Guidance Notes: Rural Development FinalVersion Issue • The EDPRS I (2008-2012) Flagship Themes of Sustainable Growth for Jobs and Exports and Vision 2020 Umurenge in different ways focused on rural development to attain, over the last five years, an economic growth of 8% a year and poverty reduction of 12% (headcount). • However, poverty in rural areas remains persistent and rural areasstill lack basic access to services and markets. Income generating potential from private sector investment also remains vastly underutilized, mainly due to the inherent risks in agriculture. Therefore both public (facilitating access to services) and private investments (creating employment and sustainable growth) are required for rural development.Agriculture growth fuelled by public and private investments will allow further poverty reduction. • The concept of rural development is defined as the development of the non-urban space in Rwanda. In other words, it refers to the process of improving the quality of life and economic wellbeing of people living in rural areas. However, given the intrinsic rural-urban linkages, if done effectively, rural development will greatly assist the process of urbanization. • While economic transformation continues in order to attain Vision 2020 targets, there is a need to ensure that growth is equitable, food security is ensured and access to basic services is guaranteed and the depth of poverty is reduced in all districts in Rwanda.In particular, female subsistence farmers, who are arguably the largest most vulnerable population, need to receive the proceeds of economic growth.Even if the role of agriculture growth (as a proportion of GDP)declines with structural economic transformation, rural development will continue to be critical to reducing poverty and inequality. • This rural development thematic guidance provides the strategic framework that will facilitate the co-coordinated implementation of sector strategies and District Development Plans (DDPs) to reduce rural poverty in Rwanda. Rural Development Primary Objectives 1) Rural Poverty is Significantly Reduced in all Districts – This culminatesin an average of 15% reduction in overall poverty reduction. 2) Proceeds of Growth are Equitable: Inequality, as measured by the Gini coefficient,across districts/provinces is further reduced to ensure that economic transformation benefits all Rwandans. 3) Economic Transformation Occurs within the Rural Population – Rural development is the engine of the potential 8.5% agricultural growth and contributes to the 11.5% national economic growth. Growth accounting should reveal which sub-sectors can be targeted to facilitate economic growth. Background Analysis • This section seeks to provide, firstly, the rationale for rural development as a thematic area and secondly, the justification for the areas of focus for sectors and districts over the coming 5 years. We analyze EICV III data and other reports to satisfy these two demands. • The rural sector accounts for over 80% employment in Rwanda, with the main sector being agriculture, making up 32% of GDP. The rural world therefore dominates the urban in Rwanda with over 9 out of 10 people living in rural areas. Poverty remains largely a rural and agricultural phenomenon, with rural poverty at 48.7% (urban 22.1%). Province 2000/01 2005/06 2010/11 Kigali City Southern Province Western Province Northern Province Eastern Province 22.7% 65.5% 62.3% 64.2% 59.3% 20.8% 66.7% 60.4% 60.5% 52.1% 16.8% 56.5% 48.4% 42.8% 42.6% 28.5% 61.9% 56.7% 22.1% 48.7% 44.9% Urban Rural Total 58.9% Figure 1: Poverty Rate (Headcount) • Rural poverty fell from 61.9% to 48.7% in the last five years (EICV III). Extreme rural poverty fell from 39.5% to 26.4% (EICV III). However, many poor Rwandans continue to live at levels very far below the poverty line. It is very important to note that the headcount measure only counts people below the national poverty line (118,000 RwF annual income, 2011 prices) – it is does not differentiate between a person earning 105,000 RwF and the other earning 60,000 RwF as both are counted as simply being below the poverty line. The poverty-depth measurement – the proportion of the population that falls beneath the poverty line, shows that many are very far from getting near the poverty line. This has implications for poverty targeting. It should be noted for comparison that rural consumption is three times less that of urban consumption. Province Kigali City Southern Province Western Province Northern Province Eastern Province 2000/01 14.5% 44.7% 40.4% 46.5% 39.4% Urban Rural Total 40.0% Figure 2: Extreme Poverty Rates • 2005/06 12.9% 44.9% 37.7% 39.1% 29.9% 2010/11 16.0% 39.5% 10.4% 26.4% 35.8% 24.1% 7.8% 31.1% 27.4% 23.5% 20.8% Looking at the changes, there was a significant decline in poverty in 13 out of 30 districts. While we observe differences in poverty across districts, ranging from 8.3% to 73%, rural poverty in Rwanda remains highly persistent. All Provinces had districts that performed well and those that did not. Poverty reduction therefore varies significantly, even within Provinces. When looking at extreme poverty and