Background and introduction

The Independent Office of Evaluation of IFAD (IOE) conducted a country programme evaluation (CPE) in Rwanda in 2010/2011. The CPE had two basic objectives: (i) to evaluate the performance and impact of IFAD's operations in the country; and (ii) to generate lessons and recommendations to inform the next country strategic opportunities programme (COSOP) for Rwanda.

The agreement at completion point (ACP) reflects the agreement between the Government of Rwanda (represented by the Ministry of Agriculture and Animal Resources, MINAGRI) and IFAD Management (represented by the Associate Vice President, Programmes) on the main evaluation findings (see section B below), as well as the commitment to adopt and implement within specific timeframes the recommendations included in part C of this document. The ACP contains inputs gathered at the national roundtable discussion held on 29 September 2011 in Kigali, Rwanda. It is noted that IOE does not sign the ACP, although it facilitated the process leading up to its conclusion. The recommendations agreed upon will be tracked through the President's Report on the Implementation Status of Evaluation Recommendations and Management Actions. In addition, this ACP will be submitted to the Executive Board of IFAD as an annex, along with the new COSOP for Rwanda.

Main evaluation findings

The CPE found that, during the period under review (2000-2010), the partnership between the Government of Rwanda and IFAD had made a significant contribution to reducing rural poverty, and that the performance of the portfolio has improved since the CPE of 2005. On IFAD's part, contributing factors include a more participatory approach and transition to direct supervision, while, on the part of the Government, they include the introduction of clearly-defined strategies and programmes as well as a strong accountability framework. Rwanda's governance culture is highly results-oriented, thereby ensuring that policies and strategies are implemented.

The relevance of the portfolio has been assessed as satisfactory. The main thematic thrusts are highly relevant to the national context and sectoral strategies and to IFAD's COSOPs. Overall, they are technically sound and adopt approaches conducive to achieving their main objectives. Nevertheless, the CPE identified selected design issues. In particular, the support for rural finance, an element of the early part of the period under review, was not designed based on best practices and IFAD's rural finance policies. The design of support for watersheds has not adequately anchored its implementation in local government structures. Finally, the design of support for export crop value chains was broadly valid but did not take sufficient account of the food security risks faced by households with very small landholdings.

Overall, the portfolio has been effective. It made satisfactory progress in meeting the projects' immediate objectives, and in some cases exceeding them, particularly for watershed and rural enterprise development. Support to developing the capacity of cooperatives and local governments has been less effective to date, while that for rural finance made no contribution to developing a sustainable rural finance system. The portfolio has been generally efficient: target achievement, time overruns and the share of project management costs in total project costs are generally in the satisfactory zone. Monitoring and evaluation systems are generally superior to those of other projects in the region, and include systems for assessing impact.

Impact has been strong in generating income and access to household assets and in improving food security. In the case of cash crop development, however, protection measures have been missing for very small landholders during the cash tree growing. Prospects for sustainability have been found moderately satisfactory. While many of the activities in the watersheds are likely to be sustained, either by the beneficiaries alone or with government assistance, there are serious questions as to the sustainability of rural finance and cooperatives. The evaluation expressed concern that the Government's policy to formalize the economy, pushing informal entities to register as cooperatives or companies, will be implemented too rapidly, without allowing for a proper transition. Some of the newly-formed cooperatives do not as yet have the capacity to manage high levels of debt and complex operations (e.g. coffee cooperatives).

The portfolio has been moderately innovative. The most important innovations are in the area of improved agricultural practices for yield increases and soil management, which have been the subject of a major testing effort and gradual scaling up. Outside this area, innovativeness and the potential for scaling up have been more limited. Progress has been more modest in upgrading the technology for microenterprises, particularly in relation to the processing of agricultural produce. Progress in gender equality and women's empowerment has been satisfactory, thanks to the participation of women in the activities supported and in the management of cooperatives and associations, which has contributed to raising their status and economic independence.  

The performance of non-lending activities is assessed as moderately satisfactory overall, with policy dialogue rated moderately unsatisfactory and knowledge-management and partnership building both rated moderately satisfactory. IFAD has provided technical assistance to the Government to develop its policies and strategies (e.g. the Strategic Plan for the Transformation of Agriculture) but there has been limited institutional-level dialogue between IFAD and the Government on policy directions and strategic objectives. It should be recognized, however, that in the past the Government has seldom invited IFAD to join in such dialogue. Financial partnerships with the Government and other development partners are well established, but there is need for a more active and profiled IFAD participation in sector working groups. Partnerships with the private sector and NGOs have taken the form of contracting out service provision in projects. A new experiment of private-public partnership has recently emerged in the tea sector. Regarding knowledge-management, the situation is positive within and among the projects but IFAD has invested limited resources in capturing and learning from the experiences of other development partners.

