MODULE COURSE: RWANDAN ECONOMY, INES Ruhengeri by Aime MUYOMBANOKEEN ADVANCED INSTITUTE OF RESEARCH AND DEVELOPMENT

MODULE COURSE: RWANDAN ECONOMY, INES Ruhengeri by Aime MUYOMBANO

Course Unit: RWANDAN ECONOMY, INES Ruhengeri by Aime MUYOMBANO

INSTITUTE OF APPLIED SCIENCES

RUHENGERI (INES)

PUBLIC ADMINISTRATION AND GOOD GOVERNANCE DEPARTMENT

Module Title: RWANDAN ECONOMY

Lecturer: Aime MUYOMBANO (PhDs)

INES, 2015

Learning outcomes

Having successfully completed the module, students should be able to demonstrate knowledge and understanding the way to Introduce Rwandan Administration and its Leadership, General Considerations of Rwandan Economy, Current Situation and Major Challenges Facing Rwanda today and Rwandan Planning Horizon and Millenium Development Goals (MDGs)

Communication/ICT/Numeracy/Analytic Techniques/Practical Skills

Having successfully completed, the module students should be able to demonstrate knowledge

and understanding of important of Rwandan Economy in Rwandan Community; communicate

theoretical knowledge of Rwandan Administration and its Leadership, General

Considerations of Rwandan Economy, Current Situation and Major Challenges Facing

Rwanda today and Rwandan Planning Horizon and Millenium Development Goals

(MDGs) both in written and oral forms.

General transferable skills; having successfully completed the module students should be able

to: Illustrate that he/she can use the gained competencies and skills effectively

Evaluation:

a. Assignment (Scenarios, Hard talk and Simulation)

b. CAT/PAT

c. Final Examination

d. Class attendance and participation will be highly taken into consideration.

CONTENTS OF THE COURSE

Chap I. Introduction to Rwandan Administration and its Leadership

I.0 Introduction

I.1 Rwanda division Units

I.1.1 SWOT Analysis

Chap II. General Considerations of Rwandan Economy

II. 0 Introduction

II.1 History of Economy in General

II.1.1 Economics

II.1.1.1 Microeconomics

II.1.1.2 Macroeconomics

II.1.2 Scarcity

II.2 Rwanda Economic Indicators

II.3 History Rwandan Economy

II.4 Statistical Snapshot

II.4.2 The Rwanda Labour Law, No. 13 of 27/05/2009

II.4.3 Some formulas used to calculate economic activity indicators

II.5 Rwanda to emergence System

II.6 Rwandan Government Budget

II.6.1 Budget or Feasible Set

Chap III. Current Situation and Major Challenges Facing Rwanda today.

III.1 Rwanda Trade, Exports and Imports

III.1.1 Rwanda Trade: Exports

III.1.2 Rwanda Trade: Imports

III.1.3 Externality (negative or Positive) Diagram

III.1.4 Game of Theory

III.2 Rwanda Economic Forecast

III.2.1 Rwanda Unemployment Forecast

III.2.2 Rwanda Inflation Rate Forecast

III.2.3 Rwanda Current Account Balance Forecast

III.3 Major Challenges facing Rwanda Today

III.3.1 diminishing agricultural productivity

III.3.2 Natural Barriers to trade

III.3.3 Narrow economic base

III.3.4 Weak institutional capacity

III.3.5 Low level of human resource development

III.3.6 Public debt

4.7. Social and Economic Consequences of the Genocide

Chap IV. Rwandan Planning Horizon and Millenium Development Goals (MDGs)

IV.1 Rwandan Planning Horizon

IV.1.1 Economic development and poverty reduction strategy (EDPRS)

IV.1.1.1 Major Objectives of Vision 2020

IV.1.1.1.1 The Short Term: Promotion of macroeconomic stability and wealth creation to

reduce aid dependency.

IV.1.1.1.2 The Medium Term: Transforming from an agrarian to a knowledge –based

economy

IV.1.1.1.3 Long Term: Creating a productive middle class and fostering entrepreneurship

IV.1.2 the Pillars of Vision 2020

IV.1.2.1 Good Governance and a Capable State

IV.1.2.2 Human Resource Development and a Knowledge-based economy

IV.1.2.3 Private Sector-led Development

IV.1.2.4 Infrastructure Development

IV.1.2.5 Productive High Value and Market Oriented Agriculture

IV.1.2.6 Regional and International Integration

IV.1.2.7 Cross-cutting issues of Vision 2020

IV.1.2.7.1 Gender Equality

IV.1.2.7.2 Natural Resources and the Environment

IV.1.2.7.3 Science, Technology and ICT

IV.1.2.7.4 The Road Map

IV.1.2.7.4.1 Rwanda’s planning Process and the Realization of Vision 2020

IV.1.2.7.4.2 Financing of Vision 2020: Macroeconomic Assumptions and Projections

IV.1.2.7.4.3 Institutional Framework for the Implementation of the Rwanda Vision

IV.1.2.7.4.4 Institutional Framework for Implementation of Vision 2020

IV.2 Millenium Development Goals (MDGs)

IV. References and Notes

Chap One. INTRODUCTION TO RWANDAN ADMINISTRATIVE AND ITS

LEADERSHIP

I.0 Introduction

Rwanda is a land locked located Country in eastern African nation and in the great lakes region. It shares Regional borders with Uganda, Burundi, Tanzania and the Democratic Republic of Congo. The country has a population of above 10.5 million, based on 2009 estimates, with almost 60% of the people living below the international poverty line.

The country has a total area of 26 338 Sq.km, of which 24 950 sq km (94, 7%) is made up of land and 1 288 sq km (5, 3%) of water. The total land area, on 8 600 sq km (32, 7%) are suitable for cultivation. The nearest port on the Indian ocean is at 1700km away from Kigali and least at 2 200km to Atlantic ocean.

This feature makes imported goods to be relatively expensive and Rwanda’s exports to be less competitive on the global market.

Rwanda’s economy primarily depends on agricultural productivity. Almost 90% of the population thrives on farming and livestock rearing. Unlike other African nations, Rwanda does not have mineral deposits or measurable natural resources but we are using (absolute Method more than comparative method). The industry and service sectors are not entirely developed to push the economy towards higher growth.

Tangible Example according on distribution of activities among 3 sectors according to Colin CLARK and it is significant to the level of soci0-Economy and development.

	Agriculture	Industry	Service
Countries with weak income	73	10	17
Countries with medium income	51	20	29

Countries with high income

Rwanda is a nation with approximately 90% of the general populace engaged in (mainly subsistence) Agriculture, fisheries and farming. It is the most densely populated nation in Africa and is landlocked with few natural resources and minimal industry. Primary foreign currency exchange and exportation earners are coffee and tea.

After 1994 genocide against Tutsi that decimated Rwanda’s fragile economic base on severely impoverished the general populace, in particular women, and eroded the country’s ability to attract private and external investment.

However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy to pre-1994 levels, although poverty levels are higher now. Gross Domestic Product (GDP) has rebounded and inflation rates has been curbed. Despite Rwanda’s fertile ecosystem, food stuffs production often does not keep pace with general populace growth, requiring food stuffs imports.

Rwanda perpetuates to receive substantial aid money and obtained International Monetary Fund (IMF)-World Bank (WB) Heavily Indebted Poor Countries (HIPC) initiative public debt relief in 2005-06. Rwanda also received Millennium Challenge Account Threshold status in 2006.

The government has embraced an expansionary financial policy to reduce poverty by improving education, infrastructure facilities, foreign and domestic investment and pursuing market-oriented reform, although energy shortages, instability in neighboring states, and lack of adequate transportation linkages to other countries perpetuate to handicap growth. According to the official data, the death toll exceeds one million (approximately), which is almost 20% of the population. The genocide resulted in the destruction of the emerging industrial sector. It caused widespread unemployment and population displacement. It also hampered the efforts towards attracting foreign investment.

I.1 Rwanda division Units

The Republic of Rwanda is an Independent Country ruled by a Constitution (Rule of Law) with a universal participation of the Rwandese on their Leadership system of election from Village to the Nation and it’s subdivided by two branches of Government (Central and Local Government) and into Provinces, Districts, Sectors Cells, Villages and Kigali City.

Apart from the Executive System, the Rwandan Nation are used Judicial System, Registrative System and the Global known as Socio-Media System.

In January 2006, the Rwandan Government has reformed the administrative implementation of the decentralization policy decided since 2000. The country is organized in four provinces in addition to the Kigali city, 30 Districts, 416 Sectors, 2.148 Cells and 14.837 Villages.

The Village

The Village is the smallest politico-administrative entity of the Country and hence closest to the people. Therefore, this is the entity through which the problems, priorities and needs of the people at a grassroots level will be identified and addressed.

Leaders at the Village level are volunteers who are elected, to serve their country, through a direct and universal suffrage by all the residents of the village aged above 18. They don't handle any technical issues.

Above the Village is the Cell, which is managed by competent technicians, with another political team that serve as decision makers and advisors to those technicians.

Technical and key political matters are handled and addressed at the Cell level. The key organizational bodies of the Cell are:

The Cell Council (CC)

All citizens resident in the Cell who are aged 18 and above are members of the Cell Council. The Cell Council mobilizes the residents of the Cell, identifies, discusses and prioritizes the problems of the Cell, and takes decisions for their resolution.

ü The Cell Executive Committee (CEC)

The Cell Council elects the Cell Executive Committee composed of ten members. The CEC executes functions related to administration and community development including the policy orientation and technical advisory for the implementation of the decisions taken by the Cell Council.

The Cell Executive Committee works through its technical committee (the Community Development Committee) to identify and prioritize needs, design development plans, mobilize development resources and implement the plans.

The Sector Organizational Structure

The Sector is the third level of administration where people participate through their elected representatives. And is the one to executing and implementing Community’s action plan at the Sector level.

ü The Sector Council (SC)

There is a political organ for policy-making decisions called the Sector Council. The number of Sector Council members is determined by the number of Cells forming the Sector. The Sector Council’s functions include approval of Sector action plans and programmes and ensuring the follow-up of their implementation.

ü The Sector Executive Committee (SEC)

The Sector Council (SC) elects the Sector Executive Committee (SEC) to support the preparation and implementation of its policies, plans, and decisions.

The SEC is composed of 10 members and monitors the day-to-day administration of the Sector and the implementation of the decisions and plans of the Sector Council.

The Sector Executive Committee works with the technical support of its two sub-committees:

· The Political and Administrative Committee (PAC)

· The Community Development Committee (CDC).

The District Organizational System

District is the basic, manager and Control of the Local Policies and political-administrative unit of the country.

The Provincial organizational structure

The Province serves as a coordinating organ to ensure the efficiency and effectiveness of Central Government planning, execution and supervision of the decentralized services. It serves mainly as advisor to the decentralized entities and coordinates development activities.

