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AFRICAN DEVELOPMENT FUND
RWANDA
SKILLS, EMPLOYABILITY AND ENTREPRENEURSHIP
PROGRAMME III (SEEP III)
APPRAISAL REPORT
OSHD/RWFO DEPARTMENTS
June 2016
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TABLE OF CONTENTS
ACRONYMS AND ABBREVIATIONS .......................................................................................................... i
PROGRAMME EXECUTIVE SUMMARY ................................................................................................... iii
I – INTRODUCTION: THE PROPOSAL .................................................................................................... 1
II – COUNTRY CONTEXT ........................................................................................................................... 2
2.1 Political development and Governance Context ............................................................................... 2
2.2 Recent Economic Developments, Macroeconomic and Fiscal Indicators ........................................ 2
2.3. Competitiveness of the Economy ...................................................................................................... 4
2.4. Public Financial Management ........................................................................................................... 4
2.5. Inclusive growth, Poverty and Social Context .................................................................................. 4
III – GOVERNMENT DEVELOPMENT PROGRAMME ........................................................................ 5
3.1. Government Development Strategy and Medium-Term Reform Priorities ...................................... 5
3.2 Challenges to National/Sector Development Programme ................................................................. 6
3.3 Challenges to National/ Sector Development Programme- Annex 8 ................................................ 6
3.4 Consultation and Participation Processes .......................................................................................... 7
IV – BANK SUPPORT TO GOVERNMENT STRATEGY ....................................................................... 8
4.1. Link with Bank Strategy ................................................................................................................... 8
4.2 Meeting the Eligibility Criteria: ........................................................................................................ 8
4.3 Collaboration and Coordination with other Partners ......................................................................... 9
4.4 Relationship with Other Bank Operations ...................................................................................... 10
4.5 Analytical Works Underpinning the PBO ....................................................................................... 10
V – THE PROPOSED PROGRAMME ...................................................................................................... 11
5.1. Programme Goal and Purpose ......................................................................................................... 11
5.2. Component 1: Skills and Employability ........................................................................................ 11
5.3 Component 2: Entrepreneurship and Enterprise Development ....................................................... 13
5.4 Policy Dialogue ............................................................................................................................... 14
5.5 Prior Actions: .................................................................................................................................. 15
5.6 Application of Good Practice Principles on Conditionality ............................................................ 15
VI – OPERATION IMPLEMENTATION ................................................................................................. 16
6.1. Beneficiaries of the programme ...................................................................................................... 16
6.2 Programme’s impact on gender ....................................................................................................... 17
6.3 Impact on Environment and Climate Change ................................................................................. 17
6.4 Implementation, Monitoring and Evaluation .................................................................................. 17
VII – LEGAL DOCUMENTATION AND AUTHORITY ........................................................................ 19
7.1. Legal Documentation ...................................................................................................................... 19
7.2. Conditions Precedent to Disbursement of the Loan ........................................................................ 19
7.3 Compliance with Bank Group Policies ........................................................................................... 20
VIII – RISKS MANAGEMENT .................................................................................................................. 20
IX – RECOMMENDATION ........................................................................................................................ 20
List of Appendices
Appendix 1 - Letter of Sector Development Policy
Appendix 2 - IMF Press Release
Appendix 3 - Bank Group On-Going Project Portfolio
Appendix 4 – Operation Policy Matrix
List of Tables
Table 1: Rwanda: Key Macroeconomic Indicators
Table 2: Link between the PRSP/NDP, the CSP and the Proposed Operation
Table 3: Lessons Learned from Previous Bank Operations
Table 4: Prior Actions
Table 5: Projected Financing Requirements and Sources, date
Table 6: Disbursement Triggers
Table 7: Risk and Mitigation Measures
List of Technical Annexes
Annex 1 – Meeting Eligibility Criteria for PBO Annex 2 - Country Fiduciary Risk Assessment (CFRA) Annex 3 - Assessment of Rwanda Public Procurement System Annex 4 - Progress towards Meeting MDGs
Annex 5 - Comparative Socio-Economic
Annex 6 - Selected Macroeconomic Indicators Annex 7 - Achievements Under SEEP I & II
Annex 8- Indicators Detail Sector Challenges
Annex 9 - Division of Labour Annex 10 - Map of Rwanda
Currency Equivalents
As of June 2016
1 UA = 1,096.69 RWF
1 UA = 1.40 USD
1 USD = 781.74 RWF
Fiscal Year
July 1st – June 30th
Weights and Measures
1metric tonne = 2204 pounds (lbs)
1 kilogramme (kg) = 2.200 lbs
1 metre (m) = 3.28 feet (ft)
1 millimetre (mm) = 0.03937 inch (")
1 kilometre (km) = 0.62 mile
1 hectare (ha) = 2.471 acres
i
Acronyms and Abbreviations
ADF African Development Fund
AfDB African Development Fund
AU African Union
BDF Business Development Fund
BDS Business Development Services
BICS Business and Investment Climate
Survey
BNR Banque Nationale du Rwanda (Central
Bank)
CATs Certified Accounting Technicians
CFRA Country Fiduciary Risk Assessment
CPCs Community Processing Centres
CPI Corruption Perception Index
CPIA Country Policy and Institutional
Assessment
CPPR Country Portfolio Performance Review
CSOs Civil Society Organisations
CSP Country Strategy Paper
DFID Department for International
Development
DoL Division of Labour
DPs Development Partners
DRC Democratic Republic of Congo
DPCG Development Partner’s Coordination
Group
DRM Domestic Resource Mobilisation
EAC East African Community
EDPRS Economic Development and Poverty
Reduction Strategy
EICV Integrated Household Living Conditions
Survey
ESSP Education Sector Strategy Plan
EU European Union
FAPA Fund for African Private Sector
Assistance
FCS Fiscal Consolidation Strategy
FRA Fiduciary Risk Assessment
FY Fiscal Year
GAAP Generally Accepted Accounting
Principles
GBEs Government Business Entities
GCI Global Competiveness Index
GDP Gross Domestic Product
GIZ German Government Development
Agency
GLR Great Lakes Region
GoR Government of Rwanda
ICGLR International Conference of the Great
Lakes Region
ICT Information and Communication
Technology
ICPCs Integrated Craft Production Centres
IFMIS Integrated Financial Management
Information System
IIAG Ibrahim African Governance
IMF International Monetary Fund
IPRC Integrated Polytechnic Regional Centre
IPSAs International Public Sector Accounting
Standards
MDA Ministries, Departments, Agencies
MDG Millennium Development Goal
MCF Master Card Foundation
MIFOTRA Ministry of Public Service and Labour
MINECOFIN Ministry of Finance and Economic
Planning
MINEDUC Ministry of Education
MINICOM Ministry of Trade and Industry
MSME Micro, Small and Medium Enterprise
myICT Ministry of Youth and ICT
MTEF Medium Term Expenditure Framework
NCBS National Capacity Building Secretariat
NEP National Employment Programme
NISR National Institute of Statistics Rwanda
OAG Office of the Auditor General
PBO Policy Based Operation
PCN Project Concept Note
PCR Programme Completion Report
PEFA Public Expenditure and Financial
Accountability
PFM Public Financial Management
PIU Project Implementation Unit
PSDS Private Sector Development
Strategy
PSDYE Private Sector Development and Youth
Employment
PSF Private Sector Federation
PSI Policy Support Instrument
RCA Rwanda Cooperative Agency
RDB Rwanda Development Board
RIF Rwanda Innovation Fund
RWF Rwanda Francs
RWFO Rwanda Field Office
SACCOs Savings and Credit Cooperatives
SBS Sector Budget Support
SDGs Sustainable Development Goals
SEEP Skills, Employability and
Entrepreneurship Programme
SMEs Small and Medium Enterprises
SSCs Sector Skills Councils
STSDP Support to Science and Technology
Skills
SOEs State Owned Enterprises
SWG Sector Working Group
TI Transparency International
TYS Ten Year Strategy
TVET Technical Vocational Education
Training
UA Unit of Account
UNDP United Nations Development
Programme
USAID United States
VAT Value Added Tax
VSLA Village Savings and Loans Associations
WDA Workforce Development Authority
WGI World Governance Indicators
Y&WA2F Youth and Women Access to Finance
ii
PROGRAMME INFORMATION
INSTRUMENT Sector Budget Support
PBO DESIGN TYPE Single Operation
LOAN INFORMATION
Client’s information
BORROWER: Republic of Rwanda
EXECUTING AGENCY: Ministry of Finance and Economic Planning (MINECOFIN)
Financing plan
Source Amount
(UA Million)
Instrument
African Development Fund 35.90 Loan
Swedish Embassy 2.71 Grant
GIZ 5.17 Grant
KfW 3.18 Grant
Koica 3.56 Grant
Government Contribution 5.29
TOTAL COST 55.74
ADF key financing information
Loan
UA 35.9 Million
Service Charge 0.75% per annum on amount
disbursed and outstanding
Commitment fee* 0.50% per annum on
undisbursed portion on of the
loan
Duration 30 years
Grace period 10 years
As a June 22, 2016, Rwanda had an ADF-13 balance of UA 35.9 million; to be utilized for SEEP-
III;
*if applicable
Timeframe - Main stepping stones (expected)
Concept Note approval:
May 2015
Programme approval: July 2016
Effectiveness: September 2016
Completion: June 2017
iii
PROGRAMME EXECUTIVE SUMMARY Programme
overview
The Skills, Employability and Entrepreneurship Programme III (SEEP III) is a one year Policy Based Operation.
The programme cost is UA 35.9 million to be disbursed in one tranche in fiscal year 2016/17 based on
disbursement triggers agreed with Government of Rwanda (GoR) in consultation with Development Partners
(DPs). The SEEP III aims to contribute to inclusive growth and poverty reduction by enhancing labour
productivity and promoting employment. Specifically, SEEP III will support implementation of reforms to
enhance skills development, relevance and promote entrepreneurship/enterprise development for job creation.
The SEEP III is a follow-up programme which builds on and consolidate strategies promoted under SEEP I and
II. SEEP I and II focused on building critical mass of TVET skills, business advisory services and creation of
new start-up businesses. SEEP III will develop skills that will promote high value added production in key
economic sectors, and promote private sector growth through strengthening existing micro, small and medium
entrepreneurships (MSMEs). In line with aid harmonization, the programme was developed with the GoR and in
close consultation with DPs including Germany (including KfW and GIZ), DfID, Netherlands, World Bank, EU,
Sweden and the US. Programme
outcomes
The SEEP III expected outcomes are: (i) Share of TVET enrolment as percentage of upper secondary stream
increased from 42% (2015) to 50% (2017); (ii) Proportion of employers who are satisfied with TVET graduates
increased from 73.4% (2013) to 76% (2017); (iii) value added per worker in industry increase from US$2418
(2014) to US$2538 (2017); and number of MSMEs created annually as start-ups increased from 13,610 (2016)
to 14,500 (2017).
Alignment with
Bank priorities
SEEP III is aligned with the Bank Group’s Ten Year Strategy (TYS) 2013-2022, particularly the core
operational priorities of “skills and technology” and “private sector development”, as well as TYS areas of
special emphasis particularly gender (promoting women’s economic empowerment). It reflects the Bank’s
commitment to the High5’s agenda particularly on the priority on ‘Improving the quality of life for the people of
Africa’ and ‘Industrialize Africa’. SEEP III is aligned with Pillar II of the Bank’s CSP 2012–16 for Rwanda
(Private Sector Development), which focuses on skills and innovative entrepreneurial development. It also aligns
with the Bank’s Human Capital Strategy (2013-2017), Jobs for Youth in Africa Strategy (2016-2025), Private
Sector Development Strategy (2012-17), Gender Strategy (2014-2018), Governance Strategic Framework and
Action Plan (GAP 2014-18), Financial Sector Development Policy and Strategy (2014-2019) and the Eastern
Africa Regional Integration Strategy Paper (2011-16) which emphasizes capacity building through skills
development (Higher Education and TVET). Needs
assessment
Rwanda has made significant progress in increasing off-farm jobs from about 104,000 annually in 2011 to
146,000 annually in 2014, although below the national target of 200,000 off-farm jobs. Progress has also been
registered in new business establishments from 119,000 (2011) to 148,376 (2014). However, the private sector
still is dominated by micro and small firms with low productivity and limited growth. About 68% of private
establishments are one person owned firms and have not expanded since 2011. More needs to be done to
increase economic transformation in Rwanda. The private sector is not creating sufficient jobs to meet the
growing demand. About 125,000 youth are projected to enter the labour force annually between 2016 and 2020.
Furthermore, many hundreds thousands of additional underemployed are searching for more and better jobs. The
challenge is therefore to create sufficient stable and better paying jobs. And thus improving the quality and
relevance of TVET skills is critical in ensuring better paying jobs. On the demand-side, there is need to improve
private sector productivity, promote the growth and expansion of MSMEs in order to create more job
opportunities. Achieving these objectives require the GoR to maintain stable and predictable public revenues and
thus, sustained Bank support to the GoR will contribute to closing the financing gap. Bank support will therefore
reduce the risk of underfunding which could result in reversing the gains that have already been made. Harmonisation The programme will be aligned to the National Employment Programme (NEP) and Private Sector Development
Strategy (PSDS) Implementation Plan. The programme will use the Joint Sector Reviews under the PSDYE
SWG as a platform for monitoring progress in the implementation of employment creation initiatives under
SEEP III and more broadly under the NEP as well as the implementation of the PSDS strategy in collaboration
with other stakeholders in the sector. SEEP III will also benefit from the coordination mechanisms under the
TVET sub-Sector Working Group (SSWG) under the Education SWG.
