World Bank grant to help Rwanda develop irrigation

Rwanda has received a $41m grant from the World Bank to finance projects in the agricultural and financial sectors.

The World Bank signed a four-year $35m grant to help the central African country reclaim existing marshland and an extra $6m to fund reforms in the micro-finance sector.

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 $50m tranche that covered the last four years.

Rwanda's finance minister predicted agriculture would grow by at least 7% in 2008 mainly due to greater use of fertilisers, better farming methods and good rains this year. Rwanda expects its economy to expand between 7% and 8% this year.

Rwanda has about 90% 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 IMF. 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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