Rwanda’s Dependence On Foreign Aid Drops 45 Percent

Rwanda’s dependence on foreign aid fell from 86 per cent in 2000 to 45 per cent in 2010, according to a new report from ActionAid, indicating the country’s steady recovery and increasing ability to foot its budget on domestic revenues.

Arwandaprofile_1Actionaid – Lacherie Cyimpaye, 8, who’s health has improved since a feeding programme was introduced at her school

Dubbed “Real Aid 3”, the report demonstrates that Rwanda over the years used aid effectively to transform from a shattered economy to meet the socio-economic needs of its citizens.

Josephine Uwamariya, the Country Director of ActionAid Rwanda, said that although aid usually comes with strings attached, its quality usage enables countries to develop.

“These results show Rwanda is moving in the right direction and means that good quality aid works. It (aid) makes governments answerable to their own citizens, rather than to the donors,” she said.

“Real aid can help countries do things like raising tax revenues more effectively so they can generate more of their own funds for development.”

The Commissioner General of Rwanda Revenue Authority, Ben Kagarama, said that, Rwanda’s ability to mobilisze domestic resources to fund projects is a major step towards self reliance.

“Step by step, the government engages in private/public relationships to mobilisze revenue for both small and long term projects. On top of that, foreign direct investments are also encouraged as important alternatives to generate domestic revenue,” he said.

According to the Director of the External Finance Unit in the Finance Ministry, Ronald Nkusi, unlike many developing nations, Rwanda has the powercontrol to decide the allocation of aid money.

“We spend donor money more effectively; they have responded to our positive results by giving us more say over how we use their aid,” Nkusi said.

Although reliance on aid reduced significantly, there are large government projects that are still heavily dependent on it, according to the Director of Planning in the Ministry of Infrastructure, Christian Rwankunda.

“Foreign debts are usually repaid over a long period of time; say in 20 years, because they fund long lasting infrastructural projectses. Many projects still need foreign assistance, although government’s emphasis is on mobiliszing domestic revenue to fund them,” he said.

The report also indicates that foreign aid reliance among African countries declined by a third over the last decade.

Source – September 14, 2011