaneza and increasethe quality of education. Ginicoefficient of The Gini coefficient increasedto 0.50 in 2006, income inequality up from 0.47 in2000. E\,enwith concerted efforts. it is unlikely that the 2010 target of 0.40 can be achieved. Population growth rate The population gron-thrate has reduced from 2.9 per cent in 2000 to 2.6 per cent in 2006. Although the 2010 target of 2.4 per cent is f 0 0 i'tlr(\' f(Jii'fl iiithin reach, actual population le\rels are beyond bikeneye gukurikiranwa target and a faster reduction inpopulation growh would be desirable. 7.17 The distinction between sectors, ministries and districts merits some clarification. In the context o f the ongoing decentralisation process, the role o f line ministries i s reduced to policy development and monitoring o f service delivery, whereas actual service delivery i s the responsibility o f local government. The traffic light reports are based on the achievement of sector objectives and the production o f the reports is the responsibility o f the lead ministry in the sector. Whereas the actual responsibility for specific actions may rest with either the lead ministry, local government, or even another ministry or agency, the lead ministry i s responsible for ensuring that every agency fulfils its part. The lead ministry i s the guardian o f the sector, and therefore bears overall responsibility that sector objectives are met. 7.18 The traffic light report must be produced early on in the year in time for government's retreat in Akagera. The report will be compiled by MWECOFIN and subsequently published on MINECOFIN's website as well as inthe national newspapers. It is envisaged that the report will also feed into the Public Accountability Day. 7.2.4 Joint Sector Reviews 7.19 PRSPl started a process o f annual Joint Sector Reviews (JSR), which fed into the production of the PRSP Annual Progress Report. The scope and depth o f the Joint Sector Reviews has generally increased during the implementation o f the PRSP, 153 culminating in a highly participatory and very extensive self-evaluation by each sector in 2006. 7.20 The JSRs will be further entrenched in the annual activity calendar o f all sectors, with a specific focus on the consideration o f budget execution information. To maximise the utility for the annual budget process, the Joint Sector Reviews will look at the performance o f each budget programme, specifically the extent to which the expected contribution to the various sector objectives are being realised. In this way, the EDPRS has put in place the foundation for performance budgeting, though further work will be required clearly to map the most relevant indicators from the sector logframes to the different budgetprogrammes. 7.21 The JSRs will also consider the role and impact o f external aid, with a view to building a common understanding o f progress and limitations inthe effective use o f aid, and agreeing on actions on the part o f both donors and government to ensure that the impact o f aid i s maximised. Such discussions play an important role in fostering mutual accountability inthe GoR-donor aid relationship. 7.3 Implicationsfor the statistical system 7.22 The EDPRS monitoring system is only as good as the data which feeds it. The quantitative information i s drawn from surveys and censuses conducted by the National Institute o f Statistics Rwanda (NISR), and from the routine data systems o f line ministries. Qualitative information i s generated by the ubudehe process and other types o f participatorypoverty assessment. 