AfDB-Rwanda: USD 37.6 Million Grant to Finance Poverty Reduction Strategy Support Programme

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The Board of Directors of the African Development Fund (ADF) today in Tunis approved a budget support grant of USD 37.6 million (UA 23.2 million) from ADF-12 resource allocations to finance The Poverty Reduction Strategy Support Programme (PRSSP) Phase IV of  Rwanda. The ADF support to the PRSSP-IV constitutes 13.9% of the total grant resources of USD 271.2 (UA 167.4 million) to which other development partners including the World Bank, European Union, Great Britain (DFID) and Germany are contributing.

The PRSSP-IV, which is aligned to the Bank’s 2008-2012 Medium Term Strategy (MTS) and the Bank’s Country Strategy Paper (CSP) 2008-2011, is an important contribution to the implementation of Rwanda’s Development and Poverty Reduction Strategy (EDPRS) 2008-2012. The overall objectives of the Programme are to enhance public finance management and improve institutional capacity for the provision of quality services needed to support accelerated and broad-based economic growth. Specifically, it aims at achieving sustained economic infrastructure investment, export promotion, favorable macroeconomic environment, improved business environment for competitiveness private sector development and overall poverty reduction.

The main direct beneficiaries of the Programme will be private sector operators particularly small and medium scale enterprises (SMEs), financing institutions and Government institutions including the Ministries of Finance and Economic Planning, Trade and Industry, and Education, not to forget the Rwandan Development Board. However, the entire population of Rwanda is also expected to benefit from its social and economic development impacts, notably in terms of export growth, job creation, increased income and overall poverty reduction. The Grant Agreement for the Programme is expected to be signed on Monday 18 July 2011.

Rwanda, with a land area of 26,338 square kilometers and a population of about 10 million inhabitants, has been one of the good economic performers in Africa over the past few years. In 2010 its real GDP growth rate rebounded significantly to an estimated 7.5%, from 4.1% in 2009. Consequently, significant poverty reduction outcomes have been achieved and Rwanda enjoys overall political and economic stability. Significant results have also been achieved under the implementation of the Government’s Economic Development and Poverty Reduction Strategy (EDPRS). This new operation is expected to contribute to maintain its reforms and achievements. The Bank, through its Country Office in Rwanda, is chairing the Budget Support Harmonization Group since June 2011; and the PRSSP-IV is timely, as it reflects the Bank’s firm commitment to the Rwanda’s development efforts and the General Budget Support in particular.

The Bank Group’s current portfolio comprises 13 active operations for a total commitment value of USD 293.2 (UA181 million), out of which USD 151.6 million (UA93.6 million) representing 51.7%, has been disbursed.  The Country Strategy Paper (CSP) 2008-2011 for Rwanda approved on 6 November 2008, aims at supporting the Government’s Economic Development and Poverty Reduction Strategy (EDPRS) through two pillars: (i) economic infrastructure and (ii) competitiveness and enterprise development.

The CSP proposes a threefold approach to delivering Bank assistance to Rwanda; first, through analytical work and advisory services in conjunction with Government and other Development Partners; secondly, through support to capacity building efforts of the Government; and thirdly, through investment activities, budget support, and a range of private sector and regional operations, with emphasis on economic infrastructure.

1UA = USD 1.62 as at 15/7/2011

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