The administrative structure of the Province is as follows:

ü The Provincial Inspectional

The Governor of the Province is the custodian of the authority of the State and the Government’s delegate in the Province. The main functions of the Governor of Province are: to ensure the execution of and adherence to existing laws and regulations; to ensure the implementation of Government programs; and to take, within its competence and on the basis of instructions from the Government, all measures and initiatives to promote the general development and Province Economy.

ü The Provincial Coordination Committee (PCC)

The Provincial Coordination Committee is composed of :

v The Governor of Province who is also the Chairperson

v The Permanent Secretary, Secretary

v The Chairpersons of Councils of District that make up the Province, member

v The Coordinators of Departments in Province, members

v The Heads of decentralized services at Province, members.

The mains functions of the Coordination Committee of the Province are to examine and coordinate all matters concerning the administration and the development of the Province.

ü The Provincial Permanent Secretary (PS)

The Provincial Permanent Secretary ensures the coordination of the administrative and technical services of the Province.

I.1.1 SWOT Analysis

The current set up of the LGs show a number of strengths on which the revision of the structure can build and weaknesses to remove. The LGs working environment has also number of opportunities and threats which have to be taken into consideration.

Every Village is budgeted with a certain percentage of amount which help them to put in action the Village small activities even the Cells

STRENGTH

§ The district has an average of 300 staff (district, sector and cell)

§ Around 200 staff have an A0 degree

§ Additional staff from Central Government and its agencies to support LG

§ Mayors have been promoted to the rank of SG

§ Budget support (block grant, earmarking) – average district budget of 10 billion per year

§ Facilitation for Sector ES for transport

WEAKNESSES

§ Structure mismatch/incompatible with the current mandate, roles and responsibilities of the district and realities on the field;

§ Unclear functions and reporting mechanisms within the current structure (e.g. VM and technicians)

§ Emerging priorities not addressed by the current structure (Current units not connected to the 4 GoR pillars and EDPRS clusters)

§ Number of staff officially allocated mismatch with department functions resulting into staff overload

§ Relationship between the district and sector structure (reporting mechanisms, departmental links)

§ Lack of harmonised reporting framework

OPPORTUNITIES

§ Political will & support

§ Decentralisation policy

§ Local Government Capacity Building strategy and its implementation plan

§ Imihigo, JADF, PPP

§ Institutional support to the LGs (RALGA, RGB, RLDSF, PSCBS, etc.)

§ ICT (application, communication, etc.)

§ Fiscal decentralisation (increase of district funds)

THREATS

§ High staff turnover

§ Low salaries

§ Poor working environment (space, tools, number of staff)

§ Limited /inadequate coordination of CG/LGs relationships

§ Nonconducive working environment in LGs (physical infrastructure, poor HRM/D, lot of reporting poles at different levels, poor communication, etc.)

Chap II. GENERAL CONSIDERATIONS OF RWANDAN ECONOMY

II. 0 Introduction

An economy (Greek meaning household and manage) or economic system consists of the production, distribution or trade, and consumption of limited goods and services by different agents in a given geographical location. The economic agents can be individuals, community, businesses, organizations, or governments.

A market-based economy is where goods and services are produced without obstruction or interference, and exchanged according to demand and supply between participants (economic agents) by barter or a medium of exchange with a credit or debit value accepted within the network, such as a unit of currency and at some free market or market clearing price.

Capital and labor can move freely to any area of emerging shortage, signaled by rising price, and thus dynamically and automatically relieve any such threat. Market based economies require transparency on information, such as true prices, to work, and may include various kinds of immaterial production, such as affective labor that describes work carried out that is intended to produce or modify emotional experiences in people, but does not have a tangible, physical product as a result.

II.1 History of Economy in General

Ancient times

As long as someone has been making, supplying and distributing goods or services, there has been some sort of economy; economies grew larger as societies grew and became more complex. Sumer developed a large-scale economy based on commodity money, while the Babylonians and their neighboring city states later developed the earliest system of economics as we think of, in terms of rules/laws on debt, legal contracts and law codes relating to business practices, and private property.

The Babylonians and their city state neighbors developed forms of economics comparable to currently used civil society (law) concepts. They developed the first known codified legal and administrative systems, complete with courts, jails, and government records.

The ancient economy was mainly based on subsistence farming. The Shekel referred to an ancient unit of weight and currency. The first usage of the term came from Mesopotamia circa 3000 BC. and referred to a specific mass of barley which related other values in a metric such as silver, bronze, copper etc. A barley/shekel was originally both a unit of currency and a unit of weight, just as the British Pound was originally a unit denominating a one pound mass of silver.

For most people the exchange of goods occurred through social relationships. There were also traders who bartered in the marketplaces. In Ancient Greece, where the present English word 'economy' originated, many people were bond slaves of the freeholders. Economic discussion was driven by scarcity.

Middle ages

In Medieval times, what we now call economy was not far from the subsistence level. Most exchange occurred within social groups. On top of this, the great conquerors raised venture capital (from ventura, ital.; risk) to finance their captures. The capital should be refunded by the goods they would bring up in the New World. Merchants such as Jakob Fugger (1459–1525) and Giovanni di Bicci de' Medici (1360–1428) founded the first banks. The discoveries of Marco Polo (1254–1324),Christopher Columbus (1451–1506) and Vasco da Gama (1469–1524) led to a first global economy. The first enterprises were trading establishments. In 1513 the first stock exchange was founded in Antwerpen. Economy at the time meant primarily trade.

Early modern times

The European captures became branches of the European states, the so-called colonies. The rising nation-states Spain, Portugal, France, Great Britain and the Netherlands tried to control the trade through custom duties and (from mercator, lat.: merchant) was a first approach to intermediate between private wealth and public interest.

The secularization in Europe allowed states to use the immense property of the church for the development of towns. The influence of the nobles decreased. The first Secretaries of State for economy started their work. Bankers like Amschel Mayer Rothschild (1773–1855) started to finance national projects such as wars and infrastructure. Economy from them on meant national economy as a topic for the economic activities of state Community.

The Industrial Revolution

The first economist in the true meaning of the word was the Scotsman Adam Smith (1723–1790) who was inspired partly by the ideas of physiocracy, a reaction to mercantilism. He defined the elements of a national economy: products are offered at a natural price generated by the use of competition (supply and demand) and the division of labor.

He maintained that the basic motivation for free trade is human self-interest. The so-called self-interest hypothesis became the anthropological basis for economics. Thomas Malthus (1766–1834) transferred the idea of supply and demand to the problem of overpopulation (example of India and China today).

The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, and transport had a profound effect on the socioeconomic and cultural conditions starting in the United Kingdom,

After World Wars

After the chaos of two World Wars and the devastating Great Depression, policymakers searched for new ways of controlling the course of the economy. This was explored and discussed by Friedrich August von Hayek (1899–1992) and Milton Friedman (1912–2006) who pleaded for a global free trade and are supposed to be the fathers of the so-called neoliberalism.

However, the prevailing view was that held by John Maynard Keynes (1883–1946), who argued for a stronger control of the markets by the state. The theory that the state can alleviate economic problems and instigate economic growth through state manipulation of aggregate demand is called Keynesianism in his honor.

Late 20^th – beginning of 21^st century

With the fall of the Iron Curtain and the transition of the countries of the Eastern Block towards democratic government and market economies the idea of the post-industrial society is brought into importance as its role is to mark together the significance that the service sector receives at the place of the industrialization, as well the first usage of this term, some relate it to Daniel Bell's 1973 book The Coming of Post-Industrial Society, while other - to social philosopher Ivan Illich's book Tools for Conviviality.

With the spread of Internet as a mass media and communication medium especially after 2000-2001 the idea for the Internet and information economy is given place because of the growing importance of e-commerce and electronic businesses, also the term for a global information society as understanding of a new type of "all-connected" society is created.

In the late 00s the new type of economies and economic expansions of countries like Brazil, Russian, India, China and South Africa (BRICS), Southern-East Asian cold Tiger Economy that are composed by Singapore, Taiwan, Malaysia, Indonesia, India, China and others organs bring attention and interest to different from the usually dominating Western type economies and economic models.

II.1.1 Economics

Economics is the study of how society manages its scare resources. In most societies resources allocated not by a single central planner but through the combined actions of millions of households and firms. It also studies the decisions of businesses, government and other decision makers in the society.

Two main branches Economics are microeconomics and macroeconomics.

II.1.1.1 Microeconomics

Microeconomics is the study of how individual households and firms make decisions and how the interact with one another in markets. In microeconomics the focus is on individual parts of economy. In microeconomics the decisions or functioning of decision makers such as individual consumers, households, firms or other organizations are considered in isolation from the rest of economy.

II.1.1.2 Macroeconomics

Macroeconomics is concerned with the economy as a whole. In macroeconomics we focus on the big picture. We develop an overall view of the economic system and we study total or aggregate economic behavior. It emphasis on topics such as total production, income and expenditure, economic growth, aggregate unemployment, the general price level, inflation and balance of payments. The goal of macroeconomics is to explain the economic changes that effect many households, firms and markets.

The basic tools of supply and demand, for instance are as central to macroeconomics analysis as they are to microeconomics analysis. Yet studying the economy in it entirety raises some new and intriguing challenges.

II.1.2 Scarcity

Scarcity means that society has limited resources or the resources are not well managed and therefore cannot produce all the goods and services people wish to have.

As society cannot give every individual the highest standard of living to which he or she might aspire. The management of society’s resources is important because resources are scarce.

II.2 History of Rwandan Economy

Human occupation of Rwanda is thought to have begun shortly after the last ice age. By the 16th century, the inhabitants had organized into a number of kingdoms. In the 19th century, Mwami (king) Rwabugiri of the Kingdom of Rwanda conducted a decades-long process of military conquest and administrative consolidation that resulted in the kingdom coming to control most of what is now Rwanda.

During this period, the Economy of Rwanda was strong based on

Ø Hunting and gathering: at the certain period, Rwandese Community characterized by the daily collection of wild plants and the hunting of wild animals.

Ø Pastoral: Pastoralism is a slightly more efficient form of subsistence rather than searching for food on a daily basis, Rwandan was also the main actors of this pastoral society rely on domesticated herd animals to meet their food needs.

Ø Agrarian: Agrarian societies use agricultural technological advances to cultivate crops over a large area.

Rwanda has made significant progress from the devastated nation that emerged from the 1994 genocide against Tutsi, but still remains severely under-developed and agrarian based economy with around 60% of the population living under the poverty line. In order to fully understand the present situation, it is important to appreciate Rwanda’s historical perspective.

Since the 11^th century, Rwanda existed as a nation founded on a common history (community, Nation and State) of its people, shared values, a single language and culture, extending well beyond the current boarders of the country. The unity of the Rwanda as nation was also based on 18 clan groups (abasinga, abazigaba, abenga and so on……) and its means were characterized by the tangible materials.