poverty depth combined we see that the pervasive poverty is in the South, West and Northern provinces. In particular, the highest levels of poverty from these measures can be summarized as:Gakenke, Gicumbi, Nyamagabe, Nyaruguru, Ruhango, Gisagara, Karongi, Nyamasheke, Rutsiro, 2 Ngororero. Poverty by province and district 90% 80% North Eastern South West Kigali 70% 60% 50% 40% 30% 20% 10% Musanze Burera Gicumbi Rulindo Gakenke Kirehe Gatsibo Nyagatare Bugesera Ngoma Kayonza Nyaruguru Gisagara Nyanza Huye Kamonyi Ruhango Nyamagabe Muhanga Nyabihu Rubavu Rutsiro Ngororero Rwamagana Rusizi Nyamasheke Karongi Kicukiro Gasabo Nyarugenge 0% Poverty 2010/11 Reduction in poverty since 2005/06 Figure 3: Poverty by Province & District • Rural development is arguably a strong driver of ensuring that the proceeds of growth are inclusive. Inequality over the past five years has reduced when compared to the previous five years. This indicates that the growth has translated into faster poverty reduction and that the benefits of growth have not simply gone to the rich. However, the Northern province, an area experiencing high growth did not encounter a decline in equality. In sum, inequality is still high and is likely to be pushed up with increasing urbanization and economic transformation. Rural development is one strategy to minimize this impact. Province Kigali City Southern Province Western Province Northern Province Eastern Province 2000/01 0.559 0.425 0.445 0.457 0.403 National 0.507 Ratio of 90th to 10th 7.066 Figure 4: Inequality Measurement • 2005/06 0.586 0.446 0.492 0.431 0.436 2010/11 0.522 7.100 0.490 6.36 0.559 0.373 0.395 0.438 0.362 Just as poverty across districts is complex, there are differences in the types of actors in rural world in Rwanda. Some large commercial farmers, particularly in the east, coexist with smallholders. In many parts of the country, commercial smallholders deliver surpluses to food markets (nationally, on average, 26.9% of household output is sold) and share in the benefits of expanding markets for new agriculture of high-value activities. The commercialization drive in agriculture has been a key driver in poverty reduction. However, a large population remains in subsistence farming, consuming nearly all the food they produce and participate in the market as buyers of food and sellers of labour. The subsistence farmer is of course the most vulnerable to agricultural seasonal fluctuations and may not have other income sources to diversify their risk. Additionally, according to the data women within this group are even more vulnerable and are the least likely to graduate out of this group to having off-farm job employment. 3 Rural Development • Role of Agriculture:Agriculture contributes to development as an economic activity, as a livelihood, and as a provider of environmental services, making the sector a unique instrument for development. Land-use consolidation combined with the crop intensification program (CIP) has been an important driver in attempting to ensure that farmers get more from their land with input provision and some market organization. The efforts, particularly in the last two years, of encouraging storage and post-harvest handling infrastructure investment have played a strong role in improving the capabilities of farmers and cooperatives to market their produce. • The improved surpluses have allowed farmers to sell more and there has been an increase in agricultural exports, particularly in informal exports to the DRC. However, productivity per hectare of many high value and staple crops in Rwanda is still very low and nearly all agro-processors complain about the lack of raw material. • Food security in relation to agriculture means income generation and for the household importantly means having sufficient income, education and health access – it does not imply that all that the household consumes needs to be locally produced.Farmers that processed of crops and marketed their surplus saw significant income increases over the past five years. • Other Economic Opportunities in Rural Areas: Understanding the economic opportunities to escape poverty in rural areas is paramount. In Rwanda, the rural labour market has many poorly remunerated agriculture jobs and a very small number of high-skill jobs that offer ways out of poverty. On average,non-agricultural work is the most secure route to escape from poverty, with poverty being the lowest for those obtaining half or more of their income from non-agricultural work.For households, the combination of agricultural work with non-agricultural work diversifies incomes (reducing risk& vulnerability) and is clearly important for rural transformation.Therefore facilitation of the private enterprises and the private sector in general is key. • Rural Urban Linkages: Understanding the rural-urban linkages in Rwanda is key.The danger is that withslower growth in the agriculture sector and a rapidly growing nonagriculture sector, labour markets strongly segmented by labour skills can widen the ruralurban income gap. However, rapid growth of urban incomes in Rwanda and increasing demand for high-value products(such