New World Bank Group Development Strategy Will Help Rwanda Create Jobs, Boost Agricultural Productivity and Spur Private Sector Investments

What will it take to end extreme poverty and promote shared prosperity by 2030? And how can the World Bank Group – the IFC, MIGA, and the International Development Association – help in that challenge over the next five years? These questions shape the World Bank Group Country Partnership Strategy for Rwanda which draws heavily on close consultations with the Government of Rwanda, the private sector, civil society organizations, and international development partners and articulates how financing and knowledge will be mobilized so that Rwanda can realize its potential to lift millions of families out of poverty and become a truly modern economy.

Rwanda has made extraordinary progress in recent years. It is one of the few countries anywhere in the world that has managed a “triple crown” of fast economic growth, robust reductions in poverty, and a narrowing of inequality. The poverty rate fell from 59 percent to 45 percent in the last decade and Rwanda is now ranked as the second easiest place to do business in all of Africa. This progress, so notable in this year marking the twentieth anniversary of the Genocide against Tutsi, illustrates the possibilities and opportunities for any country seeking a new path of peace and prosperity. Moving forward, Rwanda must consolidate peace and development so that ordinary citizens like Judith can look forward to a chance to realize their dreams and their children’s dreams in the next twenty years.

“Rwanda can focus on second-generation economic reforms of export diversification, structural transformation, regional integration and financial sector deepening to accelerate economic growth and boost incomes of the poorest so that Rwandans can advance in their journey to prosperity.” says Diariétou Gaye, World Bank Country Director for Rwanda.

IFC will provide investments and advisory services to help expand access to finance and support critical sectors of the economy, including agribusiness and infrastructure. “To unlock rapid and uninterrupted growth that is sustainable and inclusive, Rwanda needs to transform the drivers of growth from the public to the private sector by removing key constraints,” said Oumar Seydi, IFC’s Director for Eastern and Southern Africa. “These constraints include a small financial sector, weak infrastructure (particularly electricity), and low human capital and qualified workers. Under the strategy we aim to expand our support in responding to these challenges.”

Accelerating growth

At the heart of the strategy lies the premise that the growth and other developmental dividends of the post conflict period have been skillfully harnessed, and that the transformation of the economy is underway. Rwanda is seeking to make a shift in its growth trajectory that has private sector at its vanguard. This implies investing in infrastructure, such as transport and electricity, to bring the cost of doing business down to a competitive rate. In energy, the World Bank Group will increase installed generation capacity by 450 megawatts from diversified sources to reduce the cost of doing business, attract private sector investment, and expand electricity access for Rwandans.

Boosting agricultural productivity

Growth alone will not be sufficient. Progress on inequality reduction also plays a critical part in helping meet Rwanda’s goals of reducing poverty and improving people’s social conditions. Well-targeted investments can help raise productivity and incomes of the lowest groups. These can include cash transfers, focusing on agricultural productivity and rural infrastructure to improve the incomes of the poorest and transform livelihoods in rural areas in a sustainable way. In agriculture, the World Bank Group will aim to irrigate an additional 14,000 hectares of marshlands and hillsides and improve rural roads so that farmers can connect to new markets and increase their family incomes so that growth is inclusive and prosperity can be shared by all.

Supporting accountable governance

Managing the wide-ranging consequences of rapid growth will also require flexibility, strong feedback loops, and capacity to respond to unforeseen developments. Building capacity at the district level will be an important ingredient in these efforts. In service delivery, the World Bank will collect citizen feedback on the quality of services at the local level, support accountable governance, strengthen public fiscal management and decentralization in decision making, and access to public information to strength public accountability.

Investing in regional integration

Rwanda’s size and location will mean that stronger integration with regional economies will be vital for further growth. Regional integration will expand markets for potential investors and turn “land-locked” into “land-linked” in the interests of competitiveness. Countries of the region represent potential markets for exports, managers of transport corridors and facilitators of cross-border trade. Regional integration and cross-border investments could also potentially bring greater political stability and security to the region.

To help Rwanda respond to these challenges, the World Bank Group will build on its current portfolio of a net commitment of almost $600 million and invest $1 billion or more new resources in the next five years to support Rwanda’s journey to prosperity.