Bank’s added
value
The Bank has considerable experience and expertise in PBO’s in Rwanda and across the continent. The Bank
has been one of the major DPs providing sector budget support to Rwanda since 2012. It is thus well positioned
to engage in dialogue and currently co-chairs the PSDYE SWG. The preparation of SEEP III has benefitted from
experiences and lessons learned during the design and implementation of similar programmes focusing on
education and employability, fiscal consolidation, protection and promotion of basic services, and social
inclusion in other regional member countries. The Bank has consolidated its comparative advantage which is
derived from (i) flexibility in responding to the need for financial resources to meet financing gaps, for instance
as was the case during the 2012/13 aid suspension in Rwanda, (ii) ability to leverage its budget support for
policy development and (iii) the Bank’s enhanced presence in the country.
Contribution to
Gender Quality
and Women’s
empowerment
The SEEP III will assist in promoting economic opportunities and empowerment especially for women and
youth through improved access to TVET skills, finance for start-up businesses, loans for toolkit and business
advisory services that should help women owned SMEs to grow. The programme thus will promote strategies
that enhance access to finance for women and youth; and address barriers to girls’ enrolment in TVET especially
male dominated trades.
Policy dialogue
and linked
technical
assistance
Policy dialogue will concentrate on (i) private sector participation in skills development. (ii) access to finance—
and (iii) female participation in TVET skills. The programme will benefit from technical assistance provided
under the GIZ support to skills and private sector development under the Eco-Emploi programme and Swedish
Embassy to the NEP and Private Sector development.
iv
Results-Based Logical Framework Country and Programme: Rwanda – Skills, Employability and Entrepreneurship Programme III (SEEP III)
Purpose of the Programme: To support implementation of reforms to enhance skills development, relevance and promote entrepreneurship
development.
RESULTS CHAIN
PERFORMANCE INDICATORS
Indicator Baseline
2016
Target
(2017)
Means of
verification
Risks/Mitigation
Measures
IMP
AC
T
Inclusive growth and poverty
reduction.
% of population living below poverty line 39.1% (2013/14) 30% (2018) NISR
% of off-farm employment in total employment
30.5 (2014): M 41.4%, F 21.4
%
34% (2018): (M 45%, F
24%)
NISR
.OU
TC
OM
ES
Outcome 1:
Enhanced
employable
skills for labour market.
Share of TVET enrolment as % of upper secondary stream1(share of male and
female in TVET enrolments)
Total 42% (2015): M 58%, F 42%)
Total: 50% M: 54%
F: 46%
WDA 1. Risk: Regional
political instability: Protracted instability in
the region would be a risk to Rwanda’s social and
economic stability
diverting resources from critical investments for
job-creation.
Mitigation: Stakeholders (through the EAC)
continued demonstration
of strong commitment stakeholders to resolve
political crises in region.
2. Fiduciary risk: A
weak institutional
capacity and high turn-over of qualified
accountants in public
sector could undermine PFM reforms.
Mitigation: Continued
implementation of the integrated PFM reform
programme and financial
reporting to improve fiduciary environment.
3. Risk: Macroeconomic
instability: Rwanda
remains vulnerable to external shocks, which
could include an
unforeseen rise in import commodity prices, global
commodity market
downturn (minerals). These could affect GoR’s
resource mobilization and
commitment to reforms and investments.
Mitigation: Continued
implementation of the IMF PSI programme, and
GoR’s commitment to
sound fiscal and monetary policies,
ongoing efforts to
diversify the economy and exports base, and
increased DRM. Donor
commitment to enhance aid predictability.
4. Risk: Limited private
sector development:
Bottlenecks such as
infrastructure deficit restrict private sector
development. Majority of
% of employers who are satisfied with the TVET graduates
73.4% (2013)
76% WDA
Value added per worker in Industry (US$)
2418 (2014) 2538 EICV
Outcome 2:
Improved
entrepreneurship and business
development.
No. of newly registered SMEs created
annually as start-up
13,610 (2014/15) 14,500 MINICOM
Component 1: Skills and Employability
OU
TP
UT
S
1.1 Increased
private sector
participation in building
employable skills for jobs.
No. of TVET curricula designed in
collaboration with private sector
76 88 (12
additional)
WDA
No. of private sector enterprises hosting
TVET trainees (companies and
cooperatives)
12,314 (2015) 13,500 WDA
A Skills Audits in five economic sectors
(Mining, Manufacturing, Energy,
Tourism and Horticulture) conducted
0 1 NCBS
Feasibility study for financing model for
TVET validated by WDA
0 Draft report
(prior action)
WDA
Draft report Report
validated
Operationalization of Four Sector Skills
Councils – MOUs signed with PSF
(Manufacturing, Energy, Tourism and ICT)
0 4 NCBS
Capacity Development Policy and
Strategy submitted to Prime Minister
(prior action)
Draft policy
available
Submission to
Prime
Minister
MIFOTRA
National Qualification Framework
validated (prior action)
Draft NQF
framework
NQF validated MINEDUC
1.2 Increased
availability of quality and
relevant
vocational skills
No. of TVET trainers trained on the
revised training modules
650 (2015) 870 (220
additional)
WDA
No. of TVET graduates (including TSS,
VTC, IPRC) (% of female)
70,747 (42.9%) –
(2014)
95,000 (44%) WDA
No. of TVET trainees enrolled in
industrial attachment programmes
39,337 (30% F)
41,000
(33% F)
WDA
No. of trainees benefited from
apprenticeship and IBT (% of female)
1,568
(30%) (2015/16)
2,568
(33%)
WDA
No. of trained out-of-school that were
unskilled and semiskilled (% of female)
14,819 (30%)
(2015/16)
19,000 (30%) MIFOTRA
A Study on Challenges and Barriers
affecting female enrolment in TVET
conducted
0 1 WDA
Number of public TVET schools (TSS,
VTC, IPRC) with a gender focal point
designated
7 30 WDA/
MIGEPROF
Component 2: Entrepreneurship and Enterprise/Business development
2.1 Enhanced
MSMEs
competitiveness and growth
A BDA reporting software
operationalized (prior action)
0 1 (2017) MINICOM
SME growth support programme
developed and operational
0 1 RDB
An action plan to harmonize and
simplify decentralized taxes for MSMEs
developed.
0 1 MINICOM
No. of ICPCs (Integrated Craft
Production Centers) and CPCs
15 ICPCs; 3 CPCs 20 ICPCs; 6
CPCs MIFOTRA
1 TVET includes VTC, TSS, and IPRC. The indicator = TVET enrolment / (TVET enrolment + upper-general secondary enrolment).
v
(Community Processing Centers)
equipped and operationalized (3 additional CPCs: Banana, ceramic,
Honey)
companies are small,
affecting the absorption
capacity of skills.
Mitigation: Dialogue
between Government and Private sector to address
bottlenecks affecting
private sector growth and competitiveness. Reforms
to expand access to
financial services and deepen financial markets.
2.2 Improved
access to financial
services for
MSMEs
No. of SACCOs re-capitalized by the
Business Development Fund (BDF)
16 31 (15
additional) MINICOM
Feasibility Study for Establishment of a
SME Growth Fund conducted.
0 1 MINECOFIIN
/MINICOM
No. of new MSMEs accessing start up toolkit loan facility
13,000 17,000 MINICOM
A revised strategy on access to finance for women and youth2 approved by NEP
steering committee
0 Draft report available
(prior action)
MIGEPROF
Draft report strategy
validated
No. of SMEs for youth and women
accessed to finance. (through): Guarantee Scheme,
quasi equity and
Youth and Women Access to Finance Grant (Y&WA2F grant)
11,435
4,142
22
5260
15,000
6,627
45
7890
BDF
Key
Acti
vit
ies Components:
Component 1: Skills and Employability
Component 2: Entrepreneurship and Business Development
Inputs: Funding in Million UA
ADF loan: UA35.9 million - loan
2 Rwanda definition of youth – 16-30 years, old definition – 14-35 year; ILO definition 15-24 years
1
I – INTRODUCTION: THE PROPOSAL
1.1 Management submits the following proposal and recommendation for a loan of UA
35.9 million to the Republic of Rwanda to finance Skills, Employability and Entrepreneurship
Programme III (SEEP III). This Sector Budget Support (SBS) is a continuation from SEEP II
designed to further deepen strategies and consolidate the achievements realized in SEEP I and II.
The Bank has been supporting Rwanda’s effort to enhance productivity and employment creation
through skills and entrepreneurship development since FY2012/13. However, more needs to be
done to achieve Rwanda’s economic transformation agenda. The private sector is not creating
sufficient jobs to meet the growing demand. About 125,000 youth are projected to enter the labour
market annually between 2016 and 2020 and also many hundreds thousands of additional
underemployed are searching for better paying jobs. The challenge is to create sufficient stable and
better paying jobs. As a result, sustained Bank support will be necessary to address these
challenges. The SEEP III was jointly designed with the Government in consultation with
Development Partners (DPs), private sector and Civil Society Organizations (CSOs).
1.2 The overarching goal of SEEP III is to contribute to promotion of inclusive growth
and poverty reduction. The purpose of the programme is to support implementation of reforms,
enhance skills development, relevance and promote entrepreneurship development. SEEP I and II
focused on building critical mass of TVET skills, business advisory services and creation of new
start-up businesses. SEEP III will (i) develop middle level technical skills (eg. masons, artisans,
plumbers) that will promote high value added production and (ii) strengthen the micro, small and
medium entrepreneurships (MSMEs) particularly those engaged in the key sectors such as
manufacturing and agro-processing. This will spur jobs especially for the youth. The programme
will also contribute to accelerating availability of skilled labour force that will enhance productivity
and promote rapid economic transformation and industrialisation, thereby improving the quality of
life of Rwandans in line with the Bank’s High 5s. The programme will thus contribute to
attainment of relevant Sustainable Development Goals3 (SDGs). The programme outcomes include:
(i) enhanced employable skills for the labour market; and (ii) improved entrepreneurship and
business development.
1.3 The proposal for continuation of sector budget support will enhance and deepen on-
going dialogue with Government on quality and relevance of skills; and SME growth. The
Bank’s previous support under SEEP I and II have contributed to: (i) creation of 146,000 off-farm
jobs annually between 2011 and 2014, (ii) improved number of TVET graduates from 21,307
(2014) to 70,747 (2015) in line with the Government’s focus on placing TVET at the centre of its
job creation agenda for especially youth; and (iii) improved coordination of the employment
creation initiatives through development of National Employment Programme (NEP).
1.4 The SEEP III is a one year sector budget support and builds on the achievements
under SEEP I and II (see Annex 7). SEEP III will continue to be aligned with the NEP and
Private Sector Development Strategy (PSDS) Implementation Plan’s policy priorities for
FY2016/17. The SEEP III has been designed as a one year programme creating a transition for
Bank’s future support to align with the outcome of the skills audit to be conducted under SEEP III,
the SME Growth Support Programme being designed by the government and to ensure full
alignment with the Bank’s Jobs for Youth in Africa Strategy (2016-2025).
3 Relating to Poverty, Quality Education, Decent Work& Economic Growth, Gender Equality and Reduce in Inequality.
2
II – COUNTRY CONTEXT
2.1 Political development and Governance Context
2.1.1 Rwanda has achieved improved political stability and security but instability in the
Great Lakes Region (GLR) presents risks to Rwanda’s development aspirations. Rwanda has
overcome the legacy of 1994 genocide and made commendable progress towards political stability,
civil liberties and political rights. In December 2015, the country held national referendum to
address presidential term limit and in February 2016 the country held Local Government elections
which were regarded as orderly, free and fair by international observers. Civil strife in eastern
DRC has reduced although any resurgence will adversely affect Rwanda’s trade given that the GLR
countries are among Rwanda’s key trade partners. Instability in Burundi also has security, social
and economic implications for Rwanda. Rwanda is actively participating in regional peace
initiatives under the International Conference on the Great Lakes Region (ICGLR) and African
Union (AU). This is expected to contribute to the resolution of instability and insecurity in Burundi
in particular and the GLR in general.
2.1.2 Rwanda has outperformed its peers in EAC on key governance indicators. According
to 2014 Mo Ibrahim African Governance (IIAG) ranked Rwanda 11th out of 52 countries with the
overall score of 60.7%/ out of 100. This is an improvement over the 2011 ranking of 23rd overall
composite index on Safety & Rule of Law, Sustainable Economic Opportunity and Human
Development and Participation and Human Rights steadily improved from 57.8/100 in 2011 to
60.7/100 in 2014. The country’s score on the IIAG was higher than the EAC (44.3%) and
continental (50.1%). Three new media laws were ratified in March 2013 to create a free
environment for the media to operate. The Bank’s Country Policy and Institutional Assessment
(CPIA) rating for Rwanda on the Governance cluster improved from 3.7/6 in 2004 to 4.65/6 in
2015 and is the highest in Africa. The Gallup Law and order index for 2015, ranks Rwanda the 5th
out of 141 countries in the world, with tightened safety and security for citizens hence enabling
people to freely walk alone at night4.
