Rwanda: US$ 45 Million ADF Budget Support Grant for Poverty Reduction Programme

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Tunis, 6 May 2009 – The African Development Fund (ADF), the concessionary window of the African Development Bank (AfDB) Group will support efforts by the Rwandan government to reduce poverty and improve the people’s living conditions, with a grant of 30.3 million Units of Account (UA*), equivalent to US$45.38 million to finance the country’s Third Poverty Reduction Strategy Support Programme (PRSSP-III).

The overall goal of the PRSSP III approved by the ADF Board on Wednesday in Tunis is to contribute to economic growth and poverty reduction in Rwanda in line with the strategic objectives of the country’s Economic Development and Poverty Reduction Strategy (EDPRS).

In the medium-term the programme is expected to support Rwanda’s ability to cope with the adverse impacts of the global financial crisis and to sustain its economic growth rate at an average of 6 percent over the 2009-2012 period. Furthermore, because of its focus on outcomes that would benefit the poor, the programme will support Rwanda’s EDPRS goal of reducing poverty to 46 percent by 2012, from 56.9 percent in 2006.

The EDPRS covers the period 2008-2012, and sets the country’s development objectives, priorities and policies for the period.. The strategy is fully supported by the country’s stakeholders, including development partners and gives high priority to accelerating private sector-led growth. The PRSSP-III is aligned to the Bank’s 2008-2011Country Strategy Paper. Furthermore, it contributes to the strategic outcomes of the following two flagship programs of the EDPRS: growth for jobs and exports; and governance. The third flagship program of the EDPRS is Vision 2020 Umurenge that aims to reduce inequality and poverty.

Consistent with the CSP and lessons learned from previous operations, the programme is expected to create an enabling environment for private sector development; and improve governance in public finance. Effective reforms in these two areas will provide the critical foundation for productivity growth, competitiveness, and good governance that are critical for achieving Rwanda’s development objectives.

The Bank has so far provided Rwanda with two budget support operations that were developed collaboratively with the government, donors, and other country level stakeholders. The institution brought to bear, this cumulative level of experience during the design of the PRSSP-III. PRSSP III is indeed important because it provides the Bank with the first opportunity to fully harmonize, with the other budget support donors, the monitoring of the implementation of agreed policy measures by Rwanda under the Common Performance Assessment Framework (CPAF).

The PRSSP-III’s expected outcomes include:

  • improved Rwanda’s ranking in the “Doing Business” index;
  • deeper access to credit by the private sector; and
  • enhanced financial governance as reflected in improved Public Expenditure and Financial Accountability (PEFA) scores.

The primary beneficiaries of the programme include Rwandese entrepreneurs, especially small and medium-sized enterprises (SMEs), and the private sector.

As at end of December 2008, the Bank Group’s total commitments net of cancellations in Rwanda amounted to UA 180.9 million for 13 operations.

* 1 UA = USD 1.49783 as at 06/1052009

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