as processed agriculture products) can provide a catalyst for faster agriculture growth and subsequent rural development. • Human Settlements:Human settlements in rural areas are organized agglomerations of housing and living. Nationally, 37.2% of the habitat of households is isolated rural housing and 37.5% of houses are within an Imidugudu.Being within an Imidugudu canenable closer access to basic services such as water, electricity and health and education services. To pick an example,water and sanitation are high impact areas of releasing economic development – with improved sanitary methods and water sources being used by 74% of the population, while in Kigali the average of population with access to clean water is above 90%. In particular, within the Eastern and Western Province where the access is sometimes below 60% in some Districts access is low.Imidugudu settlements can enable land to be used optimally with fertile land being used for agriculture and poorer land for 4 construction of settlements. Given the land scarcity, using the land optimally will be key for economic and social development. • Extreme Poverty & Social Protection:The Government uses the VUP program to target the extreme poor to lift them out of poverty, however, the VUP public works appears to under deliver in terms of income support to extremely poor Rwandan households. For example, only 26% of all individuals who had participated in the public works program in the preceding year were still active in the program the following year, importantly of the 75% no longer active, only 10% had found any work.When analyzing the district data, targeting has not always targeted the areas of the most persistent extreme poverty.While this may be due to the persistence of poverty in all districts in Rwanda, over the past five years many in extreme poverty have not necessarily been received significant assistance from government. Additionally, the amounts received for those in extreme poverty are very insignificant. • Gender inequality: here is particularly serious in poorer rural communities – given the transition of some men to off-farm employment, there are now more women in agricultural subsistence than any time in history.Nonetheless, the government is responsible for guaranteeing a safety net may need to ensure that social protection targeting maximizes its investments in those districts where poverty is most pervasive. Targeting criteria can also be improved to ensure that those in extreme poverty have a greater change to move out of poverty. • Malnutrition:In rural areas, despite poverty reduction over the past years, chronic malnutrition is markedly high. The respective declines in wasting and acute malnutrition have not been as evident in chronic malnutrition. Chronic malnutrition in children affects lifetime cognitive functioning with negative implications on productivity and the education levels of the workforce. In many countries including Rwanda, this problem has justified, on economic and social grounds, targeted education and feeding campaigns (critical window). This remains a key area to improve the productivity of the rural population. • Infrastructure: Infrastructure development guarantees that rural communities are able to maximize their income generation potential. Rural road connectivity and quality is important, currently only 15% of districts roads are deemed to be good quality. Lack of quality rural feeder roads has meant poor connectivity and higher costs for the population to seek markets. Many districts that have particularly poor connectivity and quality are some of the highest regions of poverty in the country – for example, Rutsiro has the highest average walking distance to all-weather road, Gisagara has the lowest rate of public transport (41% not using public transport at all). Nationally, the main reasons for lack of use of public transport is cost and not being proximate. • Information and Communication Technology:Rural populations are becoming more connected to each other through utilization of ICT devices, primarily mobile phones which 45% of households are estimated to own. This has great potential for the spread of market information and other demand-driven services. Additionally, it has enabled the flow of money to rural areas through mobile banking. This enables transfers to those in poor areas and facilitates trading. Internet utilization is unsurprisingly is very low, though through low cost mobile devices higher rates will be possible. • Electricity: Electricity access nationwide is 16% (2012). Those districts with particularly low access to electricity are those with some of the highest rates of poverty: Gisagara, Nyaruguru, Rutsiro and Ngororero and Gakenke are equal or below 1% of their 5 populations using electricity distributors. Firewood is used by 86.3% of the population as the primary fuel for cooking. Forest, natural reserves and hillsides are cleared in search of fuel wood for cooking and production of charcoal for use or sale. This puts additional pressure on land that could have been used for agricultural production. Additionally, this can lead to the degradation of areas of Rwanda. • Environment:Agriculture, industry, commerce and rural energy requirements place significant demands on natural resources, while the livelihoods of rural communities are shaped by their access and use of them.33% of households report being adversely affected by environmental problems – primarily soil erosion and soil fertility issues.It is estimated that Rwanda loses capacity to feed 40,000 people per year due to soil losses mainly caused by environmental degradation and climate change effects. Accelerating growth in economic sectors will put additional pressure on renewable and nonrenewable natural resources. Sustainable management of natural resources needs to be an integral part of any work on rural development. 