Annex I 1. Identification Title/Number Total cost Aid method / Method of implementation Sector Budget Support Social Protection FED/2010/22173 EU contribution: EUR 20 million (5.7 % of NIP) Sector budget support (centralised management) DAC-code 43040 Sector Rural Development 2. Rationale and country context 2.1. Country context and rationale for SPSP 2.1.1. Economic and social situation and poverty analysis Between 2005 and 2009, real Gross Domestic Product (GDP) per capita increased by around 5.5% per year. However, according to the latest National Institute of Statistics household living conditions survey in 2006, the proportion of the population living below the national poverty line only decreased from 60.4% in 2000 to 56.9% in 2006 and progress was concentrated in urban areas. Nevertheless, the social sectors have generally seen a significant improvement in outcomes. In the health sector, the Rwanda Interim Demographic and Health Survey 2007/08 highlighted a number of key achievements, including a decrease in infant mortality rates, and increases in prenatal cares and post-natal services, immunization for infants, and use of modern contraceptives. Equally, Rwanda has made incredible progress in education since the devastating impact of the 1994 genocide. Since 1998, enrolments have grown by an average of 4% per annum bringing the gross enrolment rate to 128% and net enrolment rate to 94% in 2008. Development Partners have expressed concerns around a number of events that occurred in 2010 which, taken together, have raised doubts about the situation of democratic governance and human rights in Rwanda. 2.1.2. National development policy The Government of Rwanda adopted the 2nd Poverty Reduction Strategy Paper in 2007, the Economic Development and Poverty Reduction Strategy (EDPRS), covering the period 2008-2012. The document identifies four main priorities: (i) increase economic growth, (ii) reduce population growth, (iii) tackle extreme poverty and (iv) ensure greater efficiency in poverty reduction. The EDPRS is strongly owned by the GoR and implementation is monitored through annual EDPRS Progress Reports. Progress is summarised in a Common Performance Assessment Framework matrix. The responsibility of monitoring overall progress in EDPRS implementation lies with the Development Planning Unit in the Ministry of Finance and Economic Planning, supported by the National Institute of Statistics to ensure the quality of reported information. The Donor Performance Assessment Framework consists of a set of indicators drawn from international and national agreements relating to effective delivery of aid, and forms the basis for government s assessment of donor performance. In an effort to EN 1 EN
strengthen aid effectiveness, Rwanda and its development partners have agreed a division of labour. 2.2. Sector context: policies and challenges Sector Context: Poverty in Rwanda is concentrated in rural areas as well as in certain socioeconomic groups. In the initial Ubudehe 1 survey of the mid-2000s, communities identified widows, the landless, the sick, the elderly and child-headed households as being the poorest and the most vulnerable categories of the population. Major vulnerability risks were linked to nutrition, health for children in the 0-4 age bracket, increasing unemployment, and the effects of war and genocide. Until recently, a plethora of interventions, accounting for up to 10% of the national budget, were aimed at social protection initiatives. However, in line with the objectives spelled out in the EDPRS, a single, coherent strategy was designed in the course of 2009 and 2010, resulting in a coherent and credible Social Protection Strategy that was adopted at technical level in May 2010 and is now awaiting adoption by Cabinet. Sector budget and its medium term financial perspectives: The Social Protection Strategy includes a clear five-year budget for 2010/2011 to 2014/2015, broken down into core and complementary programmes. Core programmes include Old Age Grants, other social transfers, and public work programmes. The complementary programmes include the provision of financial services and Ubudehe Community Projects. Table 1: Financial projections in the Social Protection Strategy 2010-2015 (in EUR million) Global budget: 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015 Core Programmes 18.2 18.5 29.4 44.2 54.4 Complementary Programmes 12.1 8.2 8.4 2.3 2.3 However, further work is required to consolidate different budget lines in the Annual Finance Law, where a large number of social protection related expenditures are captured under different ministries, some of which are not considered in the social protection strategy. Coordination in the sector between the Government, development partners, and non state actors takes place in the social protection sector working group, which is a forum in charge of coordinating the implementation of the Social Protection Strategy and monitor progress. The working group meets on a regular basis and is chaired by the Ministry of Local