The colonial power, based on an ideology of racial superiority and in collaboration with some religious organizations, exploited the subtle social differences and institutionalized discrimination.

The recent history of Rwanda can be summarized by the following key events:

Ø The 1884 Berlin Conference placed the Kingdom of Rwanda under German rule as part of Deutsch Ostafrica (German East Africa);

Ø During the subsequent partition of Africa in 1910, a big part of Rwanda was annexed to neighboring countries. This caused the loss of 1/3 of the Rwandan internal market and a large part of its natural resources;

Ø Following the 1st World War and the defeat of Germany, Rwanda was given to Belgium as a trustee territory under the authority of the League of Nations;

Ø After the 2nd World War, the League of Nations became the United Nations and Rwanda became a UN Mandate trust territory, under Belgian administration, until 1962;

Ø During the colonial period, the Belgian administration applied contemporary Darwinian theories, thereby deeply dividing the people of Rwanda. This unfortunate development can be seen as laying the foundations for periodic mass killings even after independence was gained in 1962, culminating in the 1994 genocide.

With RPF put an end to the 1994 genocide against tutsi and thereafter formed the Government of National Unity (GNU) and the Transitional National Assembly (TNA) in coalition with other political parties to define a new future for Rwanda through democratic institutions and Economic aspect.

II.3 Rwanda Economic Indicators

Rwanda’s economic freedom score is 64.8, making its economy the 65th freest in the 2015 Index. Its score remains essentially the same as last year’s, with improvements in half of the 10 economic freedoms, including freedom from corruption and trade freedom, undermined by a significant decline in business freedom. Rwanda is ranked 4^th out of 46 countries in the Sub-Saharan Africa region, and its score exceeds the world average. Over the past five years, economic freedom in Rwanda has advanced by 2.1 points, led by 20-point and 15-point improvements in freedom from corruption and investment freedom, respectively. Efforts to reform the economy have contributed to sustained economic growth and poverty reduction.

However, the government’s reform efforts have not yet fully restored the institutions and structures previously undermined by political unrest and civil war. An increasingly Authoritarian president has restricted judicial independence.

Meanwhile, corruption continues to undermine public trust. An underdeveloped financial system leads to a high cost of financing and discourages many of Rwanda’s citizens from

opening formal bank accounts.

o Rule of Law and by Law

Measures to foster a better business environment and improve government transparency

and accountability have helped to limit corruption, though graft remains a problem. Recent

improvements in the judicial system include improved training and revisions of the legal code, but the judiciary has yet to secure full independence from the executive.

A nationwide land registration program is being implemented.

o Government Size

Rwanda’s top individual and corporate income tax rates are 30 percent. Other taxes include a value-added tax and a property transfer tax. Total tax revenue amounts to 13.6 percent of domestic output, and government expenditures are equal to 26.3 percent of domestic production. Public debt is equivalent to 29 percent of gross domestic product.

o Regulatory Efficiency

Incorporating a business takes eight procedures and about a week on average, with no minimum capital required, but regulatory reform has slowed. Labor regulations are more flexible, but a more vibrant formal labor market has yet to develop. The state sets maximum prices for automotive fuels and subsidizes power for the 20 percent of the population with access to electricity.

o Open Markets

Rwanda’s average tariff rate is 4.6 percent. Non-tariff barriers are relatively low. There are concerns that an “abandoned property” law enacted in 2014 may make it easier for the government to expropriate property. Financial markets consist mainly of banks, which have been expanding their services. The capital market continues to grow, but the cost of financing remains relatively high.

o GDP

The Gross Domestic Product (GDP) in Rwanda was worth 7.45 billion US dollars in 2013. The GDP value of Rwanda represents 0.01 percent of the world economy. GDP in Rwanda averaged 1.79 USD Billion from 1960 until 2013, reaching an all-time high of 7.45 USD Billion in 2013 and a record low of 0.12 USD Billion in 1961. GDP in Rwanda is reported by the World Bank.

Gross Domestic product means the total value of goods produced and services provided in a country in a year. GDP is customarily reported on annual basis.

Using the Expenditures Approach

Expenditures

Transfer Payments	$54
Interest Income	$150
Depreciation	$36
Wages	$67
Gross Private Investment (I)	$124
Business Profits	$200
Indirect Business Taxes	$74
Rental Income	$75
Net Exports (X-M)	$18
Net Foreign Factor Income	$12
Government Purchases (G)	$156
Household Consumption (C)	$304

By using the data in Table 1 we can calculate the GDP using the expenditures approach. As you can see, the table contains more data than is necessary so you have to look for the parts which make up the expenditures approach to calculating GDP. The necessary data is highlighted within the table. Remember:

GDP = C + G + I + (X - M)

In this case the C is represented by Household Consumption which is $304.

The G refers to Government Spending which is $156

.I is gross private investment and is $124.

(X - M) is the net exports and in the table is shown to be $18.

Therefore:

GDP = $304 + $156 + $124 + $18

GDP = $602

GDP can be contrasted with gross national product (GNP) or, as it is now known, gross national income (GNI). The difference is that GDP defines its scope according to location, while GNI defines its scope according to ownership. In a global context, world GDP and world GNI are, therefore, equivalent terms.

GDP is product produced within a country's borders; GNI is product produced by enterprises owned by a country's citizens. The two would be the same if all of the productive enterprises in a country were owned by its own citizens, and those citizens did not own productive enterprises in any other countries. In practice, however, foreign ownership makes GDP and GNI non-identical. Production within a country's borders, but by an enterprise owned by somebody outside the country, counts as part of its GDP but not its GNI; on the other hand, production by an enterprise located outside the country, but owned by one of its citizens, counts as part of its GNI but not its GDP.

We can also compute the annual growth rate if we know the amount per period by which the amount increased. The formula is:

Annual growth rate = (

Where n is the number of periods in the year n=4.

Example: The previous quarter GDP is 6502.3, and the current quarter GDP is 6580.8. What is the equivalent annual growth rate?

Annual growth rate = (

By the end of Rwanda’s 2012 financial year, the Ministry of Finance and Economic Planning (MINECOFIN) Requested to determine the Rwanda’s 2012 Gross Domestic Product (GDP); Gross National Income (GNI) and Annual growth rate.

N0	Articles	Amount in Million
01	Gross Private investment in previous 6 months	Rwf 250 M
02	Gross Private investment in previous 6 months	Rwf 300 M
03	Export Price Index 11/12	Rwf 130 M
04	Gross Private investment in previous 6 months	Rwf 50 M
05	Export in Coffee and Tee	Rwf 50 M
06	Gross Private Investment in Current 6 Months	Rwf 120 M
07	Gross Private Investment in Current 6 Months	Rwf 30 M
08	Importation of computers	Rwf 25 M
09	Imported goods from United States	Rwf 65 M
10	Exported Inyange and Nyirangarama product	Rwf 70 M
11	Gross Private Investment in Current 6 Months	Rwf 350 M
12	Imported Vehicles TOYOTA	Rwf 10 M
13	Gross Private Investment in Current 6 Months	Rwf 100 M
14	Imported Markers for Schools and Universities	Rwf 100 M
15	Exported Agaseke	Rwf 250 M
16	Government Purchases	Rwf 650 M
17	Household Consumption	Rwf 500 M

Determine a Global GDP
Determine a Net Exports (EX-IM)
Determine Gross National Income (GNI)
Determine Annual growth rate when N=6

o GDP Per Capita

Gross Domestic Product per capita at nominal values. This is the value of all final goods and services produced per a personal within a nation in a given year, converted at market exchange rates to current U.S. dollars, divided by the average (or mid-year) population for the same year.

Comparison of GDP per Capita between Rwanda and Monaco according to the UN 2013 Report

Rwanda	Monaco
Per Year in Dollars 640 $ Per year in Frw 1$= 720 Frw 640$= 640x720=460.800 Frw Per Month= Per Day=	Per year in dollars 173,377 $ Per year In Frw 1$= 720 Frw 173.377$= 173.377x 720=124.831.440 Frw Per Month= Per Day=

Natural Resources: gold, cassiterite (tin, ore), wolframite (tungsten ore), methane, hydropower, arable land.

II.4 Statistical Snapshot

Besides the endorsement of recommendations from major international conferences held under the auspices of the United Nations, the Government of Rwanda (GoR) has been focusing since 2000 on the long-term Vision 2020 that aims at transforming Rwanda into a middle-income country. This is being implemented through the medium-term planning framework of the Economic Development and Poverty Reduction Strategy (EDPRS) for successive five-year periods. The measurement of progress in implementing the EDPRS and the various UN recommendations calls for the availability of demographic and socio-economic statistical data to inform the selected indicators at different levels.

to provide indicators for monitoring poverty reduction strategies and achievement of international development goals (MDGs, ICPD-PoA, NEPAD, etc.)

II.4.1 National employment policy, strategies and legal framework context

Vision 2020 presents the framework and key priorities for Rwanda‟s development with employment as one of the fundamental pillars. Vision 2020 has been made operational by a series of medium-term national Poverty Reduction and Economic Development Strategies.

The first strategy was the Poverty Reduction Strategy Paper (PRSP) finalized in 2001, which covered the period 2002–2006. The PRSP evaluation report shows that social life improvements in the education and health sector were achieved; however, the sector dealing with the production of goods and services saw little change. The PRSP was followed by the EDPRS I, which covered the period 2008–2012. During its implementation, priority was given to accelerating economic growth, creating employment and generating exports.

The evaluation of the EDPRS I showed the achievements, opportunities and challenges, learned lessons, which resulted in the organization of EDPRS I. The EDPRS1 will cover the period 2013–2018 and it is built around four thematic priority areas: economic transformation, rural development, productivity and youth employment and accountable governance. The 2012 Census data on economic activity contained in this report will inform the implementation of the EDPRS II.

The National Employment Policy places employment promotion at the center of poverty reduction and sustainable development, and it highlights the following priority areas of intervention: rural sector development, private sector and entrepreneurship development, youth employment promotion, women’s employment promotion, employment promotion of vulnerable groups, strengthening of the labor intensive approach in economic and social infrastructure programmes, human resource development and employability, promotion of tripartism and social dialogue, and social security promotion.

II.4.2 The Rwanda Labour Law, No. 13 of 27/05/2009

“It is prohibited to employ a child in any company, even as apprentice, before the age of sixteen (16).A child aged between sixteen (16) and eighteen (18) may be employed under condition that the rest between two working periods be of a minimum duration of twelve (12) consecutive hours and that the performed job be proportionate to his/her capacity and not be of the nature that can damage his/her health, education and morality.”

Article 9 of the above mentioned law stipulates that „it shall be forbidden to directly or indirectly subject a worker to gender-based violence or moral harassment within the context of work‟. Its Article 12 relates to the right to equal opportunities and salaries of all workers regardless of their race, color, origin, sex, marital status, family responsibility, religion, beliefs, political opinions, social or economic condition, disability and previous, current or future pregnancy.