2.2 Recent Economic Developments, Macroeconomic and Fiscal Indicators
2.2.1 Rwanda’s economic growth has recovered from the 2012 aid suspension. Real GDP
growth was estimated at 6.9% in 2015 higher than initially projected 6.5%. GDP growth increased
from 4.7% in 2013 to 7% in 2014, driven by the services and industry sectors. Growth in
agriculture which accounted for 33% of GDP in 2014 recovered to 5% compared to 3% in 2013.
The economic outlook is subject to risks related to weather conditions, global demand and unstable
commodity prices. GDP growth is thus projected to slow down to 6% in 2016 and 2017 in line with
the adjustment policies the Government is undertaking to address the external imbalances. A
revised National Export Strategy (NES) was adopted in 2015 to promote export growth and
diversification. In addition, several measures including irrigation are being implemented under the
Strategic Plan for Transformation of Agriculture (2013-18) to reduce the agriculture sector’s
reliance on rainfall. These reforms are expected to mitigate the two risks.
2.2.2 The monetary policy stance has remained focused on price stability and expansion in
private sector credit. The central bank’s key policy rate was maintained at 6.5% since June 2014
to support bank financing to the private sector and ensure positive real interest rates to stimulate
domestic savings. The accommodative monetary policy has supported credit to private sector to
grow by 26.7% in 2015 compared to 19.6% in 2014. Inflation has also remained muted below the
medium target of 5%. Average headline inflation increased from 1.8% in 2014 to 2.5% 2015.
4 Gallup’s Law and Order Index is a worldwide measure that gauges people’s sense of personal security in their neighbourhoods and
their personal experiences with crime and law enforcement.
3
2.2.3 Rwanda continues to make efforts to maintain fiscal stability. Fiscal policy is focused on
implementing a fiscal consolidation strategy (FCS), which aims to increase public revenue
mobilization and expenditure prioritization to reduce the fiscal gap and reliance on external funds.
The public expenditure policy acts as a key vehicle for delivering the Economic Development and
Poverty Reduction Strategy-2 (EDPRS-2) 2013-18 whose objectives include; addressing the
binding infrastructure constraints to improve productivity, exports and job growth for economic
transformation. Revenue mobilization measures such as introduction of gaming and mineral royalty
taxes, electronic billing machines for Value Added Tax (VAT) and revision of the investment code
to eliminate unproductive tax incentives have increased tax revenues from 14% of GDP in 2012/13
to an estimated 15.9% in 2015/16. This has led to an increase in the share of the budget financed by
domestic revenues from 55% to 62% during the same period. Success has also been made in
rationalising expenditure to reduce the fiscal gap. The expenditure and net lending remained steady
at 29% of GDP in 2015/16 from 28.8% of GDP in 2012/13. The fiscal deficit including grants as a
result, has remained stable at 5.4% in 2015/16, although slightly higher than 5.2% of GDP in
2012/13. Indicators such as trends in domestic arrears and recurrent spending also signal sustained
fiscal stability. The key fiscal risks include; high dependence on external aid and a weak economic
outlook. The Government is expected to implement a cautious fiscal policy stance in 2016/17
including the postponement of non-priority spending to reduce import demand and thus ensure
external sustainability in light of continued reduction in commodity prices (see paragraph 2.2.4).
Tax policy changes in agriculture, mining and property tax regime are also planned to be
implemented to boost domestic tax revenue and reduce aid dependency.
2.2.4 The external balance has weakened due to persistent shocks from the global economy.
The current account deficit increased from USD 945.4 million in 2014 (12% of GDP) to USD
1096.0 million in 2015 or 13.6% of GDP due to low external receipts from exports due to the
sustained reduction in commodity prices. Private capital and remittances have also been lower than
programmed, reflecting the weaknesses in the global economy. High import demand, reduced
foreign exchange receipts and appreciation of the US Dollar against major currencies have jointly
put downward pressure on the exchange rate and official reserves. The Rwandan Franc depreciated
by 7.4% in December 2015 compared to 3.6% against the USD in December 2014. Official
reserves decreased from 4 months of imports in 2014 to 3.6 months in 2015. The Government has
taken decisive steps to safeguard external sustainability. These include tightening fiscal and
monetary policies to reduce the demand for non-priority imports and preserve the foreign exchange
reserves. The Government has also secured a USD 204 million Standby Credit Facility (SCF) from
the IMF to boost the official reserves in the short term. In the medium term, the Government plans
to aggressively implement the National Export Strategy to increase export revenues and a Domestic
Market Recapturing Strategy to reduce on the importation of construction materials, textile and
garments and agro-processed goods.
Table 1: Key Macroeconomic Indicators (% of GDP, unless otherwise indicated)
Real GDP) 2013 2014 2015 2016
(proj)
2017
(proj) Real GDP growth ( % change)
4.7 7.0 6.9 6.0 6.0
Consumer price inflation (end of period rate in %) 3.6 2.1 4.5 4.7 5
Current account balance including official transfers (in % of GDP) -7.4 -12 -13.5 -17.2 -13.2
Public external debt (end period)% of GDP) 21.5 14.9 26.9 34.4 38.9
Gross reserves (in months of imports of imports) including IMF financing
4.8 4 3.6 3.8 3.8
Private sector growth( % growth) 11.1 19.6 26.7 16 16
Private Sector Credit as % GDP 15.7 16.8 19.7 20.6 21.5
Fiscal balance excluding grants (in % of GDP) - -12.9 -11.1 -9 -8
Fiscal Balance including grants (in % of GDP) - -5.3 -5 -3.6 -3.1
4
2.3. Competitiveness of the Economy
2.3.1 Rwanda has made great strides in improving the business regulatory environment. Rwanda ranked 62 out of 189 economies in 2016 World Bank Doing Business report compared to
55 out of 189 in 2015. However, Rwanda is still the third most competitive country in Sub-Saharan
Africa behind Mauritius and South Africa as well as the second most overall consistent reformer
globally behind Georgia in the last 12 years. Rwanda also ranked 58 out 140 countries in the 2015
Global Competitiveness Index (GCI) compared to 62/144 in 2014. The key impediments to private
sector competitiveness include infrastructure bottlenecks and low labour productivity. Investments
in transport, energy, and water infrastructure are needed to unlock key bottlenecks to private
competitiveness. Rwanda also needs to develop skills to reap the dividends of its youthful
population who account for 40% of the population and support private sector competitiveness.
2.4. Public Financial Management
2.4.1 The overall assessment of Public Financial Management (PFM) is adequate to
implement the SEEP III. Over the last decade the government has implemented extensive PFM
reforms that have yielded significant results both at national and district levels. Consolidating and
cementing sound PFM systems at all levels of government will continue to help bolster service
delivery, whilst enhancing value for money in implementing government policies. These
achievements were made possible by ensuring compliance to the legal and regulatory framework,
improved transparency, enhanced debt management and external scrutiny and oversight. A key
underpinning of the PFM reforms and decentralization is the human resource and particularly the
role of Finance Officers and Certified Accounting Technicians (CATs) at districts, sub-districts,
and State Owned Enterprises (SOEs) levels; role of Tax Advisors in the fiscal decentralization
process, and role of financial officers in assisting with Generally Accepted Accounting Principles
changes. A detailed Fiduciary Risk Assessment (FRA) is attached as Annex 2.
2.5. Inclusive growth, Poverty and Social Context
2.5.1 Rwanda has achieved all the MDGs at goal level (Annex 4). Rwanda’s economic growth
has been accompanied by sustained poverty reduction. The share of population living below the
national poverty line decreased from 44.9% in 2011 to 39.1% in 2013/14. Extreme poverty also
reduced from 24.1% to 16.3% exceeding the MDG target of 20%. However, poverty remains high
among women (43.9%) compared to men (36.9%). Also poverty rates are over twice as high in
rural areas. Inequality as measured by the Gini coefficient reduced from 0.49 in 2011 to 0.45 in
2014 although income disparity remains a challenge with urban areas exhibiting high levels of
inequality. All MDGs indicators were met, except the ones on poverty, stunting and waged women
employment. Rwanda ranks 163 out of 188 countries on the Human Development Index (2015) of
the United Nations Development Programme (UNDP) demonstrating an improvement from 167 out
186 countries in 2013. This improvement is attributed to consistent investment in poverty reduction
programmes. The government has undertaken SDGs assessment to identify the SDGs that need to
be mainstreamed into national strategies.
2.5.2 Strong progress has been made in promoting gender equality and Rwanda ranked 6
out 145 countries according to Global Gender Gap Report (2015). The MDG target on equality
between boys and girls in primary and secondary education enrolment has been surpassed. There is
significant progress in women in governance. The number of parliamentary seats held by women
increased from 56% in 2010 to 64% in 2013. However, there are still inequalities in access to
economic opportunities. Although share of women in waged off-farm employment has increased
from 18.1% in 2010/11 to 27.3% in 2013/14, but remains short of the 50% MDG target; women
accounted for only 36.3% of the private sector workforce in 2014 and more women are employed
5
2.0%
8.7% 9.0%
13.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Rwanda Urban Secondary University
Figure 1 : Unemployment Rate in 2013-2014
Source: NISR.
in the agriculture sector. Off-farm employment tends to require higher education attainment and
women’s attainment is relatively low (AfDB 2014). About 33% of women do not have any formal
education. The Government is implementing various reforms to promote gender equality in the
access to economic activity through NEP and other initiatives.
2.5.3 Rwanda has low unemployment rate of 2% but this masks the high level of
underemployment. While the unemployment rate appears low, the statistics mask serious
challenges in the labour market i.e., persistent underemployment, dominance of employment in
subsistence agriculture, low earnings and informality. About 64% (2011) of workers had multiple
jobs. Given the dominance of agriculture, only a small fraction of labour force is employed in
formal or informal business establishments. Retail and wholesale trade, hospitality account for a
bulk of permanent employment in the formal sector,
and agriculture, manufacturing and construction tend
to provide temporary employment. Unemployment is
high in urban areas around 9%. Female
unemployment is high in urban areas at 12%
compared to men at 6%. More women are in
agriculture, forestry and fishing i.e. 66.2% compared
to 42.8% for males. The unemployment rate among
the youth is 4.1%. However, the unemployment rate
for young women stands at 4.9% against 3.2% for
young males. The unemployment rate is positively
correlated with the level of education. According to
the National Institute of Statistics of Rwanda (NISR-
2015) – Fig. 1, unemployment doubled from 7 to 14% among university graduates between
2010/11 and 2013/14, suggesting a significant mismatch between available jobs and skills
development. Underemployment is high, it is estimated that about 70% of the Rwandan youth are
underemployed resulting into low earnings. Rwanda therefore faces challenges of creating
sufficient jobs to accommodate the growing labour force and improving earnings for workers in
subsistence agricultures and informal non-farm sectors.
III – GOVERNMENT DEVELOPMENT PROGRAMME
3.1. Government Development Strategy and Medium-Term Reform Priorities
3.3.1 Rwanda’s overall development strategy is anchored on the vision 2020 whose
overarching goal is transforming the country from a subsistence agricultural economy into a
knowledge-based middle income economy. The Economic Development and Poverty Reduction
Strategy (EDPRS II – 2013-2018) provides the medium-term framework for achieving the
country’s Vision 2020 goals. The EDPRS II aims to accelerate poverty reduction and facilitate
economic transformation towards inclusive and sustainable green growth. It seeks to do so by
unlocking private sector competiveness through investments in infrastructure, energy, water and
transport sector as well as improving skills to reduce the cost of doing business and increase
economic productivity. This is expected to contribute to generate 200.000 off-farm jobs annually.
Rwanda development framework has potential to guide the economy towards private sector
inclusive and sustainable growth.
6
3.2 National/Sector Development Programme
3.2.1 The government remains committed to accelerate poverty reduction and promote
economic growth through national initiatives such as NEP (2013-20185). The NEP is an
overarching framework for employment creation initiatives with a focus on particularly youth and
women. The NEP aims to: (i) creating sufficient jobs that are adequately remunerative and
sustainable across the economy, (ii) equipping the workforce with vital skills and attitude for
increased productivity needed for private sector growth, and (iii) provide a national framework for
coordinating all employment and related initiatives and activities in the public, private sector and
civil society. SEEP III is anchored to NEP and also the following strategies and policies:
3.2.2 The Education Sector Strategic Plan (ESSP 2013-2018) – the strategy aims to facilitate the
development of human capital for the socio-economic development of Rwanda. The key objectives
include: (i) promoting access to education at all levels, (ii) improving the quality of education and
training, and (iii) strengthening the relevance of education and training to meet labour market
demands. Equity in access to education is emphasised across all three goals. Strategy also
prioritises skills development to strengthen the quality and relevance of education and to better
equip students to meet the requirements of the diverse labour market.
3.2.3 TVET Policy and Strategy (2015-2018). The policy aims to develop a regional and
international TVET system that produces men and women quality graduates, with employable
skills that respond to the changing demands of employers and the country’s labour market,
providing them with the opportunity to engage in decent work, work for themselves, be competent
entrepreneurs and engage in life-long learning. . The Workplace Learning Policy (2015) - aims at
creating systems, institutional structures as well as standards and regulations that ensure full use
and recognition of the country’s potential of training and learning at the workplace in order to
increase the relevance and marketability of skills.