7.23 The NISR has a key role to play in strengthening and developing the EDPRS monitoring system. By continually seeking to improve the country's official statistics, it will provide a sound evidence base for policy-making and results verification. Ideally, the NISR's mandate should extend beyond surveys and censuses to include the exercise o f quality control over information collected by line ministries, which are often the weakest link in the data chain. Developing ministry MIS and linking these between central and local levels will therefore also be paramount. 7.24 The NISR, together with properly qualified civil society organisations, will be the prime source o f suggestions for second generation indicators. This will require that any long term plans for developing the monitoring system are fully integrated with Rwanda's National Strategy for the Development o f Statistics (NSDS). 7.25 In collaboration with UNAgencies, the GoR is currently developing Rwanda Devinfo as the national database for the management o f GoR monitoring information. Rwanda Devinfo will offer a method o f organising, storing and previewing data in a consistent and harmonised manner. As such it will facilitate the sharing o f information between government institutions and users, as well as with development partners and other institutions o f research. The database will contain standard indicators such as those defined by the Vision 2020 and the MillenniumDevelopment Goals, together with other 154 specific indicators defined in the sector strategies' monitoring and evaluation frameworks. 7.4 Evaluation of EDPRS itztewentions 7.26 Evaluating the impact o f public actions i s more complex than monitoring a set o f indicators. This i s because it requires isolating the causal impact o f a particular intervention on a particular outcome from all the other determinants o f that outcome. For example, a programme which provides food supplements to infants in poor households aims to improve their nutritional status and reduce child mortality. However, child mortality and nutritional status may also depend on mother's education, access to clean drinkingwater andthe distance to the nearest health clinic. 7.27 Inorder to identify and quantify programme impact, it is necessary to estimate what the outcome among a group o f those benefiting from the intervention would have been in the absence o f the intervention22.Unfortunately, this hypothetical state o f affairs cannot be observed directly, so it i s necessary to select a control group to serve as a counterfactual. 7.28 A variety oftechniques are available for conducting impact evaluation, but they share some common features. Firstly, an evaluation strategy should be agreed and designed before the intervention occurs. This will determine what techniques will be used and what data will be collected at which date. If no thought i s given to evaluation until after the intervention has started, certain evaluation strategies may no longer be available. 7.29 Secondly, all evaluation strategies require a baseline survey o f the selected beneficiaries and the control group before the intervention occurs. This provides a benchmark for comparing post-intervention outcomes among the treatment group with those among the control group. After the intervention starts, follow-up panel surveys o f the two groups are carried out to measure how the outcomes o f interest, such as infant mortality or child nutrition, change over time. Thirdly, all rigorous impact evaluations demand technical expertise instatistics. 7.30 The ideal design for an evaluation strategy requires random assignment to the treatment and the control group. This i s rarely feasible to undertake for several reasons. However, there are occasions where it i s possible to adopt a strategy of randomisation. Such opportunities arise when a new programme i s launched, but owing to budget and/or administrative constraints, it i s not possible to implement it nation-wide in a single year. Ifselection into the programmeis randomised, then those areas excludedbychance from the programme initially can serve as a control group until they are covered by the intervention. 