II.4.3 Some formulas used to calculate economic activity indicators

Labour force participation rate =

Example: A Community with Population of 6 Million, 4 Million of 16 above, 1000.000 of them still at Schools, decide to motivate foreigners to have any internal investment. The big Manufacturing Corporates decide to have a Labor forces as its Staffs. Calculate the Labor Force participation

LFPR= =75%

Employment rate: The employment rate measures the level of employment in the labor force of a country. It shows the percentage of the labor force that is employed (ILO).

Employment rate = 100x

The same Community of 6 Million Population, 4 Million of 16 above, 1000.000 of them still at Schools, decide to motivate foreigners to have any internal investment, some of the big Manufacturing Corporates decide to have a 500.000 of these Labor force of 16 above as its staffs. Calculate the Employment rate?

ER= =17%

Unemployment rate: The unemployment rate is a measure of imbalance in the labour market. It shows the percentage of the labor force without work (ILO).

Unemployment rate =100x

UR= =83,3%

Inactivity rate: The inactivity rate is the proportion of the working-age population that is not in the labour force. By definition, the inactivity rate and the LFPR will add up to 100% (ILO).

Employment to population ratio: The employment to population ratio measures the performance of the economy in providing employment to its growing population (ILO).

Employment to population ratio = 100x

EPR= 12,5%

Source: Fourth Rwanda Population and Housing Census.

Labor force; total in Rwanda was last measured at 5228059.31 in 2010, according to the World Bank. Total labor force comprises people ages 15 and older who meet the International Labor Organization definition of the economically active population: all people who supply labor for the production of goods and services during a specified period. It includes both the employed and the unemployed.

Labor in agriculture: Rwanda is a poor rural country with about 90% of the population engaged in (mainly subsistence) agriculture and some mineral and agro-processing. Tourism, minerals, coffee and tea are Rwanda's main sources of foreign exchange.

Exchange rate and real exchange rate 720 Rwandan Francs per US Dollar

In most of underdeveloped countries we face money depreciation.

In what concerns the rate of exchange, we should distinguish between the real rates of exchange and nominal rates of exchange. A nominal rate of exchange is the relative cost between 2 countries. For instance (1$=720 Frw) certain quotation of foreign currency with local currency, the opposite is called uncertain quotation 720 Frw= 1$

1Frw= 1/720= 0, 0013889. However, the real rate of exchange is the relative cost of goods between two countries and it is calculated in the following way.

Real rate of exchange= RRE= E.g.: A car coats 1500 US $ in the USA, Currency Exchange is 1$= 720 Frw

A car coats 1,050,000 Frw in Rwanda without Taxes and others Expense, Transportation from USA up to Rwanda is 500.000 Frw, Taxes and Others Expenses 500.000 Frw

After Giving the Value of this car in Rwanda Calculate the Real Rate of Exchange?

The Value of this Car in Rwanda is 1.050.000+500.000+500.000= 2.050.000 Frw

720 Frw= 1$, 1 Frw= , 1 Frw = 0, 0013889$

Real rate of exchange (RRE) = = 1.89. When RRE is 1 and above, its

II.5 Rwanda to emergence System

How do Rwandan envisage their future? What kind of community do they want to become? How can they construct a united and inclusive Rwandan identity? What are the transformations needed to emerge from a deeply unsatisfactory social and economic situation? These are the main questions Rwanda Vision 2020 addresses.

This Vision is a result of a national consultative process that took place in Village Urugwiro in 1998-99. There was broad consensus on the necessity for Rwandans to clearly define the future of the country. This process provided the basis upon which this Vision was developed.

Today, Rwanda finds itself at a crossroads, moving from the humanitarian assistance phase associated with the 1994 genocide against Tutsi into one of sustainable development. Since 1994, the Government of Rwanda has stabilized the political situation, whilst putting the economy back on track with considerable assistance from development partners. However, the challenges remain daunting.

The Rwandan population is expected to double to around 16 million by 2020. Given that the major aspiration of Vision 2020 is to transform Rwanda’s economy into a middle income country (per capita income of about 1240 USD per year, from 220 $ in 2000 and 640 $ in 2014),

Economic growth, alone, is not sufficient to bring about the necessary rise in the standard of living of the population. To vanquish hunger and poverty, growth must be Pro-Poor, giving all Rwandan’s the chance to gain from the new economic opportunities. Vision 2020 aspires for Rwanda to become a modern, strong and united nation, proud of its fundamental values, politically stable and without discrimination amongst its citizens.

In view of the aspirations and challenges outlined above, it is important to develop a new Vision for Rwanda and translate it into an achievable program based on the following pillars:

Reconstruction of the nation and its social capital anchored on good governance, underpinned by a capable state;

Transformation of agriculture into a productive, high value, market oriented sector, with forward linkages to other sectors;

Development of an efficient private sector spearheaded by competitiveness and entrepreneurship;

Comprehensive human resources development, encompassing education, health, and ICT Skills, aimed at public sector, private sector and civil society, to be integrated with demographic, health and gender issues;

Unless family planning improves, in which case the population is projected to reach 13 million;

Infrastructural development, entailing improved transport links, energy and water supplies and ICT networks;

Promotion of regional economic integration and cooperation.

At all times, these will be affected by a number of cross-cutting issues including, gender equality and sustainable environmental and natural resource management, and ICT. Vision 2020 is to be achieved in a spirit of social cohesion and equity, underpinned by a capable state. Rwanda’s ongoing development will have, at its core, the Nation’s principal asset - its people

II.5 Rwandan Government Budget

Government Budget is an itemized accounting of the payments received by government (taxes and other fees) and the payments made by government (purchases and transfer payments). A budget deficit occurs when government spends more money than it takes in. The opposite of a budget deficit is a budget surplus.

Rwanda Government Budget is an actual values, historical data, forecast, chart, statistics, economic calendar and news.

Rwanda recorded a Government Budget deficit equal to 5.10% of the country's Gross Domestic Product in 2013. Government Budget in Rwanda averaged 1.64% of GDP from 2006 until 2013, reaching an all-time high of 0.10% of GDP in 2010 and a record low of 5.10% of GDP in 2013. Government Budget in Rwanda is reported by the National Bank of Rwanda and Managed by the Ministry of Finance and Economic Planning (MINECOFIN) .

The government with a goal that is Vision 2020 was spired from the UN Strategy which is MDG and is there to achieve the Globalization as UN vision.

Vision 2020 is a goals and with the strategies that are EDPRS I, II and so on… (Econmic Development and Poverty Reduction Strategy).

•After having these two main Elements that a Planning and budgeting institutions formally separate. However both are linked to the national budget through the Medium Term Expenditure Frawork (MTEF).

•Budget preparations is looking for 12 months ahead are quite solid, though theory ears of the MTEF are currently not used for strategically thinking through Budgetary commitments.

•A clear and well respected budget calendar is well defined for all entities involved in the budget process.

Rwanda’s Budget theme for the year 2014/2015 is infrastructure development to accelerate export growth. This reflects the government’s focus on implementing strategic policies aimed at addressing the infrastructure needs in order to increase export of goods and services.

The 2014/2015 budget is projected at Rwf 1,753.3 billion compared to the previous year’s budget of Rwf 1,677.7 billion indicating an increase of 4%. Despite a drop in the global economy to 3%, and a slowdown in donor aid, the Minister of Finance expects Rwanda’s economy to grow by at least 6% in 2014, on the back of improved exports and infrastructure.

II.5.1 Budget or Feasible Set

The Government should have a choice of models. The first community knows that many of the papers will need to be copied on both sides. The second community knows that very few of the papers it copies will need double sided copying. of course, the second community will not pay much more for this, while the first community will.

Formula: PA+PB+PN GB

Example 1: Given a Budget Z, with the product A which consume 5 and Product B Consume for 12, the total Budget is 6000 within Graphic, determine the budget consume

Solution

A+B BGT 17AB 6000

3^rdresolution of Mathematics equation 5A 353 12B 353 6000

5A+12B 6000, AB , A B

Example 2

Example 1: Given a Budget W, with the product X which consume 6, for and Product Y Consume for 4, the total Budget is 60 within Graphic, determine the budget consume

6X+4Y 60 XY =6 4Y 6x4=24

10 XY 60 6X 6x6=36 24+36 24+36

Example 3:

Given a Budget U, with the product D which consume 4, for and Product E Consume for 8, the total Budget is 500 within Graphic. Determine the budget consume

Chap III. CURRENT SITUATION AND MAJOR CHALLENGES FACING RWANDA

TODAY

III.1 Rwanda Trade, Exports and Imports

Rwanda is predominantly a country of rural farmers, with few natural resources. About 90% of the population is engaged in agriculture and the remainder in the service sector. Tea and coffee are the main export commodities of Rwanda trade. Since 2001, growth has been driven by exports to the tune of 5% in the last five years.

III.1.1 Rwanda Trade: Exports

Despite the setback caused by the 1994 genocide, Rwanda has spared no efforts to bring its economy back on track. The signing of an Enhanced Structural Adjustment Facility with the International Monetary Fund (IMF) in 1998 saw the beginning of privatization, with support from the World Bank. Rwanda’s exports include:

•Tea, Coffee, Coltan, Cassiterite, Iron ore Tin and Animal hides

Currently, Rwanda’s road to recovery and robustness are largely dependent on the financial fate of tea and coffee prices in the international market. In 2000, coffee production stood at 14,578,560 tons and in 2002, tea became the largest export item at 15,000 tons, translating into revenues of US$18 million. Animal hide and tin ore are Rwanda’s other export goods. Most of Rwanda’s exports go to China (9.1%), Germany (7.3%), the US (4.5%), Thailand (8.6%) and Belgium (4.1%). The total revenues generated by exports in Rwanda’s economy are around US$213 million (2009 est.).

III.1.2 Rwanda Trade: Imports

Rwanda’s trade imports are far larger than its exports and are in the region of $786 million (2009 est.). The main countries that goods are imported from include Kenya (15%), Uganda (13.1%), China (6.2%), Belgium (5.2%), and Germany (4.5%). France and Israel are also countries that Rwanda imports from. The main imports are:
• Machinery and equipment
• Steel
• Cement and construction material
• Petroleum products
• Foodstuffs
The US is an important exporter to Rwanda, accounting for almost $10 million in imports annually since 1990-93, and over $40 million in 1994 and 1995. In 2007, the amount rose to approximately $17 million, a 20% increase over the 2006 level. Being a member of the Common Market for Eastern and Southern Africa (COMESA) and the East African Community, roughly 90% of Rwanda’s imports come from COMESA countries and 34% from other African countries.