Over the period under review, IFAD prepared two strategies (COSOPs) for its cooperation with the Government of Rwanda, in 2002 and 2007. The strategies were very well aligned to Government and IFAD policies and relevant to the national context. However, the CPE noted some inconsistency in the definition of target groups, in particular the various vulnerable groups. Also, while COSOPs have identified areas of policy dialogue and partnership, no action plans (and related resource allocations) have been drawn up. Within policy dialogue in particular, while there is room for improvement, this will require that the Government invites IFAD to contribute its international experience. And while it is the Government's prerogative to define the country's strategic objectives, IFAD's international experiences could, in some areas, contribute to defining strategies and approaches for achieving objectives. With respect to COSOP effectiveness, the CPE finds that there has been progress in achieving the strategic objectives and that IFAD's country programme has contributed to this progress.

The partnership between IFAD and the Government of Rwanda has, overall, been satisfactory and has addressed sub-sectors relevant to poverty reduction. Rwanda has now a more solid institutional and policy environment compared to when the 2007 COSOP was formulated. Adapting to this new context implies, inter alia, pitching the objectives of the programme and the type of interventions at a higher level. Attention will need to be reinforced on, and adequate resources allocated to, non-lending activities (policy dialogue, partnership building and knowledge management) to pursue development objectives that were only achieved in part or not at all (e.g. institutional development of local government, rural finance), as well as to harmonization and strategic programme management. The present CPE argues that portfolio development activities will remain very important and probably absorb the greater part of IFAD's investments. However, recommendations are deliberately presented starting from "higher plane" objectives as these have so far commanded limited resources.

Agreement at completion point

Recommendation 1

C.1. Place greater emphasis on institutional support and non-lending activities to promote the scaling up of innovations and harmonized approaches to rural finance and cooperative development.

These recommendations include two sub-areas: (i) providing institutional support to local government for the scaling up of agricultural innovations and pave the way to SWAp preparation; and (ii) programme-based support to participate in harmonized frameworks in rural finance and cooperative development. This calls for a gradual shift from project focus towards more attention on the systematization of lessons learned both from within and outside the IFAD portfolio. It also calls for further dialogue and harmonization with development partners and for sharing knowledge, experiences and values in the policy arena.

C.1.a. Provide institutional support to local governments in the scaling up of agricultural innovations and in paving the way for the forthcoming agricultural SWAp.

Individual projects such as the Support Project for the Strategic Plan for the Transformation of Agriculture (PAPSTA) and the Kirehe Community-based Watershed Management Project (KWAMP) have helped promote emerging agricultural innovations. The long-term challenge to scale up such innovations is of an institutional nature. The challenge is to define an institutional approach that fits into the decentralization process and local government structure. As decentralization proceeds into its third phase (2011-2015) and district and sector administrations/governments further develop their capacity, it may be possible to transfer full responsibility for implementation to local governments.

Such transfer would need to be facilitated. IFAD, in collaboration with the central and local governments and other developing partners, should support the development and systematization of approaches and guidance tools that help local governments plan, implement and monitor the various technical interventions. These approaches and tools may create the basis for central government grants to local governments for watershed development, which could be one of the important pillars of the agricultural SWAp. IFAD will explore opportunities for integrating its interventions in the forthcoming SWAp in order to ensure its participation in major strategic and policy dialogue initiatives in the agriculture and rural development sector. IFAD's participation in the SWAp may also include the development of implementation tools and methodologies that ensures ownership by local governments in up-scaling innovations.

Proposed follow-up: IFAD will explore opportunities for integrating the agricultural existing and new projects it supports in the forthcoming agricultural SWAp by: (i) strengthening the role of district authorities in project planning and implementation through growing partnerships between districts and the single project implementation unit, and through improved watershed management planning ; and (ii) supporting MINAGRI in the development of at least 3 concept notes for modular key intervention areas such as Watershed Management Planning (WMP), soil and water conservation, and community innovation centres (CCIs).

Deadlines for implementation:

• No deadline, as this is a continuing process; and
• End-December 2012

Entities responsible for implementation:

• MINAGRI, supported by IFAD implementation support missions; and
• MINAGRI, supported by IFAD.

C.1.b. Support harmonized thematic programmes in rural/micro finance and cooperative development.

Within as well as outside IFAD-financed portfolio, support is provided for the development of rural/micro finance and cooperatives but approaches and methodologies often differ. The present CPE finds that such support is of an ad hoc character and that systemic issues are not addressed in a coherent and harmonized manner. Through a modest financial contribution to harmonized thematic programmes, IFAD could establish its presence in high-level policy dialogue and share its experiences.