Government, Community Development and Social Affairs (MINALOC) and co-chaired by the UK Department for International Development (DfID). Twice a year the Social Protection sector working group convenes for the Joint Sector Review, once to assess progress achieved in the previous year and once to agree on the direction of future policy in terms of budgetary allocations and targets to be achieved in the coming years. The discussions at sector level feed into the discussions of the overall Joint Budget Support Reviews. Following the validation of the new Social Protection Strategy, the Government and other working group members, 1 Ubudehe is a programme supported by the EU and implemented at the lowest administrative level namely "umudugudu" (village). It is based on household micro-projects and collective actions through a Community participative traditional approach called Ubudehe. Two campaigns were carried out for the period of 2005 to 2008. EN 2 EN
including the Delegation of the European Union, are committed to signing a Sector-wide Approach Memorandum of understanding in the near future. Institutional capacity: While the implementation of the social protection strategy is coordinated at central level, actual implementation is done at district level. Since 2006, Rwanda has initiated a decentralization process with increasing devolution of authority and transfer of human and financial resources to local authorities at district and sector level. The Government is taking corrective actions to address identified weaknesses in monitoring and reporting. Performance monitoring: Implementation of the Social Protection Strategy will be monitored by the sector working group (SWG). MINALOC has set up and staffed a Social Protection Unit in order to meet the needs of the programme. Each district will have a specific unit of 3 Social Protection specialists. An electronic management information system (MIS) is under development. Macroeconomic Framework: Rwanda has registered strong economic growth in the recent past, averaging 8.7% in real terms over the five years 2005-2009. Rwanda also established a track record of sound macroeconomic management, evidenced by a series of successful reviews under the Poverty Reduction and Growth Facilities (PRGF) of the International Monetary Fund (IMF). In June 2010, the Board of the IMF approved a new three-year Policy Support Instrument for Rwanda. Public Financial Management: In 2008 the Government completed a Public Expenditure and Financial Accountability (PEFA) assessment, which observed that the Public finance management (PFM) reform achievements over the last decade in Rwanda have been wideranging and impressive given the circumstances, resources and capacities of the country during this period and the nature and extent of the reform challenges facing the Government. Following the PEFA assessment, the Government finalised a PFM Strategy in September 2008, which has guided PFM reforms since then. Annual Action Plans are updated every year and discussed and approved by the PFM Steering Committee, which convenes on a regular basis. A second PEFA assessment is currently ongoing, with a draft report expected to be available for discussion at the latest by October 2010. The Government has expressed its commitments to update the PFM reform strategy following the PEFA exercise. 2.3. Eligibility for budget support Rwanda meets all eligibility conditions to receive sector budget support and is expected to maintain these conditions for the duration of the proposed programme. A well defined Social Protection Policy and a Social Protection Strategy due to be adopted by the Government are in place, overall macroeconomic management is sound, and a credible and relevant programme to improve the management of public finances is in place. 2.4. Lessons learnt From the Government's perspective, the Social Protection Strategy incorporates lessons learned from different social protection activities financed in the past, including labour intensive public works and the EU financed Ubudehe programme. From the EU perspective, the proposed programme builds on the positive experience gained with 9 th EDF financed projects, in particular: (1) EUR 34 million Decentralized Programme for Rural Poverty Reduction (DPRPR), (2) EUR 3 million support programme for the social and economic reinsertion of demobilised soldiers in the city of Kigali (PARES), (3) EUR 4.4 million budget support to the EN 3 EN
