Potential Risks
Transfer of Programme implementation
to the districts. While this is the strategy that the
Programme must follow – to be in line with national legislation
and to make Programme processes more sustainable – there is
a risk that the requisite capacity and discipline will be
difficult to instil in the districts and that they may not
develop into effective and accountable organizations for implementation
of Programme activities with the result Programme performance
and impact could suffer. While it is acknowledged that
this is a risk and that the performance might be less than
ideal, especially in the first year or two, the law stipulates
that the districts are to be responsible for planning and
implementation of public infrastructure. Furthermore, the
performance of the PCU during the first phase has been far
from exemplary, particularly in terms of its handling of contracts
and delivery of investment; therefore, with well planned institutional
support and technical assistance to the districts (as provided
for during the second phase), it should be possible to improve
on first phase performance.
Rural Finance. Rural finance is
complex under any circumstances and in Rwanda with the new
and unproven legislation there are even more questions than
usual. The project made good progress in developing community
level savings groups, the risk is that with the new legislation
and its registration requirements, it might be difficult to
transform the groups into more associations capable of handling
a broader range of rural financial services. While this
is a clear risk, there are few alternatives and experience
in the country and elsewhere indicates that the best way to
create a sustainable rural finance system that responds to
the needs of rural women and men, farmers, new rural entrepreneurs
and enterprise groups is to develop such associations. The
design of the second phase of the Programme incorporates a
four-month transition period to allow for the situation to
be carefully studied before finalizing the design of the sub-component.
Rural Enterprise Development. PPPMER
I was a successful project with a good approach. PPPMER will
build on the experience of the first project. Enterprise development
is an important area in which UCRIDP needs support and the
proposed arrangement with PPPMER is good. But, there are a
number of complications that will need to be ironed out within
the first six months or so of implementation of the sub-component.
The two most obvious are the linkage between the Programme’s
rural finance services sub-component and the rural finance
operations that form part of the PPPMER approach. The second
is the generation of rural enterprise initiatives from the
agricultural development initiatives and how to best link
them with support from the rural enterprise sub-component.
The risk is that that the complementarities will be difficult
to achieve and that the management of the two projects (PPPMER
and UCRIDP) are not able to develop a smooth integration of
the activities of the two projects. But, it is advised,
that the risk is worth taking as the benefits could be substantial
for UCRIDP. Furthermore, if PPPMER were not to provide this
support, the PCU would have to develop its own capacity to
support rural enterprise initiatives, basically from scratch!
Substantial Investment Available.
There is a risk that the absorptive capacity of the districts
will take too long too build up to allow the Programme to
disburse the large sums of money available for the second
phase. It is extremely unlikely that the Programme will
be able to spend anything like the approximately USD 50
million available. But, it is notoriously difficult to estimate
accurately the amount that might be spent, especially for
a participatory demand-driven process. The most critical component,
in investment terms is water development, which alone has
an investment budget of USD 14 million to be spent over the
remaining Programme period. To help the districts plan, contract
and supervise implementation of the water and roads programmes,
considerable support has been provided during the second phase.
This should mitigate the risk but not remove it.
Technical/Implementation Risks.
There are a number of less structural but nevertheless
important risks for the Programme. These risks are listed
in the working papers, in particular in the Water Development
and Feeder Roads Working Papers.
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