3.2.4 Private Sector Development Strategy and Implementation Plan (PSDS 2013-18) – aims to
develop an entrepreneurial, innovative and competitive sector that delivers broad-based and
inclusive economic growth resulting in many more and better-paid jobs for Rwandans. . The PSDS
Implementation Plan focuses on 3 priority programmes namely: (i) Entrepreneurship Growth –
facilitating SME and job creation. The objective is to boost the number of new ventures and
ensuring survival of existing one. The NEP is anchored this programme; (ii) Investment
Implementation – attracting and operationalizing investments and (iii) Export development –
closing trade deficit through export growth and diversification.
3.3 Challenges to National/ Sector Development
Programme
3.3.1 Limited skilled labour force resulting in
importing labour to fill the gaps (see Annex 8). The
skills gap analysis6 conducted in 2012 revealed a skills
gap averaging 43% of the labour force in eight (8)
priority economic sectors (agriculture, construction,
energy, financial sector, ICT, manufacturing, mining
and Tourism). The survey also showed that 87% of the
skills gap was in technical and vocational education
and training – TVET (Artisans and Technicians levels),
followed by professionals (7%) and managers (6%).
5 NEP Pillars: (i) Skills Development, (ii) Entrepreneurship and Business Development and (iii) Labour Market Intervention. 6 See: Rwanda Skills Survey, 2012, by the Rwandan Development Board (RDB).
7
Technical jobs are largely taken by more qualified workers from neighbouring countries. The
labour force suffers from low levels of education. About 87% of the Rwandan labour force has
never attended school or have attended only primary school. About 47% of the unemployed
population have a primary school level of education. Most Rwandans have no formal
qualifications. Graduates experience challenges in getting a job (Fig 2). The 2012 Population and
Housing Census indicated that 93% of the employed did not have any degree, 5% had a secondary
degree and only 2% had a university degree. Employed males are more highly educated than
employed females. Only 1% of employed females had university degree compared to 2% male. The
skills gap analysis conducted in 2012 guided recent reforms in skills development.
3.3.2 The government has prioritized private sector as engine for employment creation but
is dominated by micro firms with low productivity – Fig 3. Private sector in Rwanda has not
expanded significantly to become the engine
of economic growth and spur job creation.
Although the private sector employs more
than 90% of the workforce, it is
characterized by high prevalence of micro,
small, medium-sized enterprises (MSMEs)
and informal private enterprises with low
survival. MSMEs account for 98% of the
148,376 formal and informal private
enterprises and account for 84% of all off-
farm employment7. Furthermore, self-
employed (a firm with one worker-the
owner) remains the dominate mode of
entrepreneurship – 68% of private
establishments are one-persons affairs and
about 55.9% owned by youth8 with slightly
over one third in wholesale and retail trade,
repair of motor vehicles and motorcycles.
As such, overall domestic private investment in Rwanda remains low, at about 50% of the gross
investment realized during 2008-2012. Although MSMEs have been a key vehicle for job creation,
about 73% of jobs created between 2011 and 2014, there are concerns on the quality, stability and
earnings remain low. Low earnings reflect in large part of the unskilled nature of the labour force.
. A number of factors hold back the expansion of MSMEs. These include: (i) limited access to
capital from the mainstream financial institutions. Established financial institutions perceive SMEs
as high risk and reluctant to lend to them; (ii) inadequately skilled labour to enhance productivity –
the graduates lack basic skills and practical experience needed for jobs; (ii) limited access to
affordable and reliable energy; and (iv) absence of quality business advisory services resulting in
poor business planning and management.
3.4 Consultation and Participation Processes
3.4.1 The SEEP III was designed through participatory approaches. The Bank’s
identification, preparation and appraisal mission consultations involved stakeholders including
government, development partners, private sector and civil society organisations. Field visits were
conducted. All these processes informed the design of the programme. The consultations pointed
to a number issues which included: (i) the need to pay attention to both soft skills and technical
skills to improve youth readiness for work, and ensure “after care” support services to ease
7 United Nations Rwanda Report - 2014 8 Rwanda new definition for youth – 16-30 years
8
transition into labour market (tracer surveys of graduates, and business linkages services for active
youths); (ii) need for innovative tools to enhance access to finance for youth and women enterprises
who don’t have collateral. (iii) high taxation is a constraint for start-ups; as such a special
preference for MSMEs should be explored; (iv) need to ensure greater involvement of private
sector (industry) in Community Processing Centres (CPCs) and the governance of TVET; (v)
female should benefit from equal economic opportunities through increased access to TVET and
(vi) capacity building for private sector for effective engagement. Stakeholder participation will
continue during programme implementation, particularly through supervision missions.
IV – BANK SUPPORT TO GOVERNMENT STRATEGY
4.1. Link with Bank Strategy
4.1.1 SEEP III is fully aligned with the Bank Group’s Ten Year Strategy (TYS) 2013-2022,
particularly “skills and technology” and “private sector development”, as well as TYS special
emphasis on gender (on the pillar of women’s economic empowerment), and reinforced by the
Bank’s High-5s. SEEP will contribute to two of the High 5s namely: ‘Improve the quality of life of
the people of Africa’ and ‘Industrialize Africa’. SEEP III is also aligned with the second pillar of
the CSP – ‘Private Sector Development’, which focuses on skills and innovative entrepreneurial
development. The CSP considered use of budget support instrument. Bank’s Human Capital
Strategy (2013-2017) under its pillar of skills and technology for competitiveness and jobs; Job for
Youth Strategy (2016-2025) - the Agriculture and Industrialization flagship programmes; Private
Sector Development Strategy (2012-17), the Governance Strategic Framework and Action Plan
(GAP 2014-18), Gender Strategy (2014-18), Financial Sector Development Policy and Strategy
(2014-2019) and the Eastern Africa Regional Integration Strategy Paper (2011-15)9 which
emphasizes capacity building through skills development (Higher Education and TVET).
Table 2: Link between the PRSP/NDP, the CSP and the Proposed Operation
EDPRS II
(2013-18) Sector Strategies CSP (2012-16)
Proposed
Operation Strategic Obj. Sector Objective Strategic Objective Strategic Objective
Priorities Priorities Priorities Priorities EDPRS II (2013-18)
aims to consolidate
gains in economic
growth, poverty
reduction and
reduced income
inequality. It focuses
on four thematic
areas. The third area
which is
“productivity and
youth employment”
emphasizes on
appropriate skills
and productive
employment.
Education Sector Strategic Plan (2013-18) - to
increase the coverage and quality of basic education
and strengthen TVET and higher education provision.
Specifically, the TVET strategy (2015-18) envisions
creating quality male and female graduates responsive
to both local needs and that of regional and the
international labour market.
The overarching objective
of the CSP (2012-16) is to
promote economic
competitiveness for
inclusive growth and
poverty reduction. It has
two pillars: (i)
Infrastructure
development with a focus
on energy and transport;
and (ii) Private sector
development with
emphasis on
entrepreneurship and
enterprise development.
(i) Enhancing quality
and relevant skills for
labour market through
private sector
participation.
(ii) Strengthening
entrepreneurship and
business development
and promoting SME
growth and
competiveness.
Private sector development strategy (2013-18) - to
develop an entrepreneurial, innovative and
competitive sector that is characterized by adequate
and well remunerated jobs.
National Employment Programme (2014-2018) - to
guide the creation of 200,000 off-farm jobs annually;
equip the workforce with required skills for private
sector development; and consolidate and coordinate
all employment interventions.
4.2 Meeting the Eligibility Criteria:
Rwanda has met all the eligibility criteria for Programme Based Operations (PBOs). Therefore
Rwanda is eligible to borrow from the ADF concessional window. It fulfils all general and
technical prerequisite conditions for SBS operations (Annex 1).
9 A new East African regional integration strategy for 2017-21 is under preparation. It will be fully aligned to the Bank’s Regional
Integration Policy and Strategy (2014-23) who has two main pillars namely (i) Hard and Soft Infrastructure Development; and (ii)
Enhancing Industrialization and Trade anchored on value chain development.
9
4.2.1 Government commitment to poverty reduction and inclusive growth. Rwanda’s
commitment to Poverty Reduction is very strong. The medium term economic framework (EDPRS
II: 2013-2018) lays strong emphasis on reducing poverty, job creation and making improvements in
infrastructure to unlock productivity and support private sector led inclusive and sustainable
growth. The EDPRS II builds on strong progress made in the previous two medium term reform
programmes which contributed to sustained economic growth and poverty reduction. Reflecting
strong commitment to poverty reduction spending pattern is aligned to growth oriented and pro-
poor sectors. For example; the total budget allocated to productive and social sectors which
comprise; health, education, energy, transport, water and agriculture in 2015/6 was 13.9% of GDP
compared to 9.5% of GDP for general public services.
4.2.2. Macroeconomic stability: Macroeconomic management is anchored on the IMF policy
support instrument which was approved on 2 December 2013. The 5th review of the PSI indicates
that the implementation of economic policies have been satisfactory and remains prudent to support
macroeconomic stability. Downside risks such as high dependence on aid and vulnerability to
external shock are being addressed by a range of policy measures with emphasis on fiscal
consolidation, import substitution, export diversification and regional integration.
4.2.3 Satisfactory fiduciary risk assessment: The overall assessment of Rwanda’s Public
Financial Management (PFM) system including the beneficiary sectors of Education (MINEDUC),
Labour & Civil Service (MIFOTRA) and Industry & Commerce (MINICOM) is adequate to
implement the SEEP III as enforced by the 2013 Organic Law on State Finances and Property (N°
12/2013/OL of 12/09/2013). The overall fiduciary risk is deemed medium for SEEP III- Annex 2.
4.2.4 Political stability: Rwanda has been politically stable in the last two decades benefiting
from effective leadership. Political stability is expected to prevail beyond 2017 general elections
judging from the majority support that the incumbent and the ruling party currently enjoys.
4.2.5 Harmonization: There is a strong partnership between the GoR and DPs, and various levels
of dialogue forums exist, including the Development Partners Coordination Group (DPCG) and
Sector Working Groups (SWGs). The government developed a new division of labour (DoL) to
enhance coordination. SEEP III will benefit from various effective aid coordination mechanisms,
including the Sector Working Group (SWG). The Bank co-chairs the Private Sector Development
and Young Employment (PSDYE) SWG.
4.3 Collaboration and Coordination with other Partners
4.3.1 The preparation process of the programme was in consultation with DPs. Consultations
were done with DPs in skills development, enterprise development and private sector development.
These included Swedish Embassy, the Netherlands, Germany Embassy, KfW, GIZ, DFID, USAID,
World Bank and EU. With target of 200,000 off-farm jobs, DPs acknowledged the need to address
supply and demand side of the labour market with emphasis on improving quality of skills, access
to finance and increasing private sector participation in skills development. Collaboration will
continue during implementation of the programme within PSDYE framework.
4.3.2 Donor coordination is strong and the Bank, through its field office (RWFO), continues
to play an active role in policy dialogue. Donor coordination is guided by the 2013 Revised
Division of Labour (DoL) – (Annex 10) which enhance alignment with the EDPRS-II themes and
priorities. The revised DoL maps each Development Partner (DP) to three core sectors based on
comparative advantage. SEEP III is aligned and coordinated under PSDYE SWG. The Bank co-
chairs PSDYE and Transport sector working groups (SWGs) and co-chair the Energy Access Sub-
10
SWG. The Bank also actively participates in the Development Partner Coordination Group (DPCG)
which is the highest-level coordination forum in Rwanda and TVET Sub-Sector working group.
4.4 Relationship with Other Bank Operations
4.4.1 The Bank Group’s on going portfolio in Rwanda is comprised of 21 operations with a
total value of about UA 401 million (Appendix 3). The operations covers Energy (24%), transport
(35%), human development (7%), water supply and sanitation (4%), multisector (13%), private
sector development (13%) and agriculture (4%). The portfolio comprises of 8 public sector projects
financed through loans and grants; 4 private sector operations and 9 multinational operations.
Infrastructure (transport, energy, and roads) accounted for 63% of the overall portfolio value. The
ongoing portfolio is rated as satisfactory with an overall rating of 3.4 (on a scale of 1 to 4). The
disbursement rate as at end of May 2016 stood at 43%. SEEP I and II were successfully completed
and disbursed fully.
4.4.2 SEEP III will integrate and compliment other on-going Bank operations. In addition it
will enhance strategic dialogue, strengthening interface between education system and private
sector. The programme will help to improve effectiveness of sector-based on-going projects
including line of credit to financial institutions; support to energy sector, the Fund for African
Private Sector Assistance (FAPA) Skills Development in the Energy Sector; the Support to Science
and Technology Skills Development Project (STSDP), and the Regional ICT Centre of Excellence
Project. The programme will also enhance skilled labour in the energy sector a key binding
constraints for private sector growth. The programme will compliment Bank upcoming initiatives
including Rwanda Innovation Fund (RIF) which aims to boost entrepreneurial skills.
4.4.3 The previous sector budget operations in Rwanda have provided valuable lessons and
have informed the design of this operation. The Bank Group has approved, in the past, 4 sectors
budget support operations for Rwanda. The operations have contributed to strengthening policy
dialogues between Government and DPs; provided platform to discuss sectoral issues including
productivity and job creation, MSMEs growth in Rwanda - Annex 7. Lessons from these operations
have been taken into account in the design of this operation (Table 3).
