19 November 2012

Rwanda: AFDB Tells Donors to Unfreeze Rwandan Aid

Rwanda — The head of the African Development Bank (AfDB) has warned that Western donors must lift an aid freeze on Rwanda or risk causing a new crisis in the region.

AfDB president Donald Kaberuka who was speaking to the media in Nairobi argued that the damage caused by aid freezes on Rwanda's economy could be significant and the cost of recovery even higher and urged donors who have delayed or plan to delay their aid to Kigali to reconsider.

More than 40% of Rwanda's budget is funded by donors and its proper use of aid backed by strong accountable institutions and a tough stance on corruption has seen the economy registering robust growth rates in recent years on the back of increased investments and consumption.

However, recently, Finance Minster John Rwangobwa said his economy could take a hit after Washington, Berlin and other donors suspended some of their aid over accusations Rwanda was backing M23 rebels fighting in eastern Congo which Kigali has denied on numerous occasions.

Aid to Rwanda should resume "as soon as possible and that means yesterday," AfDB president Donald Kaberuka who is also Rwandan national is reported to have told The Reuters in Nairobi.

"There is no reason whatsoever to create an economic crisis in the Great Lakes because that would impact on all the countries in the Great Lakes," he added.

Recently while opening the Economic conference of Africa, President Kagame also made the same concerns noting that despite his country's adherence to foreign aid conditions, the insistence by some development partners to delay their aid will hurt the sustained growth of his country's economy.

"So even when we are planning our policies, we must know that they operate under political environment that could affect their effectiveness," said Kagame.

He was also referring to the accusations by some elements in the international community that his Government was in bed with dissents against Kabila's government in Kinshasa which he again denied and dismissed as baseless.

According to Kaberuka, the regional economies are closely linked and any slowdown in Rwanda could hit cross-border trade with Burundi and other neighbors noting that the aid cuts risked reversing development in Rwanda's health, education and other social sectors, achieved as the country tries to recover from the 1994 genocide.

The AfDB is offering Rwanda $45 million in budgetary support this financial year.

He said Sub-Saharan Africa, excluding South Africa, was likely to grow by 6.4 percent next year, buoyed by increased internal demand largely because of urbanization.

The International Monetary Fund sees a 5.4 percent growth for Sub-Saharan Africa this year from 5.1 percent in 2011.

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