Vision 2020 Umurenge Programme, and (4) various labour intensive projects for close to EUR 4 million. 2.5. Complementary actions The proposed programme is complementary to the already ongoing 10 th EDF EUR 20 million sector budget support programme for decentralized agriculture, which is the other main intervention in the focal sector rural development of the 10 th EDF national indicative programme. Other donor support for social protection will come from DfID (sector budget support of GBP 15 million for 2011-2013), SIDA (contribution to the VUP, Vision 2020 Umurenge Programme, of SEK million 95 2 for 2010-2012) and the World Bank (an annual contribution of USD 5 million tacked onto their general budget support programme). Significant capacity building support is being provided by DfID and the World Bank, therefore no complementary support is envisaged from the EU sector budget support programme. 3. Description 3.1. Objectives The overall objective of the sector budget support programme is to support the Government of Rwanda in putting in place policies to eradicate extreme poverty. The specific objective is to contribute to the implementation of the Government's Social Protection Strategy. The global objective of the Social Protection Strategy is to build a Social Protection System that tackles poverty and inequality, enables the working poor to move out of poverty, helps improve health and education among all Rwandans, and contributes to economic growth. The specific objectives are to: (1) establish a system of cash transfer programmes; (2) extend access to health and education services to all, but in particular to the poorest and most vulnerable families and individuals, especially children; (3) strengthen systems for the delivery of social protection, in particular by establishing a nationwide and comprehensive electronic management information system; (4) deliver complementary programmes that enable vulnerable families to access credit facilities and strengthen the cohesion of communities; (5) begin to extend contributory social security mechanisms to the informal sector; and (6) build leadership and capacity across government on social protection, and strengthen the non-governmental actors to national priorities. 3.2. Expected results and main activities The social protection programmes will have six major outputs: (1) a system of non-contributory cash transfers established that provides an economic stimulus to local markets, income support for the most vulnerable members of society; (2) a Social Security Fund for Rwanda (SSFR) extended to informal sector workers and strengthened benefits from labour legislation; (3) leadership and capacity on Social Protection strengthened across government; (4) evidence generated on Social Protection in Rwanda that feeds into policy debates and is effectively disseminated; (5) effective and efficient systems developed for the delivery of Social Protection in Rwanda and (6) programmes implemented that complement Social Protection by enabling people to move out of poverty and improving community cohesion. The main activity associated with the sector budget support programme is the pursuit of policy dialogue. 2 Approximately EUR million 10 EN 4 EN
3.3. Risks and assumptions The main assumption is that the Government maintains its support to the current pro poor strategies and their decentralized implementation methods in coherence with the EDPRS. Considering the strong ownership displayed so far, the risk in this area is judged to be minimal. The risks linked to the other eligibility criteria on macroeconomic stability and commitment to PFM reforms are equally judged to be minimal. As a result of the strong will to promptly implement pro-poor strategies, insufficient human resources especially for monitoring and evaluation activities may partially affect performance of several Government interventions. These issues are addressed in the strategy document and solutions are proposed. Nevertheless, any programme involving cash transfers will have inherent fiduciary risks. Electronic MIS and payment on the bank accounts of the beneficiaries will allow appropriate control and monitoring. Despite the fact that significant experience has been gained in these areas, financial institutions are not yet uniformly developed and represented throughout the country, which may reduce the regularity and predictability of cash flow and payments. Both risks will be mitigated by appropriate planning of cash transfers and a strong monitoring system as indicated in the Social Protection Strategy. 3.4. Stakeholders The Government of Rwanda through its ministries, agencies and local governments collaborate with development partners, civil society organizations and non-governmental organisations (NGOs) as key stakeholders in the implementation of the Social Protection Strategy. MINALOC is the ministry in charge of the social protection sector, other ministries such as the Ministry of Education, the Ministry of Health, the Ministry of Family and Gender Promotion and the Ministry of Finance are key partners in implementing the Social Protection strategy. The sector involves other government institutions like the Common Development Fund, the Genocide Survivors Assistance Fund, and decentralised institutions (districts, sectors, cells and villages). The main development partners are the World Bank, DfID, SIDA and the United Nations Children's Fund (UNICEF). Members of Civil Society organisations and NGOs are also key stakeholders: Save the Children; CARE, CCOAIB (a local network of local NGOs - Conseil de Concertation des Organisations d'appui aux Initiatives de Base). The beneficiaries include groups of needy people who are landless and unable to work; the elderly, genocide survivals, the disabled, vulnerable children and single parents. 3.5. Crosscutting Issues The Social Protection Strategy takes into consideration gender and HIV issues, and MINALOC has on board key partners to ensure that gender and HIV are mainstreamed during programme implementation. It is the intention to collection information on key results indicators on a gender-disaggregated basis. Where relevant, public works programme are subject to an environmental screening process. Ultimately, the programmes will improve health and nutrition conditions of beneficiary families and in particular of children. EN 5 EN