In rural finance, explore the option for support to Access to Finance Rwanda (AFR). IFAD should stay involved in rural finance in Rwanda. Despite problematic experiences in Rwanda, the Fund has relevant lessons to contribute through its regional and global portfolio. AFR, established by the Government and several development partners led by the United Kingdom Department for International Development (DfID), is expected to address systemic issues with a view to increasing access to finance, particularly for the large numbers of people who have no, or only limited, access to financial services. Recently, DfID has supported Government in developing a Rural and Agricultural Finance Strategy and AFR has presented a sustainability strategy for Savings and Credit Cooperatives. Even a modest financial participation from IFAD would be important because it would allow IFAD to contribute to the agenda and work, based on its own experience in implementing the portfolio and, at the same time, benefit from exchanges of information. Being outside these harmonized frameworks would severely limit IFAD's ability to engage in policy dialogue and knowledge management. Obviously, IFAD's contribution to AFR should be based on an assessment of whether this facility provides an effective contribution to rural poverty reduction objectives.

Regarding cooperative development, IFAD should contribute to efforts to develop a harmonized support framework. The Rwanda Cooperative Agency reports that it is planning to harmonize the current highly fragmented support for cooperative development; it would be appropriate for IFAD to support this endeavour. If the initiative leads to a harmonized framework with financial support from government and several development partners, IFAD should explore the possibility of making a financial contribution so as to become an active participant, as per the rationale described above.

Proposed follow-up: IFAD will: (i) work with MINAGRI to implement the Rural and Agricultural Finance Strategy, including possible collaboration with sector-wide initiatives to strengthen rural financial services, such as AFR; (ii) continue the integration of systematic support packages to cooperative development in its Country Programme.

• Deadline for implementation: End-December 2014.
• Entity responsible for implementation: IFAD

Recommendation 2

C.2. Move towards more strategic programme management and reliance on national systems, in line with the Paris Declaration.

Increased engagement in non-lending activities will call for a review of current transaction costs in individual project follow-up. In line with the Paris Declaration, IFAD/Government project cooperation should rely more on the Government's accountability and implementation systems, recognized as among the best and most efficient in sub-Saharan Africa. IFAD should move away from micro management, leaving this to government systems, while adopting a more strategic management approach.

In this new role, IFAD would use more of its country programme management resources for addressing strategic issues both within and above projects. This should also include more strategic use of technical assistance grants, not only for project design but also for developing the capacity of institutions so that national institutions can take over activities once the projects end. This would be a gradual process, adapted to capacity improvements in government systems, where IFAD and the Government would continuously reassess what should and can be done by government institutions, and what are the most conducive cooperation procedures for ensuring accountability and local ownership. The introduction of portfolio-wide annual joint reviews between the Government and IFAD has been a commendable step towards strategic portfolio management. Additional measures are indicated below.

C.2.a. Replace PCUs with facilitation support.

In the current portfolio, there is a tendency to perceive projects as independent institutions and the PCUs as their managers - while in reality "a project" is no more than a temporary initiative for partner institutions. Recent government policy encourages Ministries to reduce the number of PCUs by establishing a single project implementation unit for all donor-assisted projects. Though the efficiency of this new set-up has yet to be demonstrated, eventually IFAD may have to comply and change its implementation management procedures. Under the new set-up, it is recommended that IFAD's projects should include the provision of technical assistance/facilitation support, not as decision-making managers but as advisers and facilitators, to the implementing management units - whether at the central ministry level or within district administrations.

Proposed follow-up: IFAD will explore opportunities for integrating the agricultural existing and new projects it supports in the forthcoming agricultural SWAp by: (i) supporting MINAGRI and the Ministry of Trade and Industry (MINICOM) in transforming the PCUs to a single unit of the MINAGRI Single Project Implementation Unit;

• Deadlines for implementation: End-December 2011
• Entities responsible for implementation: MINAGRI

C.2.b. Articulate more clearly the division of labour between the headquarters, the IFAD regional office in Nairobi and the country office.

This implies giving a more substantive role to the latter in partnership-building, policy dialogue and knowledge management. In this context, consideration should also be given to defining the technical backstopping functions of the Nairobi office, which, for example, could include quality assurance of baseline and impact surveys.

Proposed follow-up: IFAD will raise the implementation support role of its Rwanda country office, covering both technical and fiduciary issues. Support will be provided by the Regional Office in Nairobi. However, a quality assurance role is not foreseen for the Regional Office.

• Deadlines for implementation: No deadline, as this is a continuing process.
• Entities responsible for implementation: IFAD

C.2.c. Undertake joint supervision missions with the Government and development partners.

One can reduce transaction costs of IFAD, of the concerned Ministries and of development partners by having more joint supervision and implementation support missions. When feasible, it should be considered to field a single mission covering several projects executed by the same Ministry.