22Those benefiting from an intervention are known as the treatment group, while those non-beneficiaries serving as the basis for comparison are knownas the control group. The control group provides the counterfactual. 155 7.31 It may bepossible to undertake a randomised evaluation o f the impact o fVision 2020 Umurenge. At present, this programme i s ina pilot phase duringwhich each district selected its poorest umuvenge (sector) to participate. While these 30 sectors were not randomly chosen, it would be possible to evaluate the pilot using propensity score matching techniques, so long as baseline survey information i s available for all sectors before the intervention began. Randomisation could then be used to select the date of entry for the remaining 386 sectors into the programme. If it took a minimum o f two years for Vision 2020 Umuvenge to attain national coverage, this will provide a window for undertaking a rigorous impact evaluation. 7.32 The evaluation design described above i s currently being used to assess the impact o f performance based contracting for general health and HIV and AIDS services inRwanda. In2001, a pilot phase started innine districts. The national roll-out of this programme began inmid-2006 in twelve randomly chosen districts, and coverage will be country-wide by 2008. The twelve districts selected into the programme in 2006 are the treatment group, while the nine districts which are not covered by the programme until 2008 act as a control group for two years (2006-2008). 156 APPENDIX 1:APPENDIX TO CHAPTER 1 EDPRS Sector WorkingGroups Lead Government Theme / Sector Working Institution LeadDonor Other participating Theme 1:Economic Growth. Private Sector Devek pmerzt and Infrastructure 1.1 EconomicGrowth & MINECOFIN World Bank BNR, RRA, SFB, Financial Sector MINICOM, Development MINAGRI,HMO, ILO, CESTRAR 1.2 Private Sector MINICOM USAID RIEPA, BRD, OCIR Development The/Caf6, ORTPN, CAPMER, RPSF 1.3 Infi-astructure: MININFRA EC MINITERE, Electrogaz, RITA, KIST, TIG, CDF, MVK & 4 Provinces Energy World Bank Transport EC ICT UNDP Habitat andurbanisation German Cooperation 1.4 EmploymentPromotion MIFOTRA World Bank HIDA,HMO, & CapacityBuilding MINICOM. RIAM Theme 2: Rural Develowment 2.1 Agriculture and Animal MINAGRI World Bank MINITERE, Husbandry MINALOC (CDF), MININFRA, MINICOM, HMO, TIG, OCIR The/Cafe, MIFOTRA 2.2 Environment andLand MINITERE UNDP REMA,MINAGRI, Use Management MVK 3.1 Education,Research & MINEDUC DFID RITA, MIJESPOC, Development KIST, NUR, Universities 3.2 Health, Nutrition, MINISANTE Belgium CNLS, M A , Population & HIV/AIDS Mutuelles de Sante, PNLP, NISR 3.3 Water & Sanitation MINITERE ADB MININFRA, MINISANTE, Lead Government Theme/ Sector Working Institution LeadDonor Other participating Group (Chair) (Co-chair) institutions* MINAGRI, Electrogaz, REMA,MINEDUC 3.4 Social Protection MINALOC DFID HIMO, MIGEPROF, FARG,MINEDUC, MINISANTE 3.5 Science, Technology & MINISTR DFID Innovation 3.6 Youth, Culture & Sports MIJESPOC Theme 4: Good Governance UNDP MININTER, Law & Order MINAFFET, MINADEF, Supreme Court, gacaca, NURC, NHRC, RDRC, Ombudsman, Prosecutor, TIG 4.2 Security MINADEF MINIJUST, MININTER, MINAFFET, NSS 4.3 Decentralisation, Citizen MINALOC Netherlands MININFOR, RALGA, Participation, Empowerment, MVK& 4 Provinces Transparency& Accountabilitv Multi-disciplinary Group on Cross-Cutting Issues Environment, Gender, 1MINECOFIN IDFID&UNDP IHIDA, RIAM, HIV/AIDS, Social Inclusion, MINEDUC, Youth MIJESPOC, National Women's Council, CNLS, MINALOC, MIGEPROF, MIFOTRA every Sector Working Group. 