Jointly enhancing development finance and effectiveness in Rwanda

• The adverse effects linked to the economic and social impacts of the COVID-19 pandemic and most recently Russia’s invasion of Ukraine and the cost of living crisis are all taking a toll on the global economy and Rwanda is no exception. There is a greater need now than ever before to scale-up financing to achieve the SDGs as well as Vision 2050. 
•   The UN Rwanda is therefore supporting the Government of Rwanda in the set up and implementation of the INFF -- a gateway to provide a framework for financing national sustainable development priorities and the SDGs at the country level.
•  The INFF is expected to help Rwanda realize a paradigm shift in how it mobilizes and allocates funding to implement its national development agenda for ending poverty, reducing economic inequalities, improving education and health, tackling climate change and promoting economic growth.

Our Joint Programme (JP) on Enhancing development finance and effectiveness in Rwanda through integrated and innovative approaches for National Priorities and the Sustainable Development Goals (SDGs), has provided substantial technical support to Rwanda’s INFF elaboration process. In addition to the SDG Fund contribution of US$1 million to the JP, I am pleased to report that the UN Rwanda through my office, and the Participating UN Organizations (PUNOs) being the United Nations Development Programme (UNDP, as lead agency) and United Nations Children’s Fund (UNICEF), have provided financial resources collectively totaling US$ 867,000 as well as technical support to the Government of Rwanda (GoR) through the Ministry of Finance and Economic Planning (MINECOFIN) and line Ministries.

Rwanda launched the Integrated National Financing Framework (INFF) for SDGs in September 2020 and thereafter embarked on translating the INFF building blocks into reality. Through the JP, the PUNOs have facilitated the undertaking of diagnostic works on the funding landscape namely (i) INFF Diagnostic Assessment to identify and provide a roadmap for the Financing Strategy for possible financing solutions that can be incorporated for the proposed INFF. (ii) Diagnostics at sector level; the Fiscal Space Analysis for Social Sectors, annual Budget Briefs and Sustainable WASH financing strategy which all fed into the discussions on the INFF financing strategy. Whilst (iii) the draft Integrated National Financing Strategy (INFS) and Roadmap have been developed and are under review by the GoR (at the time of writing this blog).

Capacity building has been delivered in Public Financial Management (PFM) through citizen engagement initiatives linked to the planning and budget cycle including the development of citizen budget guides and engagement of members of child forum committees at district level. The JP also provided technical assistance to mainstream nutrition through integrated planning and budgeting approaches at central and district level.

In ensuring the aspect of innovation and identifying new sources of financing; support was provided to the Kigali International Finance Centre (KIFC) through Rwanda Finance Limited to develop and launch the first-ever "Rwanda Sustainable Finance Roadmap". Through this JP UN Rwanda has realized stronger partnerships in development financing and cooperation through studies on innovative development and green finance, fiscal assessments, and the development of tools and guidelines to boost revenue generation[1].

The JP also supported SDG 16 by reinforcing the governance structures (including planning and monitoring systems) to realize and monitor SDG achievements, as well as promoting more dialogue and transparency around budget allocations and strengthening institutions and systems for effective service delivery. It has contributed greatly to the achievement of SDG 13; mainstreaming climate action and risk management in budget plans, as well as in the costing of sectoral targets such as for the WASH sector. The JP has supported piloting innovative financing instruments and mechanisms to mobilize private climate investment such as the green bond expected to be issued by the Rwanda Development Bank.

Going forward, these activities will overall set the stage for INFF implementation from the policy and strategic level and will contribute specifically to having a policy framework in place that supports investments in poverty eradication (SDG target 1.b), to sustaining economic growth per capita (SDG target 8.1), strengthening domestic resource mobilization (SDG target 17.1) and enhanced policy coordination for sustainable development (SDG target 17.14).

The draft INFS essentially provides a holistic and internally consistent framework that draws on and integrates the key policies in all areas while indicating financing and policy gaps. It spells out the need to ensure adequate financial resources for investments in sustainable development through (a) strengthening domestic resource mobilization by improving tax collection and the efficiency of public spending and by strengthening systems to harness domestic savings for investment; (b) the full implementation by developed countries of ODA commitments in line with the agreed formula and timetable; and (c) the mobilization of additional financial resources from multiple sources. Once operationalized, the INFS will provide the basis for the GoR to activate policies and instruments “to mobilize, invest and influence public and private financing from both domestic and international sources”.

Lastly and of importance on closure of our JP; I am confident on the sustainability and scalability of the JP results. The existence of a strong governance structure championed by the GoR leadership of the INFF process, and continuous engagement of public institutions and civil society organisations in efforts to monitor budget transparency through the Open Budget Survey, will ensure the sustainability of the INFF. The integration of the JP INFF into the local financing framework of the GoR has offered support for the design and implementation of the proposed financing roadmap. The policies and reforms such as performance-based budgeting, climate change financing, public-private partnership financing, and green financing framework that are already in existence under NST-1 have made the INFF localized.

I am pleased to report that the INFF JP has attracted great support from the GoR and the private sector. This has built strong ownership of the initiative through monitoring of the governance structures to ensure accountability for continuity. Integrating the private sector into the INFF is a clear indication of their role in revenue contribution to scale up, sustainability and promotion of local ownership of the INFF. On its part, the UN Country Team recognizes the critical importance of the INFF and has agreed to adopt a whole of UN approach to mainstreaming the INFF in our development work. We are looking forward and remain determined to explore the innovative financing space to support efforts towards achieving sustainable development!

[1] Eg. Agreement with GIZ to partner on several areas related to INFF implementation, including joint development of a scoping study on an integrated development financing dashboard. PUNOs coordinated with other Development Partners (IMF, AFRITAC, World Bank, and other bilateral partners) to strengthen PFM systems. Partnership with the AfDB and Capital Markets Authority to initiate innovative development and green finance.