Rwanda

The number of people who have a bank account is lower in Africa than anywhere else in the world. This is especially true in Rwanda, where more than two thirds of the population have no regular income and therefore no access to banking services. Hence, they do not have an opportunity to escape poverty. To improve this situation, Germany engages in the development of the financial sector in close cooperation with its Rwandan partners.

On behalf of the German federal government, KfW Development Bank supports sustainable Rwandan microfinance banks whose target group are the poorest of the poor. This enables the majority of Rwandans to save for emergencies and to conduct financial transactions securely and cost efficiently. Further, small and micro enterprises also have access to credit that they can invest in their businesses, and last but not least create the jobs that are so sorely needed in this country.

With an economic development and poverty reduction strategy, Rwanda wants to move closer to achieving its "Vision 2020" objective of becoming a middle-income country. The cornerstones of this strategy include developing rural infrastructure and good governance. Since 2001, KfW Development Bank on behalf of the German federal government has supported the local Rwandan development fund LODA, which promotes the grassroots planning and financing of infrastructure projects at district level. Via the national environment and climate change fund FONERWA KfW funds projects at district level, which are designed to help with climate change adaptation. This is another way in which KfW contributes to improving living conditions in rural areas.

There is a strong will for reform in Rwanda. The government has been striving since 2008 to create an efficient and transparent public finance framework (Public Financial Management, PFM). Together with other development partners, KfW has used basket finance to fund the efforts of the Rwandan government since 2010 as part of a coordinated, holistic reform approach. Based on the government's reform plan, diverse areas of the budget cycle and key cross-cutting topics are supported, such as for example an integrated financial management and information system. External budget control has been supported since 2011 following the strengthening of the Rwandan Audit Office as an independent audit institution. New support measures since 2015 explicitly aim to strengthen the Rwandan tax authority and substantial own resources.

In the wake of decades of conflict, the energy supply in Rwanda and in neighbouring Burundi and (Eastern) Congo is in a poor state of repair. Only one in every fifty people in Eastern Congo has access to electricity, while in Burundi it is one in every twenty five. There are barely any power plants in the Great Lakes Region, most of them are powered by diesel and fuel oil, which has negative effects on the environment and makes the electricity very expensive. The transmission and distribution networks, if they even exist, are outdated, which results in regular power cuts that hinder economic development.

The aim of KfW Development Bank is to promote low-cost generation of energy in all three countries. There is certainly enough potential: the Ruzizi river along the border can generate up to 500 megawatts of electricity if it is developed jointly as part of a regional approach. This is not just because the resources are owned by more than one country, but also because interstate electricity trading offers the most cost-effective and eco-friendly opportunity to cover the medium to long-term demand in the region.

Operating power plants then becomes more efficient, bottlenecks in production and surpluses can be balanced out on a regional basis, while expensive diesel and heavy oil facilities can be replaced with renewable energies. The political cooperation required between the three states (also in terms of network expansion) is being driven forward by EGL (Energie des Grands Lacs).

German financial cooperation is supporting the three countries with the planned expansion of their regional cooperation in the power sector, for example by funding power plants on the Ruzizi River as well as related transmission lines and infrastructure.

Although the economy has grown by an average of more than 10 % over the last decade, four out of every five Rwandans still work in agriculture or in casual, poorly paid jobs. The weak education system is the main reason for this as it still predominantly favours quantitative goals over qualitative criteria. Only 20 % of the working-age population have completed primary school, a figure that falls to 10 % for secondary school.

This is why KfW Development Bank, on behalf of the German federal government, is supporting a qualitative expansion of public and private vocational schools and their training programmes. To this end, selected public vocational schools are being modernised and refurbished while their management teams are strengthened at the same time. KfW is also backing the involvement of private vocational schools in the education system. These schools are subsidised based on the number of successfully completed courses (fully equivalent with Rwandan standards). This ultimately creates competition between public and private schools, thereby motivating them both to offer a high quality of vocational training and further education.

Last but not least, vocational school teachers receive a high level of further training to improve the standard of their teaching. The aim of the programme is to increase the number of skilled workers that Rwanda's economy so desperately needs. Of course, the students from largely poor backgrounds benefit too: after completing their courses they have good prospects of finding gainful employment and enhancing their standard of living.