Macroeconomic advice for poverty reduction

Project description

Title: Macroeconomic advice for poverty reduction in Rwanda
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Rwanda
Lead executive agency: Ministry of Economic Planning and Finance (MINECOFIN)
Overall term: 2011 to 2018

Rwanda. Broad-based growth, for the rural population as well. © GIZ

Context

With its Economic Development and Poverty Reduction Strategy II, the Government of Rwanda wants to accelerate economic growth while continuing to reducing poverty. The country is pursuing the vision of becoming a middle-income country by 2020.

Important instruments for achieving this include macroeconomic stability, a sustainable fiscal policy for the country, and the financing and management of state and private-sector investments. A decisive role is also played by the quality of macroeconomic analyses and the investment programme of the Ministry of Finance and Economic Planning.

The envisaged economic growth should derive from publicly and privately financed investments in the business sector and in infrastructure. The company will promote rural development through appropriate investments and create opportunities for young people.

Objective

The Ministry of Finance and Economic Planning is capable of designing its economic and investment policies.

Approach

The project team works with institutions of the central administration and their subordinate public institutions, as well as with academics, the private sector and civil society actors. It involves all these groups in the planning and realisation of its measures. In addition, the project networks Rwandan institutions with international partners, above all with universities and research centres in Germany.

The project supports the ministry’s Macro-Economic Policy Division in developing its employees’ capacities to conduct analyses of economic and investment policies, improve their macroeconomic models, and organise the operational procedures more systematically. A group of 10 employees from the Macro-Economic Policy Division and the National Bank of Rwanda has received training in the use of the country’s integrated macroeconomic framework. In May 2016, the project team collaborated with the Macro-Economic Policy Division to launch the Young Economist Programme, a trainee scheme for university graduates.

Together with the ministry, the project team is introducing new processes of investment planning and redesigning existing processes in a more efficient manner. The partners have also produced the first draft of the National Investment Policy, which should serve as the basic policy document. The involvement of private companies in public sector investments is also part of this document, as are the processes for planning and implementing public-private partnerships and joint ventures. Templates have been developed using standardised processes to improve the evaluation and assessment projects. The aim is to integrate the planning and monitoring of investments into the ministry’s central information management system

In order to enhance exchanges and coordination between the ministry, the central bank, the National Institute for Statistics, Rwandan universities and the Economic Policy Research Network, the project organises regular meetings of all these stakeholders.

Rwanda. Change through sustainable investment – from an agricultural economy to a centre of international finance and services. © GIZ

The project has assisted the Economic Policy Research Network in redesigning its website, and has organised special training events to prepare future researchers for macroeconomic work. These included a course with the title, Applied Quantitative Economics – Preparation for a Doctorate.

Results

The group of staff from the Macro-Economic Policy Division and the National Bank of Rwanda have so far contributed to the development of modules that link macroeconomic analysis to other modules on employment, income distribution and poverty. Some 15 university graduates have already participated in the Young Economist Programme, preparing themselves to work for the ministry, where they will now fill vacant posts.

Once the Cabinet has accepted the draft National Investment Policy, the efficiency of public investment management will increase due to the more transparent and better structured processes. The annual conference of the Economic Policy Research Network records a large number of participants each year. During these conferences, researchers have presented their findings and made policy recommendations that have been discussed and shared with state institutions. The Network’s new website serves as a communication and cooperation platform for the ministry, researchers, the central bank and the statistics institute. Using the website and other social media channels, the network shares new developments in macroeconomic topics and puts its information and services at the disposal of others.