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ActionAid's Analysis of 2013/2014 Rwanda National Budget on Agriculture

Using the FAO MAFAP classification, Rwanda has surpassed the 10% CAADP requirement for public spending in agriculture over the last seven years except for the year 2007 when the 9% spending in agriculture was below the CAADP requirement of 10%.

In addition, the government is spending just over half the budget on foundational issues. The question is, however, is this enough? This represents a reduction from previous years and a reduction from the amounts pledged in EDPRS-2. The proportion of the budget being spent on health (9%) is below the 15% recommended in the Maputo agreement, and the 15 per cent being spent on education (from foundational issues and youth employment) is at the very bottom end of the recommendation for the per cent of budget to be spent on education (15-20 %).  

Critically analysing the rural development, what is being done to help the very poorest, especially the landless or near landless in rural areas? The spending on rural development seems to be focused on the better-off small farmers as opposed to rural poor smallholder farmers, women in particular.

At a time when only around 50 per cent of children are completing primary school by the age of 19 and there is clear evidence that learning is inadequate; when the majority of teachers do not have a good command of English, the language they are expected to teach in; when double-shifting in 9YBE is still the norm; and few children have the opportunity of pre-school education, should more be invested in primary school education? From the perspective of a rights-based approach to development, this raises serious questions about the ability of all citizens to claim their rights.

There is a danger that investment in technical and vocational education and training (TVET) and youth employment will disproportionately benefit those from better off homes, living in urban areas and boys/male youth. Not least because youth from better off homes and those living in urban areas are more likely to have the functional literacy skills to be able to benefit from the training to be provided.  Again this increases the potential for widening inequalities as non-farm employment pays more than farming. Girls are also less likely to benefit because the investment is in job creation is in areas girls have traditionally not worked in. What strategies are in place to ensure that women farmers benefit disproportionately from investment in agricultural transformation, TVET and access to non-farm employment?

Further inequalities within the agricultural sector could be avoided by prioritizing government expenditure on priority food crops in addition to cash crops to ensure that increased agricultural commercialization and spending on cash and export crops does not compromise food security within rural farm households. Given that stunting in children is at about 40% in Rwanda, it is important to prioritize food crops as well cash crops. While the government may allocate a larger portion of its agricultural spending on cash crops, the impact of cash crops on rural poverty reduction may be lower. This is because food crops for consumption contribute the largest share to smallholder farmers’ well being. Household power relations imply that men in household control most of the proceeds from cash crop sales and this might negatively affect the welfare of children and women in farm households. Therefore, as the government prioritizes intensification and commercialization to expand Rwanda’s export base, it must be mindful of food security concerns in order to ensure that rural farm households have adequate food for consumption by empowering women farmers.

While the government has been able to finance 60 per cent of the national budget using domestic resources in 2013, donor dependence in financing the agriculture budget is still high. This trend is not sustainable in the long term and needs to be reversed through the development of agricultural value chains in Rwanda to enable private sector actors like traders, input suppliers, exporters and financial institutions others to enter into agricultural value chains and sustain financing in the sector over the long term. This calls for added efforts to implement Rwanda's 2011 Rural Financing Strategy in the agricultural sector, which has been developed but not widely implemented

Rwanda has achieved significant gains with Crop Intensification Program (CIP) and its land consolidation program. However, there still remains a risk of generating a rural-rural divide between landless households and those households with land since the bulk of CIP and land consolidation spending targets households with land. The government should increase spending in the agricultural sector in order to meet the needs of the landless households by creating off-farm activities in agro-processing within rural areas. This increased spending on agro-processing will also help the government increase non-farm employment and will greatly reduce poverty in rural areas.

Given that women are likely to benefit less than men from the cooperative bank formed from the Umurenge SACCOs, the government should take measures to ensure women are financially included. This can be achieved through increased empowerment of rural women in order to increase their rights to household resources like land. On-going efforts in land titling should sensitize women that they jointly own land and can mutually agree with their husbands to use land titles to increase their access to credit. In addition financial institutions need to be sensitized in order to change traditional mind-sets and biases regarding women farmers’ access to credit. Land titling coupled with sensitizing households and financial institutions about the importance of women access to finance will help increase access to credit among women in Rwanda. In addition the government should implement other avenues of agricultural financing including leasing, which will help smallholder farmers acquire farm machinery and labour saving technologies on lease. This will reduce the drudgery faced by rural women farmers.

Although the budget is seemingly pro-poor, there is need to put more emphasis on initiatives that target rural poor women smallholder farmers who contribute almost 80% to the agriculture sector. It is true that the government needs to invest in economic transformation if Rwanda is to become a middle-income country.  However, the benefits from this transformation are long term, and there is no guarantee that the poor will benefit. In fact, there is potential for widening economic differences. Despite the decline in poverty and the narrowing of socio-economic differences, poverty is still high as are socio-economic differences (poor/better off, urban/rural and gender). There is a danger of widening inequalities between the poor and the better off, those living in urban and rural areas, and between men and women if initiatives to empower rural women farmers are not emphasized in the long run.

Recommendations for Public Financing in Agriculture

·        Reduce the large donor dependence in the agriculture sector and increase public financing within the agriculture sector that empowers and benefit smallholders women farmers

·        Increase financing of storage and agro-processing programs that favours landless households in line with the Crop Intensification Program (CIP); increased financing would also allow landless households to carry out additional income generating activities other than just selling labour to those have land.

·        Prioritize expenditure on priority food crops and smallholder farmers while creating a balance on cash crops to avert food imports threatening rural and family farms.

·        Increase capital expenditure on labour saving technologies, equipment and machinery in the agricultural sector that benefits smallholder farmers especially women while recognizing their “fair shares[1]”.

·        Increase spending on storage to reduce pre-harvest and post-harvest crop losses among smallholders.

  • Grant the Finance Ministry (not solely the Investment Promotion Authority) powers over tax incentive decisions.
  • Refrain from entering into stability clauses (which lock in tax incentives long term) when negotiating new tax incentives and investment agreements.
  • Ensure that tax incentives are audited by the Auditor General’s Office to check that the investment for which an incentive is offered has actually been carried out.

[1] Fair Shares concept means that government must promote investment and policies that recognises, support, encourage and align with smallholder farmers own investment in agriculture and food security