Table 3: Lessons Learned from Previous Bank Operations in the Country
Key lessons learned Action taken to integrate lessons into the Programme Private sector participation in skills
development is critical in reducing skills mis-
match.
The SEEP III builds on the success of SEEP I and II in promoting
private sector involvement in defining critical skills needed by
private sector
Integrated approach to job creation is key for
increased job creation outcomes.
The PBO will address both supply and demand-side of labour
market ie. skills development and enterprise/business development
in order to promote job creation.
The use of country systems, alignment to
government priorities and convergence of
views among stakeholders is key factor in the
ownership and success of the programme.
This PBO has ensured that it is aligned to national strategies and
programmes to ensure government ownership, effective
implementation, meaning dialogue and effective synergy with other
stakeholders.
Choice of conditions for entry into and
disbursement should not presume and/or be
linked to parliamentary approval in order to
avoid effectiveness and implementation delays.
The SEEP III conditions for loan effectiveness are limited to
required executive actions only, and have been extensively
discussed with government and determined to be achievable and
realistic.
4.5 Analytical Works Underpinning the PBO
4.5.1 A number of analytical works informed the design of the proposed operation. These
include: the CSP 2012-2016; the 2014 AfDB Gender and Youth Employment study; the 2016
AfDB draft policy brief on Rwanda’s TVET System; AfDB/GoR study on Leveraging Capital
Markets for SME Financing in Rwanda from 2013; Country Policy and Institutional Assessment
11
(CPIA, 2015); the 2013 Rwanda Business and Investment Climate Survey; the 2016 Finscope
study; EICV 4 reports (2013/14); Completion Report; SEEP II PCR, Establishment survey 2014;,
Rwanda Employment and Jobs Study (June 2015); MCF-Youth Employment in Rwanda- A
Scoping Paper- 2015; AfDB/WDA Rwanda Skills Needs Assessment in the Energy Sector-2016;
NEP progress reports; Study on mainstreaming vulnerable girls and women into NEP; Study report
on women skills gap and existing opportunities in all districts; BNR annual report 2015; IMF
country reports; and on-going assessment on the impact of local tax fixing and administration on
MSMEs. Key recommendations include: (i) pay attention to quality and the relevance of training
for the labour market; (ii) improve quality of business development advisory services to support
SME growth and competitiveness; and (iii) address gender imbalances in both access to skills,
finance and employment opportunities. These recommendations have informed the programme
components.
V – THE PROPOSED PROGRAMME
5.1. Programme Goal and Purpose
5.1.1 The overarching goal of the programme is to support Rwanda’s efforts to promote
inclusive growth and poverty reduction. The purpose of the programme is to support
implementation of reforms to enhance skills development, relevance and promote entrepreneurship
and enterprise development.
Programme Components
5.1.2 The country remains on course to achieve its target of creating 200,000 new off-farm
jobs per year. The Rwandan economy produces about 146,000 new off-farm jobs per year since
2014 though below target. There are simply not enough jobs to meet the growing demand. SEEP
III will focus on improving competitiveness and spur job creation by the private sector. The
programme will therefore focus on two (2) components namely (i) Skills and Employability and (ii)
Enterprise and Business Development.
5.2. Component 1: Skills and Employability
Challenges and Constraints
5.2.1 The Government has made substantial achievements in increasing the number of
TVET graduates but limited availability of quality skills remains a major constraint to both
poverty reduction and economic transformation. The 2013 Business and Investment Climate
Survey (BICS) showed that “Inadequately educated workforce” is one of the bottlenecks. The
graduates lack basic skills and practical experience needed for jobs and business development in
particular in the manufacturing, tourism and ICT sectors. This is partly due to low level of skilled
human capital—with less than 2% of the labour force having attained higher education. As such
there is very high skills premium which has resulted with rural/urban migration especially for those
with higher education. The number of TVET trainees increased from 52,000 in 2010 to 94,000 in
2015—an increase of 80%. At the same time, there has been great progress in addressing skills for
out-of-school. About 15,000 out-of-school unskilled and semi-skilled youth have acquired TVET
skills that are critical for employability and productive self-employment. Despite this progress there
are concerns on quality, portability and relevance of the skills output. The number of TVET trainers
trained on revised competency-based curriculum is low - only at 5% (2015) thus affecting quality.
The absence of a national qualification framework (NQF) to provide TVET students with clear
effects on portability of qualification and career advancement is a concern. A NQF is crucial for
both the mobility and progression of learners.
12
38,8%
49,6%
23,1%
47,2%
37,8%
44,7%
23,0%
41,8%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
VTCs TSSs IPRCs Total TVET
2 011 2 015
Figure 4 : Share of Female in TVET Students, 2011 vs 2015
Source: WDA report (2016) on TVET Statiustics 2015.
5.2.2 Gender disparity in access to TVET continues
to persist – Fig.4. The number of females enrolled in
TVET is increasing at a low rate compared to that of male
counterpart. In recent times, the percentage of TVET
female students have even decreased. In 2015 only 41.8%
of all TVET students were female down from 47.2% in
2011. The majority of female students are in Business
services (39%), while the majority of male students are in
construction (47%) and manufacturing (17%). Therefore
there are fewer female TVET trainees in male dominated-
trades which pay better wages. Female access to TVET in
general, and in “male dominated trades” in particular, is
key to reduce the gap related to economic opportunities and enhance inclusive growth.
5.2.3 Relevance to private sector needs remains a challenge. The labour force is young,
considered low skilled and limited experience. Focus has been supply driven hence the skills mis-
match. A tracer survey targeting graduates from 2011 and 2012 showed that 40% of graduates were
jobless mainly because of skills mismatch (61% of all cases). While there has been progress in
promoting private sector involvement in education reforms, its role has not been significant. The
government in collaboration with private sector established 12 Sector Skills Councils (SSCs) to
define skills needed by specific sectors. The SSCs are not fully operational to play their meaningful
role. This is a new concept and private sector is yet to embrace the value addition of SSCs.
Recent Government Actions
5.2.4 TVET has been put at the core of the government’s agenda on job creation resulting in
significant investment. The GoR has undertaken a number of reforms to improve TVET. These
included TVET Policy and Strategy and Workplace Learning Policy which were approved by
Cabinet in 2015. The share of TVET in total education expenditures increased from 5.2%
(FY2011/12) to 9.2% (FY2013/14). This level is almost 50% more than in other comparable low
income African countries. The financial model for TVET requires close examination, especially in
a relatively constrained fiscal outlook. The government continues to review TVET curricula in
collaboration with private sector to ensure relevance. Up to date, 76 curriculums were revised for
selected qualification levels in 13 priority areas10. The priority is to build a more demand-driven
TVET system through increased industry participation in TVET governance and service delivery;
and to improve both quality of service and equity in access. The government in collaboration with
private sector through Private Sector Federation (PSF) is investing in capacity building of SSCs and
their effective operation.
Programme Activities
5.2.5 The programme will support measures aimed at reducing skills gaps, eenhancing
quality and relevant skills for labour market. The programme will continue to support increase
in TVET enrolment. In SEEP III emphasis will be on skills key to economic sectors with high
potential for job creation. Thus it is critical to ensure private sector participation in building
employable skills for jobs. Measures to include (i) operationalizing the 4 Sector Skills Councils in
collaboration with PSF, (ii) revising TVET curriculum with private sector participation; and (iii)
increasing the number of private sector enterprises hosting TVET trainees for internships. Also in
order to improve quality of TVET, SEEP III will support the roll-out of: (i) training of trainers on
10 Agriculture and Food Processing; Arts and Crafts; Beauty and Aesthetics; Business Services; Construction; Energy; Hospitality
and Tourism; ICT; Manufacturing and Mining; Media and Film Making; Technical Services; Transportation and Social Services.
13
the revised training modules; (ii) industrial attachment and apprenticeship programmes; and (iii)
training targeting unskilled and semiskilled out of school youth for self-employment. The
programme will support placement of gender focal points in 30 TVET public schools. The
programme will also support: (i) skills audit in five economic sectors (manufacturing, energy,
tourism, mining and horticulture) to ensure skills relevance, (ii) study on understanding ‘challenges
and barriers affecting female enrollment in TVET’ and (iii) study on financing model for TVET to
promote sustainability.
5.3 Component 2: Entrepreneurship and Enterprise Development
Challenges and Constraints
5.3.1 The government has made tremendous efforts in expanding supply-side labour market
interventions, but there is need to also place emphasis on demand-side interventions. While
there has been significant growth on private sector, MSMEs dominate and represent over 98% of
establishment (2014) and provides 80% of private sector employment. Survival rate of MSMEs is
low. The private sector in general employs more than 90% of the workforce and as such provide
direct channel for expanding employment. The challenge for the private sector is not only to
generate employment but also improve the quality of jobs in terms of pay and stability. Given the
size, depth of the private sector and potential for job creation, there is critical need to support
enterprise development. MSMEs lack systematic way of fostering value chains, technology
innovation capacities and compatibility with national international standards in order to exploit
foreign markets. They also lack managerial skills to run and grow the business product innovation
know-how. SMEs also use middlemen to access foreign markets thus decreasing profit margins on
products. Expanding the private sector will require intensified efforts to promote enterprise
development and entrepreneurship. Most one-person firms have not expanded - about 68% per one-
person firms in 2011 were still one-person firms by 2014. In addition high taxes and business fees
are a major burden to the operations of MSMEs in particular and private sector in general. SMEs
pay significant local taxes, plus VAT (18%).
5.3.2 Access to Credit/Capital is a key obstacle to the start-ups and growth of existing
MSMEs. This also includes limited access to long term and affordable credit. Although Rwanda is
being rated high in financial inclusion rated at 89% in 2016 (4 million individuals)11 but access to
credit for MSMEs and start-up remains low. Only about only 25% of MSMEs have ever accessed
bank loans from the mainstream financial institution. Financial institutions often perceive MSMEs
as high risk and are reluctant to lend to them12. There are limited financial products to meet the
consumer needs. In addition, banking transactions are concentrated in Kigali and lending is thereby
restricted to small number of large firms to the disadvantage of MSMEs in rural areas. As a result
most of the MSMEs access credit through SACCOs where the interest rate are as high as 24% per
annum ie. 2% per month. Also a challenge is access to finance for youth and women owned SMEs.
For example only 35.9% women owned SMEs accessed BDF guarantee loan compared to 64.1% to
men owned in 2013. Thus positioning Umurenge SACCOs as vital in promoting access to finance
especially for women and youth though they face refinancing constraints. Barriers to women’s
access finance include limited financial knowledge, lack of collateral, societal norms where men
are head of family, risk averseness and financial services not tailored to women’s needs. Women
continue to rely on informal financing mechanism as such village savings and loans associations
(VSLA) where they represent about 70%. Therefore, refinancing of the SACCOs and increasing
their capacity in lending to many Rwandans especially women and youth businesses become
critical. Long-term solutions of funding MSMEs needs to be explored.
11 Finscope Data 12 UNR2014
14
Recent Government Actions
5.3.3 The government is taking necessary measures to improve enterprise development and
entrepreneurship through a number of initiatives under NEP and PSDS. The government
funds BDF to provide credit guarantee risk coverage for women and youth loans to 75%. Also
improving quality of business advisory services for MSMEs at local level through BDAs; providing
start-up toolkit loan facility and promoting value-chain through CPC and ICPCs. Rwanda is
promoting: (i) “Made in Rwanda” which aims to enhance domestic production of locally made
products in light manufacturing, agro-processing and construction; (ii) the “Secondary cities”
programme which will help to ensure economic activities are harnessed; (iii) the strategic
orientation of Kigali as a regional “conference hub” which will require skills especially in the
service industry; and (iv) Government strategy to make Kigali an innovation hub in the region and
the Kigali Innovation City aim to support highly differentiated export oriented tech enabled enterprises,
and impact investment industry. The government Smart Rwanda Master Plan (SRMP) is promoting
‘innovation’ leading to job creation and digitization of the government and economy. Most youth
are interested in job opportunities in the ICT sector. On access to finance, the Bank is working
with Government on several transformative financial instruments including the Rwanda Innovation
Fund and the Risk Sharing Facility (RSF) which are expected to be approved in Q4 2016. The RIF
aims to catalyse funding through venture capital funds for ICT and related value chains which the
RSF will promote risk sharing and de-risk commercial bank lending to sectors with a high potential
to promote high value added production and exports, in particular agri-processing/business and the
associated value chains. SEEP-III will support the development of the required skills under the
SME Growth Support Programme to allow MSMEs to adequately benefit from these innovative
financing instruments.
