Aid Effectiveness in Rwanda

1
Aid Effectivenessin Rwanda
Problems, Progress and Issues Remaining

• Ministry of Finance and Economic Planning

2
Overview

• Background ODA to Rwanda
• Problems of aid in Rwanda
• Local initiatives to improve aid effectiveness
• Next steps and suggestions for Government and
  partners
• What can HLF add to the GOR process?

3
Background Aid to Rwanda

• In 2005, Rwanda received about 400 million in
  ODA
• It remains heavily dependent on external
  assistance
• 48 2004 GoR Budget not including off-budget
  aid
• Equivalent to 62 of 2004 imports and
• 26 2004 GNI

4
Background Aid to Rwanda

• 1994 Aid focussed on emergency relief and
  humanitarian assistance
• Followed by a transition period in which order
  restored and institutions rebuilt
• Late 1990s / early 00s beginning to focus on
  sustainable development
• 2005/06 Government taking a firm lead in
  promoting aid effectiveness. E.g. development of
  an Aid Policy

5
Background Aid to Rwanda

• 2004 Estimated allocation of aid by sector
• Health a significant sector, and growing.

Source Baseline Survey
6
General Problem Areas (I)

• Donor performance still poor in some areas, with
  high transaction costs resulting
• Too many projects, resulting in poor alignment
• Vertical Funds allocated without reference to
  overall government priorities
• Short-term commitments, given long-term
  obligations in certain sectors
• Continued tying
• Donors restricted by own organisational
  constraints

7
General Problem Areas (II)

• Some weaknesses in GoR capacities to plan,
  co-ordinate and implement, but efforts to
  eradicate bottlenecks e.g. procurement reform
• Good progress on PFM, but plans for further
  strengthening
• Weak intra-government co-ordination, planning and
  implementation systems

8

• Large variance in quality sector work

9
Local Initiatives Rwandas Aid Policy

• Paris Declaration consistent with Governments
  Aid Policy, but Government goes further
• Government ownership is central to the policy
• Preferences articulated in terms of aid
  modalities
• Clear division of responsibilities within GoR for
  the management of aid
• Commitment to mutual accountability

10
Timeline for Aid Policy Adoption and
Implementation
11
Planning and Budgeting Where Aid Fits In

• Jan to March
• Sector reviews of progress, plans, financing
  needs based on common monitoring and
  independent reporting
• Budget Support Group reviews of PFM and
  macro-economy
• April to June
• PRSP annual progress report, informed by sector
  reviews
• Development Partners Coordination Group reviews
  overall financing needs and priorities for donor
  support
• Update budget support 3 year projections
• July to September
• Firm commitments of budget support for the coming
  year
• Commitment and disbursement forecasts by all
  donors
• Prepare budget framework paper, informed by
  reviews and Development Partners Coordination
  Group discussion of funding gaps
• October to December
• Budget finalised and presented to Parliament

12
Harmonisation in Education
13
What the Compact is

• The proposed Compact signed between Government
  and Development Partners is the agreement to
  implement the new aid policy
• It will include provision for monitoring of both
  Government and donor actions against the
  obligations set out in the compact
• The over-arching compact complements the
  various lower-level joint agreements on budget
  support and any sector level agreements such as
  the education sector MOU and joint financing
  agreement. It does not replace them

14
Requirements for a successful Compact

• The proposed approach should achieve worthwhile
  benefits, but will place greater demand on
  government planning and coordination. Technical
  assistance is needed to strengthen the process at
  over-arching and sectoral level
• Revision of rules binding country offices to
  allow greater flexibility at a country level
• High-level support from all parties

15
Going Further What Can The HLF Add?

• Collective assurance of minimum aid levels,
  on-plan and on-budget, provided GOR implements
  the agreed strategy, consults on changes, abides
  by democratic principles and good governance
• High level support to ensure donor self
  assessments find creative ways to align with GOR
  strategy and procedures
• Agree to be held accountable through transparent
  independent monitoring.
• If requested, facilitate negotiation of compact
  with TA and high-level management support.