Project description

Title: Promotion of the economy and employment
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Rwanda
Lead executing agency: Ministry of Finance and Economic Planning (MINECOFIN)
Overall term: 2004 to 2013

Context

Despite the global financial crisis, Rwanda continues to record dynamic economic growth and has retained its political stability notwithstanding the difficult regional context. Rwanda is a land-locked country without any significant raw materials; it has a high population density and its human resources are inadequately qualified, and are therefore of limited employability. Economic growth is therefore only possible because the government’s activities are strongly development-oriented. In 2009 Rwanda attracted international attention when the World Bank’s Doing Business 2010 report published results showing an improvement in the investment climate in the country.

This success is attributable to the willingness of the Rwandan Government to embrace reform. However, the country’s considerable achievements should not be allowed to distract from the structural deficits of its economy. The business sector still lacks qualified employees, and companies often choose to forego growth – and thus the creation of new jobs – because of the excessive tax burden and over-regulation.

Objective

The economic performance of MSMEs and non-agricultural employment opportunities have improved.

Approach

The project promotes the development of skills and performance capabilities of people and organisations at all levels and across sectors. It comprises two components:

• Business and investment climate
• Vocational education and the labour market

The interaction of the two components enhances mutual understanding between specialists and executive personnel in business and the education system, in important areas for sustainable economic development. It thus reinforces the political impact. Support takes the form of technical, organisational and process advice as well as training, materials and equipment, financing and local subsidies.

Capacity development is the key focus. In cooperation with the private sector, the Ministry of Trade and Industry (MINICOM) receives support in implementing sector strategies for economic policy in the form of action programmes. Special emphasis is placed on sectoral and regional value chains. This area of intervention is being coordinated by a sub-contractor – a consortium comprising the consulting firms GFA and COMO. Structures are being developed to enable a constructive public-private dialogue and facilitate regional development partnerships. At the same time, a vocational training strategy for selected economic sectors, specialised services and promotion of the national Workforce Development Authority is being drawn up.

Jobs can be created – and also filled with better qualified personnel – if favourable conditions are encouraged and obstacles to company growth removed, and if support is given to regional and sector-wide value chain approaches and the adoption of new forms of demand- and practice-oriented training. The transition of large numbers of people from subsistence agriculture to employment in skilled crafts and the service sector makes an important contribution to poverty reduction.

Results achieved so far

Business and investment climate. Conditions in the private sector have improved as a result of economic policy advice to MINICOM, and the institutions of the private sector and intermediary organisations (Private Sector Federation, Rwanda Development Board and its members, Rwanda Bureau of Standards) have been strengthened. Transaction costs for commercial enterprises have been reduced by cutting the amount state bureaucracy and by improving the performance of the intermediary organisations. Also, the public-private dialogue has been enhanced by using appropriate instruments (Business Climate Survey, Red Tape Study).

Moreover, three companies were selected for support in the form of development partnerships with the private sector (public-private partnerships). These companies represent three different industries: textile and silk production (UTEXRWA), leather manufacturing (Rwanda Leather Industry) and vegetable production and processing (Rwanda Flora). The resulting expansion and diversification of their product ranges and quality improvements led to a marked increase in turnover at these partner companies.

Vocational training and labour market. As provided for in the technical and vocational education and training (TVET) strategy established in 2007, the Ministry of Education (MINEDUC) has taken over responsibility for all aspects of TVET. The Workforce Development Authority, founded in 2008, has been built up into an effective and fully operational institution with expanded staff numbers and a significantly larger budget. The Labour Market Information System (LMIS), also launched in 2008, collates key data concerning the needs of Rwandan business and the available workforce, and increasingly publishes this information. A manpower survey is currently in preparation to supplement the existing data by examining employment promotion needs. Additionally, the development of a concept for a national employment agency together with MIFOTRA (Ministry of Public Service and Labour) has been launched.

Since 2009, in the courses selected for support at participating schools, vocational students have been benefiting from needs-based, up-dated curricula and modernised teaching materials. This has been achieved with the support of the Association of Technical and Vocational Schools (TEVSA), founded in 2007. As a result, the students involved have better chances of entering the national labour market. The programme supports the private sector in its overall development and with the implementation of training measures and the introduction of vocational internships for TVET graduates.