RURAL SMALL AND MICROENTERPRISE
PROMOTION PROJECT

THE ECONOMY, SECTORAL CONTEXT AND IFAD STRATEGY

IFAD’s Strategy for Collaboration with Rwanda

Rwanda’s policy for poverty eradication. The project will reflect and support IFAD corporate strategy in at least two main areas. First, its decentralized approach enables beneficiaries to participate in the planning and implementation processes; while the development activities of the professional organizations will empower entrepreneurs to establish and conduct market relations with a variety of economic agents. In terms of government and private sector agencies, local capacity will be enhanced at the national, provincial, district and local level, through the project’s institutional strengthening activities. Second, as the project serves as a vehicle for establishing a broader sectoral programme, it will support the Government in developing an enabling policy environment for rural (micro) enterprises and finance.

Poverty eradication activities of other major donors. In total, donors are expected to disburse USD 1 478 million during 2001-2005, of which USD 219 million is destined for rural development. The principal donors providing support for agriculture, industry and commerce are the World Bank, the African Development Bank (AfDB), IFAD, the United States, the European Union, Belgium, The Netherlands and the United Nations Development Programme. Partnerships between IFAD and donors active in rural SME development will be strengthened to facilitate coordination and complementarity of activities. IFAD will actively participate in and support the ongoing harmonization and decentralization process in Rwanda.

IFAD’s strategy in Rwanda. The Strategic Framework for IFAD 2002-2006 stipulates three strategic objectives: strengthening the capacity of the rural poor and their organizations; improving access to productive natural resources and technology; and increasing access to financial services and markets. Within IFAD’s Strategic Framework, the regional strategy for eastern and southern Africa was developed, based on a comprehensive assessment of rural poverty in the region. Four major regional strategic thrusts were identified: (i) promoting efficient and equitable marketing linkages; (ii) developing rural financial systems; (iii) improving access to and management of land and water; and (iv) creating a better knowledge, information and technology base.

The Country Strategic Opportunities Paper (COSOP) approved in December 2002 indicates three basic themes for interventions, namely: (i) emphasis on institutional developments that empower the target group’s organizations and enhance their role; (ii) exploitation of all potential means for increasing the income of the rural poor, including measures to increase food and cash crop production, reduce the impact of market imperfections and improve the incentive system faced by rural producers; and (iii) more focus on potential synergies among different IFAD projects ongoing in the country.

Project rationale. The project conforms to government and IFAD policy and will contribute to poverty reduction, improved food security, increased incomes for the rural poor and sustainable natural resource management. It aims to address the numerous constraints to which SMEs are subjected and support the development of the asset base of the rural poor. With strong beneficiary participation, the project will implement a coherent sequence of interrelated and interdependent activities that will facilitate market access and generate higher, more stable incomes for the most disadvantaged rural producers and establish a national platform for policy discussions on SMEs. As a result, the Government will have mechanisms at its disposal for the implementation of its poverty reduction policies through concrete field-level activities beneficial to the rural poor.