The institutional context

Central government agencies relevant to project implementation

Ministry of Finance and Economic Planning (MINECOFIN) has its headquarters in Kigali. It is headed by a Minister, a State Secretary, and a Secretary-General. The Ministry comprises three principal departments: Finance, which includes Rwanda’s tax revenue authority; Planning, and CEPEX, a unit responsible for coordinating the different projects that operate in the country. CEPEX performs a very useful function, facilitating the implementation of development projects, particularly in the field of planning and budgeting and streamlining the relationships between the line ministries, the project coordination units and the Ministry of Finance. Within the Ministry, a special Privatization Unit deals with turning over the government assets invested in production and trading to private sector enterprises. Close coordination with this unit is important for the IFAD project to ensure a coherent approach with government development objectives and policies in the cash crop sector

Ministry of Agriculture, Animal Resources, and Forestry (MINAGRI) is responsible for agricultural development policy and services. It has its headquarters in Kigali, and de-concentrated units in each province and district. The Ministry is headed by a Minister, a State Secretary and a Secretary-General. It is structured with seven technical departments, each headed by a director, who reports to the Secretary- General (who reports to the Minister). The departments are: (i) Agriculture; (ii) Livestock; (iii) Rural Engineering; (iv) Administration and Finance; (v) Planning; (vi) Extension; and (vii) Forestry. Deconcentrated units are established at Provincial and district level. MINAGRI sets the general policy for the development of all sub-sectors in agriculture. However, with regard to the traditional export crops, it operates through the national agencies specifically responsible for tea and coffee: OCIR-Thé and OCIR-Café.

OCIR-Thé and OCIR-Café were originally established to provide technical extension services, to control production, processing and marketing of the two major export crops of Rwanda. Under the liberalization and privatization reform, they are expected to divest their production and marketing activities. In the processing field, OCIR-Café has only a few assets and the sub-sector is de facto liberalized. In contrast, OCIR-Thé is the major industrial concern of the country, owns several large-scale tea estates and 10 tea factories, and plays a dominating role in the sub-sector. The GoR policy envisages that after privatization, the two organizations will continue to play a central role in the development of the traditional export crops, albeit not with regard to production and marketing. Important details of the new functions of these two institutions have not yet been firmly formulated. It is expected that they will have a role in technology generation and transfer, promoting and monitoring development, formulating and enforcing a regulatory framework for the private processing industries and marketing organizations. Both agencies, particularly OCIR-Thé, have a pool of highly trained and experienced technical and managerial staff with expertise in growing, processing the cash crops and providing extension services to growers. These staff represent precious human capital upon which to build further development of the sub-sectors.

Ministry of Land, Resettlement and Environment is responsible for the conservation of the natural environment of Rwanda, for land allocation in resettlement areas, and for formulating proposals for land tenure policies and legislation. However, land tenure affairs have been devolved to the District Councils, and responsibility for environmental and natural resources is delegated to various line ministries, including the Ministry of Agriculture, Animal Production and Forestry, the Ministry of Water, Energy and Natural Resources, and, in the case of protected areas, to the Rwanda Office of Tourism and National Parks. The overall role of the Ministry of Land, Resettlement and Environment is to control the implementation of the National Strategy for the Environment, and to ensure that technical ministries act in compliance with the environment conservation policy of the government. The ministry is structured into five departments: (i) Environmental Protection; (ii) Planning; (iii) Lands; (iv) Settlement; and (v) General Services. The Department of Environmental Protection has a staff of six professionals divided into three divisions: Environmental Policy and Planning, Monitoring and Evaluation, and Environmental Impact Assessments. No Ministry office is envisaged at provincial level.

The Ministry of Commerce (MINICOM) sets the policy framework and oversees the smooth functioning and development of the domestic and international market of the country. The Office national de normalisation (ONN) has been set up in the Ministry, with the mandate to define the rules governing production and marketing of goods in the domestic and international markets. Within the Ministry, a special unit funded by UNDP is responsible for market research and this unit would be very useful to assess the potential of new cash crops and to design promotional policies and measures for traditional export crops. The results will orient smallholder producers, individually and as groups or professional associations, as well as private entrepreneurs.

The Institute des Sciences Agronomiques du Rwanda (ISAR) is the main organization responsible for agricultural research. Its headquarters are in Rubona and it runs field stations in many districts. ISAR produces all the germoplasm required for the production of basic seed by the Department of Agriculture. Heavily affected by the war, during which many-trained staff were lost, it is still in the process of reconstructing its capacity. Currently ISAR appears overcharged with responsibilities, as a result of the heavy demand from projects funded by many Donors, including IFAD. With regard to tea and coffee, the respective role in research of the new OCIRs and of ISAR are not well defined.

The Rwanda National Bank (RNB). The RNB is the central bank of Rwanda, responsible for managing the money economy of the country with a supervisory role with regard to all the banking institutions of the country.

The Rwanda Development Bank (RDB) is the national financial institution responsible for development credit. The bank is a joint venture of the GoR and private financial institutions (with foreign partners – mainly bilateral cooperations, and main Rwandese private companies). A recent World Bank review of the banking system of Rwanda included the RDB among the institutions that are considered viable and soundly managed. The RDB has played a major role in funding the industrial development of the country, contributing to the financial engineering of many commercial enterprises in the public and private sector in which it holds important equity participations. Its staff has experience in launching new enterprises, and in re-capitalizing enterprises that are viable in the long run, but need medium term support to overcome temporary financial difficulties. Loans have been extended to the RDB by the World Bank (3 loans), the AfDB (2 loans), and KfW of Germany (5 loans).

The current financial position of the RDB is still affected by the loss of assets due to the 1994 war, which increased the loan delinquency rate from 17% of total loans outstanding in 1993 to 41% in 2000, despite the serious recovery drive undertaken after 1996. A full re-adjustment of the situation would require clearing all the loans that cannot be recovered due to the war by way of a fresh injection of capital. Pending that, the coverage of delinquent loans has been provided for by tapping the RDB reserves and shareholders’ equity account, weakening the bank potential to raise funds in the capital market. Nevertheless, the 2000 income statement shows a modest profit, and the bank liquidity and capital/loans position is satisfactory, reflecting the prudent approach of the bank management.

A general programme for re-capitalizing and strengthening the RDB, including support for the bank involvement in the rural areas and in micro finance, was approved by the GoR in July 2001. In approving the RDB programme, the GoR took the view that the RDB, in view of its past performance (which includes funding since its inception sustainable projects that provide employment to over 26 000 people), and of its present sound and dedicated management, is the financial institution in Rwanda which is best placed to provide the required services to developing rural private enterprises and SMEs, in addition to carrying out its basic statutory functions. The RDB will play a central role in the implementation of the IFAD cash crop project.