158 APPENDIX 2: APPENDIX TO CHAPTER 2 Figure A2.1: Public and private shares of gross fixed capital formation Source: World Bank (2007) Figure A2.2: Rwanda's balance of payments performance Millions USD 300 ETrade Balance mCurrent Account Balance 200 @Capitaland Financial Account Balance ~ EOverall Balance 100 0 -100 -200 -300 2002 2003 2004 2005 2006 159 TableA2.1: Balanceofpayments Millions USD 2002 2003 2004 2005 2006 Trade Balance -140.6 -165.4 -177.9 -228.7 -296.7 Exports (fob) 67.4 63.3 98.1 125 142.7 Coffee 14.6 15 32.2 38.3 54 Tea 22 22.5 21.6 24.4 32.1 Imports (fob) -207.9 -228.7 -275.9 -353.6 -439.4 Current Account Balance -105.9 -96.8 -34.7 -57.8 -216.8 Overall Balance 12.8 -35.7 107.9 119.2 80.1 TableA2.2: Crop-growinghouseholds usingdifferentinputby quintile(YO) Crop input Survey Expenditure q ntile Total Lowest 2nd 3rd 4th Highest Organic fertiliser EICV 1 0.9 1.1 2.8 3.5 5.6 2.6 EICV 2 3.7 6.9 8.1 7.0 10.6 7.1 Chemical fertiliser EICV 1 1.8 3.2 7.1 7.8 11.8 6.0 EICV 2 6.6 9.3 11.4 15.9 17.4 11.9 Labour EICV 1 6.7 13.7 25.2 38.4 58.6 26.5 EICV 2 16.6 34.4 47.8 63.9 77.9 46.7 Seeds EICV 1 58.9 51.1 51.2 49.9 41.4 51.1 EICV 2 71.4 73.6 73.4 70.6 65.6 71.2 Sacks andpackaging EICV 1 10.0 14.6 19.2 20.3 28.1 17.8 EICV 2 21.5 36.2 43.6 47.0 46.2 38.6 Insecticide EICV 1 3.9 8.1 14.2 14.8 21.1 11.8 EICV 2 10.3 21.4 29.6 33.6 39.2 26.2 Source: McKay et al. (20'1 160 Table A2.3: Crop yield comparison 1999-2003 average (Mt/Ha). Africa's World Yield (Mt/Ha) Rwanda Burundi Ethiopia Tanzania Uganda average average Maize 0.8 1.1 1.8 1.6 1.8 1.3 4.4 Sorghum 0.9 1.2 1.3 1.1 1.5 0.8 1.3 Cassava 6.1 9.0 n.a 10.2 13.2 8.9 10.6 Sweet Potatoes 5.8 6.5 9.6 1.9 4.4 4.6 14.9 Potatoes 8.0 2.6 9.1 6.9 7.0 7.7 16.3 Plantains 6.5 5.2 16.0 2.2 5.9 5.6 6.3 Beans 0.7 0.9 0.6 0.7 0.7 0.6 0.7 Peas 0.5 0.7 0.7 0.4 0.6 0.7 1.7 Coffee 0.7 0.9 0.9 0.4 0.7 0.5 0.7 Tea 1.3 0.8 1.o 1.3 1.9 1.9 1.3 Source: World Bank Country Economic Memorandum (CEM), calculated from FAOSTAT, 2005. Table A2.4: Households' engagement in reforestation activities, by quintile Quintile Rural population living in Mean hectares planted' communities that practise reforestation (%) EICV1 EICV2 EICVI EICV2 Lowest 41.2 62.0 4.8 12.4 Second 39.2 59.9 5.0 12.4 Third 40.3 56.3 5.4 12.0 Fourth 40.1 58.2 4.2 12.1 Highest 37.4 62.1 3.9 13.2 Total 39.8 59.6 4.7 12.3 Source: E. V2 results. Note: (1) Data refer to communities where replanting took p :e. 161 Table A2.5: Poverty headcount, share of poor and Ginicoefficient by province Poverty headcount Share of the poor Extreme poverty '.I (' 1 headcc ut (Yo) EICV1 EICV2 EICV1 EICV2 EICV1 EICV2 by province City of Kigali 24.4 20.2 4.1 3.4 15.4 11.1 Southern 65.8 67.3 27.1 30.2 45.9 47.2 province Western 63.1 62 24.9 26.3 41.8 40.9 province Northern 66.9 62.7 23.5 20.3 47.2 40.8 province Easternprovince 61.8 50.4 20.4 19.7 41.7 28.7 by oldprovince City of Kigali 16.1 13 2.2 1.7 8.4 6.3 Kigali Ngali 70.7 46.5 11.9 8.4 54.0 26.4 Gitarama 53.8 56.5 9.4 9.9 34.5 31.2 Butare 73.5 70.6 10.0 11.4 52.5 53.4 Gikongoro 76.1 79.2 8.0 9.1 56.5 62.9 Cyangugu 63.9 61.4 8.0 7.3 45.2 40.9 Kibuye 73.1 64.5 6.9 6.7 47.1 41.7 Gisenyi 54.9 61.8 8.7 11.5 36.0 42.3 Ruhengeri 71.2 64.5 13.7 11.3 49.4 41.1 Byumba 64.7 67.2 9.9 9.9 43.8 43.3 Umutara 53.7 45.4 3.7 4.7 33.2 24.1 Kibungo 53.7 50.3 7.6 8.1 33.2 30.1 National 60.4 56.9 100.0 100.0 41.3 36.9 Source: EICVl and EICV2 surveys. 162 Figure A2.3: Growth and poverty by province, total percentage change in 2000101 to 2005106 40% 20% 0% -20% Source: Minecofin staff analysisbasedon EICV data. Figure A2.4: Growth incidence curve, Southern Province Ecs 8 7 !: 6 3 2 1 0 I I 1 I 1 I 53 2(3 40 630 80 106 Percentiles Note: The curve plots the percentage change inreal income at each percentile of the income distribution. Source: MINECOFIN(2007b). 