Rwanda: EEC aid and the challenge of rural development

by Pasquale RAIMONDO

After 30 years of sustained and praiseworthy effort, Rwanda is faced with yet more challenges forcing it into constant acceleration of the pace of its twofold, social and economic change.

The structural adjustment programme begun in October 1990 is intended to put the country back on the path to economic growth, controlled inflation and rationalised public finance. An essential corollary to this is a return to the rules of the market and rehabilitation of the private sector.

At almost the same time, the call for proper democratisation of society was sounded loud and clear. With the welcome move to a multiparty system which this implies, the process appears increasingly irreversible.

Agriculture is a vital sector of Rwanda's economy and society and provides a practical illustration of just what the economy as a whole has to do - i.e. get the people to say more (diagnosing the problems) and be more involved (applying solutions).

And as if these problems were not enough, there is war on top of them with the burden of hundreds of thousands of displaced persons and the destruction of the flimsy apparatus of agricultural production.

Lastly - and this is most important - the country's new rural development challenges are an opportunity to put Europe's cooperation methods to the test, to fine-tune the concepts and to consolidate the programmes.

 

Agricultural crisis

Rwanda's lasting agricultural crisis began in the mid-1980s, with a basic imbalance involving economic stagnation, demographic growth and agricultural regression. Farm output, increasing at an annual rate of 2%, cannot keep pace with demographic expansion of more than 3.3% p.a. GDP has been declining by an average of 0.5% p.a. since 1985 and there is no possibility of creating the nonagricultural jobs which would mop up the surplus rural labour force and create economically viable farms.

Agricultural production is hampered by four things.

- There is a problem of space. Farms have been divided up into small areas and there is increasing inequality in the distribution of land. 43% of the country's holdings are smaller than 0.75 ha in area while 16% are bigger than 2 ha. The former account for 15% and the latter 43% of the total land available.

- There is a problem with the fertility of the soil, because of poor inputs of both minerals (2 kg fertiliser per ha p.a.) and organic matter (abandonment of fallow periods, disappearance of pastures and cattle). There is also large-scale erosion (the equivalent of 8000 ha of arable land are lost every year).

- Food production is a problem in terms of both quality (the daily ration of 1893 Kcal contrasts with the norm of 2100 Kcal) and quantity (a cereal shortfall of 200 000 t p.a.).

- Export avenues are blocked, particularly in the coffee industry, where quality is diminishing (52% standard and 40% ordinary in 1984 down to 2% standard and 95% ordinary in 1989) and quantify shrinking(53 782 tin 1987 down to 33 830 t in 1991).

Lastly, there are two prices to pay for the destruction wrought by the war which began in October 1990 and the effective abandonment of the rural economy when people were forced to flee the trouble zones. There is a food deficit which international aid alone is currently trying to make up and there is the countryside in the 10 communes on the Ugandan frontier to rehabilitate, a job which has to be tackled as soon as possible.

 

National agricultural policy

The Rwandese Government is tackling the crisis, with the help of its main external partners, with a new national agricultural policy geared to introducing a market economy in the farm sector. The centralised method of agricultural administration, bolstered by the project-type assistance of the funders, has not been successful in bringing progress to the farms. It is only the initiatives of millions of producers, encouraged by a free and competitive market, which can adapt resources to needs, make use of all the information scattered over the economy, make the most of opportunities and thus promote the rural areas.

This kind of policy involves privatising input supply and product sales, ensuring regional specialisation and increased trade, intensifying production techniques, improving extension, research and credit systems, reforming land ownership and organising the peasant world into cooperative associations which will ultimately turn into professional agricultural organisations.

 

The European contribution

Community assistance for Rwanda's farm sector is both macro- and microeconomic.

Macro-economic assistance - This, provided as part of the structural adjustment programme, comes in four main categories.

General and sectoral import programmes (GIP/SIP) provide foreign exchange so that intermediate, capital and consumer goods can be imported. The idea is to lighten the external debt, improve the budget balance with counterpart funds accruing from the local sale of the imported products and help reorganise the agricultural economy by channelling some of the counterpart funds into the farm sector. In 1991-1992, Lomé IV SIPs for the agricultural sector were worth ECU 7.7 million.

Stabex transfers are intended to make up for lost agricultural export revenue. The effect is archieved by purchasing, with foreign exchange, supplies and equipment to improve the quality, productivity and marketing of the main exports and by reorganising the various industries with counterpart funds accruing from the sale of the imported goods. Stabex 1990 brought ECU 14 242 630 for coffee, ECU 1 121000 for tea, ECU 967 433 for hides and skins and ECU 241 109 for pyrethrum. Transfers in 1991 were for three products - ECU 9 184 660 for coffee, ECU 939 227 for hides and skins and ECU 11 269 for pyrethrum.

Food aid, of which the Community (along with Canada) provides the largest amounts, has totalled 10 258 t of cereal equivalent, or 24% of total aid, over the past four years. Three quarters of this was emergency and a quarter structural food aid.

Counterpart funds as budget support from the EEC were worth RF 986 million in 1992, almost 34% of total aid in this category (from Belgium, Canada, the EEC, Japan and Germany). Worth noting here is the pioneering work of the Kigali Delegation in the coordinated integration of the various contributions, which led to a Protocol between the Rwandese Government and the funders on general principles governing counterpart funds as support for the Rwandese budget, which Rwanda, Germany, Be]gium, Canada, the IBRD, the EEC and the UNDP/WFP signed in Kigali on 29 July 1992.

