On managing foreign aid in Rwanda, a framework where both donors and the government push each other for performance is the secret to success, government's top manager of external donations tells Sunday Times in an exclusive interview.
Ronald Nkusi, the Director of External Finance Unit in the Ministry of Finance and Economic Planning, shares with Sunday Times' Eugene Kwibuka how Rwanda has succeeded in using foreign aid for its economic development.
Nkusi says the bottom line for the government's effective use of aid is having a clear plan of what it intends to do before inviting donors. Once the latter are shown the priorities and asked to intervene, the rest becomes easier because there is a baseline on which to start evaluating accountability for both donors and the government.
"Donors are accountable to the government in light of the internationally agreed principles of aid effectiveness and also the government is accountable to donors and to the citizens in general through different forums that we have set up," Nkusi explains.
The expert says that foreign aid has indeed been used to pull many Rwandans out of poverty in the last few years, but he warns against ending support before Rwanda has a firm foundation on which to build her self-reliance.
Amid the current aid standoff, Sunday Times' Eugene Kwibuka (ST) talked to Ronald Nkusi (RN), the Director of External Finance Unit in the Ministry of Finance and Economic Planning. In the following excerpts, the expert discusses Rwanda's success in effective use of aid and Rwanda's road to self-reliance.
ST: Some experts continue to say that Rwanda has effectively used aid for its economic development, explain it briefly.
RN: Yeah, I think what the experts say is true from a development cooperation point of view because if you look at what the government has achieved in the last five years, it points to that direction that actually aid has been catalytic in making sure that Rwanda achieves most of its plans and programs. That is evidenced by the recent EICV (Integrated Household Living Conditions Survey) results that showed that we have been able to reduce poverty numbers by 12 percent, we have lifted one million of our population out of poverty. That points to the fact that Rwanda is using aid effectively.
ST: How does it work? What mechanisms are in place?
RN: I think in the first place, it's the government defining a vision of what it wants to do. Second, that vision is broken down into development programs, strategies like EDPRS that it will be implementing. Now clearly the government is setting a kind of a roadmap of what it is going to do.
After making clear of the intentions of the government, what it's going to do, and then you request support for programmes that you have identified as priority.
There are different forums ranging from policy dialogue forums to technical and practical issue discussions.
In terms of reporting we have the so called CPAF (Common Performance Assessment Framework).
This framework actually takes different indicators in the development strategy EDPRS and tries to identify which key indicators that sectors will be striving to achieve. These indicators are put together in the CPAF and then you can monitor them annually to see if you are actually making progress against those indicators and critical policy actions.
And then you can gauge how much resources you are putting into that sector to make sure that you achieve the other indicators and targets we've set for ourselves.
That's on the side of the government, donors are able to track whether the government is on the right side of implementation and if there are difficulties you discuss it in the forum.
On the side of donors, to make sure that they comply with what they have agreed to do, we use the DPAF (Donor Performance Assessment Framework).
These are reports that we generate annually to indicate how every donor has performed against the set of internationally agreed principles.
ST: What are the key activities in which aid money is most spent on?
RN: Well, aid resources or financial support from our donors are actually not very limited to specific sectors though some sectors receive more funds than others.Some it's general budget support funds which are channeled to all sectors of the economy, other financing is specific to sectors for example health, education, or agriculture, so you cannot say that these sectors are the ones supported by donors.
ST: You mean there are no ways you can see if we are using more aid in the health sector or infrastructure?
RN: Of course you can get that by looking at the Official Development Assistance report (ODA) that we generate every year. You can identify the funding by modalities. If you wanted to look at the sectors you can see which sectors have received more money. For example the health sector was the largest beneficiary of aid resources in the fiscal year 2010/2011.
Agriculture is also receiving substantial money. So, you can know which sectors are receiving significant amounts of aid resources but again we have done our division of labour which is a kind of indication where the donors should be channelling their resources to make sure that the economy is balanced in terms of support. So, you try to make sure that donors go to different sectors.
ST: Rwanda is trying to be less reliant on foreign aid.Do you see this happening in the future?
RN: Well, I think the leadership vision has been to have Rwanda that is self-reliant, Rwanda that is partnering with other countries but from a point of interdependence in a broader global economy without being simply Rwanda depending on other countries. If you look at what the government has been doing for the past years, it's growing domestic revenue base trying to mobilise more resources domestically to finance its own programmes.
Actually support to our budget is reducing. It's not reducing in terms of the nominal numbers but it's reducing in terms of what we are able to mobilise domestically vis-à-vis what we get from donors, that (what we are able to mobilise domestically) has been going up.
Now when exactly do we get there, when is Rwanda off aid? I cannot pinpoint to a particular period when we will be off aid but that's what we are working towards and by the virtue that Rwanda is looking at the year 2020 being a middle-income country at least you are beginning to significantly reduce your reliance on foreign aid.
ST: But you can't see aid stopping at one point?
RN: Well, there are changes in the global economy. If you look at the development cooperation in general there is a shift in the way donors, countries that used to provide aid, actually looking at cuts because of different reasons --because of constraints in the economies of those countries that were providing aid or because of other political developments in the world that was providing aid before--So, there is a shift in the way countries are actually looking at this whole business of development cooperation. So like it or not aid at one point will diminish and will probably come into a different form.
ST: Maybe to wrap up, do you have a message for donors to the government?
RN: I think the message is simple. The government has been consistent in meeting all its commitments in achieving tremendous poverty reduction results.
If you look in the region or internationally, I think Rwanda is credited for making tremendous progress in improving the livelihoods of its people. That has been possible because we have been getting support to achieve that and we think we still need that support to make sure that we establish a firm foundation upon which we can be able to graduate from aid.
But this support should be consistent at least till the foundation. Issues of predictability greatly undermine that foundation before it's solid and strong enough.