4. Implementation issues 4.1. Method of implementation A Financing Agreement will be signed between the Commission and the Government of Rwanda for a direct untargeted budget support programme. 4.2. Procurement and grant award procedures The standard public financial management provisions of the Government of Rwanda are applicable. For evaluations and audits, all contracts implementing the action must be awarded and implemented in accordance with the procedures and standard documents laid down and published by the Commission for the implementation of external operations, in force at the time of the launch of the procedure in question. 4.3. Budget and calendar The foreseen operational duration is 60 months from the signing of the Financing Agreement. Sector budget support disbursements consist of fixed and variable tranches, as summarised in the indicative table below. The sector budget support will be paid into the consolidated treasury account and disbursed over the four Government of Rwanda fiscal years 2011/2012 up to 2014/2015. Table 2: indicative calendar for disbursements (in EUR million) Sector Budget Support - Of which fixed tranche - Of which variable tranche 2011/ 2012 4 4-2012/ 2013 5 3 2 2013/ 2014 6 3 3 2014/ 2015 5 3 2 Total 20 13 7 4.4. Performance monitoring and criteria for disbursement A fairly robust monitoring system is already in place for some of the social protection initiatives. These will be strengthened further through the establishment of an electronic and nation-wide management information system. The Social Protection SWG is responsible for oversight of monitoring of all social protection programmes, in particular through the bi-annual joint sector reviews. The release of the fixed and variable tranches will be linked to a set of general conditions: (1) satisfactory progress in the implementation of the sector policy including appropriate funding by the Government, (2) satisfactory progress in the implementation of the programme to improve public financial management; and (3) satisfactory progress in the maintenance of a stability oriented macro-economic policy. The amount to be released in the variable tranches will be based on the assessment of the following performance indicators: Percentage of eligible households granted public works in sectors of the Vision 2020 Umurenge Programme (VUP) 3 sectors; 3 The Vision 2020 Umurenge Programme is one of the 3 EDPRS flagship programmes and is aimed at eradicating extreme poverty by 2020. Vision 2020 is the title of Rwanda's long term development strategy, while Umurenge is the Kinyarwanda word for sector, the lowest administrative unit in Rwanda's decentralisation structure. The title captures the intention of realising Vision 2020 goals in some of the poorest sectors in Rwanda within a short time span by concentrating efforts. The programme has three components: (1) public works to build community assets and create off-farm employment; (2) credit packages to tackle extreme poverty as well as to foster entrepreneurship and off-farm employment opportunities; and (3) direct support to improve access to social services or to provide for landless households with no members qualifying for public works or credit packages. EN 6 EN
Percentage of eligible households granted direct support in VUP sectors; Number of communities implementing priority projects 4.5. Evaluation and audit In collaboration and co-ordination with the other development partners, the EU may request the Social Protection Sector Working Group to evaluate periodically the sector policies, action plans, and strategic issues. If required, the EU may contribute to that evaluation with funds from the Technical Cooperation Facility. Since the financial support granted by this sector budget support programme will be of an untargeted nature, the only financial audit evidence requested will be the annual audit report of the State Budget accounts by the Rwanda Office of the Auditor General. 4.6. Communication and visibility The sector budget support programme for Social Protection will be summarised on the website of the EU Delegation to Rwanda. This action will also be publicized through the annual visibility programmes for EU cooperation activities for Rwanda, and the visibility of the EU will be promoted through a signing ceremony of the Financing Agreement and a press release for the annual sector budget support disbursements. The Social Protection Strategy rests heavily on the VUP programme, but complements it in a number of important areas. EN 7 EN