Programme Activities 5.3.4. The SEEP III will support enterprise development with emphasis on strengthening
existing MSMEs. While SEEP III will continue to support creation of new start-ups, strengthening
existing MSMEs capacities and capabilities to increase productivity and participate in export
markets will be prioritized. This will include supporting SMEs with export and high growth
potential. The current concentration is in manufacturing and agro-processing sectors. Transforming
the existing SMEs into large firms will increase industrial output, create more jobs, and inject more
capital and innovation into the economy. SEEP III will support: (i) development of the SME
Growth Support Programme which should assist SME growth and boost ‘Made in Rwanda’
campaign, - Domestic Re-capturing Market Strategy and contribute to Rwanda’s exports. The
development of business development advisors to provide customised technical and advisory
assistance for SMEs will be embedded in the SMEs Growth Support Programme; (ii) action plan to
harmonize and simplify decentralized taxes for MSMEs; (iii) Revising the Access to Finance
strategy for women and youth and (iv) feasibility study on establishment of SME growth Fund to
address access to finance challenge. The programme will also continue to: (i) support BDF to
provide credit guarantee facilities especially to youth and women, (ii) re-financing the SACCOs to
enhance access to finance especially for start-ups and MSMEs owned by youth and women who
lack collateral, (iii) start-up toolkit loans and (iii) support value chains through continued
operationalization of CPCs and ICPCs – improving the quality and private sector involvement. 5.4 Policy Dialogue
5.4.1 Policy dialogue in Rwanda is carried out using the structures agreed with
Government. This is done in line with the country’s Development Assistance Strategy that
ensures the advancement of the principles of the Paris Declaration (2005), the Accra Agenda for
Action (2008) and Busan Aid Effectiveness (2011). Development Partner Coordination Group
15
(DPCG) is the highest-level of dialogue between the government and development partners. Sector
Working groups (SWGs) provides platform for sector dialogue. Key areas of strategic dialogue to
be pursued within the programme-time frame include: (i) quality of skills, (ii) private sector
participation, (iii) female participation in TVET skills; and (iv) access to finance – incentives to
lend in sectors that are perceived as risky are tools to support growth. 5.5 Prior Actions
Before the loan proposal is presented to the Board for approval, the Government shall have
provided evidence to the Fund that the measures outlined in Table 4 have been fulfilled. Five (5)
prior actions have been selected to underscore the government’s commitment to its job creation
agenda. The selection of these policy actions was guided by their importance to achieve
government commitment to job creation.
Table 4: Prior Actions
Component Prior Actions Component 1: Skills and Employability
National Capacity Development
Policy and Strategy submitted to
Prime Minister.
Status: Final draft available
Required Evidence: Letter by MINECOFIN to the Bank submitting evidence
that MIFOTRA has submitted the draft National Capacity Development Policy
to the Prime Minister and also submit copy of the draft policy.
Report on Feasibility Study for
Financing Model for TVET finalised.
Status: Draft available
Required Evidence: Letter from MINECOFIN to the Bank submitting a draft
report on Feasibility Study for Financing Model for TVET finalised.
National Qualification Framework
validated by Minister of Education
Status: Finalised
Required Evidence: Letter from MINECOFIN to the Bank transmitting the
validated National Qualification Framework.
Component 2: Entrepreneurship and Enterprise Development
BDA Reporting Software Developed
and tested.
Status: Developed
Required Evidence: A letter from MINECOFIN to the Bank confirming the
establishment of the BDA reporting software and submitting a copy of the
user’s manual and training report.
Revised Strategy on Access to Finance
for Women and Youth developed
Status: Draft report available
Required Evidence: A letter from MINECOFIN to the Bank submitting a draft
copy of the Revised Strategy on Access to Finance for Women and Youth.
5.6 Application of Good Practice Principles on Conditionality
5.6.1 SEEP III observes the good practice principles of conditionality in line with the Paris
Declaration principles and Accra Aid Effectiveness Agenda. Through aligning the programme
to EDPRS II, the relevant sector strategies and plans including the ESSP II, TVET Policy and
Strategy, Workplace Learning Policy and NEP. This alignment helps to reinforce country
ownership and hence, its commitment to successful implementation. The SEEP III prior actions and
disbursement triggers were selected after extensive consultation with government and other DPs in
skills and enterprise development sectors and considered as critical for achieving results in key
sectors of SEEP III. The Bank will continue to collaborate and coordinate closely with the GoR and
other DPs to ensure complementarity, synergy, consistence and coherence. The programme is also
designed to be fully aligned with the budget cycle and financing needs. This, coupled with the fact
that the conditions are realistic and achievable, will help ensure smooth disbursement.
5.6.2 Financing needs and arrangements: The programme forms part of GoR’s external
financing sources that will help close the 2016/17 financing gap. The total budget for the FY
2016/17 is projected to slightly increase by 3.6% from RWF 1785 billion in 2015/16 to at RWF
1848.8 billion while total revenue and grants are projected to increase from RWF 1478.9 billion to
RWF 1601.9 billion during the same period. In relative terms, both public expenditure and total
revenue and grants will decline as share of GDP from 29% in 2015/16 to 27.1% in 2016/17 and
16
from 24.1% in 2015/16 to 23.5% respectively. The revenue and expenditure performance is
expected to result in a budget deficit including grants of RWF 266.8 billion (3.9% of GDP) in
2016/17 which is lower than RWF 332.5 billion or 5.4% of GDP in 2015/16. The proposed loan of
UA 35.9 million will finance 15.2% of the total financing gap. The Bank contribution brings three
key benefits to safeguarding fiscal sustainability ie: (i) reduces the proportion of resources
borrowed from the domestic financial markets and hence crowds in lending to the private sector;
(ii). ADF concessional resources supports the country to remain in a sustainable debt position; and
(iii) supports the growth and productivity of SMEs and increases their taxable capacity. This will in
turn support the mobilization of domestic resources, contributing to reduced aid dependency,
closure of the fiscal gap and thereby ensure sustainably in the implementation of the Government’s
public spending plan over the medium term.
Table 5: Projected financing requirements and sources, date (in RwF) 2015/16 2016/17 2017/18
Revised Budget Projected.
A Revenue and grants (including Budgetary grants) 1478.9 1601.9 1745.1
Of which Grants (excluding Budgetary grants) 374.7 365.3 370.7
B Total expenditure and net lending 1785 1848.8 1983.4
Of Which :Interest payments 56.1 65.5 71.6
Of Which : Capital expenditure 776.3 750.6 796.0
C Overall deficit (payment order ( A-B) 306.1 246.9 238.3
D Change in arrears (net reduction-) -26.4 -20.0 -13.2
E Overall Deficit /cash basis (A-B+D) 332.5 266.9 251.5
F Financing (G+H+I) 332.5 266.8 251.4
G External financing net 239.7 343.7 310.7
Of which - drawing 258.7 367.7 310.7
Total budgetary loan including AfDB contribution 139.8 172.2 141.8
AfDB Budgetary loan 17.2 40.5 30.4
Other budgetary loan 122.6 131.8 111.5
Project loan 118.9 195.4 195.5
Authorisation -19 -23.9 -26.6
H Domestic financing 92.8 -76.9 -59.3
Nominal GDP 6148.0 6811.0
Source: MINECOFIN
5.6.3 Rwanda is classified as an ADF country and therefore eligible for financing under the
ADF-Loan window”. Debt burden indicators remain positive and new borrowing has been
undertaken on terms conducive to long-term sustainability. Total public and publicly guaranteed
(PPG) debt (external and domestic) is estimated to increase from USD 2.52 billion (32.5% of GDP)
in June 2015 to an estimated USD 2.76 billion (33.6% of GDP) in June 2016. External debt
accounts for 74.8% of the total public debt and 59.6% of the total public debt is from concessional
sources by multilateral donors. The debt sustainability analysis in March 2016 indicated that
Rwanda’s debt metrics remain sustainable. The present value of debt to exports increased from
101.7% in December 2014 to 112.7% in December 2015 due to an increase in the level of non-
concessional borrowing to fund strategic investments in transport and tourism sector but remains below
the 200% threshold. The Government is implementing export promotion and domestic market
recapturing strategies to improve export revenues and reduce imports and the trade deficit. In
addition, a robust debt management strategy is in place to ensure prudent borrowing repayments.
VI – OPERATION IMPLEMENTATION
6.1. Beneficiaries of the programme
6.1.1 The beneficiaries of the programme are the whole population (about 11.5 million)
however, women and youth will be the direct beneficiaries of the programme. The youth and
women constitute about 40% and 52% of the total population respectively and own most MSMEs
establishment since 2014. Through increased investment in TVET skills and enterprise/business
development will enhance youth employability and productivity of MSMEs thus creating more job
17
opportunities. Also given the expected positive impact of reforms in areas of skills and
enterprise/business development, the entire population will indirectly benefit from the programme
through improved private sector performance. SEEP III will have positive impact on MSMEs
through increased access to finance and enhanced entrepreneurship skills through business advisory
services - women and youth are expected to benefit considering their high numbers in MSMEs.
Refinancing of the SACCOs will increase women and youth access to finance. Majority of women
and youth access credit through SACCOs. Continued support to CPCs and ICPCs will promote
youth in agri-business value and supply chain.
6.1.2 The programme will contribute to MSMEs growth to absorb new entrants. Enable
entrepreneurs to innovate and grow businesses in high-potential sectors. In addition, increased
access to finance and quality business advisory services will enhance private sector growth.
Improved skilled workforce will enhance productivity of the private sector especially MSMEs.
SEEP III being a budget support it will reduce the proportion of resources borrowed from the
domestic financial markets and hence crowds in lending to the private sector.
6.2 Programme’s impact on gender
6.2.1 Women will significantly benefit from SEEP III. The Programme will support women’s
increase in TVET and their participation in male dominated trades through deployment of Gender
Focal Point persons in public TVET schools. Women will continue to benefit from the loan
guarantee scheme under BDF. The government is committed to reach at least 50% of women
borrowers in SACCOs and MFIs by 2017. Women will also benefit from refinancing of SACCOs.
The start-up tool kits loan will enable female youth to be self-employed and create job
opportunities. The CPCs and ICPCs will help women especially those in cooperatives to transition
to on-farm paid labour. Through the programme, the government will generate knowledge on
‘Barriers affecting female enrolment in TVET’.
6.3 Impact on Environment and Climate Change
6.3.1 The Programme has been classified as category 3 in the Bank’s environmental
classification. It is not expected to generate any negative impacts on the environment and climate
change. SEEP III will promote quality of skills in key sectors including energy in order to enhance
private sector growth. The programme will support skills audit in a number of sectors including
energy. The programme also supports building skills in the energy sector especially off-grid,
methane and renewable energy.
6.4 Implementation, Monitoring and Evaluation
6.4.1 The Executing agency for the programme will be Ministry of Finance and Economic
Planning (MINECOFIN), in collaboration with the relevant sector ministries and institutions.
These include Ministry of Public Service and Labour (MIFOTRA), Ministry of Trade and Industry
(MINICOM), Workforce Development Authority (WDA), Ministry of Youth and ICT (myICT),
Ministry of Gender and Family Promotion (MIGEPROF), National Capacity Building Secretariat
(NCBS), Rwanda Development Board (RDB) and Business Development Fund (BDF).
MINECOFIN will have the overall responsibility for the management of the programme.
MIFOTRA through the NEP Coordination Secretariat will be responsible for monitoring and
reporting SEEP III outputs under the guidance of MINECOFIN.
6.4.2 Monitoring system: The programme will use the policy matrix (Appendix 4) and Joint
Sector Reviews (JSR) to monitor implementation of productivity and employment creation which
includes SEEP III activities. The NEP Secretariat will be responsible for reporting results on SEEP
III activities bi-annually. The supervision of SEEP III will be done bi-annually. The Bank will
18
actively participate and contribute to these reviews, including sector reviews and country dialogue.
In addition a joint Bank-GoR PCR will be prepared at the end of the programme.
6.4.3 Financial Management Arrangements: In line with Bank’s guidelines, the Paris
Declaration on Aid effectiveness and the subsequent declarations of the Accra Agenda for Action
and the Busan Declaration, the Sector Budget Support will follow the existing government financial
management systems which were also used for the implementation of SEEP II. The fiduciary risk
assessment concluded that the country’s PFM system is adequate to support the proposed Sector
Budget Support. The beneficiary sectors of Education, Labour and Civil Service, and Industry and
Commerce are part of the Integrated Financial Management Information System (IFMIS) system
and follow the same principles, utilize the same tools as the central PFM structure at MINECOFIN.
These sectors, just like the central Rwanda PFM system have been assessed as adequate for the
purpose of providing reasonable assurance on the appropriate use of Bank’s financing,
implementing, accounting and reporting for the SEEP III resources. The system in place ensures
outside of the consolidated central financial statements under the stewardship of MINECOFIN,
each Ministry/Sector produces its own annual financial statements separately. Further joint sector
reviews allow all stakeholders to ascertain funding requirements for a given sector, in line with the
approved budget law within the Medium Term Expenditure Framework.
6.4.4 Country Fiduciary Risk Assessment (CFRA): GoR continues to embark on a series of
transformative PFM reforms, which will lay forth a clear path for a sustained and inclusive growth,
while ensuring effective, comprehensive, and credible budget in the medium to long term. Over the
last decade, the government has implemented extensive PFM reforms that have yielded significant
benefits and produced tangible results both at the national and districts levels. Consolidating and
cementing sound PFM systems at all levels of government will continue to help to bolster service
delivery, whilst enhancing value for money in implementing government policies. These
achievements were made possible by ensuring compliance to the legal and regulatory framework,
improved transparency, enhanced debt management and external scrutiny and oversight.