III.1.3 Game of Theory

Market Structures in International Trade and Corporate firm

For defining market structure we first need to understand what market is? Market is a place where buyers and sellers meet and exchange goods or services. And now if we extend this concept a little more, there are certain conditions which create the structure of a market. Such conditions can be condensed in the following

Number of Buyers
Number of sellers
Buyer Entry Barriers
Seller Entry Barriers
Size of the firm
Product Differentiation/ Homogeneous Product
Market Share
Competition

The above factors are the quick reference if you need to judge the market structure and under which one particular firm belongs to.

Corporates with the same product completion on common market, should know how to manage their perfect competition with its market structure.

Quick Reference to Basic Market Structures
Market Structure	Seller Entry Barriers	Seller Number	Buyer Entry Barriers	Buyer Number
Perfect Competition	No	Many	No	Many
Monopolistic competition	No	Many	No	Many
Oligopoly	Yes	Few	No	Many
Oligopsony	No	Many	Yes	Few
Monopoly	Yes	One	No	Many
Monopsony	No	Many	Yes	One

Corporate should understand each other on the way of producing and supplying their goods and services.

Without mutual comprehensive, the one with power can gain the market or lost causes by those small corporate.

The Profits of the Corporate or firms will not depend only on what are producing but also on how it’s playing its relationship with others

On game of theory, 4 model are involve

1. Players 2. Rules 3. Outcome 4. Pay off

Economic model is used by economist for helping economy to have a scientific response on the economic problem

Example:

The demand and supply equations of a good and Services and how you can calculate the equilibrium price and Quantity

Example 1.

• 4P = −Qd + 240,

• 5P = Qs + 30.

Determine the equilibrium price and quantity.

Solution

• 4P = −Qd + 240, P= Qd=240-120

• 5P = Qd + 30.

a) 4x30= - Qd+240 Qd= 120

9P=240+30 120= - Qd+240

b) 5x30=Qs+30 -Qs=30-150

150=Qs+30 Qs=120

The demand and supply functions of a good are given by

• P = −Qd + 125

• 2P = 3Qs + 30.

Determine the equilibrium price and quantity.

III.1.4 Externality (negative or Positive) Diagram

Is a community element considered at the economics level that can affect the Organization Development positively or negatively on individual and Organizational system of the society. It’s Negative when it affect negatively the community and it’s positively when it affect positively the community

An external benefit is a benefit that someone gains because of someone else's action, outside of any market transaction between them as Community.

A public good or Community asset is an element such that, if you provide it for some people, you might as well provide it for everybody. National or community defense is the classic public good. Roads, water, and sewers are public goods (unless you're living alone out in the country).

A free rider is a person who gains an external benefit, or a benefit from a public good, without paying for it. Suppose you said that you did not want to pay community income tax anymore, and that, in return, I think you will not reclaim for protection.

A Private cost (to me): a cost incurred in the production process by the producer; including tax and profit margins that are anticipated. Ex: raw material cost, labor cost, energy cost, transportation cost and so on

An external cost is a cost that a producer or a consumer imposes on another producer or consumer, outside of any market transaction between them (community). "External" means "outside." Here, "outside" means outside of any buying and selling among people or firms. Healthcare, smoking and fire damage, emotional cost and so on

A Social cost: assessing the overall impact of its commercial actions in terms of social costs, a socially responsible business operator should take into account its own production expenses, as well as any indirect expenses or damages borne by others. Combination of Private and External cost composition

SC= PC+EC

Example: A Corporate that manufactured mediums products, decided to buy different elements below and some ignorance element appearing

Raw materials RwF 15 Million/ month

Health care 1.5 Million/month

Increasing its labor cost RwF 7 Million/ month

Fire of Smoking bring damage and Personal Staffs Materials and objective disparate of fire 2 Million/month

Transportation cost 4 Million/month

Wage and others company’s advantages 1.5 Million/month

After differentiated the private cost to the external cost calculate the Social cost

Solution

a. Private cost= RM+LE+TC+WG 15 m+7 m+4 m+1.5 m= 27.5 Millions

External cost= HC+FD 1.5 m+2 m= 3.5 Millions

b. Social Cost= 27.5 m+3.5 m= 31 Millions

Negative Externalities

A negative externality (also called "external cost") is a community activity that imposes a negative effect on an unrelated third party. It can arise either during the production or the consumption of a good or service in the Community.

A Social Optimal is a point of production for a Corporate in a monopolistically-competitive industry, or in a monopoly, or in an oligopoly is the point where the average cost curve (ATC) intersects the demand curve (or average revenue curve).

Positive Externalities

A Positive externality (also called "external benefit" or "beneficial externality") is an economic activity of a Community that imposes a positive effect on an unrelated third party.

A Private benefit: enjoyed by the buyers and sellers when economic activity take place. They are within economics transaction

Ex: Market: Higher Education; Job created at University, greater earning potential and employability for graduates

External Benefit: accrue to the third parties to the economic activity and are outside the economic transaction (are ignored by the price mechanism).

Ex: Market: Higher Education; country is more productive; better worker attracts, foreign firms to invest, higher government tax receipts, innovation and so on

Social Benefit: is a combination of both Private and External Benefit.

Market generated level of output is below the socially optimal level of output.

Formula is SB= PB+EB

Example:

Community Higher Education: Job created at University were cost 250 Million, greater earning potential on 150 Million, and employability for graduates on 100 Million

High quality of production 150 Million; better worker attracts 150 Million, foreign firms to invest 100 Million, higher government tax receipts 100 Million and finally innovation activities of 100 Million

After separate the Private Benefit to the External benefit, Calculate the Social Benefit

Solution

PB= JC+EP+EG= 250+150+100= 500 Million

EB= QP+WA+FI+GT+I= 150+150+100+100+100=600 Million

SB= 500+600= 1100 Million

III.2 Rwanda Economic Forecast

Rwanda is a poor rural country and of all countries in Africa, it is the most densely populated. Because of few natural resources, and minimal industry opportunities, people struggle. While this country’s economy was already weak, in 1994 genocide added to the pressures of impoverishment, specifically the female population. Because of this, private and external investments were nearly impossible to attract.

Although Rwanda’s poverty level is still bad, the Gross Domestic Product or GDP has seen some recovery. A huge challenge although Rwanda has a fertile ecosystem, foods production cannot keep up with consumer demand. To get the country back on track, the government has received a significant amount of assistance from the International Monetary Fund and World Bank in 2005. Then in 2006, additional aid was received from the Millennium Challenge Account as a means of lowering the poverty level through better facilities, infrastructure, domestic investment, and education. The country still needs market reform primarily due to energy shortages along with low food production.

III.2.1 Rwanda Unemployment Forecast

Now, when looking at the Rwanda population, this country is home to almost 10 million people. Of these, some 90% work in the agriculture sector but even so, approximately 60% of the country’s population still lives below the poverty line. Although Rwanda has experienced a struggling economy for some time, when genocide hit in 1994, the country was devastated even more, virtually destroying the industry sector. When this occurred, the already high unemployment rate worsened and almost 20% of Rwanda’s population was killed. All of this coupled with the AIDS epidemic, the country has suffered. Although, the Rwanda unemployment rate for 2010 has not been published, we know that in 2000, it was 14% and considering that only 4.5 million people are reportedly employed, we can assume the rate has increased.

III.2.2 Rwanda Inflation Rate Forecast

Regarding the Rwanda inflation rate, instead of using end-of-period data, forecasters and economists use data based on averages for the given year using an index of 2000=100. By the end of 2008, the inflation rate was reported at 15.44% but with a 32.63% reduction seen, 2009 ended at 10.4%. With this, Rwanda was ranked worldwide at number 25. For the future, experts speculate that 2010 will have an inflation rate of 6.40% and for 2015, slightly lower at 5.00%.

III.2.3 Rwanda Current Account Balance Forecast

To determine the Rwanda current account balance, forecasters use virtually all transactions for classifications of goods, services, income, and current transfers with the exception of capital and financial items. The year 2008 had an account balance of minus $0.23 billion in US dollars. Following, a moderate increase of 65.22% was seen, closing 2009 at minus $0.38 billion and putting the year at number 97 for world rankings. Regarding 2010 and 2015, forecasters are predicting the current account balance will be a negative $0.41 billion and negative $0.442 billion in US dollars, respectively.

III.3 Major Challenges facing Rwanda Today

The economy of Rwanda is currently characterized by internal (budget deficit) and external (Balance of Payments) macroeconomic disequilibria, alongside low savings and investment rates and high unemployment and underemployment. In addition, Rwanda’s exports, composed mainly of tea and coffee whose prices are subject to fluctuations on the international market have not been able to cover imports needs.

This overall situation can be best explained by reviewing a number of individual challenges.

III.3.1 diminishing agricultural productivity

Agriculture, accounts for more than 90% of the labor force, yet remains unproductive and largely on a subsistence level. Distribution of arable land now stands at one hectare for every 9 Rwandans and is diminishing due to high birth rates. The obvious consequence is that a substantial number of rural families who subsist on agriculture own less than 1 hectare, which is too small to earn a living. Available pastureland is 350,000 hectares most of which is of poor quality. This results in intense exploitation of the land, with no simultaneous application of corrective measures, most notably through fertilizer use.

III.3.2 Natural Barriers to trade

Rwanda is land-locked, with long distances from ocean ports; a factor that raises transportation costs for both exports and imports. The country lacks a link to regional railway networks, which means most trade is conducted by road. Poor road quality creates high transportation costs leading to inflated prices of domestically manufactured products, as raw materials used for manufacturing need to be imported

III.3.3 Narrow economic base

It is clear that increases in the productivity and exports of Coffee and Tea alone, will not be sufficient to build the Rwandan economy. Therefore efforts need to be made to expand the economic base and especially exports. Although there are small pockets of various high value minerals in Rwanda, there is no single natural resource of sufficient quantity that will kick-start the economy. For several decades, the mining sector was largely based on the extraction and export of Cassiterite from several mines and numerous surface operations. Deposits of other minerals such as Wolfram, Colombo-tantalite and Gold do exist, but total reserves are not known. The country does have estimated reserves of 60 billion cubic meters of natural gas in Lake Kivu, but this sector has lacked investments both for effective exploration and profitable exploitation.

III.3.4 Weak institutional capacity

Governance, including the management of public resources remains insufficient due to lack of sound institutions and competent personnel. Rather than develop sound systems themselves, past governments continued to rely on foreign technical assistance that was both costly, largely indifferent to domestic long term needs and failed to build local capacities. Although great progress has been made on this front, it still represents a significant hindrance to effective governance.

III.3.5 Low level of human resource development

The severe shortage of professional personnel constitutes an obstacle to the development of all sectors. Lack of adequately trained people in agriculture and animal husbandry hampers modernization of this sector, whilst a shortage technicians and competent managers severely constrains the expansion of the secondary and tertiary sectors. Illiteracy is rampant both amongst the urban and the rural population with 48% of Rwandans unable to read and write. Addressing this situation is made more difficult by the prevalence of major diseases, such as malaria and HIV/AIDS, which together with malnutrition reduce the productivity of the population.

