Social protection could adversely be affected as its budget for the next fiscal year faces a Rwf29 billion cut from Rwf80 billion in the current revised budget, to Rwf51 billion projected allocation for 2021/2022, according to data from the Ministry of Local Government (MINALOC).
This was revealed during the proposed 2021/2022 budget hearings on Friday, May 14, 2021 as MINALOC and its affiliated institutions were virtually presenting their projected budget allocations to the parliamentary committee on national budget and state patrimony.
The budget hearings are intended to understand the budget allocations, priorities, as well as challenges or funding gaps that might hinder the implementation of important national programmes.
Such considerations will help Members of Parliament to analyse the budget and make adjustments that are needed for fair and reasonable budget allocations before approving the financial plan.
"Social protection projects intended to improve the welfare of citizens face a funding gap as the allocated financing is very little compared to the needed budget, such that it would need reconsideration,” said Samuel Dusengiyumva, the Permanent Secretary at MINALOC.
Meanwhile, he commended the Ministry of Finance and Economic Planning for having given an instruction that all infrastructure projects should make priority employing residents within the vicinity of these projects.
This, he said, will boost the livelihood of the people.
The projected decrease in social protection funding is largely attributed to the Covid-19 pandemic that has had a negative impact on sources of revenues, according to officials.
They said that it comes even as the Strengthening Social Protection Project funded by the World Bank will wind up in December 2021, a situation that requires strategies to ensure further funding for social protection going forward.
The project worth $80 million (equivalent to about Rwf67billion in 2017 and about Rwf80 billion based on the current exchange rates), was reached between the government and World Bank to support the country’s Social Protection System.
The project was meant to help expand the coverage and improve the effectiveness of the Vision 2020 Umurenge Programme (VUP), thus increasing the number of households receiving income support.
VUP is an integrated local development program to accelerate poverty eradication, rural growth, and social protection. It was launched in 2008.
In February 2021, the World Bank’s Rwanda Economic Update indicated that the Rwandan economy has fallen into its first recession, estimating that the country’s gross domestic product (GDP) was estimated to have dropped by 0.2 percent in 2020, compared to a projected expansion of 8 percent before the Covid-19 outbreak.
The recession, it said, was due to the Covid-19 pandemic and could potentially compromise years of gains in poverty reduction.
Moreover, it estimated that, because of the lockdown, social distancing, and increased costs associated with the pandemic, the poverty headcount was likely to rise by 5.1 percentage points (more than 550,000 people) in 2021, with more than 80 percent of the new poor in rural areas.
Social protection so important that more funding needed
LODA Director-General, Claudine Marie-Solange Nyinawagaga said that social protection is an important initiative in terms of lifting people out of poverty so as to achieve the goals planned for under the first phase of the National Strategy for Transformation (NST1), enabling citizens to get the services they need and the support they expect from the leadership.
Regarding development projects, She said that the Ministry of Finance and Economic Planning gave them a guidance to put emphasis on ongoing projects – which is understandable because we are in the context of the Covid-19 pandemic when resources have been reduced.
But, she indicated that the social protection funds (Rwf51 billion) earmarked for the 2021/2022 budget are too little.
"Such allocation for the next fiscal year cannot even cover the ongoing projects, yet, there are also [other] social protection programmes that are needed in order to create jobs for the residents through public works, and the mandatory direct support provision to the vulnerable beneficiaries,” she said.
"We consider direct support as critical because once the vulnerable beneficiary does not get it, they cannot survive,” she said.
She said that job creation through public works, not only does it help tackle poverty, it also contributes to the growth of the country’s economy.
"That has a huge multiplier effect,” she said.
At the end of March 2019, in line with the objective to increase access to social security and income support programmes, over 137,000 households from 244 sectors benefited from VUP public works programme while more than 107,000 eligible households received direct support (cash transfers), according to information from the Ministry of Finance and Economic Planning.