Out of the World Bank (WB) $80 million (Rwf45.5 billion) grant donation, the agriculture sector will receive a share of $10 million (Rwf5.7 billion).
This is to help farmers’ access loans to promote agricultural production and development.
The grant deal is channelled through the national budget for the Fifth Poverty Reduction Support Grant (PRSG.V) to assist government with the implementation of the 2009 mini-budget.
The six month budget underlines key policy actions in the Economic and Development Poverty Reduction Strategy (EDPRS).
The grant was signed last week between the WB Country Manager, Victoria Kwakwa and the Minister of Finance and Economic Planning, James Musoni.
Musoni explained, “We expect this form of assistance to enhance the reduction of poverty through pro-poor growth.”
Apart from the agriculture sector, the total grant will also enhance access to energy, transport and creation of an attractive business environment.
“We are confident that the support will make a difference in creating job opportunities and increase agricultural produce,” Kwakwa said.
This is the first time the Common Performance Assessment framework (CPAF) was used in the PRSG series in order to harmonise the economic performance.
The National Bank of Rwanda (BNR) will administer the grant the under the Rural Investment Facility (RIF).
However, the first disbursement will be made after parliament’s approval of the grant. This is expected within two weeks.
The funding comes at a time when the latest World Development Report calls for greater investment in agriculture in Africa.
The report warns that the sector must be placed at the centre of the development agenda if the goals of halving extreme poverty and hunger by 2015 are to be realised.
It is expected that a greater focus on agriculture will help boost overall economic growth and can offer multiple pathways out of poverty.
Agriculture in Sub-Saharan Africa employs 65 percent of the labour force and generates 32 percent of GDP growth.
In Rwanda, the sector employs about 80 percent of the population and contributed 11.2 percent to the GDP last year.
This was attributed to the favourable weather conditions experienced countrywide throughout the year.