Notes:
Medium-Term Expenditure Framework : MTEF, Poverty Reduction Strategy Paper: PRSP; Heavily Indebted Poor Countries: HIPC; Sector-Wide Approaches: SWAPs
Situated towards the east of Central Africa, Rwanda is a small, landlocked country (26338 sq km (10170 sq mi)). With a population of around 10 million people and a population density of more than 787 per square mile (303 per sq. km), it has to look elsewhere than agriculture to sustain itself. It is not mineral-rich, nor is it likely that it will attract sizable foreign investment into its very small manufacturing sector.
Rwandan colonial and post-Independence history has been dominated by ethnic violence, orchestrated by various governments. About 90% of the population may be classified as Hutus while 10% are Tutsis. The extent to which this is a racial or a class divide, with the Tutsis representing the old dominant social groups, may be disputed. It remains that the Hutu/Tutsi divide has been an extremely potent weapon for unscrupulous governments and movements. The divide was utilized to generate the 1994 genocide committed by Hutu militias; a genocide which, in parts of the country, also involved Hutu villagers as perpetrators.
After the genocide a mainly Tutsi government gained power, led by Paul Kagame. Militarily, it pursued the remnants of the extremist army in neighbouring Congo, through direct military intervention in Congo from 1996 onwards. In 2000, peace was well secured within the Rwandan borders, but the conflict in Congo continued, with involvement of both Rwandan troops, and through Rwandan support to proxy movements within Congo.
It was a top priority for the Kagame government to maintain power, in order to avoid a repeat of the genocide. It did pursue important policies of reconciliation, but by year 2000 it was clear within the donor community that the kagame government regarding maintaining power as a non-negotiable 'must'. Even minor oppositional activities were punished harshly, and free elections were not on the agenda. Local elections in 2002 led to reinstatement of leaders already appointed by government, and very few leaders Hutu candidates won. International Crisis Group described the political climate in the country as a 'climate of fear'.
At the same time, Rwanda was well on its way to become a darling of (part of) the international development community. It was heavily dependent of donors, who funded around 65% of its government budget. During the second half of the 1990s, it had followed donor recommendations regarding the rebuilding of its government structures. Practically all ministries housed several donor funded long-term resident consultants. Donor funded projects and SWAPs were commonplace. and the GoR was now ready to embrace the PRSP idea. The government already had a long term policy vision, the 'Vision 2020', and an MTEF was under implementation.
The Ministry of Finance was central to the development of the PRSP. The Minister was a UK educated economist, very familiar with donor thinking and reforms. Of all the Ministers in Rwanda, he had the biggest number of long-term consultants under him – around ten in the Ministry proper, and 10-15 in the Revenue Authority under the Ministry. He worked well with donors, not the least with DFID which was the biggest bilateral donor in Rwanda.
DFID was keen to support what it saw as a discerning and pro-poor government. It had taken over as the major bilateral donor after the genocide, primarily on moral grounds (this was the early days of Claire Short's tenure as minister in the UK), although some other donors saw it as a move to gain influence in a previously francophone country. There were some concern within the UK government regarding Rwanda's role in the war in Congo, with the Foreign and Commonwealth Office (FCO) much less happy than DFID with the situation. Some DFID advisors were also concerned. Their concern was fuelled by the high number of deaths in Congo during the war years of the late 1990s; by a UN report accusing the Rwandan government from benefiting from exploitation of natural resources in Congo; and the fact that Rwanda's foreign exchange balance benefited dramatically from export of minerals such the high-value mineral Coltan which, it was thought, probably was mined in Congo. However, DFID as an organisation agreed with the GoR that its actions in Congo were necessary self-defence against genocidal forces.
There were also some concern in DFID regarding the harsh treatment of political opponents inside Rwanda, and the very limited press freedom that existed.
In spite of these concerns, DFID had entered into a long-term development collaboration agreement with Rwanda. A MoU (Memorandum of Understanding) between the two governments ensured high level financial support, including budget support, to GoR. The MoU, explicitly, also gave DFID the right to raise policy issues with GoR over and above areas where it provided development assistance. For example, mechanisms were put in place for yearly discussions covering areas such as human rights, political freedoms, press freedom and the war in Congo. It was also not nuncommon for DFID advisors to call on ministers and top level civil servants to discuss political issues, and to point out how certain heavy-handed actions (eg against the tiny privately owned press) would be perceived as negative by the international development community. DFID saw itself as a bridge between the GoR and the development community at large.
