ADF approves US $76 million to support skills, entrepreneurship and job creation in Rwanda

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On May 7, 2014, the African Development Bank’s (AfDB) Board of Executive Directors approved an African Development Fund (ADF) loan of US $76 million for a Skills, Employability and Entrepreneurship Program II (SEEP II) in Rwanda for three fiscal years ( FY2013/14, FY2014/13 and 2015/16).

This second Sector Budget Support operation will contribute to the Government of Rwanda’s policy reforms aimed at promoting inclusive growth and accelerating poverty reduction. SEEP II will specifically aim to consolidate, sustain achievements and scale-up reforms/interventions supporting skills and entrepreneurship development initiated under SEEP I. Rwanda has made notable progress in developing skills and workforce that meet the demands of the labour market and enhance job creation for youth by increasing private sector participation in TVET; improving access to business advisory services especially for MSMEs and enhancing entrepreneurship skills through incubators.

“AfDB’s support directly contributes to Rwanda’s competitiveness, inclusive growth and poverty reduction”, said Ndoumbe Lobe, the Bank’s Acting Vice-President for Operations (Water, Agriculture, Human Development, Governance, and Natural Resources Departments).

However, Rwanda still experiences skills gaps as well as low labour productivity stifling private sector growth and competitiveness. The average skills deficit is at about 40%. The main challenge therefore is to increase labour productivity, creating decent jobs and reducing underemployment, which is about 58% (63% for youth). SEEP II will therefore provide the much-needed resources to further deepen reforms and consolidate the achievements already undertaken by the government.

“The Government appreciates this timely support which will boost its efforts towards the implementation of its current medium-term Economic Development and Poverty Reduction Strategy – the EDPRS 2,” said Leonard Rugwabiza Minega, Chief Economist in the Ministry of Finance and Economic Planning, Rwanda.

SEEP II will benefit youth, women and micro, small and medium enterprises (MSMEs). Forty per cent of all registered entrepreneurs are women. Women also make up 52% of the population. The youth comprise of 39% of the population, while SMEs account for over 92.6% of private-sector establishments and employ the majority of the population.

“This program once again, demonstrates the important relationship between the Bank and Rwanda. Over the last 40 years, the Bank’s total commitments to the Republic of Rwanda have been more than 1.1 billion Units of Account (approximately US $1.7 billion). This commitment has gone towards promoting entrepreneurship in Rwanda not only through reducing the cost of doing business but also the risk of doing business,” added Rugwabiza Minega.

SEEP II was developed jointly by the African Development and the Government of Rwanda and in close consultation with the private sector and other key development partners (Germany, UK, USA, European Commission, France, Netherlands, Sweden and the World Bank).