6Key Areas to be addressed by Sectors and Districts • • • • • • • This thematic guidance note directs sectors and districts around six areas of rural development. The areas will focus coordinating and prioritization to maximize impact. 1. Increasing the Productivity of Agriculture Improving the productivity of the rural population to increase economic activity remains the most important driver for income generation. Improving the productivity of agriculture remains at the core of income generation and food security.Increasing the quality, volume, and sustainability of agriculture/livestock production per hectare of land (RwF/ha) are the three main priorities. This should be facilitated through private sector businesses that provide farmer advisory services, supply and potential market linkages to their clients (farmers). Input service delivery should be predominantly private sector and proximate – mechanization, seed and fertilizer industry, for example. While producing for domestic household to ensure a minimum food security should be encouraged, growing and producing for markets will be the driving force behind incentives to improve productivity. If government is to support value-chain development with the private sector it should support commodities with competitive. 2. Increasing the Productivity of Off-Farm Employment Increasing the productivity of non-agriculture enterprises is also paramount to transforming the rural population. Opportunities for off-farm employment will be central in reducing poverty. Encouraging medium and small enterprises (MSMEs) to integrate into firms supply chains will be one way to connect rural communities to the proceeds of growth. If the supply of agriculture produce is sufficient, public and private investment in postharvest agro-processing machines, storage facilities and private machinery rental centers will improve productivity and importantly create significant employment opportunities. Alongside the investments, unskilled rural population should be supported through training in targeted skills for labour intensive industries such as agribusiness, manufacturing and retail. Facilitating employment access for women and the youth will be particularly important. This requires access to finance to enable rural communities to profit from the development of these value-chains and related off-farm opportunities. Additionally, off-farm employment for 6 districts could come in the form of localized tourism and extending key public services to the districts to decentralize delivery and create employment. • • • • • • • • • • • 3. Increasing Incentivizes for Rural Population to move to Human Settlements and Optimize Land Use Planning Settlements for rural population enables reductions in the cost of transport and ensures individuals are proximate to services found within rural communities (water and sanitation, energy sources, finance and education, for example). Resettlement policy is a longer-term activity that requires strong pull(and not push) factors to incentivize households to move to human settlements. It is not about government pushing poor households to move, but to support the growth of human settlements and ensure community mobilization. At the same time, given land scarcity, human resettlementoptimizes land use comparative advantages for agriculture and non-agriculture activities. The district level land use management ensures optimal use of land for agriculture and nonagricultural income generating activities. The coordination of line ministry priorities for this task is particularly important. Leasing of land for agriculture will be paramount to transforming agriculture – balancing the interest of the tenant and landowner. 