Press release number: IFAD 21/02

Rome, 28 March 2002 - The International Fund for Agricultural Development (IFAD) and the Republic of Rwanda have signed an agreement for a loan of USD 12 million on highly concessional terms to finance a ''twin'' project aimed at the development of community resources and infrastructure in Umutara Province of Rwanda. Mr. John Westley, Vice President of IFAD, and Mr. Benon Karenzi, Secretary-General, Ministry for Finance and Planning of the Republic of Rwanda, signed the agreement at the Fund's headquarters in Rome.

Rwanda is a resource-poor country beset by a chronic level of poverty that was further aggravated by the civil war and genocide of 1994. In order to maintain the peace and security that have now been restored in most of the country and speed up the resettlement/ reintegration of refugees, in November 2000 the Government launched an Interim Poverty Reduction Strategy that gives a central role to administrative decentralization. The administrative reform of January 2001 led to the establishment of democratically elected Assemblies and Development Committees at the local level. The Umutara Community Resource and Infrastructure Development Project launched by IFAD in 2000 covers four districts of Umutara Province, which was created specifically for the purpose of settling the returnees.

The new twin project area accounts for almost 180 000 persons, or 42 000 households, who have been provided with plots of land and imidugudu (community) housing in Mutara Municipality and three Districts not covered by the initial project. As IFAD is now in a position to extend its assistance to every District of Umutara Province, the target group in the new project area will comprise all poor people (about 35 000 households in all) living at or below the poverty line. Of these, the most vulnerable or very poor account for about 7 000. The vast majority of the population currently have little opportunity to better their lot and are poorly serviced by a public administration that was only recently put in place and lacks the means to operate effectively.

In line with the Government's decentralization policy and administrative reform, the twin project will support both the establishment of community infrastructures and a range of production and development activities. IFAD's main objectives are to: set up sustainable microfinance institutions in the rural areas; introduce new participatory mechanisms for the development and transfer of technology; encourage the emergence of small and medium enterprises to provide alternative sources of income and create job opportunities; and support women. In addition to ensuring that rural women take an active part in all project activities, a Women's Investment Fund will be set up and a ''women's centre'' built in all Districts of the project area.

The cost of this IFAD-initiated project is estimated at USD 24.2 million, of which the Fund will provide cofinancing equal to 50% of the total. The project will be also cofinanced by the OPEC Development Fund (USD 8 million, or 33%); the Government of Rwanda (USD 2.5 million, or 10%); a number of international non-governmental organizations (for a total of USD 534 000, or 2%); and the beneficiaries themselves (USD 1.2 million, or 5%).

To date, IFAD assistance to Rwanda in the form of loans and grants amounts to USD 80.57 million.

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IFAD is a specialised agency of the United Nations with the specific mandate of combating hunger and poverty in the most disadvantaged regions of the world. Since 1978 IFAD has financed 603 projects in 115 recipient countries and in the West Bank and Gaza for a total commitment of approximately USD 7.3 billion in loans and grants. Through these projects, about 250 million rural people have had a chance to move out of poverty. IFAD makes the greater part of its resources available to low-income countries on very favourable terms, with up to 40 years for repayment and including a grace period of up to ten years and a service charge of 0.75% per year.