6.4.5 The GoR’s leadership and ownership of its PFM reform agenda, provides a strong
foundation for sustainability as it recognizes the importance of the reforms as a key catalyst
for improved service delivery to its citizens. The PFM reform is underpinned under one of the
four strategic thematic areas under the EDPRS2 (2014-2018) ‘Accountable Governance’. The
current five (5) year PFM Strategy (2013-2018) has identified four (4) top priority areas: (i)
increasing domestic resource mobilization, (ii) scaling up of the implementation of IFMIS, (iii)
strengthening PFM systems at the sub-national level, and (iv) enhancing training,
professionalization and capacity building across all PFM disciplines. Furthermore the various
diagnostics show a generally well-performing PFM system at national level, maintaining fiscal
discipline, existence of a system that provide a sound basis for resource allocation according to
priorities and efficient service delivery. The consultative and collaborative budget preparation
process underpinned by a 3-year medium term macro-fiscal framework provides a sound basis for
budget implementation and fiscal management.
6.4.6 Disbursement and Funds Flow: On fulfilment of the disbursement conditions, the
proposed loan of UA 35.9 million will be disbursed in a single tranche to avail funds for the fiscal
year 2016/2017 Budget execution. Aligned with the provisions for SEEP III, the Bank will disburse
the funds into a foreign currency account opened by the GoR at the BNR to receive the proceeds of
SEEP III resources. The local currency equivalent of the funds deposited at BNR will be transferred
to the Consolidated Fund (Treasury Single Account) of the Government of Rwanda. From the
Consolidated Fund the funds will be transferred to the implementing sectors of Education and
Commerce by the Treasury in line with the country’s systems, budgetary priorities and voted
budgetary law. The budgeted expenditures will be accounted for exclusively within the financial
19
management system of the country (SmartFMS). GoR will make payments to various beneficiaries
from the Single Treasury Account, which is part of IFMIS. MINECOFIN, within a reasonable time
not to exceed thirty (30) days of the receipt of the funds, will transmit a letter to the Bank
confirming that the amount deposited in the foreign currency account had been credited to the
Treasury Account of Government. The letter should clearly indicate the exchange rate used for the
transaction.
6.4.7 Audit: In line with the Bank Policy on PBOs and the Paris, Accra and Busan declarations,
implementation, monitoring, and evaluation of the Programme will follow the country’s systems,
including external audit arrangements. Rwanda Office of the Auditor General (OAG) as part of its
mandate, audits each ministry/sector separately and issues an independent audit opinion on each
sector. Similarly, an audit opinion is expressed on the government wide consolidated financial
statements. SEEP III proceeds will thus be audited under the mandate of OAG. For 2014/2015
OAG issued unqualified audit opinions on the MINEDUC and MIFOFRA; while audit report for
MINICOM received an unqualified opinion in 2013/2014. For the Consolidated Financial
Statements for the year ended 30 June, 2015, OAG issued a qualified report. Improving the quality
and timeliness of financial statements is included as an action plan in the PFM Reform Strategy.
The audit findings and follow up actions are availed to the public, including development partners.
Specifically for SEEP III, MINECOFIN will transmit to the Bank four (4) audit reports according
to GoR audit calendar. These are the audit reports for the (i) MINEDUC Audit Report, (ii)
MINICOM Audit Report, (iii) MIFOTRA Audit Report, and (iv) Consolidated GoR audit report for
fiscal year 2016/2017.
6.4.8 Procurement: Procurement for SEEP III will be in accordance with the Rwanda Public
Procurement Law No. 12/2007 enacted in 2007 as revised by Law N°05/2013 of 13/02/2013. The
provisions of the revised procurement law are aligned with international standards and therefore
deemed acceptable. Rwanda has a procurement legislative framework that sustains procurement
principles of efficiency, accountability, value for money and transparency in the use of public
resources. Overall risk rating of Rwanda public procurement based on the assessment is “low”.
Annex 2.
VII – LEGAL DOCUMENTATION AND AUTHORITY
7.1. Legal Documentation
7.1.1 Legal Instrument. The legal instrument to be used for this operation will be an ADF Loan
Agreement with the Republic of Rwanda on the standard applicable terms.
7.1.2 Entry into force of the Loan Agreement. The entry into force of the Loan Agreement
shall be subject to fulfillment by the Borrower of the provisions of Section 12.01 of the General
Conditions Applicable to Loan Agreements of the Fund.
7.1.2 Before this loan proposal is presented to the Board for consideration, the Borrower shall
have provided evidence to the Fund, in form and substance acceptable to the Fund, of the fulfilment
of the prior actions outlined in Table 4.
7.2. Conditions Precedent to Disbursement of the Loan
7.2.1 Conditions precedent to the disbursement of the single tranche in FY 2016/17. The
disbursement of the single tranche of the Loan will be subject to: (i) Transmission to the Fund of the
bank details for a Treasury account with the National Bank of Rwanda for purposes of receiving the
resources of the SEEP III. In addition the government will be required to fulfill the following conditions
in Table 6 below:
20
Table 6: Disbursement Triggers Condition Required Evidence
Component 1: Skills and Employability
Study Report on Financing Model for
TVET validated by DG WDA.
Letter from MINECOFIN to the Bank transmitting a copy of the validated
feasibility study report on Financing Model for TVET.
Four Sector Skills Councils
operationalized in collaboration with
Private Sector.
Letter from MINECOFIN to the Bank transmitting a letter from NCBS
confirming signing of 4 MOUs with PSF on operationalization of 4 Sector
Skills Councils (Manufacturing, Tourism, ICT and Energy) and submitting
copies of MOUs signed with 4 Sector Skills Councils with PSF.
Component 2: Enterprise/Business Development
SME Growth Support Programme
developed and validated by RDB CEO.
Letter from MINECOFIN to the Bank transmitting a letter from RDB
confirming approval by the RDB CEO of the SME Growth Support
Programme.
Revised Strategy on Access to Finance for
Women and Youth validated by the
Permanent Secretary (PS) of MIGEPROF
Letter from MINECOFIN to the Bank transmitting a copy of the Revised
Strategy on Access to Finance for Women and Youth validated by the PS of
MIGEPROF.
7.3 Compliance with Bank Group Policies
7.3.1 The SEEP III programme complies with all applicable Bank Group policies and
guidelines including: (i) Policy and Guidelines on Programme-Based Operations (2012 and 2013);
(ii) The Bank’s Human Capital Strategy (2014-18);; (iii) the Bank’s 2013 – 2022 Strategy and
Private Sector Strategy, Job For Youth Strategy,
VIII – RISKS MANAGEMENT
8.1 Key risks to implementation and achievement of Programme objectives and measures for
the mitigation of the risks under the programme are outlined in the Table 7.
Table 7: Risk Management Risks Probability Mitigating measures
Regional political instability: Protracted instability in the region would be a risk to Rwanda’s social and economic stability diverting resources from critical investments for job-creation.
Moderate
Stakeholders (through the EAC) continued demonstration of strong commitment stakeholders to resolve political crises in region.
Fiduciary risk: A weak institutional capacity and high turn-over of qualified accountants in public sector could undermine PFM reforms
Moderate
Continued implementation of the integrated PFM reform programme and financial reporting to improve fiduciary environment.
Macroeconomic instability: Rwanda remains vulnerable to external shocks, which could include an unforeseen rise in import commodity prices, global commodity market downturn (minerals). These could affect GoR’s resource mobilization and commitment to reforms and investments.
Moderate
Continued implementation of the IMF PSI programme, and GoR’s commitment to sound fiscal and monetary policies, ongoing efforts to diversify the economy and exports base, and increased DRM. Donor commitment to enhance aid predictability.
Limited private sector development: Bottlenecks such as infrastructure deficit restrict private sector development. Majority of companies are small, affecting the absorption capacity of skills.
Moderate
Dialogue between Government and Private sector to address bottlenecks affecting private sector growth and competitiveness. Reforms to expand access to financial services and deepen financial markets.
IX – RECOMMENDATION
9.1 Management recommends that the Board of Directors approve the proposed loan of UA
35.9 million from the resources of ADF 13 for the Republic of Rwanda for the purposes and subject
to the conditions set out in this report.
I
APPENDIX 1: LETTER OF DEVELOPMENT POLICY
II
III
IV
APPENDIX 2: PRESS COMMUNIQUE BY IMF
IMF Executive Board Approves US$204 Million Stand-by Credit Facility for Rwanda and
Completes Fifth PSI Review Press Release No. 16/270
June 8, 2016
FOR IMMEDIATE RELEASE
On June 8, 2016, the Executive Board of the International Monetary Fund (IMF) completed the fifth review of Rwanda’s
economic performance under the program supported by the Policy Support Instrument (PSI)1 and approved an 18-month
arrangement under the Standby Credit Facility (SCF)2 for SDR 144.18 million (about US$204 million or 90 percent of
Rwanda’s quota). In completing the review, the Board granted a waiver for a minor and temporary no observance of an
assessment criteria on the non-accumulation of external arrears. The Board also approved the extension of the current PSI up
to the end of 2017.
The SCF will complement the authorities’ efforts to address growing external imbalances, by boosting reserves, with a first
SDR 72.09 million disbursement (about US$102 million) available immediately. Both near and medium term adjustment
policies to position Rwanda’s external position on a sustainable basis will form part of an overall strategy to support growth,
support poverty reduction and improve the country’s resilience to future uncertainties in the global economy.
The Executive Board approved the PSI for Rwanda on December 2, 2013 (see Press Release No.13/483). Following the
Executive Board’s discussion, Mr. Min Zhu, Deputy Managing Director and Acting Chair, issued the following statement:
“Rwanda’s continued strong performance under the Policy Support Instrument has created a platform for high growth and
steady poverty reduction. Growth in 2015 was buoyed by strong construction and services activity, while inflation remained
contained.
“Nevertheless, the situation has grown more challenging in recent months due to external shocks related to commodity prices
and tighter conditions for private inflows. Combined with the appreciation of the U.S. dollar, these have reduced export
receipts and put downward pressure on the exchange rate and official reserves.
“Accordingly, the authorities are taking decisive steps to address external imbalances; first and foremost, through using
continued exchange rate flexibility as the principal adjustment tool. This will be supported by tighter fiscal and monetary
policies to help curb demand for imports. Implementation of these policies should maintain GDP growth of around 6 percent
in both 2016 and 2017, while IMF financing under the Standby Credit Facility will help bolster reserves. The authorities are
also accelerating policies to diversify and promote higher value exports, which should help strengthen the country’s medium-
term growth prospects and its resilience to future shocks.
“Downside risks to growth and the program remain: for example, should further shocks to commodity prices or regional and
weather-related developments materialize, additional adjustment policies would need to be put in place rapidly.”
Annex
Recent economic developments
Despite the drop in global commodity prices, Rwanda’s growth remained strong in 2015, with a GDP rate of 6.9 percent.
Mining exports dropped by almost half in 2015, leading to a significant loss in foreign exchange earnings. As such, the
current account deficit has also worsened, from a deficit of 16.4 percent in 2014 to a deficit of 18.1 percent in 2015. The
growth outlook for 2016–17 has also become more uncertain. Consumer price inflation remained contained, averaging 2.5
percent for the year, though it increased in the second half of 2015 due to higher food prices and administrative increases in
utility prices. Monetary policy remained largely accommodative through end-2015 but was tightened in the first quarter of
2016.
Despite these developments, macroeconomic policy performance through December 2015 remained in line with the PSI
program objectives. Most targets were met and were also supported by structural reforms, notably changes to boost domestic
revenue collection, reduce liquidity overhangs, strengthen financial market supervision and functioning, and improve
domestic revenue collection. Planned measures to revise the property tax law and improve the timeliness of public reporting
on budget execution are taking longer than anticipated.
V
Program summary
The existing PSI and new SCF arrangement will support the country’s efforts to address growing external imbalances,
thereby supporting continued strong growth and durable poverty reduction. The SCF arrangement adds a financing
component to the existing PSI-supported program, which aims to promote private-sector led growth through safeguarding
macroeconomic stability, including through external sustainability, fiscal sustainability based on continued improvements in
domestic resource collection, low and stable inflation, and enhancing access to credit and deepening the financial sector.
VI
Appendix 3: Bank Group’s On-going Project Portfolio As of May 2016
Project Window Total
Approved
Dated
Approved
Closing
Date
Amt.