Annex II 1. IDENTIFICATION Title/Number Trade, Regional Integration and Business Development Support Programme (TRIBS) CRIS 022-184 Total cost Total cost: EUR 8 577 000 EU contribution: EUR 6 000 000 (1.7% of NIP) Two components are jointly co-financed with the International Finance Corporation (IFC) and the Japan International Cooperation Agency (JICA) (EUR 1 869 000), the Government of Rwanda (EUR 0.245 million), and private sector beneficiary co-payments (EUR 0.463 million) Aid method / Project approach Method of partially decentralised management implementation joint management with IFC DAC-code 25010 Sector Business support services and institutions 2. RATIONALE 2.1. Sector context The Government of Rwanda considers the private sector a key player in the country s development. Rwanda s aspirational strategy, Vision 2020, has six pillars, the third of which envisages the development of an efficient private sector spearheaded by competitiveness and entrepreneurship, while the sixth pillar recognises regional and international economic integration as a crucial element of achieving the vision. The Economic Development and Poverty Reduction Strategy (EDPRS), which was published in 2007 and translates Vision 2020 into medium-term objectives also shows Rwanda s commitment to the productive sectors and growth. One of the three flagship programmes under the EDPRS (Growth for Jobs and Exports) aims to relax key constraints on growth by systematically reducing the operational costs of business. Rwanda has recently been recognized as top reformer worldwide and has significantly improved its ranking on the Doing Business 2010 index, given its significant legal reform achievements. However, further work is required to consolidate and implement the reforms, and much still needs to be done to create a vibrant private sector. One important required transformation is a clearer focus on Small and Medium Size Enterprises (SMEs) as well as Micro and Small Scale Enterprises (MSSEs). The 2004 World Bank study of MSSEs in Rwanda reported thousands of formal and informal MSSEs (nearly 70,000), about 100 to 200 SMEs employing more than 30 people, and under 50 large scale enterprises employing more than 100 people. The small and medium enterprises thus form the backbone of the Rwanda economy and are potential employment as well as revenue generators. One of the sectors holding great potential to develop the local enterprises and communities through direct employment and increased business opportunities to local enterprises is Tourism, which is already one of the main foreign exchange earners for Rwanda. The development of the private sector is heavily influenced by the ongoing process of regional integration. Rwanda, like Kenya, Burundi, and Uganda, is a member of both the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA), while Tanzania is a member of EN 8 EN
both the EAC and the Southern African Development Community (SADC). An EAC Customs Union was established in 2005, culminating in the application of a common external tariff effective from July 2009. Equally in 2009, a Common Market Protocol was signed and is expected to be effective starting July 2010. This will create a significant challenge to harmonise a number of policies, laws, rules and regulations, as well as a need to monitor their wider impact on the Rwanda economy over the years to come. The Government of Rwanda is strongly committed to the process of EAC integration. 2.2. Lessons learnt Under European Development Fund 9 (EDF 9), support to trade and private sector development was channelled through the Rwanda Institutional Support to Economic Management (RISEM) programme, which also included support to Public Financial Management, the National Authorising Officer (NAO) Support Unit, and Statistics. This grouping of relatively different interventions into a single Financing Agreement somehow thwarted the objectives in the different areas. Moreover, all trade related components were supposed to be implemented through a single programme estimate under the Ministry of Commerce. The resulting bureaucracy in terms of long visa chains proved an important obstacle to programme implementation. This challenge was overcome by aligning programme estimates with institutional structures. The current programme will therefore only focus on trade, regional integration, and business development, and limit the number of institutions directly involved in the management of the programme to two the Ministry of Trade and Commerce (MINICOM) and the International Finance Corporation (IFC). In the areas that will be supported, past interventions by either the European Union (EU) or other donors have yielded a number of important lessons. As regards the reform of the investment climate, an area supported by the IFC, strong political commitment at the highest levels and the clarity of the