By Relief Web
The World Bank Group
August 31, 2009
Full_Report
1. Country and Sector Background
Both the economic growth and the poverty-reduction objectives for Rwanda rely critically on agricultural growth. Rwanda appears to have fully exhausted the growth effects of its postconflict reconstruction. Rwanda's recent CAS (FY09-FY12), thus highlights the need to activate new drivers to sustain rapid and inclusive growth, raise incomes and reduce income poverty. Agriculture is identified by the Government as one of the key sectors its poverty reduction strategy, the EDPRS. Despite the country's potential for growth, at the present time, Rwanda remains one of the world's poorest countries, with an average annual income of US$320 per capita. Poverty remains largely a rural—and agricultural—phenomenon with rural poverty at 67 percent. Poverty incidence among families whose main source of income is agricultural wage labor is extremely high at 91 percent. Therefore, it is not only the growth agenda, but also the country's MDG on poverty which depend critically on improving agricultural productivity, given that 80 percent of the country's labor force is engaged in agriculture.
Agriculture is the backbone of Rwanda's economy, accounting for about 39 percent of GDP and 63 percent of foreign exchange earnings. It also provides 90 percent of the country's food needs. Total arable land in Rwanda is slightly above 1.5 million ha, 90% of which is found on hillsides. The sector faces several challenges: (i) a binding land constraint that rules out extensification (bringing more and more land under cultivation); (ii) small average land holdings (0.3 ha); (iii) poor water management (uneven rainfall and ensuing variability in production) resulting from very low levels of irrigation (15,000 ha in the whole country); (iv) the need for greater (public and private) capacity from the district to the national levels and the lack of extension services for farmers; and (v) limited commercial orientation constrained by poor access to output and financial markets. Without the option of extensification, agricultural intensification must take place in the context of a potentially fertile, but challenging, physical environment. Steep terrains and the highest population density in sub-Saharan Africa (355 inhabitants per km²) make good land husbandry a strict necessity (to curtail erosion and otherwise maintain the quality of the soil), as well as an environmental prerogative. Arable land on hillsides constitutes the vast majority of the total agricultural land in the country, but erosion costs the country 1.4 million tons of fertile soils per year. Given its high dependence on rain fed agriculture, irrigation is critical to reducing the sector's vulnerability to climatic variation and to aligning the right incentives for intensification.
2. Objectives
The Project Development Objective (PDO) is to increase the productivity and commercialization of hillside agriculture targeted for development under the Project. Specifically, the key outcome indicators for the project objective are proposed as follows: (i) increased productivity of targeted irrigated command areas ($/ha); (ii) increased productivity of targeted non-irrigated command areas ($/ha); and (iii) increased share in commercialized products from the targeted areas.
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