The government of Rwanda has introduced a new development cooperation policy aimed at aligning funding from development partners with national priorities. The policy, approved by Cabinet last week, replaces the 2006 Aid Policy and will guide cooperation with donors, development finance institutions, private investors, philanthropies, and other partners through 2050. This move is expected to bring about a more centrally coordinated model of development financing.
Under the new policy, development partners are encouraged to finance Rwanda's priorities rather than run separate projects according to their own systems. The policy introduces the concept of "flagships" - larger national programmes that bring several activities together and are linked to Rwanda's development goals. These flagships are expected to be large enough to have a transformational effect, operate across sectors where necessary, and attract different forms of financing.
The new policy also introduces institutional changes, including the reduction of development-cooperation working groups from 16 to six broader Priority Working Groups. This move aims to reduce fragmentation and move cooperation away from separate sector discussions towards larger national outcomes. The policy's architecture includes an annual Cooperation Partners Retreat, a Cooperation Partners Coordination Group, an Executive Committee, and the six Priority Working Groups.
A 24-month transition period is planned, with the new system expected to be fully operational by the 2027 Cooperation Partners Retreat. The policy also sets out a different way of thinking about development finance, treating projects that do not generate direct income as requiring more heavily on grants and highly concessional financing. Projects that can generate some revenue may use blended finance, while projects that can generate sufficient revenue to repay borrowing may use commercial or other non-concessional financing.
The policy calls this approach "optimum financing" - matching the type of money to the risk and revenue characteristics of an investment. For example, a public health programme may not generate enough revenue to repay a commercial loan, making grants or concessional financing more appropriate. A logistics facility, on the other hand, can generate income from users, allowing the government to seek private investment or public-private partnerships.
Donors will still have choices about which areas they want to support, but these choices will need to fit within Rwanda's national planning and coordination system. The policy gives greater importance to nationally selected flagship programmes and expects development cooperation to align with the National Strategy for Transformation and Vision 2050. This will give the government greater visibility over development resources entering the country and greater ability to coordinate them around national priorities.
The policy is broader than traditional aid, with a financing framework that includes government resources, direct budget support, pooled funds, climate finance, concessional loans, private investment, public-private partnerships, blended finance, results-based financing, diaspora investment, and South-South cooperation. This reflects a changing development environment in which traditional aid alone is unlikely to finance the scale of investment Rwanda wants to achieve.
Key points
- Rwanda introduces new development cooperation policy to align partner funding with national priorities
- The policy encourages development partners to finance Rwanda's priorities through larger national programmes called "flagships"
- The policy aims to reduce fragmentation and move cooperation towards larger national outcomes through institutional changes and a new approach to development finance