reform objective (the doing business indicators) have been very powerful in keeping the programme focussed and on schedule. At the same time, the important gains made during the first phase of support have created significant political appetite for greater and more fundamental reforms. In the area of business development services (BDS), the support builds on the BDS centres that have been developed by the Rwanda Private Sector Federation with support under RISEM. The mandate for provision of business development services has been transferred from the Private Sector Federation to the Rwanda Development Board (RDB). The choice of working with the IFC is based on the need to consolidate the currently existing Government of Rwanda supported BDS programmes, and help RDB to implement a framework that encourages the private sector to start delivering such services. The IFC s Entrepreneurship Development Programme is an existing programme operating with success, and fits within this framework. 2.3. Complementary actions The programme is complementary to the Rwanda Window of the UK Department for International Development (DfID) TradeMark East Africa (TMEA) programme 4, which seeks to achieve greater regional integration and improved trade competitiveness in Rwanda and East Africa. More specifically, it targets the following outputs: (1) increased capacity for negotiation 4 The programme is also cofinanced by SIDA. EN 9 EN
and implementation of EAC regional integration in Rwanda; (2) improved transport and trade facilitation processes; (3) enhanced capacity and participation of the private sector and civil society to engage in regional integration processes; and (4) improved monitoring and evaluation of regional integration. The TMEA programme currently has a budget of GBP 25 million. Moreover, discussions are ongoing to support the TMEA programme with funds from the 10 th EDF regional fund through the RISP2 programme. Because of the significant funding provided by TMEA, the current project will not include direct support to the Ministry of the East African Community (MINEAC). However, given the impact of regional integration on trade and business development, the support provided to MINICOM can be deployed to address questions of regional integration when needed. The programme is also complementary to other programmes active in Rwanda like ProInvest that support intermediary organisations for investment promotion, and the Centre for the Development of Enterprise whose objective is to ensure the development of professional enterprises in the private sector. Other existing programmes include the EU-ACP TradeCom programme which provides trade related technical assistance to Africa Caribbean and Pacific (ACP) countries and the EU sanitary and phytosanitary (SPS) related technical assistance to developing countries for capacity building for compliance with SPS standards. 2.4. Donor coordination The interventions in the domain of trade, regional integration, and business development are scattered among different institutions, and to date there is no sector working group that brings it all together. One sector working group exists for private sector development, but so far discussions are largely limited to the affairs of the Ministry of Trade and Commerce (MINICOM). As regards the IFC programmes, funding discussions are still ongoing, but interest to provide funding has been expressed by DfID, German Development Cooperation (GTZ), the Dutch Government, and the Japan International Cooperation Agency (JICA). Regional integration, private sector development, and joint funding mechanisms are excluded from the division of labour exercise, because the division of labour exercise focuses on national issues. Private sector development is an area in which the Government would like to attract more funding, and joint funding mechanisms already lead to reduced transaction costs. 3. DESCRIPTION 3.1. Objectives The overall objective of the programme is to contribute to private sector led-growth which reduces poverty in Rwanda. The purpose of the programme is to support trade, regional integration and private sector development in Rwanda. 3.2. Expected results and main activities Component 1 Support to MINICOM: The expected result is enhanced capacity of the Ministry of Commerce to lead, coordinate and monitor the implementation of Rwanda s trade policy and strategy, and advise on economic aspects of regional integration matters. Activities include support (i) to create and sustain a business environment conducive to growth and the protection of consumers; (ii) to increase the share of services and manufacturing in Gross Domestic Product (GDP); (iii) to support private sector growth and job creation with a focus on SMEs; (iv) to promote trade integration into regional and global markets with a focus on improving Rwanda's trade balance; and (v) to build an effective human resource base and institutional capacity for delivery. EN 10 EN
