Earmarks over US $900-million support package to support Rwanda’s economic transformation
Abidjan, Côte d’Ivoire, November 23, 2016 – The African Development Bank (AfDB) will support Rwanda’s economic transformation by boosting inclusive private sector-led growth and creating higher value-added formal employment with an indicative financing package estimated at US $939.4 million over a five-year period.
This support package is contained in the Bank’s 2017-2021 Country Strategy Paper (CSP) for Rwanda, which will guide the Bank’s operations in the country during the next five years, approved by its Board of Directors on Wednesday, November 23, 2016 in Abidjan, Côte d’Ivoire.
While commending Rwanda’s remarkable socio-economic progress over the last 16 years during which period real GDP growth has averaged 7.9%, the Board noted that economic transformation has been slow as growth continues to be generated mainly by low value added and low productivity. As a result, there is a need to adjust Rwanda’s current economic model and implement policies and measures to accelerate the economic transformation process.
Thus, to adequately address Rwanda’s overarching development challenge, the CSP focuses on improving the enabling environment for private sector development, with a focus on the agriculture sector. The CSP is articulated around two complementary pillars: Investing in energy and water infrastructure to enable inclusive and green growth; and Developing skills to promote high value added economic activities and economic transformation.
Under the first pillar, the Bank’s assistance will focus on reducing the cost of doing to further enhance the enabling environment for private investment and economic transformation through improved access to affordable and reliable energy and water supply and sanitation. The Bank’s assistance under the second pillar will support Rwanda in accelerating economic transformation through the development of skills that promote high value added economic activities. Support under both pillars is consistent with the second Economic Development and Poverty Reduction Strategy (2013-2018) and the Bank’s Ten Year Strategy 2013-2022; the High 5 priorities and the Sustainable Development Goals.
“The Bank’s assistance from the private sector window will be complementary to its support from the public sector window,” the CSP says, adding that the Bank will also give priority to increasing private investments through intensifying its efforts as a convener, connector and catalyst and use of innovative financing instruments.
Its non-lending support, including policy advice, will continue to be demand-led, ensure complementarity with the lending program and remain selective to effectively inform country policy dialogue, the Government’s investment choices and the Bank Group and other development partners programming options.
To maximize the development impact of the strategy, the Bank will introduce several innovations and scale-up its support to accelerate Rwanda’s economic transformation process through private sector-led, spatially balanced inclusive economic growth.
The Bank’s operations will include specific components to support youth employment, gender equality and women empowerment. Greater attention will also be given to partnership arrangements between the Government, the Bank, private sector, civil society and other Development Partners to mobilize co-financing, increase private investment and generate business for the Bank.
The CSP provides for a cumulative 2017-2021 indicative resource envelope of US $939.4 million. Additional resources will be mobilized from the Bank’s non-concessional window, Africa Growing Together Fund, Trust Funds, Climate Funds and co-financing with other partners.
The Bank Group’s portfolio in Rwanda comprised 19 operations with total net commitment of US $594.1 million as of October 20, 2016. The portfolio includes seven public sector operations, two private sector operations and 10 multinational operations. Infrastructure (transport, 49%; energy, 23%; and water, 3%) accounted for 75% of the portfolio in value terms. Human development accounted for 6%, agriculture 4%, multisector 8% and financial sector 1%. Private sector operations accounted for 4% of the overall portfolio.