4. Improving the Targeting the Extreme Poor and Poor by Connecting Social Protection to Rural Development The proceeds of rapid growth will not necessarily be distributed evenly in Rwanda. The Governments task is to ensure some form of equity and provide a basic level of services and safety nets to the poorest of the population. Those in extreme poverty have the largest gains from effectively implemented social protection interventions that will enable graduation out of poverty. Understanding the comparative costs and benefits of these interventions (such as school feeding) will be key in optimizing government and private sector funds. Coverage of the programs needs to be improved to target a greater proportion of people in extreme poverty. Targeting and the delivery needs to be smart and community-specific, with the particular location (geographical) and economic circumstances taken into account. The agricultural calendar involves peaks and troughs of employment and the synergies between rural development and public works can be maximized by timing public works to coincide with periods of agricultural under-employment. However, ensuring the deliberate connection between poverty targeting and rural development will catalyze growth – for example, public works programs provide income generating activities and at the same time develop rural infrastructure which is essential for improving the productivity of individuals and communities. 5. Connecting Rural Communities to Markets Ensuring rural communities and farmers are connected to centers of economic activity moves households from merely subsistence agriculture and economic inactivity to being agents of economic transformation. Improving infrastructure in electricity, roads, rural feeder roads, ICT, public and private transport facilitates citizens to operate at lower costs and therefore potentially higher profits in economic activities. For example, rural feeder roads will link areas of current inaccessibility and poor road condition with areas of high agriculture market potential. ICT improvements can empower farmers to have better knowledge of the markets available for their produce and opportunities to purchase new tools to increase productivity. Additionally, 7 access and cost of water is fundamental to all operations, particularly areas of economic agglomeration – markets. Additionally, access to finance enables rural communities to be more connected to market demand. • • 6. Sustainable Energy Generation for Rural Communities Lowering the costs of living and production for the poor is a core need for rural income generation. Improving the access and quality of energy generation methods at the household and community level seeks to bring down the cost of not only lighting or cooking but also business development of enterprises. Energy generation in terms of improved cooking stoves, biogas, micro-hydro and solar are some of the examples of rural community approaches to energy. Access to finance and encourage of private enterprise plays a particularly important role here in facilitating the growth of these sub-sectors. Coordination To ensure the mainstreaming of Rural Development in implementation by GoR institutions, private sector and other bodies, clear definition of roles and responsibilities are required. The work suggested under this theme does not ‘reinvent the wheel’ but seeks to support implementation of existing efforts by GoR institutions and the private sector. Another key factor will be how the private sector motivates Ministerial Responsibility for themes: • Increasing the Productivity of Agriculture MINAGRI, MINICOM, MINALOC, MININFRA, • Increasing Off-Farm Productivity(Covered by Youth, Productivity and Employment) MINICOM, MINAGRI, MINALOC, MININFRA • Increasing Incentivizes for Rural Population to move to Human Settlements and Optimize Land Use Planning MINIRENA, RDB, MINAGRI, MINALOC, • Improving the Targeting of Extreme Poor and Poor by Connecting Social Protection to Rural Development MINALOC, MINAGRI, MININFRA, MINICOM • Connecting Rural Communities to Markets MINAGRI, MININFRA, MINICOM, MINICT, MINALOC • Sustainable Energy Generation MININFRA, MINAGRI, MINALOC, MINIRENA for Rural Communities The technical Rural Development team developed this note through consultative sessions held the week of 9th of July , 16th of July, 27th of July and in Augustwith representation from: MINALOC, RLDSF, MINICOM, MININFRA, RTDA, EWSA, MINAGRI, RHA, MINECOFIN, MINIRENA 8 EDPRS 2 PRIORITIES (Summary) (5) 1. Increase the productivity of rural agriculture and offfarm employment EDPRS 2 Priorities (DETAILS) On-farm productivity increases to improve household food security and enable more agricultural output to be marketed On-farm productivity is sustainable through correct land & soil management practices Off-farm productivity is improved to allow for secondary activities to generate incomes for the rural population and to diversify income sources OUTCOMES INDICATORS RESPONSIBLE SECTORS 1.1 Productivity of farmers in crops and livestock is improved to generate greater income gains for the rural households 1..1(i) Yield (kgs)/Ha: Beans, Rice, Maize, Cassava, Irish Potato, Wheat, Coffee, Tea &selected Fruit & Vegetables (ii) Production in kg/liters:Animalrelated products (milk, eggs, cheese, meat etc), (to be set) (iii) Percentage (%) of agricultural operations mechanized (v2020) 1.2 Farmers adopt improved technologies and improve farming skills to enhance productivity . 