Proposed follow-up: IFAD has conducted joint missions with the Department for International Development (United Kingdom) for PAPSTA and UNIDO for PPPMER, with good experience. This practice will continue for cofinanced projects. Single missions covering several projects may be experimented with, in particular thematic supervision missions (for example focusing on M&E, knowledge management or financial management of several projects). However, the prospects of providing concrete implementation support in the context of increasing project size must be kept in view in such undertakings.

Target for implementation: At least one joint mission per calendar year, and explore scope for thematic supervision missions.
Entities responsible for implementation: IFAD

Recommendation 3

C.3. Develop strengthened sub-sectoral support activities around three main axes: (a) protection of the natural resource base in the watersheds; and develop pro-poor agricultural value chains based on private-public partnerships in (b) food crops and (c) cash and export crops.

C.3.a. Sustainable natural resources development in the watersheds and carbon financing.

IFAD's future programme should continue its watershed development initiatives, including the promotion and scaling up of agricultural innovations and soil and watershed protection. It should better assess and document environmental risks as well as opportunities. Both the 2007 COSOP and past project design documents did not include a detailed assessment of environmental risks and trade-offs, and thus no mitigation plans. The next COSOP should include a strategic analysis of environmental and natural resource management issues, in line with the requirements of IFAD's Environment and Natural Resource Management Policy, and explore opportunities for qualifying for carbon financing. Future project designs should include environmental and social impact assessments.

Proposed follow-up: The recommendation regarding priority sub-sectors will be considered during the design of the next COSOP. In this context, the possible uptake of the three proposed main axes will remain the joint decision of IFAD and the government, supported by the Country Programme Management Team. However, a detailed assessment of environmental risks and trade-offs is not likely to be practical at the COSOP stage, as a risk analysis and the development of mitigation measures will always depend on the clear definition of activities, which is only done after the COSOP stage when proceeding to project design. Such analysis would thus risk remaining superficial and irrelevant.

• Deadline for implementation: September 2013
• Entities responsible for implementation: IFAD

C.3.b. Support for the development of value chains for food crops and livestock products through private-public partnerships.

While many farm households have increased their production of food crops and livestock products beyond subsistence needs over the last three years, the systems needed to handle these surpluses (e.g. warehouses, processing and marketing) are not available. Major investments (capital and human resources investments) are required to handle the rapidly increasing surpluses. Given Rwanda's small farm sizes, the country's long-term competitive advantage is unlikely to be in low-value staple food crops that can be produced at lower cost in countries with an abundance of land.

For this reason, IFAD should consider moving towards higher-value commodities produced in intensive systems with a high labour input, and with potential for creating significant non-farm employment in processing and marketing enterprises. Based on current intensive zero-grazing systems, dairy would be an obvious candidate - but other candidates may include high-value horticultural products.

Proposed follow-up: The recommendation relates to the choice of both the priority sub-sectors and the support approach. While the former is covered by recommendation 3.a above, the latter (the choice of the value chain approach) is fully agreed for the sub-sectors that require the horizontal integration of the up and downstream industries. Its integration will be looked at during the design of the next COSOP.

• Deadline for implementation: September 2013
• Entities responsible for implementation: IFAD

C.3.c. Support a pro-poor development of export and cash crops and products through private-public partnerships.

Apart from their foreign exchange contributions, some crops have potential for generating significant on- and off-farm employment. For tea and coffee, there are still a number of unexploited value addition activities. Albeit currently in a difficult start-up phase, sericulture could well create many on- and off-farm jobs in activities that are highly labour-intensive and with products of high value to weight. According to international sericulture experts, Rwanda's climatic and natural resource conditions are well suited to sericulture.

Special mitigating measures (e.g. based on support to subsistence crops or food-for-work schemes) need to be considered for very poor households. This is because value-chain development for export and cash crops often fails to involve marginal landholders, and expansion of export/cash crop areas may be at the cost of food crops and food security.

In pursuing public-private partnerships, support will be needed to promote transparent agreements and competition in order to address situations whereby a large private investor, owing to limited competition, might exploit producers. Consideration will need to be given to the complexity and scale of operations. For certain levels of scale and complexity, private companies may be in a better position than the newly-established cooperatives. Thus, an approach for private-sector development, including development of public-private partnerships, should be developed to guide such support.

Proposed follow-up: The recommendation has already been implemented in the design of the Project for Rural Income through Exports (PRICE), which builds on the successful public-private partnership of the Smallholder Cash and Export Crops Development Project (PDCRE) in the tea sub-sector. PRICE also includes innovative public-private partnerships in the sericulture and horticulture value chains.

• Deadline for implementation: September 2011.
• Entities responsible for implementation: IFAD, with support from MINAGRI.