Rwanda

Despite impressive progress in reconstruction and a move towards longer-term planning for economic growth and poverty reduction, Rwanda remains heavily dependent on external aid in the medium term. Official Development Assistance to Rwanda totalled approximately USD 603 million in 2006, this being equivalent to some 27% of GDP, and financing over half of the national budget.
Rwanda is a signatory to the Paris Declaration on Aid Effectiveness (2005) and Rome Declaration on Harmonisation (2003), and benefits from strong government commitment to ensure that both domestic and external resources are utilized in a manner that supports sustainable economic growth, poverty reduction, and an eventual reduction of dependence on foreign aid. The finalisation in 2007 of Rwanda’s secondgeneration PRS, the Economic Development and Poverty Reduction Strategy, provides a strong national planning framework which to align external assistance. Rwanda’s Aid Policy, finalized in 2006, provides overarching guidance on how aid to Rwanda should be provided and managed, recognizing that further developments in human and institutional capacity are necessary to support the successful implementation of the EDPRS.

At the request of the Government of Rwanda, an Aid Coordination Unit was set up in the Office of the UN
Resident Coordinator in 2005 to strengthen national capacities for effective aid management and ensure that
Rwanda’s aid coordination architecture has the support needed for its effective functioning. The Aid Coordination Unit has implemented one project in support of aid coordination, harmonization and alignment under the Direct Execution (DEX) modality for the period January 2005 to December 2007. This project has delivered approximately 2.7 million USD over the three-year period, financed by a basket fund of seven donors (Belgium, Canada, the Netherlands, Switzerland, Sweden, the United Kingdom and UNDP).

The existing support project has gone far in mainstreaming the aid effectiveness agenda in Rwanda through the provision of assistance in the development of Rwanda’s Aid Policy; support to the establishment of and strengthening of capacities in a dedicated External Finance Unit (EFU) in the Ministry of Finance and Economic Planning (MINECOFIN); assistance in the development and operationalisation of an aid information management system; support to the operation and refinement of Rwanda’s aid coordination
mechanisms; cross-government policy advice and training on a range of aid-related issues, and the facilitation of south-south initiatives aimed at exchanging experiences and building wider knowledge networks.

Despite the progress highlighted above, a number of challenges remain:
- Limited human capacities for aid management within MINECOFIN, resulting from low staffing and turnover issues. This has resulted in project staff adopting a “gap filling” role at times and delaying capacity transfer.
- Increased demand for on-job training for aid management arising from recruitment of new MINECOFIN/EFU staff foreseen for 2008.
- Despite successes in institutionalising a number of coordination mechanisms, there is a need to ensure that Rwanda’s aid coordination architecture continues to respond to its needs.
- As Rwanda has finalised its EDPRS, there will be a need to ensure that mechanisms are in place to promote mutual accountability through the joint assessment of both government and development partner assistance.
- Data on aid flows to Rwanda remain incomplete, with further scope for the strengthening of a system for the collection, storage and analysis of aid data, and the integration of such a system with other GoR financial management tools and processes.

The existing project Steering Committee agreed in 2007 that support should continue to be provided to aid coordination, harmonisation and alignment activities over 2008, with a view to achieving a sustainable phasing out of such assistance and a handing over of responsibilities to national entities.

The current project is the primary vehicle through which the UN Country Team will support the attainment of Outcome 2.1 (UNDAF Result 1) of the Common Operational Document, and constitutes a large part of the UN Country Team’s contribution to the attainment of MDG 8 (Partnerships for Development).

This project builds on the previous UNDP Direct Execution project (00040553 – Support to Harmonisation and Alignment in Rwanda, 2005-2007), to achieve a sustainable phasing out of the support project and strengthen national ownership of aid effectiveness initiatives.

Development effectiveness is targeted through continued strengthening of human and institutional capacities for aid coordination, harmonization and alignment. Whilst the focus of engagement will be with the Ministry of Finance and Economic Planning (which will assume greater responsibility for implementing capacity development initiatives in this area from 2009), the project will also provide cross-government support to aid effectiveness on a demand-driven basis.

This interim support project is implemented in the context of a programme-based approach to support capacity development initiatives in the Ministry of Finance and Economic Planning, and will provide support to further strengthen
the Ministry’s leadership in planning, financing and implementing its own capacity development activities.