Micro-economic assistance-These aid schemes include agricultural development operations and micro-projects. Under the 6th EDF, ECU 51 million was put into the food strategy support programme and its five components (the national input programme, the Butare prefecture and Zaire-Nile Crest integrated development projects, a training programme and institutional support for the Ministries of Planning and Agriculture). ECU 4.6 million was provided for micro-projects.

The 7th EDF will continue to channel a large part of the national indicative programme into rural development, which, along with transport, is the focus this time. The two sectors will, between them, be receiving ECU 90 million of the total ECU 149.5 million.

 

Strengths and weaknesses of the European contribution

Strengths - The special thing about the Community assistance is that it is integrated in two ways, vertically and horizontally.

Vertical integration. The EDF programme affects all three levels of the agricultural economy - macro-economic (budget balance), sectoral (reorganisation of the various product industries) and micro-economic (agricultural schemes and micro-projects). The Community allocates considerable means for this. In 1990, for example, it was Rwanda's leading donor, with $37.3 million, followed by France ($36.7 million), the IDA ($23.3 million), Germany ($21.2 million) and Belgium ($18 million).

Horizontal integration. A leading concern of the Delegation very early on was to come to grips with development issues as a whole and to take full account of the complementarily of the different components. The two big parts of the food aid support programme (the DGB and CZN projects) are therefore tackling the three main aspects of the local agricultural economy - i.e. fanning, herding and forestry - simultaneously.

The three other parts of the food aid support programme, covering inputs, training and the design and implementation potential of the agricultural policy, add to and strengthen the synergy thus created.

 

Innovation

Area approach. On 14-16 June 1990, the Community Delegation to Rwanda invited its main partners (Rwandese Ministers and funders) to a seminar at the Akagera Hotel on guidelines for the programming of the first instalment of Lomé IV funds.

The meeting, intended to take prospective stock of the various schemes in the Rwandese agricultural sector, turned out to be an important step in shaping the national agricultural policy, for it saw the 'area' approach presented by the European side and adopted by everyone involved in Rwanda's rural development. The new concept now clearly showed where the important pools of productivity lay at each stage and highlighted the considerable possibilities which farms and firms had of boosting their creation of added value.

Decentralisation. 1993 should see a further opportunity for the Commission to organise a meeting, this time on decentralised cooperation. This new field of discussion will complete the process of involving the people who actually get agricultural development working - the farmers, associations, groups, NGOs, local authority officials etc.

The national authorising officer's full agreement on this major innovation in 7th EDF financing should mean that the seminar can be set up rapidly.

Evaluation. An important aspect of EDF schemes is the evaluation process. There have been systematic mid-term reviews and several financial audits of each of the five components of the food strategy support programme and there is also to be a final evaluation (in January 1993 for the CZN and DGB projects).

This procedure, which should be able to be turned into a proper project implementation and monitoring system, will help ensure that the results of past schemes can be fully taken into account in the design and implementation of future projects.

Duration. Lomé IV lasts for 10 years (previous Conventions lasted five), so there is a stable framework in which schemes can be planned over a significant period and there are even substantial possibilities of adjustment under Article 266 (2). A new financial protocol is to be negotiated a year before the present protocol runs out (28 February 1995).

 

Improvements

Easing the procedures. The complexity of the EDF-financed project design and implementation procedures is one of the main impediments to the Fund's efficiency. It is indeed still one of the prime concerns of Commission Vice-President Manuel Marin, who told the last meeting of Delegates on 30 March 1992 that it was 'a weight under which more than one person is groaning'. By late 1989, after two years of implementation, only 15% of the food strategy support programme had been paid over. In the 7th EDF, the Commission has responded to this major bottleneck, which is a source of discouragement to many of the people involved (economic operators, local authorities, technical assistants and their offices etc.). Schemes are now being decentralised and taken into the rural communities, national policy design and implementation potential is being improved, national managers are being trained in Community systems and work is being computerised.

Improving institutional potential. Not only is it vital to ease the European procedures. Something also has to be done about the regrettably serious drawbacks of Rwanda's own institutions. So the improvements to the national cooperation programme design, formulation, management and monitoring potential will involve the 7th EDF in providing technical assistance for the Ministries of Planning, Agriculture and Transport, the main ones concerned with the national indicative programme.

Decentralisation. The development project was the preferred method of the 5th and 6th EDFs, but the lessons learnt from this have led to a change in approach. First of all, the assistance structure embraced every aspect of rural development, almost to the point of replacing the national administration, and then it was confined to agricultural development as a form of support for local structures. It is still evolving. Now that everybody realises that a centralised economy will never get agriculture going and that farms have to be set up again to do their real job of stimulating development, projects have to give way to decentralised operations offering direct support for the initiatives of the rural communities.

Manuel Marin also had something important to say about this. When he made his speech at the signing of Lomé IV on 15 December 1989, he emphasised the fact that the Convention had been opened to forms of decentralised cooperation which must facilitate greater population involvement in the cooperation schemes and offer a wide range of non-governmental operators the opportunity to include their own initiatives in the general framework of ACP-EEC cooperation.

The same desire for commitment on the part of the rural communities emerged clearly from Jacques Delors' speech to the Senegalese National Assembly on 2 May 1991. 'The humblest must be able to take initiative and shoulder responsibility for their own lives. That is the deep-seated meaning of the spreading of initiative which we are encouraging, and which we must increase, within the framework of our partnership'.

P.R.