Rwanda's standing among donors has been boosted by a recent World Bank review that rated the country those with policies and institutions that are effective in reducing poverty.
The Country Policy and Institutional Assessment (CPIA), an annual review of the performance of institutions and policies among countries that borrow from the World Bank Group's International Development Association (IDA), showed that despite the global economic crisis, Rwanda is performing well in policies for "social inclusion and equity."
CPIA rates the performance of IDA countries on 16 indicators that grouped in four clusters such as economic management, structural policies, policies for social inclusion and equity plus public sector management and institutions.
The World Bank uses CPIA results when allocating development aid to poor countries - with those seen as implementing pro-people policies often being favored.
"Until now, the CPIA has been used mainly to inform IDA's allocation of resources to poor countries and in research. Yet the information contained in the CPIA is potentially valuable to governments, the private sector, civil society, researchers and the media as a means for monitoring their country's progress and benchmarking it against other countries," says Shatayanan Devarajan, the World Bank chief economist for Africa region.
Among the clusters, Rwanda scored highest in policies for social inclusion and equity, picking 4 points out of 6 - well above the sub-Saharan average of 3.2.
This cluster includes gender equality, equitable use of public resources, building human resource, social protection and labor as well as policies and institutions for environment sustainability.
Rwanda has indeed initiated policies and invested in programs aimed at uplifting the standard of living of the people. Such projects include the one-cow-per-poor-family (Girinka) initiative that has not only improved nutrition among poor families through consumption of milk, but also boosted domestic incomes as excess milk is sold.
With more income, families are able to afford other basic needs such as medical, education and clothing. Some beneficiaries have revealed that even food and vegetable production from small family plots has improved courtesy of manure from the cows.
The country has also invested in housing for the rural poor and has achieved almost 100% target in the eradication of grass thatched hurts, locally known as Nyakatsi. Other programs aimed at social and economic equity include Hanga umurimo, an initiative that supports citizens to create jobs for themselves.
As a result of such interventions, there has been a 12% reduction in the number of Rwandans living under conditions of poverty and economic deprivation.
Rwanda has had the most stable foreign exchange rate and inflation rate in the region that saw bigger economies like Kenya and Uganda severely hurt by high inflation and volatility in the foreign exchange markets last year.
This means that over the last five years, over one million more Rwandans gained access to adequate food, safe drinking water, good health facilities and education services. It is estimated that only 45% of the country's population of 10.7 can still be characterized as poor down from about 60% in 2006/2005. These are some of the fruits of the Economic Development and Poverty Reduction Strategy (EDPRS) launched by the government in 2008
Rwanda also scored high in the cluster of economic management that looks at aspects like monetary and exchange rate policy, fiscal as well debt policies. Rwanda has had the most stable foreign exchange rate and inflation rate in the region that saw bigger economies like Kenya and Uganda severely hurt by high inflation and volatility in the foreign exchange markets last year.
And as a reward for good debt management, the country that previously depended on grants as it main source of external budget support, became eligible for budgetary loans in 2011/2012 financial year.
"This was due to the fact that the international community [has] more confidence in Rwanda's debt management capacity and has now classified it as a country with moderate risk of debt distress. With this classification, Rwanda is now eligible to receive budget loans from the African Development Bank and the World Bank Group," finance minister John Rwangombwa said in this year's budget speech.
At least 47% of the country's budget is funded by external resources.
With an overall score of 3.8, Rwanda is above the average for all IDA countries among the top 25% of IDA countries in sub-Saharan Africa, the World Bank said. Countries that borrow under the IDA benefit from longer grace and repayment periods in addition to lower interest rates.
According to a statement issued after the launch, there is need to improve debt policy and management as well as strengthening the financial sector. "Debt policy and management and financial sector strengthening were identified as potential areas [where] further policy improvement in coming years could yield increased ratings," the statement said.
But an official of the World Bank country office in Kigali downplayed the significance of the country's low rating in debt policy, saying it has more to do with inadequate reporting than management.