Second Programmatic Human Capital for Inclusive Growth DPF

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The development objectives of the Second Programmatic Human Capital for Inclusive Growth Development Policy Financing in Rwanda are to support economic stability and inclusive growth in Rwanda by (i) promoting long-term fiscal sustainability, (ii) enhancing coverage and equity in access to critical social sector programs, (iii) enabling learning and development of children, and (iv) strengthening decentralized capacity and accountability for accelerated human capital development. Pillar A, promoting long-term fiscal sustainability, supports the Government of Rwanda’s commitment to fiscal sustainability and continued efforts to create fiscal space for investments in critical social sector and other development priorities. Maintaining state capacity to invest in human development and infrastructure is a necessary requirement of inclusive growth, which requires reforms to create enhanced fiscal space and better management of risks to debt sustainability. Pillar B, enhancing coverage and equity in access to critical social sector programs, strengthens equity in human capital development. It is critical to expand the social safety net coverage and to ensure that the benefit levels of its human capital-focused components are adequate and adjusted regularly. Without this, the real value of the transfer is eroded over time and with inflation, covering only a very small share of household consumption. Pillar C, enabling learning and development of children, supports foundational measures to improve the quality, coverage, and efficiency of critical services for children during their formative years. The COVID-19 crisis has disproportionately affected young children, which highlights the importance of protecting essential services. Pillar D, strengthening decentralized capacity and accountability, commits to strengthening the accountability and service delivery capacity of public institutions and to promote citizen participation in socio-economic development. A cornerstone of this agenda is the deepening of the decentralization process, which is gradually devolving political, fiscal, and administrative power to the district and cell level.