Component 2 Rwanda Entrepreneurship Development Programme: The expected result is increased growth and competitiveness of the small and medium enterprises sector and enhanced local entrepreneurship in Rwanda. Activities include: improve the performance of SMEs using a sectorwide and value chain approach; increase support to strengthen the SME Center for Business Solutions specifically to rollout the incubation component; strengthen the SME linkages in the Hotels and Tourism Industry. Component 3: Rwanda Investment Climate Reform Programme - Phase II: The expected result is a consolidation of the investment climate gains achieved in previous years and capitalize on these achievements through increased focus also on supporting new investments. Activities would be aimed at supporting investments in key clusters (identification of specific and short mid-term investment opportunities linked to strategic sectors; conducting competitiveness assessment and investor targeting; action-oriented cluster-level public-private dialogue in support of building competitive clusters and unlocking investment opportunities; investor servicing and aftercare to accelerate operationalization of registered projects and promote reinvestments and expansion of investments by companies in key target sectors) and sustaining improvements in the Investment Climate, especially with respect to Trade Logistics, Business Taxation, Doing Business, reform implementation and e-services. 3.3. Risks and assumptions At the aggregate level, trade and private sector development is contingent on a stable national and regional security situation, and it is assumed that the Government will continue the regional integration process that has been started. MINICOM has recently undergone a restructuring exercise and a number of posts at Director level have remained vacant so far, as no suitable candidates could be identified willing to work for the proposed salary levels. A major recruitment exercise is currently underway to at least attract young graduates, who will further learn on the job. It is assumed that the ministry will succeed in at least attracting a minimum level of human resources which will allow an effective functioning of the ministry, and that can be targeted by the institutional strengthening component. RDB has equally been restructured recently. It is assumed that IFC will be able to adjust to the constantly changing institutional environment. 3.4. Crosscutting Issues Component 2 will especially target the youth and women, as survey information highlights that 85% of business managers fall in the range of 25 to 49 years of age and more than 58% of women operate in the informal sector. Component 3 directly seeks to improve aspects of economic governance, an integral element of good governance. 3.5. Stakeholders Implementing the Economic Development and Poverty Reduction Strategy (EDPRS) growthenabling policies mainly falls to two Government institutions: the Ministry of Trade and Commerce (MINICOM) and the Rwanda Development Board (RDB). In theory, MINICOM should be providing the strategic direction, with RDB more as an implementing agency (e.g. BDS). However, because of the higher capacity at the RDB, these roles are not always adhered to. The Ministry of the East African Community (MINEAC) is charged with coordinating and monitoring regional integration efforts. Institutional capacity constraints show up in the Government s current institutional weaknesses in formulating and implementing private-sector related regulation and legislation. One example is low absorption rates in the EDF9 RISEM programme for funds destined for MINICOM. Similarly, RDB, which was only established in EN 11 EN
late 2008, is better staffed and able to pay higher wages, but was found to be ineffective and was completely restructured in early 2010. MINEAC was newly established in March 2008, but is mostly staffed with recent graduates with very little work experience. The Rwanda private sector can be characterised according to size with around 50 large companies, 100 medium sized companies, 100 small enterprises, and 70,000 micro enterprises. 5 All companies would benefit from improvements in the general investment climate, while business development services would be mainly directed toward the medium and small enterprises. 4. IMPLEMENTATION ISSUES 4.1. Method of implementation A Financing Agreement will be signed between the Commission and the Government of Rwanda. The proposed programme will be managed and implemented through a combination of delivery mechanisms: - Joint management, through the signature of an Administrative agreement with the International Finance Cooperation (IFC) for components 2 and 3. The IFC is part of the World Bank group for which the four-pillar assessment was successfully carried out. Cooperation with the IFC is covered by the Trust Funds and Cofinancing Framework Agreement between the Commission and the World Bank. The IFC will set up a single donor trust fund to manage the EU contribution. Both IFC programmes to be cofinanced have a strong track record of delivering results during their first phase, and enjoy