The overall DFID assessment was that the Rwandan government was pro-poor; that it fully bought into the neo-liberal development agenda; that it was open towards donors such as DFID; and that it was understandable, if still wrong, that it was not willing to allow a strong opposition to develop.
The PRSP
In year 2000, GoR embarked on the production of a Poverty Reduction Strategy Paper (PRSP). This was a requirement in order for Rwanda to reach the next step in the important HIPC process. Donors also thought that the PRSP might seen by GoR as an important reconciliation policy for Hutus and Tutsis (ie, economic development and poverty reduction might reduce tensions at local level).
The production of the PRSP began with the setting up of a PRSP secretariat within the Ministry of Finance (MoF). It was funded by donors (primarily DFID), and headed up by a Rwandan consultant. Together with the Minister of Finance and his close advisors (2-3 international consultants funded by DFID and UNDP), they produced a draft Interim PRSP. This was sent simultaneously to GoR ministers and donors. Donors found the document much too general, unrealistic in economic terms, not based on participative processes, and not sufficiently strong on financial governance issues. They provided extensive comments. During the next two years, first an Interim PRSP and then a full PRSP was developed by the PRSP secretarial and the MoF. This was done with some input from line ministries, and with even more input from the donors. For DFID staff, it became a major task to provide detailed comments on the structure of the PRSP and the content of its chapters. The World Bank and the UNDP did likewise. At the end, and after a major participatory exercise funded by DFID, a policy document emerged which the donor community judged to be very good. It had avoided becoming a 'shopping list' for the different ministries as it included a prioritisation of the proposed initiatives, a 'costing of the PRSP', and explicit links to the MTEF and thus to the yearly budget. The PRSP was based on the participatory poverty assessment, and it included ring-fencing of pro-poor budgets in social sectors, and a significant year-on-year increase of these budget lines. The military budget were also capped.
There were also things it did not do. It did not deal with the conflict in Congo. It did not provide spaces for democratic participation in policy making processes – in fact, it concentrated more power in the hands on the MoF, but since this was the most effective ministry, many donors did not find that disturbing. Some did though, especially those donors working mainly at district level. They had hoped for more power to the decentralised levels, something which a strict central level PRSP-MTEF would not allow.
The biggest problem was however that it was not certain that the PRSP would be accepted by the World Bank and the IMF boards. Firstly, the World Bank and the IMF in particular found that the proposed spending level of the PRSP was too high – about 10% too high. There are strict formulas for how large a government budget is acceptable in HIPC countries and it was found that GoR had gone above this. GoR argued that their way of calculating the budget as correct, and that IMF was wrong, but to no avail. Since the GoR PRSP budget also was an expression the political compromise that had been reached internally in the GoR, it could not budge, and it sent the PRSP for World Bank / IMF approval without changing the budget. In fact, this was a high risk strategy. GoR could not afford a rejection of its PRSP. The Minister of Finance and, implicitly, Paul Kagame, had staked their reputation on the PRSP.
Secondly, political enemies of GoR seemed ready to vote against its PRSP at the World Bank / IMF meetings. It was rumoured that a hitherto ' neutral' government might vote with France against the PRSP, and the worry was that if that happened, others within 'like-minded' group of donors might do so as well. Maybe even the US would block it.The war in Congo and human rights in Rwanda were powerful reasons.
DFID made it a priority to counter this. It got its high level representation in Washington involved. DFID's lobbying was successful;. Meetings with the US made clear that the US would not waver. Lobbying with other country representations in Washington shored up the like-minded group. In the end even the 'neutral' country did not vote against and the PRSDP went through.
DFID and GoR were happy. And the PRSP seemed to work: poverty levels, which in1994 stood at around 70%, had fallen to around 57% by 2005. Donors attribute to the political stability of the country in the last decade; high economic growth in spite the odds, and pro-poor service delivery policies of the government, following HIPC and the PRSP. However, in spite of various political reforms, the 'old' comverns still exist. GoR has retained stringent limits on the freedom of expression of political parties and the media. Confidential UN documents state that Rwanda maintains a 'military structure of control' over parts of DR Congo through the use of proxy Congolese forces, and Rwanda still benefits from the extraction of natural resources in those parts of Congo it indirectly controls.
Within Rwanda, local level economic decision making power has also not increased much, in spite of an official emphasis on decentralization. The economic power is still firmly at central government level, and the PRSP-MTEF is part of what ensures this.
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