III.3.6 Public debt

Rwanda’s public debt constitutes a major obstacle to its economic development. Public debt stands at about US$ 1.5 billion and is larger than current national GDP of US $ 1.3 billion (2000 data). About 75% of public debt is owed to the World Bank and other multilateral lenders. This has been accumulating at a rate higher than the country’s capacity to generate wealth to service the debt. A return to sustainable level of debt, where existing debt can be serviced comfortably without jeopardizing the country’s growth prospects, is envisaged for 2015. However, continued debt relief and grant financing by donors will still be needed, at least in the medium term and a significant rise in export earnings is vital to avoid returning to the current situation.

III.3.7 Social and Economic Consequences of the Genocide

The 1994 Genocide devastated the Rwandan economy as well as its population. GDP was halved in a single year, eighty percent of the population was plunged into poverty and vast tracts of land and livestock were destroyed. The genocide also exacerbated a number of development constraints, which existed before 1994. The already poorly developed productive infrastructure was completely destroyed and the nation was robbed of a generation of trained teachers, doctors, public servants and private entrepreneurs. Thus, the consequences of genocide have devastated Rwanda’s social, political and economic fabric. Without successful reconciliation, political stability and security, private investors will not develop confidence in the country.

Chap IV. RWANDAN PLANNING HORIZON AND MILLENIUM DEVELOPMENT

GOALS (MDGs)

IV.1 Rwandan Planning Horizon

IV.1.1 Economic development and poverty reduction strategy (EDPRS)

Rwanda’s economic development and poverty reduction strategy (EDPRS) is both a document and a process. As a document, the EDPRS sets out the country’s objectives, priorities and major policies for the next fixe years (2008-2012). It provides a roadmap for government, development partners, the private sector and civil society and indicates where Rwanda wants to go, what it needs to do to get there, how it is going to do it, what the journey is going to cost and how it will be financed.

The strategy provides a medium term framework for achieving the country’s long term development goals and aspiration as embodies in Rwanda vision 2020. The seven years government of Rwanda program, and the millennium development goals.

The EDPRS breaks with the post in two ways. Firstly, the strategy redefines the country’s priorities. Rwanda’s first poverty reduction strategy paper (PRSP) covered the period 2002-2005. It was elaborated in a post conflict environment where the primary emphasis was on management transitional period of rehabilitation and reconstruction.

Having made considerable progress during this transition, it is time to take stock and reassess the importance of different policy objectives. Secondary, this strategy documents advocates a difficult way of doing things in Rwanda. In particular, it makes the case for consolidating and extending the decentralization of public spending when accompanied by accountability mechanisms. The EDPRS also recognizes the very role of the private sector in accelerating growth in order to reduce poverty.

The priorities of the strategy are embodied in three flagship programs: sustainable growth for jobs and exports, vision 2020 Umurenge and governance.

The EDPRS assigns the highest priority to accelerating growth to create employment and generate exports. It will achieve this through an ambition, high quality public investment program aimed at reducing the operational costs of business. This big push will create strong incentives for the private sector to increase its investments rate in subsequent years.

With two thirds of the population aged less than twenty-five years, particular emphasis will be placed on creating jobs for young people.

Vision 2020 Umurenge is a highly decentralized integrated rural development program designed to accelerate extreme poverty reduction in Rwanda.

It currently being piloted in thirty of the poorest sectors (Imirenge) of the country. Governance seeks to build on Rwanda’s reputation as a country with a low incidence of and 2020 toleration for corruption and that has initial innovative home-growth mechanisms for conflict resolution, unity and reconciliation. In the next five years, Rwanda plans to develop a regional comparative advantage in “soft infrastructure”, that is , those aspects of governance, such as well-defined property rights, efficient public, administration, transparency and accountability in fiscal and regulatory matters. Viewed as a process, the EDPRS has involved extensive consultation over a period of 18 months with a wide range of stokehold at both central and local government levels.

The EDPRS was elaborated in three district phases. The first phase involved self-evaluation of the EDPRS conducted by each sector working group and each district, together with an independent evaluation conducted by external consultation. Emerging priorities from these evaluations informed the 2007 budget elaboration.

IV.1.1.1 Major Objectives of Vision 2020

The VISION seeks to fundamentally transform Rwanda into a middle-income country by the year 2020. This will require achieving annual per capita income of US$ 900 (US$ 220 in 2000), a poverty rate of 30% (60.4% n 2000) and an average life expectance of 55 years (49 years in 2000).

Taking into account Rwanda’s extremely scarce resources, prioritization and sequencing will be crucial. This section shows prioritization in the short, medium and long run. It acknowledges the interdependencies and complementarities between different policies and developments. For example, industry and service sector development cannot be realized without a competitive stock of skills, infrastructure and financial services. In the short run the key issues of stabilizing the economy, reducing aid dependency and developing exports will be vital. The following section will discuss these in detail.

IV.1.1.1.1 The Short Term: Promotion of macroeconomic stability and wealth creation to reduce aid dependency.

Rwanda will put into place macroeconomic stabilization policies that are conducive for private sector development. This, together with expanding the domestic resource base and increasing exports, is the only way to lessen aid dependence. The imbalances highlighted in Table1 have been a source of macroeconomic instability and have led to an unsustainable debt burden and dependency on foreign aid. To reduce this dependency it will be crucial to develop effective strategies to expand the tax base, attract foreign investors and address the debt situation. Also, diversification and the development of non-traditional exports need to be promoted, as well as addressing the anti-export bias in public policies.

Envisaged policies, some of which are already being formulated and implemented include trade liberalisation, privatisation, tax reforms, competitive exchange rates and market driven interest rates. Government will desist from providing services that the private sector can deliver more efficiently and competitively. With these policies in place the economy will be able to take up the challenge of transforming from an agrarian subsistence economy into a sophisticated knowledge based society.

IV.1.1.1.2 The Medium Term: Transforming from an agrarian to a knowledge -based economy

Even if Rwanda’s agriculture is transformed into a high value/high productivity sector, it will not, on its own, become a satisfactory engine of growth. There has to be an exit strategy from reliance on agriculture into secondary and tertiary sectors. The issue, however, is not simply one of a strategy based on agriculture, industry or services, but rather, identifying Rwanda’s comparative advantage and concentrating strategies towards it. For instance there is a plentiful supply of cheap labor, a large multi-lingual population, a strategic location as the gateway between East and Central Africa as well as its small size, making it easy to build infrastructure (resources permitting).

The industries established would need to address basic needs, for which there is a readily available market, as these products can satisfy local demand and even move towards export. As for services, in the medium to long term, this sector will become the most important engine of Rwanda’s economy. Since Rwanda is landlocked and has limited natural resources, the Government should take a lead role in designing policies geared towards encouraging investment in services, to acquire and maintain a competitive edge in the region.

It should be noted that the elaboration of such policies will not be sufficient to achieve a knowledge based economy. Major infrastructural investment will be required in the areas of energy, water, telecommunication and transport to reduce costs, whilst increasing their quality and reliability. Improvements in education and health standards will be crucial for providing an efficient and productive workforce.

IV.1.1.1.3 Long Term: Creating a productive middle class and fostering entrepreneurship
the developmental process and capital formation cannot – in the long run – be achieved by the state or by donor funds alone. While both of these must contribute, the backbone of the process should be a middle class of Rwandan entrepreneurs. Productive entrepreneurship must be fostered to perform its traditional role of creating wealth, employment and vital innovations through opportunities for profit.

Stimulating the private sector, particularly with regard to the promotion of exports and competitiveness is not achievable without broadening and deepening the financial sector such as banking, insurance and the application of information technology. Provision of high quality educational services in sciences and technology will be necessary for consolidating development gains made in the short and medium term. Rwanda should also aim to find a niche market in the region, for example, becoming a telecommunications hub. It is envisaged that with these reforms, Rwanda will transform from a subsistence agricultural economy to a knowledge -based society, with a vibrant class of entrepreneurs. The following section outlines the major stages of this transition.

IV.1.2 the Pillars of Vision 2020

Whereas section three focused more on the timing of activities, we will now identify the key aspects of Vision 2020 that have been discussed so far and address them individually. The aspirations of Vision 2020 will be realized around six “Pillars” and will be interwoven with three cross-cutting issues. This section will examine the Pillars, whilst section 5 will address the crosscutting issues.

Pillars of the Vision 2020 and its crosscutting areas

IV.1.2.1 Good Governance and a Capable State

Rwanda will become a modern, united and prosperous nation founded on the positive values of its culture. The nation will be open to the world, including its own Diaspora. Rwandans will be a people, sharing the same vision for the future and ready to contribute to social cohesion, equity and equality of opportunity. The country is committed to being a capable state, characterized by the rule of law that supports and protects all its citizens without discrimination. The state is dedicated to the rights, unity and wellbeing of its people and will ensure the consolidation of the nation and its security.

Social and economic transformation is as much about states as markets. In effect, the role of the state is indispensable for wealth-creation and development. However, currently in Rwanda the low capacity of the state hinders this transformation. This situation calls for rapid development and deployment of public sector skilled human resources, who grasp the needs of other sectors – in particular the private sector – and can translate them into sound policies and strategies. In short, we need a small but effective, flexible public sector that can lay the foundations for Rwanda to be competitive in the modern international economy.

The State will ensure good governance, which can be understood as accountability, transparency and efficiency in deploying scarce resources. But it also means a State respectful of democratic structures and processes and committed to the rule of law and the protection human rights in particular. People’s participation at the grassroots level will be promoted through the decentralization process, whereby local communities will be empowered in the decision making process, enabling them to address the issues, which affect them, the most.

A reconstruction of the nation of Rwanda and its social capital, anchored on good governance and an effective and capable state is considered a minimal condition to stimulate a harmonious development of other pillars.

It cannot be stressed enough however that the 6 pillars and 3 cross-cutting areas have to be developed in tandem indeed that was the main message of section 3.

IV.1.2.2 Human Resource Development and a Knowledge-based economy

Apart from raising the general welfare of the population, improvements in education and health services can be used to build a productive and efficient workforce. This will be essential for Rwanda to become a sophisticated knowledge-based economy.

a. Education

Rwanda is committed to reaching “Universal Education for All”, which is one of the most important Millennium Development Goals. However, there is clearly a need to educate and train people at all levels: primary, secondary and tertiary, with special attention paid to the quality of education. This has been declining, due in a large part to low calibre teaching staff and therefore, the government will organize intensive teacher training programs.

Major emphasis will be placed on vocational and technical training in the fields of technology, engineering and management. This will be targeted at secondary school leavers, as well as various sections of society (with particular emphasis on youth and women). To encourage skills development, micro-credit schemes will be promoted specifically to extend finance to self-employed young technicians. Special emphasis will be given to innovative, small-scale entrepreneurs. To promote efficiency and continuous upgrading of skills, appropriate programs will be launched in the national institutions aimed at on-the-job-training, in -service training and distant learning.