strong political backing. Further co-financing will come from the IFC itself, JICA, and for component 2, the beneficiaries are expected to cover a small part of the costs as well. - Partially decentralised management for component 1. Activities will be implemented in direct decentralised operations through Programme Estimates. The Commission controls ex ante all the procurement procedures except in cases where programme estimates are applied, under which the Commission applies ex ante control for procurement contracts EUR > 50,000 and may apply ex post for procurement contracts EUR 50,000. The Commission controls ex ante the contracting procedures for all grant contracts. Payments are executed by the beneficiary country for operating costs and contracts up to the ceilings indicated in the table below. The responsible Authorising Officer ensures that, by using the model of financing agreement for decentralised management, the segregation of duties between the authorising officer and the accounting officer or of the equivalent functions within the delegated entity will be effective, so that the decentralisation of the payments can be carried out for contracts up to the ceilings specified below. Works Supplies Services Grants EUR< 300 000 EUR< 150 000 EUR< 200 000 EUR 100 000 5 Large enterprises are defined as companies with more than 100 employees, medium with 30-100 employees, small with 10-30 employees and Micro as less than 10 employees. EN 12 EN
The contracting authority for the project shall be the Rwanda s National Authorising Officer. The project supervisor shall be the Ministry of Commerce. A steering committee shall be set up to oversee and validate the overall direction and policy of the programme. An imprest administrator and an imprest accounting officer shall be assigned to the management and implementation of the project. 4.2. Procurement and grant award procedures / programme estimates Component 1 will be implemented through programme estimates. The support to all programme estimates must respect the procedures and standard documents laid down by the Commission, in force at the time of the adoption of the programme estimates in question (i.e. the Practical Guide to procedures for programme estimates). Components 2 and 3 will be implemented through Administrative Agreements with the IFC. All contracts implementing the action are awarded and implemented in accordance with the procedures and standard documents laid down and published by the World Bank, and applicable to the IFC. 4.3. Budget and calendar Indicative budget of overall amount by component Categories Component 1: Support to MINICOM strategic plan and regional integration EU Contributing Partner GoR IFC and JICA in million EUR Private sector Total 2.250 2.250 Component 2: Rwanda Entrepreneurship Development Programme 1.500 0.245 0.384 0.463 2.592 Component 3: Rwanda Investment Climate Reform Programme - Phase II 1.500 1.485 2.985 Communication and Visibility 0.050 0.050 Evaluation 0.100 0.100 Audit 0.150 0.150 Contingency* 0.450 0.450 TOTAL 6.000 0.245 1.869 0.463 8.577 Note: contributions from other partners are indicative. * The European Union's contribution to the "Contingencies" heading may be used only with prior agreement of the Commission. The operational duration of the programme is 60 months as from signature of the Financing Agreement. 4.4. Performance monitoring A Steering Committee will be set up to oversee the implementation of the programme. The performance indicators for the MINICOM component will be drawn from the EN 13 EN
MINICOM strategic plan, and specific targets will be formulated for each Programme Estimate. For the two IFC components, quarterly activity reports will be prepared by the IFC for the key programme stakeholders, including an overview of the activities and planning for the next three months. Moreover, semi-annual donor reports will provide an update on programme activities, progress and results to date. 4.5. Evaluation and audit A Mid-Term Review will be conducted following standard methodologies by independent consultants recruited directly by the Commission in accordance with European Commission rules and procedures on specifically established terms of reference. Financial audits will be conducted at the end of each programme estimate. 4.6. Communication and visibility The Delegation will issue a press release for the signing of the Financial Agreement with the Ministry of Finance. A budget provision has been made for communication and visibility to raise awareness of the Programme activities to key stakeholders, direct and indirect beneficiaries. Activities will include launch of events, press releases, brochures, newsletters. These activities will follow the Visibility Guidelines for External Assistance. Moreover, the support provided to MINICOM under component 1 provides an opportunity to promote the visibility of the regional projects, in particular the 2 nd phase of the Regional Integration Support Programme (RISP 2) and the Regional Integration Support Mechanism (RISM). EN 14 EN