NEWS WIRE: Rwanda: Receives $6m from World Bank to Fund Reforms in the Microfinance Sector

Source: The New Vision.

Original news wire available here.

KIGALI, RWANDA, July 27 – Rwanda received a USD 41 million grant from the World Bank to finance projects in the agricultural and financial sectors. The World Bank signed a four-year USD 35 million grant to help the central African country reclaim existing marshland and an extra USD 6 million to fund reforms in the micro-finance sector.

“We were pleased with achievements in the first phase of our support to the agricultural sector. This grant comes to enhance and consolidate capacity and ensure continuity of what was achieved,” said Victoria Kwakwa, the bank’s country manager.

Rwanda’s economy largely depends on rain-fed agriculture and poor rains last year saw the sector register negative growth. Part of the grant will help in irrigation plans and support efforts to commercialise the largely subsistence agricultural sector, the World Bank said. The grant follows a similar USD 50 million tranche that covered the last four years.

Rwanda’s finance minister predicted agriculture would grow by at least 7 percent in 2008 mainly due to greater use of fertilizers, better farming methods and good rains this year.

“If we record good growth in agriculture and keep our good growth figures in services and industry, then our economy will certainly grow within the range that we set,” James Musoni said.

Rwanda expects its economy to expand between 7 percent and 8 percent this year. Rwanda, which is led by Paul Kagame, has about 90 percent of the population engaged in agriculture. It is the most densely populated country in Africa; is landlocked; and has few natural resources.

Primary exports are coffee and tea. The 1994 genocide destroyed Rwanda’s fragile economic base, severely impoverished the population, particularly women, and eroded the country’s ability to attract private and external investment.

However, Rwanda has made significant progress in stabilising and rehabilitating its economy. In June 1998, Rwanda signed an Enhanced Structural Adjustment Facility with the International Finance Corporation (IFC). Rwanda has also embarked upon an ambitious privatisation programme with the World Bank.

Continued growth depends on the maintenance of international aid levels and strengthening of world prices of coffee and tea.

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