Rwanda lags behind in professional training, with the most acute deficiency being apparent in the fields of applied and natural sciences and ICT. Although the country will continue to rely on imported technology from advanced countries, well-trained, specialized nationals will be essential to run as well as maintain technological systems ranging from medicine and agriculture to industry and telecommunications.

Absolutely crucial for achieving Vision 2020 will be to properly link education policies, with sector development and labor policies. It is crucial to understand that the investment needed for the development of the secondary and tertiary sectors, will not be effective without a skilled labor force.

b. Health and population

The Rwandan population is estimated at about 8 million people in 2000 with one of the highest population densities in Africa and a high population growth rate close to 3% per annum. This demographic trend is one of the major causes of the depletion of natural resources and the subsequent poverty and hunger. The demographic dynamic is the result of a number of factors:

(1) the high fertility rate of women, itself linked to

(2) a pro-birthculture

(3) diminishing child death rates

(4) the relatively low general mortality rate, due to a climate and topography unfavorable to diseases.

Rwanda considers its population as its fundamental resource and banks on it for its future development. With the success of current and future population policies, Rwanda projects to reduce the fertility rate within 20 years from 6 to 4.5 children and the population growth rate to 2.2%.

Although the state of health of the Rwandan population has improved significantly over recent years, it is still inadequate. The prevalence of malaria (40% of hospital consultations in health centres) and of HIV -AIDS (13% of the total population) is high and constitutes a major economic problem.

The objectives to be attained in the field of health within the next 20 years include: a reduction in the infant mortality rate from 107 to 50 per 1000 and the maternal mortality rate from 1070 to 200 per 100.000. Life expectancy will have increased from 49 to 55 years, malaria and other potential epidemic diseases will have been controlled and the AIDS prevalence will have been reduced from 13% to 8%.

To achieve these improvements, health policies must be targeted at the poorest members of the population to improve access to healthcare, the quality of that healthcare and to reduce its cost.

Family planning is crucial for reducing both birth rates and the prevalence of HIV/AIDS. Envisaged and current population policies should go hand in hand with strategies to overcome problems in the health sector. Indeed, poverty remains a major cause of poor health and vice versa.

IV.1.2.3 Private Sector-led Development

For Rwanda’s development the emergence of a viable private sector that can take over as the principle growth engine of the economy, is absolutely key. Not only will such a development be conducive for economic growth, but it will also ensure the emergence of a vibrant middle class of entrepreneurs, which will help develop and embed the principles of democracy. Although foreign direct investment will be encouraged, a local-based business class remains a crucial component of development.

The Government of Rwanda will not be involved in providing services and products that can be delivered more efficiently by the private sector. It is, therefore, committed towards a comprehensive privatization policy that will help reduce costs and prices and widen consumer choice. The State will only act as a catalyst; ensuring that infrastructure, human resources and legal frameworks are geared towards stimulating economic activity and private investment.

The development of the financial sector will be crucial, as it is currently underdeveloped and poorly adapted to the economic needs of the country. The financial sector must be able to provide the necessary capital for private sector development. The government will also promote local business through the introduction of export processing zones, in which foreign operators could have local partners.

The development of Rwanda’s private sector will not limit itself to the formal sector. The informal sector will also be developed, in such area as retail trade, repair workshops and garages, handicrafts and metal works.

Particular attention will be paid to the labor market. During the 40 years of colonialism, the Rwandan economy has been able to generate only 200,000 jobs outside agriculture. If family planning services improve, the population is still projected to reach 13 million by 2020, of which 7 million people will be earning a living on off-farm activities. Therefore, it will be necessary to create 1,4 million jobs outside agriculture. Given the trends of the Rwandan economy over the past decades, this is clearly a huge challenge, in which the private sector needs to play a pivotal role.

IV.1.2.4 Infrastructure Development

The rehabilitation and development of infrastructure is a crucial aspect in lowering the costs of doing business in Rwanda, which will attract domestic and foreign investment.

a. Land use management

Land use management is a fundamental tool in development. As Rwanda is characterized by acute land shortage, a land use plan is needed to ensure its optimal utilization in urban and rural development. Currently, Rwanda’s land resources are utilized in an inefficient and unsustainable manner, which limits the profitability of land and infrastructure, whilst aggravating the national capacity to retain rainwater. To address this, a modern land law providing security of tenure and freedom of exchange will be instituted.

Rwanda will pursue a harmonious policy of grouped settlements based on economic activity. Rural settlements organized into active development centres will be equipped with basic infrastructure and services. This system of settlement will serve as an entry point into the development of non-agricultural income generating activities. Land will be reorganized and consolidated so as to create adequate space for modern and viable farming.

b. Urban development

Rwanda is characterized by low but accelerating urbanization. This has happened in a rapid and uncoordinated manner, meaning that social services and employment opportunities are lagging behind. From now until 2010, each town will have regularly updated urban master plans and specific land management plans. The country will develop basic infrastructure in urban centres and in other development poles, enabling the decongestion of agricultural zones. The proportion of those living in towns and cities will increase from 10% in 2000 to 30% in 2020 (from 5% in 1995).

The income differential between towns and rural areas should remain within reasonable
proportions, due to the decentralization of economic activities to the country.

c. Transport

Rwanda is landlocked with high transport costs to the ocean ports of Kenyan and Tanzania. Therefore, it is imperative to develop, alternative lower costs of transport to the sea, notably through a regional rail extension to Isaka, Tanzania and an extension to the Ugandan Railway system. A combined rail and water system that can link to the Banguela Railway will be considered.

Furthermore, a second airport capable of serving, as a regional hub for the great lakes region will be developed. For the internal market, Rwanda has a reliable and safe transport network of feeder roads, however, this will continue to be extended and improved.

d. Communication & ICT

Telecommunication coverage in Rwanda is very low. The communication policy will take advantage of the small size of the country, its high population density and the single local language to attract investors so that the sector can be liberalized. By 2020, Rwanda projects to have internet access at all administrative levels, for all secondary schools and for a large number of primary schools. Telephone services will be widespread in rural areas and efficiency of public services will have increased through the application of e-government principles.

e. Energy

Inadequate and expensive electricity supply constitutes a limiting factor to development. Wood is the source of energy for 99 % of the population, which leads to massive deforestation and soil destruction. Imported petroleum products consume more than 40% of foreign exchange. Rwanda will therefore increase energy production and diversify into alternative energy sources.

To achieve this, Rwanda has considerable hydroelectric potential, in addition to large deposits of renewable methane gas in Lake Kivu, estimated at 60 billion cubic metres. In rural areas direct solar energy or photovoltaic energy can be used, whilst up to 1/3 of 155 million tons of peat deposit is currently exploitable. Rwanda projects that by 2020, at least 35 % of the population will be connected to electricity (up from 2% in 2000) and the consumption of wood will decrease from the current 94% to 50% of national energy consumption.

f. Water

Only 52% of Rwandans have access to clean water. Daily consumption of water is estimated at 8.15 litres per person in rural areas, far below the international standard of 20 litres. The country is endowed with reserves that could provide enough water for both consumption and agricultural purposes.

These include substantial rainfall (between 900 & 1800 mm per year) and the abundance of lakes, streams and watercourses. Furthermore, there is an abundant supply of high altitude water in the western part of the country, which may be used in providing water by gravity to the southern and south-eastern regions of the country that face water shortages.

In order to achieve the goals for water set out in Vision 2020, the country will have to increase the rate of access to potable water by 2.5 percentage points, annually from the current rate of 52% so that the whole of the Rwandan population will have access to drinkable water by 2020.

g. Waste management

Access to drainage and sewage disposal services is 85% of the population, whilst 64% of latrines do not meet the required hygienic standards. Consumption of dirty and unsafe water is at the origin of various water-borne diseases. The unplanned and disorganized construction of towns without a suitable drainage system exacerbates sanitary problems. Sewerage and rainwater can destroy public roads or stagnate, creating ideal breeding grounds for both human and animal diseases.

Since most houses are situated on the summit and on the slopes of hills, water sources are in constant danger of pollution by domestic sewerage and other human activities carried by the stream of water. The environmental impact of deficient waste management is barely taken into account by human settlements and industrial installations. By 2020, the rural and urban areas are to have sufficient sewerage and disposal systems. Each town is to be endowed with an adequate unit for treating and compressing solid wastes for disposal. Households will have mastered and be practicing measures of hygiene and waste disposal

IV.1.2.5 Productive High Value and Market Oriented Agriculture

Rwanda’s economic policies since independence are said to have targeted agriculture as the main engine of economic growth. However, the agricultural sector has continued to perform poorly, with consistently declining productivity. It will be necessary to formulate and implement realistic developmental policies that move beyond past delusions of viable subsistence -based agriculture.

Contrary to conventional wisdom, the most important issue retarding Rwanda’s agricultural development is not land size, but low productivity associated with traditional peasant-based subsistence farming. Agricultural policy orientation will have to be overhauled, promoting intensification so as to increase productivity and achieve growth rates of 4.5 % to 5% per year. This can only happen through the production of high value crops and modern livestock management. The vision aims to replace subsistence farming by a fully monetized, commercial agricultural sector by 2020.

The key policy areas that need urgent attention to bring about this transformation include the following:

Institutional and legal reforms to ensure security of land ownership;

Development of a market in land assets;

Extensive research and extension services;

Investment in rural infrastructures;

Use of high yielding varieties and intensive input use, especially fertilizers;

Promotion of agro-based manufacturing;

Environmental control measures to halt the decline in soil fertility;

Rural Financing Schemes and Markets

As mentioned above, a viable economic strategy for Rwanda requires diversification away from the agricultural sector. Agriculture will have to be developed to permit spin-off effects, beginning with the development of agro-businesses that can then provide spill-overs into other sectors of the economy. Furthermore, it can be very much expected that the above priority policy areas will not only be supportive to agriculture, but will also benefit the whole of the rural economy.

IV.1.2.6 Regional and International Integration

Rwanda considers regional economic integration as one of the crucial elements of achieving Vision 2020. To this end, it will be necessary to pursue an open, liberal trade regime, minimizing barriers to trade as well as implementing policies to encourage foreign direct investment. Furthermore, the need to adopt policies to promote competitive enterprises, exports and entrepreneurship rather than protecting failing industries cannot be over-emphasized. Economic zones for ICT based production will be crucial for enhancing competitiveness of Rwandan firms.

The vision of accessing larger regional markets will be accompanied through a program of investing in infrastructure to promote Rwanda as a communication and telecommunication hub. Furthermore, taking advantage of Rwanda’s comparative strategic position should be exploited in terms of entrepot functions in trade and commerce. Export processing zones, coupled with the industrial reforms noted above, will enable the country to consolidate its niche in services and communication sectors and take advantage of growing regional co-operation in the Great Lakes/ Eastern African Region.