1.5(i) Agriculture Input Adoption (Fertilizer Use, Organic Fertilizer Use, Improved Seed Use) (to be set) (ii) Agriculture extension utilization: Number of households utilizing proximity extension services (FFS & private/ngo) (to be set) 1.6 Agriculture and land management practices are environmentally sustainable to ensure continued productivity for farmers 1.6 (i) % of land protected against soil erosion Control Indicator (V2020) (ii) Marshlands are rehabilitated and maintained (to set indicator) Agriculture, Environment & Natural Resources 1.2(i) Number of off-farm jobs created V2020 (ii) Proportion of rural population in secondary off-farm activity PSD, Agriculture 1.3 Increase the number of waged off-farm and nonagricultural worki (Youth, Productivity & Employment Thematic) 1.4 Unskilled rural population trained in targeted skills for labour intensive industries including agribusiness, manufacturing and retail (Youth, Productivity & Employment Thematic) Agriculture, PSD Agriculture, PSD 1.3 Indicator set by Youth, Productivity and Employment 9 1.5 Increased awareness amongst rural communities of off-farm employment (Youth, Productivity & Employment Thematic) 2. Increasing Incentivizes for Rural Population to move to Human Settlements and Optimize Land Use Planning 3. Reduce inequality and poverty by making social protection programs more sustainable and targeted towards the extreme poor 4. Connect rural communities to markets through Households in disconnected areas move to areas where they can access basic services and therefore participate in the rural and urban economy Given land scarcity, land should be optimized to create in agribusiness and improve rural incomes Poverty remains high and those in extreme poverty need to be supported through poverty reduction programs and through the community Connecting poverty reduction efforts to employment opportunities will be the only way to sustainably reduce poverty over time. Connecting rural people to opportunities in market places 2.1 Rural communities will have the incentives to move to group settlements (Imidugudu) in-order to access services and optimize land use through improved investments in basic services and sensitization around human settlement 2.2 Selected agriculture land will be utilized for corporate purposes to enable agricultural to be commercialized 3.1(i) Increased coverage of poverty reduction programs targeting the extreme poor and poor (including VUP, Community-based approaches) (ii) Improved delivery of poverty reduction programs (including VUP, Community-based approaches) to enable poverty reduction amongst the poorest in Rwanda 3.2 Promote graduation from poverty reduction programs (VUP, for example) by connecting permanent employment opportunities to those in poverty reduction programs 1.4 Indicator set by Youth, Productivity and Employment 2.1(ii) % of households living in group settlements (to be set, in EICV 3 currently) 2.2 (i) Ha of serviced land for industrial development and commercial agriculture (to be set) 3.1(i) Number of poor & extreme poor included in selected number of poverty reduction programs Environment &Natural Resources, Urbanization Environment & Natural Resources, PSD, Agriculture Social Protection, (ii) Scorecard on the efficiency with which the poverty reduction programs VUP & Social Protection Programmes are delivered 3.2 (i) Number of jobs obtained by those in extreme poverty (to be set & discussed) Social Protection, Agriculture, PSD, Transport 4.1 Extended quality road network through the construction of (km) main roads& (km) rural feeder roads 4.1. (i) Main Roads (km)(to be set) (ii) Percentage of roads in Good Condition (V2020) & 10 improved infrastructure, transport, finance and ICT enables higher levels of social and economic interactions (iii) Rural Feeder Roads developed (km) (to be set) Energy, PSD 4.2 Increased access to affordable electricity for rural communities to be involved in market opportunities 4.2 (i) Access to electricity (% of population) V2020) 4,3 More rural communities connected to information through ICT (cell phones and the internet) & using innovations in ICT for development 4.3 (i) Mobile Subscriptions per 100 people (V2020) (ii) Internet users per 100 people (V2020) 4.4 Access to water is increased in rural communities to enable improved economic and social activity 5. Alternative energy is utilized by households and rural industry Access to financial services allows people to expand their rural business opportunities 4.5 Increased access by rural population to financial mechanisms to participate in the rural economy. Increasing the use of alternative energy can lower the cost of energy, an important input in social and economic life 5.1 Rural households and communities utilizing lowcost sustainable alternative energy sources to reduce the cost of productive activities ICT (iii) Number of farmers using market information systems (new indicator to be set) 4.4 (i) Access to clean water (% of population) V2020 (ii) Access to improved sanitation facilities (% of population) V2020 Water & Sanitation 4.5 (i) % of financial loans going to rural development V2020 Finance, PSD, Agriculture (ii) Percentage of adult population accessing financial institutions V2020 Change Required (outcome) 5.1(i) Percentage of rural households using Wood energy as main source of energy (V2020) (ii) Proportion of household utilization of alternative energy (Biogas, Improved Cooking Stoves, Solar) (to be set EDPRS) INDICATORS Energy, PSD, Finance 11