163 Table A2.6: Populationshare, povertystatus andlocationof vulnerablegroups Vulnerable household Population Poverty LocationbyruraVurban type share (%) headcount (%> (%I Rural Urban Femaleheaded 2000/01 2001/02 Widow headed 2001/02 2000/01 ~ Childheaded 2000/01 I I 1.3 I 60.1 2001/02 0.7 56.9 Source: EICVl andECV2 surveys. Table A2.7: Occupationby gender andpovertystatus (%) Male Female I Poor Non-poor National EICV1 EICV2 EICV1 EICV2 EICV1 EICV2 EICV1 EICV2 EICV1 EICV2 Professionals 2.4 2.6 1.5 1.5 0.5 0.4 3.9 3.8 1.9 2.0 Senior 0.1 0.1 0.0 0.0 0.0 0.0 0.1 0.2 0.0 0.1 Officials and Managers Office 0.9 0.6 0.5 0.5 0.0 0.1 1.6 1.2 0.7 0.6 Clerks Commercial 3.3 6.5 2.3 5.4 0.8 3.2 5.6 9.1 2.7 5.9 andSales Skilled 3.4 7.2 2.4 4.1 0.4 2.5 6.3 9.2 2.8 5.5 Service Sector Agricultural 83.5 71.2 92.4 86.3 96.4 88.9 77.1 68.2 88.6 79.6 &Fishery Unskilled 6.4 11.8 0.8 2.1 1.8 4.9 5.3 8.3 3.3 6.4 Elementary Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Sourc, EICV1 & ,ICV2. A PersonsL ;ed 16 and Over Woi ng inPre ous 12 Tviths 164 TableA2.8: Nutritionalstatus of children(percent of under-5s) Stunting incidence Underweight incidence 2000 I 2005 2000 2005 2000 I 2005 Male 46.3 7.0 4.2 25.1 22.9 Female 41.2 6.5 3.6 23.4 22.1 Urban 27.4 33.1 6.4 3.8 15.2 16.2 Rural 1I 6.8 3.9 25.9 23.5 45*3 47.3 Total 42.4 45.3 6.8 3.9 24.5 22.5 - - (stunting i s measured by height-for-age, wasting by weight-for-height and underweight by weight-for-age) to those of a reference population of healthyunder-5s. TableA2.9: Childrenreceivingimmunisation(%) I I xllvaccines I A BLCT 2000 I 2005 Urban Rural 75.8 75.8 85.9 87.8 E; Total 76.0 75.2 86.0 87.0 97.0 Source: DHS2 and DHS3. Note: Data refer to the percentage of 12-23 month olds receiving vaccination. 165 Table A2.10: Net and gross primary enrolment rate, by gender and location (YO) EICV1 EICV2 Male Female All Male Female All Net enrolment City of Kigali 81.5 83.9 82.7 89.8 91.0 90.4 Other urban 75.5 72.8 74.1 89.0 91.3 90.1 Rural 72.9 73.0 72.9 84.0 86.2 85.1 National 73.7 73.7 73.7 84.8 86.9 85.9 Gross enrolment City o f Kigali 107.4 118.3 112.8 129.3 131.7 130.5 Other urban 117.8 112.6 115.2 149.4 149.7 149.6 Rural 111.2 108.7 109.9 140.2 139.6 139.9 National 111.4 109.6 110.5 140.4 140.0 140.2 Source: EICVl and EICV2 data. Note: Net enrolment rate shows children aged 7-12 who are reported to be attending primary school, as aproportionof all children aged 7-12. Gross enrolment rate shows students of any age who are reported to be attending primary school, as aproportionof all children aged 7-12. EICV1 EICV2 Male Female All Male Female All City o f Kigali 24.9 22.7 23.6 29.2 29.0 29.1 Other urban 7.4 11.3 9.3 12.6 14.9 13.8 Rural 4.5 5.4 5.0 8.9 7.0 7.9 National 6.2 7.5 6.9 10.6 9.5 10.0 Source: EICVl and EICV2 data. Note: Net enrolment rate shows children aged 13-18 who are reported to be attending secondary school, as a proportion of all children aged 13-18. Figures do not include students on vocational 'post-primary' courses. 166 REFERENCES African Peer ReviewMechanism (2005) Country Review Report of the Republic of Rwanda, NEPAD. Evans, A, Piron, L.-H., Curran, Z. and Driscoll, R. (2006) Independent Evaluation o f Rwanda's Poverty Reduction Strategy2002-2005, FinalReport, ODVIDS. Hausmann, R.,Rodrik, D. andVelasco, A. (2004) GrowthDiagnostics: Determining the right policies for growth, Initiative for PolicyDialogue, Columbia University. International Monetary Fund(2007) Memorandum of Economic and Financial Policies, Washington, DC. 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