IV.1.2.7 Cross-cutting issues of Vision 2020

Next to the 6 pillars, there are the three cross-cutting areas of gender, natural resources & environment and culture, science & technology. These issues will not only be affected by the economic transformation but will also play an important role in achieving the Vision’s development goals.

IV.1.2.7.1 Gender Equality

Women make up 53% of the population and participate in subsistence agriculture more than men. They usually feed and provide care for the children and ensure their fundamental education. But until recently, girls were the minority in secondary schools, women had little access to the opportunities available to men and they were poorly represented in decision-making positions. In order to achieve gender equality and equity, Rwanda will continuously update and adapt its laws on gender. It will support education for all, eradicate all forms of discrimination, fight against poverty and practice a positive discrimination policy in favor of women. Gender will be integrated as a cross -cutting issue in all development policies and strategies.

IV.1.2.7.2 Natural Resources and the Environment

The major problem in the field of environmental protection in Rwanda is the imbalance between the population and the natural resources (land, water, flora and fauna and non-renewable resources, which have been degrading for decades). This degradation is observed through massive deforestation, the depletion of bio-diversity, erosion and land slides, pollution of waterways and the degradation of fragile ecosystems, such as swamps and wetlands.

The average population growth of 3% per annum during the 80’s to 90’s period was faster than that of agricultural production, estimated at 2.2%. This has led to the occupation of more and more marginal areas and to the rapid and continuous soil degradation of the fragile ecosystems of the country. These environmental problems are exacerbated by the poor location of industries and the direct evacuation of their waste, without any treatment, into waterways and lakes. In order to ensure sustainable development, Rwanda will implement adequate land and water management techniques, coupled with a sound biodiversity policy.

IV.1.2.7.3 Science, Technology and ICT

Rwandans are rightly proud of their cultural roots and the government will ensure that it takes advantage of this heritage in all facets of the development process. However, for this development process to be a success, Rwanda must embrace the future and exploit innovations in Science and technology to complement its cultural strengths.

In Rwanda, the rate of adoption and integration of science and technology in socio-economic life is very low and the shortage of technically qualified professionals is visible at all levels. From now until 2020, Rwanda projects to have adequate, highly skilled scientists and technicians to satisfy the needs of the national economy. There is a need to generate, disseminate and acquire scientific skills as well as technological innovations, in addition to integrating them into the social and economic development drive, detailed above.

In order for Rwanda to achieve this objective, it will have to develop the teaching of science and technology at secondary and university levels. It will facilitate the creation of high and intermediate technology enterprises and develop access to ICT down to the administrative sector level, in accordance with the national ICT plan.

IV.1.2.7.4 The Road Map

This road map lays out how the Rwanda Vision 2020 will be realized through the country’s planning process. It also establishes a set of yardsticks against which we can measure our progress towards achieving the targets. Macroeconomic projections and the underlying assumptions clearly showing the financing requirements to realize the Vision are also made.

IV.1.2.7.4.1 Rwanda’s planning Process and the Realization of Vision 2020

To ensure smooth implementation of the Vision 2020 and achievement of the aspirations described above, it will have to be reflected in the whole planning process and, particularly, medium and short-term instruments. Therefore, the long-term aspirations of the Vision will translate into medium -term programs of the National Poverty Reduction Strategy (PRS) as well as the National Investment Strategy (NIS).

The PRS is operationalized through medium -term sector strategies that will inform provincial and district development plans. The sector strategies and the decentralized development plans will be implemented through the Medium-Term Expenditure Framework (MTEF); three-year fully integrated budgets that mainstream the Public Investment Programs (PIP) of these agencies and translate into concrete action plans coasted through annual budgets. The poverty reduction achieved through the MTEF will be monitored and will feed back into the elaboration of sector and provincial plans.

IV.1.2.7.4.2 Financing of Vision 2020: Macroeconomic Assumptions and Projections

The implementation of the Vision 2020 takes into account the necessity to achieve aspirations of the Rwandans. The assumptions for the macroeconomic perspectives over the period until 2020 can be summarized as follows:

The population growth rate is assumed to average 2.7% until 2020;

Initially, agriculture is the major engine of growth representing more than 45% of GDP until 2010 whilst industry and services represent 20% and 37% respectively. Afterwards, the industrial and services sectors take over so that by 2020, services will contribute 42%, industry 26% and agriculture 33% of GDP;

Private investment would account for an average of 20% of GDP and public investment 8%; The public capital expenditure is assumed to increase to Frw 605 billion.

This road map highlights the challenges, which Rwanda will face in realizing the targets set out in Vision 2020. Specifically, we will have to streamline planning processes so that the Vision is translated into implementable plans, with strong linkages between set priorities and the allocation of resources. It also requires a mobilization of a substantial amount of financial resources from the state, the donor community and the private sector. If these resources can be efficiently allocated through the planning process, the goals set in this Vision will become attainable.

IV.1.2.7.4.3 Institutional Framework for the Implementation of the Rwanda Vision

The implementation of the Vision 2020 Vision within the ambit of all players: the state, the private sector, civil society, NGOs, decentralized authorities, grassroots communities, Faith-based organizations and development partners. The top most policy making body of Vision 2020 implementation is the Cabinet. The Ministry in charge of Economic Planning coordinates the implementation and monitoring and evaluation of the Vision. It also ensures that Vision 2020 based sector strategic plans and district development plans are developed by all sector ministries and districts. The Ministry will specifically:

Coordinate all the activities related to the implementation of the Vision 2020;

Mobilize and allocate resources to Vision 2020 priority areas;

Support the planning organs and other institutions in charge of implementation of the Vision;

Ensure that Vision 2020 based sector strategic plans and district developments are prepared and linked to the Medium Term Expenditure Framework and annual budgets;

Ensure the establishment of a monitoring and evaluation framework for Vision;

Regularly report to Cabinet on the status of achievement of Vision 2020 objectives and targets.

The Vision 2020 National Consultative Committee will be established to oversee and guide the implementation of the Vision and ensure that consensus building around Vision 2020 implementation is realized. The Consultative Committee is a mechanism for stakeholder coordination bringing together Government, Development partners, civil society, private sector and other relevant stakeholders and resource persons to dialogue on the Vision. The Committee will be coordinated and chaired by the Ministry in charge of Economic Planning.

Vision 2020 technical platforms will be established in line with the pillars of the Vision 2020. The rationale is to facilitate coordination of policies and actions of different sectors, and promote dialogue among all stakeholders in order to build consensus as they implement a shared vision. The institutional framework for implementation of Vision 2020 is shown in the organization chart below.

IV.1.2.7.4.4 Institutional Framework for Implementation of Vision 2020

The Ministry in charge of Economic Planning will prepare detailed terms of reference and definition of tasks and responsibilities for the different technical platforms as well as the National Steering Committee involved in the management of the implementation of the Rwanda Vision 2020.

IV.2 Millenium Development Goals (MDGs)

Goal 1: Eradicate extreme poverty and hunger

Target 1: Halve, between 1990 and 2012, the proportion of people whose income is less than one dollar a day.

Target 2: Halve, between 1990 and 2012, the proportion of people who suffer from hunger.

Goal 2: Achieve universal primary education

Target 3: Ensure that, by 2012, children everywhere, boys and girls, will be able to complete a full course of primary schooling.

Goal 3: Promote gender equality and empower women

Target 4: Eliminate gender disparity in primary and secondary education preferably by 2005 and to all levels of education not later than 2015.

Goal 4: Reduce child mortality

Target 5: Reduce by two-third, between 1990 and 2015, the under-five mortality rate.

Goal 5: Improve maternal health

Target 6: Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio.

Goal 6: Combat HIV/AIDS, malaria and other diseases

Target 7: to reverse the spread of HIV/AIDS by2015.

Target 8: reduce by 2015 and begun to reverse the incidence of malaria and other major diseases.

Goal 7: Ensure environmental sustainability

Target 9: Integrate the principal of sustainable development into country policies and programmes and reverse the loss of environmental resources.

Target 10: Halve by 2015, the proportion of people without sustainable access to safe drinking water.

Target 11: By 2020, to have achieved a significant improvement in the lives at least 100 million slum dwellers.

Goal 8: Develop a global partnership for development

Target 12: Develop further an open, rule-based, predicable, non-discriminatory trading and financial system.

Includes a commitment to good governance, development, and poverty reduction-both nationally and internationally.

Target 13: Address the special needs of the least developed countries.

Includes: tariff and access for least developed countries’ exports: enhanced programme of debt relief and cancellation of official bilateral debt; and more generous for countries committed to poverty reduction.

Target 14: Address the special needs of landlocked countries and small island developing states.

Target 15: Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term.

Target 16: In co-operation with developing countries, develop and implement strategies for decent and productive work for youth.

Target 17: In co-operation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries.

Target 18 : In co-operation with the private sector, make available the benefits of new technologies, especially information and communications.

The Millennium Development Goals and targets come from the Millennium Declaration signed by 189 countries, including 147 Heads of State, in September 2000. The goals and target are inter-related and should be seen as a whole. They represent a partnership between the developed countries and the developing countries determined, as the Declaration states, “to create an environment-at the national and global levels alike-which is conductive to development and the elimination of poverty.”

References and Notes

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2. Michael, BAMBERGE et al (1996), the design and management of poverty reduction programmes and projects in Africa. The World Bank Washington D.C.

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4. MINECOFIN (2007), Poverty analysis for Rwanda’s Economic Development and Poverty reduction strategy. Kigali, Republic of Rwanda.

5. MINECOFIN, (2007) EDPRS poverty analysis for Ubudehe, Kigali, Republic of Rwanda.

6. MINICOFIN (2007), National guide for planning, budgeting and policy review, Republic of Rwanda, Kigali.

7. Vera A. Wilhelm, et al, 2004: Tools for development Public Sector Governance Reform.

8. WORLD BANK (1994), Rwanda poverty reduction and sustainable growth, Washington.

9. WORLD BANK (2006), Agricultural policy note, promoting pro-poor growth in Rwanda challenged and opportunities, Washington D.C.

10. (Gustier Papanek, “The Effect of Aid and Other resource Transfers on Saving a and Grow in Less Developed Countries”EJ September 1972.)

11. Griffin and Enos (KB. Griffin and JL. Enos,” Foreign assistance: objectives and consequence, “Economic Development and Cultural change, April 1970.)

12. (Alan Carlin “Projects versus Program Aid From The Donor’s viewpoint” Economic Journal, March 1967.)

13. “(G.M. Meier, Leading Issues in Economic Development, 2 Nded., 1970.

Data Sources: IMF, World Bank, UN, OECD, CIA World Factbook

Source: www.economywatch.com

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Jomo Kenyatta University of Agriculture and Technology (JKUAT)

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KAIRInstitute