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Introduction

More than five years have passed since the horrific genocide and civil war in Rwanda of 1994 when 800,000 people perished and nearly four million people were displaced. The Government of Rwanda (GOR) has made steady progress in promoting peace and reconciliation among its ethnic groups, in stimulating economic growth and in improving the health of its people. Nonetheless, continued instability in the Great Lakes region, exemplified by the continuing war in the Democratic Republic of the Congo (DROC) and strife in neighboring Burundi pose serious constraints to Rwanda's efforts at nation building and improving the lives of its citizens. The United States' interest in Rwanda is primarily humanitarian as it seeks to prevent a reoccurrence of genocide by promoting a more equitable society and alleviating the severe poverty of much of the population. Stability and economic growth in Rwanda are increasingly seen by the United States as a necessary condition for addressing the broader issues of regional security and peace in the strategically important Great Lakes region of Africa.

This small landlocked country of 7.9 million people has made significant strides away from dependence on emergency relief towards sustainable development. GDP now stands at 85% of pre-war levels after falling by 50% as a result of the war. The government has encouraged private sector development by taking several steps to liberalize the economy and improve public sector efficiency. The divestiture of public enterprises is moving forward steadily and other key structural reform targets, programmed under Rwanda's Enhanced Structural Adjustment Facility with the International Monetary Fund (IMF), have been broadly met. However, the country still faces formidable economic challenges. Economic growth, which rebounded strongly in the first several years after the civil war (averaging 11.7% a year for 1996-1998) has slowed substantially and is estimated in 1999 to have been 5% or less.

In March 1999, successful local elections at the community level marked a critical first step towards a more open and participatory political system. Elections are planned for the commune (50,000 people) and prefecture levels in the year 2000. Furthermore, improved security conditions over the course of the year, particularly in the northwest part of the country, have enhanced the prospects for genuine peace and reconciliation. USAID's program is fully consistent with the Embassy's Mission Performance Plan (MPP), and it incorporates the principles of the Greater Horn of Africa Initiative and the Great Lakes Justice Initiative (GLJI).

The Development Challenge

The fragility of Rwanda's transition is nowhere more apparent than in the fertile northwest region bordering the DROC. The GOR's success in putting down an insurgency in this region in 1998, combined with the provision of food and material supplies by donors averted a potential humanitarian disaster following the displacement of 680,000 people caused by the fighting. The relative calm that has prevailed in the region for most of 1999, coupled with the availability of seeds and tools, and USAID's P.L. 480 resources resulted in increased agricultural output from Rwanda's richest farmland. This helped to ameliorate the effects of drought conditions in other parts of the country. Political, economic and social stability in the northwest is crucial to the ultimate success of Rwanda's transition. However, it is still tenuous. Two days before Christmas 1999 insurgents killed 30 people; this demonstrates the volatility of the region as long as the conflict in the DROC remains unresolved.

In November 1999, the GOR made an emergency appeal to donors for drought assistance to prevent further deterioration of food security in the eastern and south-central parts of the country most affected by irregular rains. Based on a rapid assessment of the situation by USAID's Famine Early Warning System (FEWS), other donors, and the Ministry of Agriculture (MOA), USAID has taken the lead in supporting a doubling of the monthly food distribution by the World Food Program for November and December 1999. Further aid needs will be determined after the current harvest.

Some regional improvements in food production, reflected by stable or falling food prices for staple crops, belies the underlying structural food deficit confronting the country. More than 90% of the population is dependent on subsistence agriculture on shrinking plots of land of declining quality. Per capita food production has declined steadily since the 1980s and stands at less than 70% of required levels. In order to address Rwanda's long-term food security needs, USAID has expanded its agricultural strategy to support improved data management, analysis, and policy planning capacities within the MOA. In addition, USAID is providing technical assistance in the areas of food marketing, research, technology transfer, and value added processing. These long-term development programs were preceded by a successful P.L. 480 Title II emergency monetization program which supported intensive food security activities of local and international non-governmental organizations (NGOs), as well as private sector associations. Of special concern is the welfare of women, who are less likely to have access to education, land and credit, yet they head some 34% of all households. Through USAID's Women in Transition Program, grants, loans and training reached more than 190,000 people as a result of reconciliation and economic activities.

Rwanda's demographic and health problems are daunting. Rwanda is Africa's most densely populated country. The population growth rate of 3.6% is among the highest in Sub-Saharan Africa and, if unchecked, will result in nearly doubling the population within 20 years. Access to potable water is a daily problem for more than half of the population and malaria is endemic. Because of poor health conditions in the rural areas, morbidity rates are high. Child and infant mortality rates are extremely high (200 per one thousand live births). An alarming increase in HIV/AIDS infection threatens to further stress the health care system. About 13% of the adult population are infected with HIV, with AIDS being one of the three leading causes of death in Rwanda. By the end of 1997, there were 94,000 orphans as a direct result of the epidemic. Life expectancy in Rwanda has fallen from 54 to just 42 years since 1988 largely due to the increase in HIV/AIDS. To reverse these trends, USAID has been working with the Ministry of Health (MOH) on a decentralization program designed to improve service delivery in an integrated primary health care system and to introduce new cost recovery measures. USAID has also been a leader in Information, Education and Communication (IEC) efforts that have had an impact on raising awareness within the population about sexually transmitted infections (STIs) and HIV/AIDs.

Public expenditure on education and health in Rwanda is well below the sub-Saharan average. Rwanda's resources for social protection are constrained by continued high expenditure on security as well as an unsustainable external debt burden. While reduction in the former is closely linked with resolution of the wider regional conflict, external debt relief can have an immediate impact on the share of public resources targeting the social sectors. At the end of 1999, Rwanda's external debt stood at $1.2 billion or 61% of GDP. To enable the GOR to increase social spending, $5 million in FY 1999 Economic Support Funds (ESF) have been applied to meet the U.S. Government's commitment to the Rwanda Multilateral Debt Relief Trust Fund (MDRTF).

In 1999, the formidable task of processing 125,000 detainees accused of genocide crimes moved steadily forward. By the end of 1999, case files were established for more than two-thirds of all detainees, more than 4,000 have been released, and over 10,000 have confessed through the plea bargaining system established by the USAID-supported National Genocide Law. In the first half of the year, 634 accused were tried. Prospects for a speedier resolution of cases have now been improved through the GOR's bold gacaca initiative. Gacaca will empower local tribunals to adjudicate all but the most serious offenses (that of leading and organizing the genocide). By decentralizing the judicial process, gacaca promises to expedite the GOR's massive caseload. USAID is assisting this process by supporting an awareness campaign designed to increase public participation and support.

Other Donors

In 1999, Official Development Assistance (ODA) flows were estimated to be $156 million (7.6% of GDP). A wide range of multilateral and bilateral donors is active in Rwanda. Overall coordination by the GOR is strong. The World Bank, African Development Bank, the International Monetary Fund, and the European Union, along with the full range of UN agencies, provide the majority of all project assistance and financial support. Between 1994-1997, the United States was Rwanda's leading bilateral aid donor providing 26% of $1.2 billion in assistance. USG assistance levels have decreased substantially as the focus has shifted from emergency humanitarian assistance to development assistance. In FY 1999 USAID assistance totaled $34 million (excluding P.L. 480). Other leading bilateral donors include Germany, the Netherlands, the United Kingdom, Belgium, Canada and Switzerland.

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