The World Bank Group (WBG) is finalizing a new Country Partnership Strategy (CPS) framed around three thematic areas: i) Accelerating economic growth that is private-sector driven and job-creating ii) Improving the productivity and incomes of the poor through rural development and social protection and iii)Supporting accountable governance through public-financial management and decentralization . The new CPS is jointly prepared by the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA) in an effort to achieve greater synergies and catalyze higher volumes of private resources to support Rwanda’s development. It builds on the Government’s second Economic Development and Poverty Reduction Strategy (EDPRS II) and on its proposed Division of Labor (DoL) among Development Partners (DPs)
Rwanda has achieved impressive development progress since the 1994 genocide and civil war. It is now consolidating gains in social development and accelerating growth while ensuring that they are broadly shared to mitigate risks to eroding the country’s hard-won political and social stability.
Rwanda’s long-term development goals are embedded in its Vision 2020 which seeks to transform Rwanda from a low-income agriculture-based economy to a knowledge-based, service-oriented economy by 2020.
In order to achieve the long-term development goals, the government of Rwanda has formulated a medium-term strategy. The Economic Development and Poverty Reduction Strategy (EDPRS 2)’s highest priority is growth acceleration and poverty reduction through its four thematic areas: economic transformation, rural development, productivity and youth employment, as well as accountable governance. The EDPRS 2 aims to achieve the following goals by 2018: (i) increasing GDP per capita to $1,000, (ii) reducing the poverty rate to below 30% and (iii) the reducing extreme poverty rate to below 9%. An underlying macroeconomic assumption is to accelerate annual GDP growth to 10% over the period 2013-2018.
These goals build on remarkable development success over the last decade including high growth, rapid poverty reduction and, since 2005, reduced inequality. Between 2001 and 2012, real GDP growth averaged 8.1% per annum. The poverty rate dropped from 59% in 2001 to 45% in 2011. Starting in mid-2012, Rwanda experienced a sudden and sharp decline in aid. Through appropriate fiscal and monetary policies, high growth and stability prevailed throughout 2012. The economy grew by 8% and inflation was contained below 6%.
Going forward, the private sector, still largely informal, will have to play a bigger role in ensuring economic growth. Poor infrastructure and the lack of access to electricity and limited generation capacity are some of the major constraints to private investment. Some reforms have been implemented successfully to improve the business environment and reduce the cost of doing business. As a result, the country was named top performer in the Rwanda Doing Business 2013 report, among the ten most improved economies in 2013 and Rwanda is now ranked as the third easiest place to do business in Sub-Saharan Africa.
In addition, reducing the country dependency on foreign aid (40% of the current budget) through a mobilization of domestic resources is critical. While Rwanda has been effectively using aid for development, the country remains vulnerable to fluctuations in aid flows. The government has successfully increased the domestic revenues to GDP ratio in the past several years, but the level is still far below the regional average.
Last updated: October 2013
The portfolio currently comprises 9 active projects and with net commitments of US$ 475 million.
Approximate shares are agriculture (48%), energy (31%), capacity building /skills development (11.7%), and transport (5.3%). Other sectors include private sector development, social protection, and demobilization and reintegration. Project objectives have ranged from helping farmers manage marshland and hillside cropping to rehabilitating water supply systems and providing electricity to rural households.
Last Updated: Apr 09, 2014