Disb
Dis. rate Undisbursed
amount TRANSPORT
1 Base Nyagatare 49,030,000 19-Nov-14 31-Dec-19 4,903,000 10.0% 44,127,000
SUB-TOTAL TRANSPORT 49,030,000 4,903,000 10% 44,127,000
ENERGY
2 Scaling Up Energy Access
Project
ADF Grant 11,871,000 26-Jun-13 31-Aug-18 1,548,790 13.0% 11,274,707
Scaling Up Energy Access
Project
ADF Loan 15,494,000 26-Jun-13 31-Aug-18 1,264,041 8.2% 15,494,000
SUB-TOTAL ENERGY 27,365,000 2,812,831 2.1% 26,768,707
SUB-TOTAL
INFRASTRUCTURE
76,395,000 7,715,831 10.1% 68,679,169
HUMAN DEVELOPMENT
3 Support to Skills Dev in
Science & Tech
ADF loan 6,000,000 11-Nov-08 31-Oct-16 3,159,153 52.7% 2,840,847
4 Regional ICT Centre of
Excellence
ADF Loan 8,600,000 14-Dec-10 30-Jun-17 2,077,939 24.2% 6,522,061
5 Support to the Energy Sector
(FAPA)
FAPA Grant 800,000 30-Nov-13 16-Dec-16 249,493 31.2% 550,507
6 EAC-CoE ADF Loan 12,500,000 26-Sep-14 30-Dec-19 35,325 0.3% 12,464,675
SUB-TOTAL HUMAN DEV 27,900,000 5,237,092 18.8% 22,662,908
MULTISECTOR
7 Support to EICV-4 ADF Grant 820,000 18-Dec-13 30-Mar-16 733,859 89.5% 86,141
8 SEEP II ADF Loan 49,000,000 7-May-14 30-Mar-16 49,000,000 100.0% 0
SUB-TOTAL MULTI-
SECTOR
49,820,000 49,733,859 99.8% 86,141
Total National Operations
- Public
154,115,000 62,686,783 40.7% 91,428,217
PRIVATE SECTOR
9 BRD(LoC) ADB loan 7,600,000 19-Nov-10 30-Jun-15 7,600,000 100.0% 0
BRD FAPA) FAPA Grant 480,789 1-Nov-11 30-May-16 454,158 94.5% 26,632
10 BK (LoC)) ADF Loan 12,000,000 19-Nov-10 30-Jun-15 12,000,000 100.0% 0
BK (FAPA) FAPA Grant 547,200 1-Nov-11 30-May-16 220,296 40.3% 326,904
11 Access Bank (LoC) ADB Loan 4,379,562 15-Jun-15 30-Sep-16 2,189,781 50.0% 2,189,781
Access Bank (FAPA) FAPA Grant 109,490 15-Jun-15 30-Sep-16 0 0.0% 109,490
12 Kigali Bulk Water ADB Loan 14,598,540 16-Dec-15 30-Dec-18 0 0.0% 14,598,540
SUB-TOTAL PRIVATE
SECTOR
39,715,581 20,054,158 50.5% 17,251,347
Total National Operations -
Public + Private 193,830,581 82,740,941 42.7% 111,089,641
MULTINATIONAL
13 Rwanda-(Nyamitanga-Ruhwa-
Ntendezi-Mwityazo Rd)
ADF grant 50,620,000 16-Dec-08 30-Jun-16 35,776,833 70.7% 14,843,167
14 Regional Rusumo Falls ADF Loan 25,384,000 23-Nov-13 31-Dec-18 16,298 0.1% 25,367,702
15 Ruzizi III ADF Loan 17,500,000.00 16-Dec-15 31-Dec-22
16 NELSAP Interconnection ADF grant 30,470,000 27-Nov-08 31-Dec-16 22,771,842 74.7% 7,698,158
17 Bugesera Multinational Project ADF loan 14,980,000 25-Sep-09 31-Dec-17 11,163,932 74.5% 3,816,068
18 Rubavu-Gisiza road Project ADF loan 40,525,000 27-Jun-12 31-Dec-17 6,711,352 16.6% 33,813,648
Rubavu-Gisiza road Project ADF grant
(UA4.525)
4,525,000 27-Jun-12 31-Dec-17 510,179 11.3% 4,014,821
19 Sustainable management of woodlands and restoration of
natural forests of Rwanda
ADF grant 4,015,424 29-Nov-11 31-Dec-16 3,401,674 84.7% 613,750
20 Lake Victoria Water & Sanitation
Prog.
ADF grant 15,110,000 17-Feb-10 31-Dec-16 7,437,992 49.2% 7,672,008
21 Payment and Settlement Systems Integration Project
ADF grant 3,690,000 5-Dec-12 1-Jun-17 553,500 15.0% 3,136,500
SUB-TOTAL
MULTINATIONAL
206,819,424 88,343,602 42.7% 100,975,821
GRAND TOTAL 400,650,005 171,084,543 42.7% 212,065,462
VII
Appendix 4– SEEP III OPERATIONAL POLICY MATRIX
Medium
term
objectives
Policy actions Institution responsible
Output indicators
Annual output targets
2013/14 2014/15 2015/16 2016/17 2013/2014 2014/15 2015/16 2016/17
EDPRS II: Productivity and Youth Employment
Component 1:Skills and Employability
1. Increased private sector participation in building employable skills and
attitude for jobs.
Increase the number of SSCs.
Develop and adopt a legal framework, procedure guidelines, and action plans for SSCs.
Establish more SSCs and operationalize them
Operationalize SSCs
NCBS, RDB No. of operational SSCs
9 SSCs established (0 operational)
Legal framework, procedure guideline and action plans approved and adopted
12 SSCs operationalized
4 MoUs signed for 4 SSCs between NCBS and PSF
Rollout review of curricula with private sector participation
Scale up roll-outing review of curricula with private sector participation
Scale up roll-outing review of curricula with private sector participation
Scale up roll-out review of curricula with private sector participation
WDA, MINEDUC
No. of TVET curricula designed in collaboration with private sector
39 59 76 88
- Train trainers on revised curricula
Scale-up training of trainers
WDA No. of TVET Trainers trained on revised modules
- - 650 220 (additional)
Develop strategy for promotion of private sector provision of professional internship and industrial attachment.
Develop strategy for promotion of private sector provision of professional internship and industrial attachment.
Implementation of the strategy.
Implementation of the strategy
NCBS, RDB, WDA
Strategy developed; No. of private sector enterprises hosting TVET trainees (companies and cooperatives)
Assessment on Internship Programme conducted; 5,636 private sector enterprises hosting TVET trainees
Strategy developed. 6,818 private sector enterprises hosting TVET trainees
Strategy approved and implemented 12,314
private sector enterprises hosting TVET trainees
13,500 private sector enterprises hosting TVET trainees
No. of trainees benefited from apprenticeship and IBT
- - 1568 2,568
Conduct Skills Audit in five economic sectors
NCBS Skills audit report produced and validated
- - - Report and implementation plan validated
VIII
Medium
term objectives
Policy actions Institution
responsible
Output
indicators
Annual output targets
2013/14 2014/15 2015/16 2016/17 2013/2014 2014/15 2015/16 2016/17
Conduct feasibility study on financing model for TVET
Feasibility study on financing model for TVET finalized
WDA Feasibility study Report and implementation validated
- - Draft report Report and implementation plan validated
2. Increased availability of
quality vocational
skills
Review the Law of Establishing WDA
Revise the Law of Establishing WDA
Draft Bill on revised Law of Establishing WDA approved by Cabinet
Revised Law Establishing WDA submitted to Parliament
WDA, MINEDUCMINIJUST
Revised Law of Establishing WDA
Review of the Law of Establishing WDA conducted
Draft revised Law of Establishing WDA
Draft bill on revised Law of Establishing WDA approved by Cabinet & submitted to Parliament
-
Develop TVET Policy and Strategy
Develop TVET Policy and Strategy
Implement TVET Policy and Strategy
Implement TVET Policy and Strategy
WDA, MINEDUC
TVET Policy and Strategy developed and implemented; No. of TVET graduates (including TSS, VTC, IPRC, % female)
Draft TVET Policy and Strategy; 26,826 TVET graduates (44.5% female)
TVET Policy and Strategy approved; 35,000 TVET graduates (47% female)
TVET Policy and Strategy implemented; 45,000 TVET graduates (50% female)
95,000 TVET graduates
No. of trained out of school unskilled and semi-skilled
- - 14,819 19,000
Rollout the enrolment of TVET trainees in industrial attachment programs
Scale up roll-outing the enrolment of TVET trainees in industrial attachment Programmes
Scale up roll-outing the enrolment of TVET trainees in industrial attachment Programmes
Scale up roll-outing the enrolment of TVET trainees in industrial attachment Programmes
WDA No. of TVET trainees enrolled in industrial attachment programmes (disaggregated by gender)
36,919 39,337 41,000
Develop the National Apprenticeship Policy
Approve and implement the National Apprenticeship Policy
Implement National Apprenticeship Policy
MINICOM, MIFOTRA
National Apprenticeship Policy developed and approved
- Draft National Apprenticeship Policy
Workplace Learning Policy approved and implemented
Workplace Learning Policy implemented
Develop training manual and
Test and validate training
Rollout training and
WDA, MINICOM
Training manual and modules
6,100 trained, 2,100 getting
1 Training manual and 5
15,000 trained, 70%
17,000
IX
Medium
term objectives
Policy actions Institution
responsible
Output
indicators
Annual output targets
2013/14 2014/15 2015/16 2016/17 2013/2014 2014/15 2015/16 2016/17
modules of short term apprenticeship; Train and provide toolkits to unskilled and semi-skilled people
manual and modules for short term apprenticeship; Rollout training and providing toolkits to unskilled and semi-skilled people
providing toolkits to unskilled and semi-skilled
developed; Number of unskilled and semi-skilled people trained, certified and provided with toolkits (disaggregated by gender)
toolkits modules developed; 10,000 trained, 70% certified, 5,000 provided with toolkits
certified, 13,500 provided with toolkits
Conduct Study on Challenges and Barriers affecting female enrolment in TVET
WDA Study report produced and validated; Action plan developed and implemented
- - - Report and recommendations implementation plan validated
Placement of Gender focal point persons in TVET public schools
Number of Gender focal point persons placed in TVET public schools
- - 4 34
Component 2: Entrepreneurship Development
Enhancing MSMEs competitiveness
Professionalize Business Development Advisors (BDAs)
Professionalize BDAs
Professionalize BDAs
Professionalised BDAs embedded in SME Growth Support Programme
RDB, Districts
Certification programme established. No. of BDAs trained and certified at level 1 and 2 (disaggregated by gender)
0 Certification programme established. 892 BDAs trained and certified
1082 BDAs trained and certified
Professionalise BDAs a component in SME Growth Support Programme.
Expand coverage of BDAs at local level
Expand coverage of BDAs at local level
Expand coverage of BDAs at local level
Continued implementation
MINICOM Two BDAs attached to each Umurenge (sector)
416 BDAs 624 BDAs 832 BDAs -
BDA reporting software developed and tested
- - Software developed
Software developed and tested
X
Medium
term objectives
Policy actions Institution
responsible
Output
indicators
Annual output targets
2013/14 2014/15 2015/16 2016/17 2013/2014 2014/15 2015/16 2016/17
Equip and upgrade technology in ICPCs and CPCs
Rollout to equip and upgrade technology in ICPCs and CPCs
Scale up roll-out to equip and upgrade technology in ICPCs and CPCs
Roll-up to operationalize CPCs and ICPCs
MIFOTRA, MINICOM
No. of ICPCs and CPCs equipped and operationalized
2 ICPCs, 1 CPCs
9 ICPCs, 2 CPCs
12 ICPCs, 3 CPCs
15 CPCs, 6 CPCs
Conduct an assessment on the impact of local tax fixing and administration on MSMEs
Conduct assessment on the impact of local tax fixing and administration on MSMEs.
Develop Action plan
MINICOM Decentralized tax system for MSMEs harmonized and simplified
Draft Concept Note approved
Assessment TORs approved
Inception report
Action Plan developed to harmonize and simplify decentralized taxes for MSMEs
2. Improved access to financial services for MSMEs
Conduct a study to assess skills gap and existing opportunities for women in all districts
Develop an action plan to implement the recommendations of the study
Implementation of recommendations
Revision of Strategy on Access to Finance for Women and Youth
MIGEPROF Study report produced and validated; Action plan developed and implemented
Study finalized and validated
Action plan to address skills and economic opportunities developed and adopted
Revision of strategy on Access to Finance for Women and Youth
Revised Strategy on Access to Finance for Women and Youth validated
Develop guidelines on provision of seed start-up capital for youth and women
Finalize and adopt guidelines on provision of seed start-up capital for youth and women
Implement the guidelines on provision of seed start-up capital for youth and women
MINICOM Guidelines developed and adopted; No. of start-up MSMEs for youth and women operational and accessed to finance
2,878 start-up MSMEs for youth and women accessed to finance
Guidelines developed and adopted. 15,000 accessed to finance
11,435 accessed to finance
15,000 access to finance
Replenish BDF Guarantee scheme
Replenish BDF Guarantee scheme
Replenish BDF Guarantee scheme
Replenish BDF Guarantee scheme
MINECOFIN No. of SACCOs re-capitalized by BDF
- - 16 SACCOs refinanced
31 SACCOs re-financed
Conduct feasibility study for establishment of a SME growth Fund
MINECOFIN Study report produced and validated
- - Report produced and validated
Component 3: Enhanced Coordination
XI
Medium
term objectives
Policy actions Institution
responsible
Output
indicators
Annual output targets
2013/14 2014/15 2015/16 2016/17 2013/2014 2014/15 2015/16 2016/17
Improved policy and
coordination mechanisms
of job creation
interventions
Develop and approve a consolidated NEP
Implement National Employment Programme (NEP
Implement NEP MIFOTRA A consolidated NEP approved and implemented
NEP developed and approved
Working technical secretariat for NEP established
Gender sensitive M&E system developed
Develop coordination framework of business development programs at district level
Establish Business Development and Employment (BDE) Units at district level
Operationalize BDE Units at district level
MIFOTRA / MINICOM
Coordination framework developed and approved; No. of BDE Units established and functional
Coordination framework developed and approved
12 BDE Units established
12 BDE Units functional
Design a consolidated database of potential youth and women entrepreneurs
Set up the database
Update the database
MYICT Database established and functional
Database designed
Database operational
Database updated
Develop a mechanism to measure the survival rate of SMEs
Implement mechanism to measure the survival rate of SMEs
NISR, MINICOM
Mechanism to measure the survival rate of SMEs established
Assessment tools adopted
Statistics system set up
