1. [Rwanda] Poverty-Environment Initiative Public Expenditure Review (PEER) Country Experience Presented to the PEI Africa Regional Economic Forum 8-11 November 2010

2. Government of [Rwanda] UNDP-UNEP Poverty- Environment Initiative 1.PEI Program Objectives 2.Key Achievements related to Public Environmental Expenditure Review (PEER) 3.Objectives and Methodology 4.Key Findings/Recommendations 5.Policy Impact 6.Challenges and Response 7.Lessons Learned 8.Next Steps Outline

3. Government of [Rwanda] UNDP-UNEP Poverty- Environment Initiative Aims to enhance the contribution of sound environmental management to poverty reduction, sustainable economic growth and achievement of the Millennium Development Goals Phase II is the integration of environment into national policy and district planning, policy and budget processes to implement the Economic Development and Poverty Reduction Strategy (EDPRS) Improved capacity within key ministries and institutions Improved capacity at district level Increased awareness and more effective participation of stakeholders Improved national funding levels for investing in environmental sustainability Improved capacity for monitoring poverty and environment linkages BACKGROUND

4. Government of [Rwanda] UNDP-UNEP Poverty- Environment Initiative PEI, Rwanda is implemented by a cross-ministerial stakeholder partnership that includes: Ministry of Environment and Lands (MINELA); Ministry of Forestry and Mines (MINIFOM); Ministry of Finance and Economic Planning (MINECOFIN); Ministry of Local Government (MINALOC); Ministry of Agriculture (MINAGRI); Ministry of Infrastructure (MININFRA) and Ministry of Industry and Trade (MINICOM). Local level implementation is executed through the decentralization policy process The project will be coordinated and implemented by Rwanda Environment Management Authority (REMA). BACKGROUND

5. Government of [Rwanda] UNDP-UNEP Poverty- Environment Initiative It has demonstrated potential for new sources of capital for Fonerwa (the fund for environment) and as such is will promote sustainability towards effective poverty reduction and economic growth. The study will continually inform coordination and management of other funds in the pipeline at both national and regional levels including but not limited to Climate Change Adaptation Fund. Engaging the government on processes that can trigger additional external incentives and resources –Funds in the name of climate change e.g. REDD –Funds under Clean Development Mechanisms and payment for ecosystem services Raising voice to ensure treasury provides reasonable seed funds for start-up; Promoting political momentum towards internal and external resource mobilization management for poverty reduction; Broadening advocacy for sustainable financing to overcome the challenge of budget constraint KEY ACHIEVEMENTS

6. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative Objectives: make a case for the environment and natural resources sector (ENR) and increase the sector specific as well as cross-sectoral share of the national budget in order to reach the EDPRS, MDGs and Vision 2020 targets; to draw lessons which should guide the GoR in rationalizing public expenditure for environment. to raise the profile of environment as a key asset for sustainable development. to assess equity, efficiency and effectiveness of public spending for pro-poor growth. METHODOLOGY

7. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative Methodology : Review of literature and documents to gather secondary data and information; define environmental expenditure so as to determine the boundary for this PEER and possibly future ones as follows: 1) national definition of environment, 2) the classification of government functions, 3) institutional mandates for environmental management and 4) practices by other countries Visits to carefully selected institutions to qualify secondary sources as well as gather lessons and other contributions from key participants in the sector. The report was presented at a validation workshop and subsequently, Overseas Development Institute (ODI) was hired to conduct a peer review of the draft report which further strengthened the quality of the final product. METHODOLOGY

8. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative Environment falls under various government functional areas; These included environment and natural resources sector overseen by the two ministries of Environment and Lands (MINELA) and Mining and Forestry (MINIFOR) and other sectors such as agriculture, industry, infrastructure; Domestic sources of national revenue is primarily taxes which do not even cover recurrent expenditure (based on 2004 data). In 2008, only 1% was spent on environmental management; PEER will require a lot of effort to discriminate environmental expenditure from within and across the sectors; KEY FINDINGS AND RECOMMENDATIONS

9. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative KEY FINDINGS AND RECOMMENDATIONS 2007200820072008 1.Land planning and management1,026.751,052.948%25% 2. Conservation and protection of the environment 556.251,682.425%40% 3. Forestry resources412.60472.783%11% 4. Water and sanitation9,171.88178.9775%4% 5. Mining and geology445.41376.974%9% 6. Service and management support597.21446.535%11% MINIRENA12,210.094,210.61 100% Intra-sectoral expenditure, 2008, shows that conservation and protection of environment took 40%

10. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative KEY FINDINGS AND RECOMMENDATIONS Where did the highest dev. Budget go in 2008, and with what implications?

11. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative KEY FINDINGS AND RECOMMENDATIONS Tax revenue not yet able to cover recurrent expenditure, leaving the country open to vulnerability of foreign aid

12. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative The government of Rwanda has institutionalized Public Expenditure Reviews. The study recommended the issuing of guidelines by the Ministry of Finance and Economic Planning to provide much needed focus for the PER including PEER; Since climate change impacts affect the productivity of key sector such as health, Agriculture and Infrastructure, the cross-sectoral impacts should begin to feature in the macro-economic framework of MINECOFIN; With increasing foreign direct investment, there is need to redirect this to benefit Environment. KEY FINDINGS AND RECOMMENDATIONS

13. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative The study has generated interest among the parliamentarians who were sensitized to track expenditure on environment management and advocate for environment financing; PEER was the subject of a validation workshop where national stakeholders discussed the implications of environment financing for sustainability; A training manual for PEER was produced and will be used in the continuous capacity building efforts in the area of PEER and mainstreaming environment into budgets; Assistance by PEI will continue to facilitate development of national capacity to integrate the environment in the Budget Call Circulars (BCC); Developing guidelines for integrating environment into sector strategic plans and to ensure that BCC include environment as a cross cutting issue. POLICY IMPACT

14. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative CHALLENGES AND RESPONSE Cross-sectoral nature of environment Too many reforms at the same time Still too much expenditure outside budget Reporting based on activities and outputs denies assessment of effectiveness Development expenditure through CEPEX not aligned to functions of government There will always be reforms, and so, one must track them for their implications on budgeting and expenditure MINECOFIN is increasingly bringing all expenditure on budget PER for environment will require special attention because of its cross-sectoral nature which calls for inter-sectoral coordination MINECOFIN is revising the Planning, Budgeting, and MTEF Guidelines to improve reporting on effectiveness

15. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative Flag out fully expenditure implications of environmental risks and vulnerabilities (e.g. climate change) and discoveries (e.g. methane oil) in its macro- economic framework Multi-sector and multi-disciplinary approach to benefit PER for environment. Build capacities of sectors in PEER MINECOFIN yet to build capacity and offer specific guidance for results-based budgeting No central unit where to capture funding by NGOs, more difficult for private sector LESSONS LEARNED

16. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative Select and use few indicators that test for sustainability; Reactivate Sector Working Group on Environment to expedite the SWAp process and ensure that sufficient engagement with other sectors; Identify and support a fund for mainstreaming of environment by sectors on demand driven basis; Advocate for additional resource allocation to the sector and ensure direct ownership of environmental issues at the sector level; Evaluate the budget against environmental impacts (positive and negative alike) and draw expenditure implications and apply results based budgeting. NEXT STEPS

17. Government of Rwanda UNDP-UNEP Poverty- Environment Initiative Thank you for listening (Murakoze) http://www.rema.rw