The PRSP presents an opportunity for development cooperation partners to streamline their practices and procedures and notably their reporting requirements.

The Government’s preferred aid delivery modality is through budget support. Harmonization of budget support is occurring within the broader context of alignment of other aid modalities behind the PRS. In the future, all support other than budgetary assistance should be given through the funding of sector strategies. The main partners currently involved in the Budget Support Harmonization Group (BSHG) are GoR and the following donors – DFID, EC, SIDA, WB, AfDB, and the IMF. All these partners (except the IMF) signed the Partnership Framework for Budget Support Harmonization in November 2003. The framework is built around regular meetings of the BSHG and separate annual review processes for (a) Public Financial Management, (b) Macroeconomics, and (c) Poverty Reduction Strategy Monitoring and Evaluation.

GoR undertook its first joint Budget Review in March, 2005. CIDA, DFID, EC and the WB were the donors involved. The Netherlands is likely to provide budget support through PRSC II co-financing.

SWAPs with harmonized features are emerging in several sectors, including health, water, and education. The education SWAp development process provides one of the best examples of aid coordination, harmonization and alignment in Rwanda and is serving as an example for other sectors and other countries. There is likely to be a SWAp in decentralization.

UNDP manages a Basket Fund for Harmonization, Alignment and Coordination. Cost-sharing agreements have been signed with CIDA, DFID, SDC, SIDA, and the Netherlands. Belgium has expressed interest in joining this Fund in 2006.

In the Common Development Fund, donors (EC, GTZ, and the Netherlands) have agreed tp channel funds intended for districts through GoR systems.

The World Bank CFAA will adopt a flexible approach relying , to the extent possible, on the work already accomplished by either the Government or development partners in the PFM domain. For this purpose, the FARAP, which was prepared in close collaboration between the World Bank and DFID, and the subsequent Action Plan phase of the review, carried out by the European Union, will form the bases upon which the CFAA will be extensively based. Furthermore, IMF technical assistance missions have been fielded in the areas of financial management, fiscal decentralization, and revenue management. The conclusions from these will be pertinent for the CFAA exercise.

In general, the Rwanda CFAA seeks to avoid unnecessary duplications of analysis of the PFM environment by placing reliance, where this is justified, on similar work already accomplished by others. The CFAA preparation will draw on the following documents: (i) Financial Accountability Review and Action Plan (2003); (ii) Public Expenditure Management Review (2003); (iii) Report on the Observance of Standards and Codes (2003); (iv) HIPC/AAP Assessment Report (2004); (v) Improving Treasury Management in Rwanda (2004); (vi) MINECOFIN Strategic Plan Document (2003); (v) Aide Memoire on Fiscal Decentralization (2003); Report on Options for Budget Management (2003); (vi) Appraisal of the Decentralization Process in Rwanda (2003) ; (vii) Report on the Development of a Public Financial Management Capacity Building and Technical Input Plan (2004); (viii) The Sequencing of Financial Management Systems in Decentralized Post-Conflict/Low Capacity Contexts: Rwanda and Sierra Leone; (ix) Country Procurement Issues Paper (2004).

The product (CFAA FY 2005) was delivered to GoR prior to being finalized.

The World Bank Multisector HIV/AIDS project is harmonizing financial management procedures for antiretroviral (ARV) with those of the Global AIDS Fund.

The Partnership Framework for Budget Support Harmonization is built around regular meetings of the BSHG and separate annual review processes including for (a) Public Financial Management and (b) Macroeconomics.

The World Bank Country Procurement Issues Paper (CPIP) is the first assessment of the country procurement system since 1986. Given the transition stage of the country’s institutions, a CPIP is being carried out in lieu of a full scale Country Procurement Assessment Report (CPAR). The CPIP focuses on fundamental issues which are to be addressed in the short term, and selected medium and longer term issues. A full scale joint CPAR may be conducted at a later stage. The CPIP is being carried out in consultation with all donors, and the final assessment will be a shared product.

Since 1994, Rwanda has managed to perform reasonably well without a recognized legal framework underpinning its public procurement system. A National Tender Board (NTB) was created at the end of 1997 within the Ministry of Finance with the broad and ambitious mandate of modernization and management of the public procurement system. Eventually the NTB was established in compliance with the country law by the Prime Minister Order of December 31, 2002. In the meantime the NTB was empowered to issue procurement guidelines and oversee the procurement process in a rather centralized mode from 1997 to 1999. A Public Procurement Law was under preparation since 1999 under an Institutional Development Fund (IDF) Grant from IDA.

The functions of control and audit of public procurement are assigned to the NTB and the Auditor General of Finance respectively. The Office of the Auditor General of Finance (OAGF) began its operations in 2000. The NTB issued the Public Procurement Guidelines (PPGs), last revised in September 2001, which are very closely guided by the Procurement Rules and/or Guidelines of the Multilateral Development Banks (MDBs), including the World Bank and African Development Bank. The PPGs are the main body of rules applicable to procurement conducted by Ministries, Public Institutions, State-Owned Enterprises and externally funded government projects.

Harmonization of procurement practices around government procedures is likely to be considered. In the mean time donors are looking into ways of reducing transaction costs associated with their procurement practices. For example, the World Bank Multi-sector HIV/AIDS project (MAP) and the Global Aids Fund are using the same project implementation unit and the MAP now has harmonized its anti-retroviral procurement procedures with those of the National Tender Board and the Global Fund unit. In order to introduce the new practices, changes had to be made to the original MAP grant agreement. The changes included measures such as dropping contract amount ceilings to take advantage of pre-negotiated prices secured by the Clinton Foundation; raising NCB thresholds; and eliminating per contract threshold amounts on some procurement procedures (i.e. least cost selection, selection based on consultant qualifications, single source selection) to allow for more flexibility.

A local version of the Development Gateway’s online government tender information service has been launched by GoR. It increases transparency in government procurement.

Harmonization efforts in the education sector were initiated by GoR and preceded the finalization of the NPRP of 2002 (Rwanda's first PRSP). In 2000, the Ministry of Education, Science, Technology and Scientific Research (MINEDUC) proposed a set of education sector partnership principles. The partnership agreement developed into a live document, periodically adjusted to reflect progress and incorporate new developments. The Government-proposed principles were further refined in 2002 to include: (i) alignment with the sector’s development strategy, (ii) alignment of donor procedures and practices with those of the Government, (iii) harmonized financing through a lead agency representing the Education Sector Donors Group (ESDG), and (iv) transparency and information sharing.

The ESDG led by DFID provides a forum for dialogue and joint response to government policy and programs. Donors jointly contribute to the Government’s review of its national policy, MTEF development, and implementation progress. DFID’s financial support to education is provided as part of general budget support to Rwanda, which started in 2002. Sweden and The Netherlands have delegated cooperation/silent partnership agreements for their education sector activities, with DFID as lead donor. Other donors active in the sector are: Belgium, France, Germany, The AfDB, the World Bank, and UNICEF.

At the end of the sector’s first joint Government–donor-CSO review in April 2003, to complement a Government-proposed overall Framework for Aid Coordination in Rwanda, MINEDUC developed and proposed a formal institutional framework for an education sector SWAp. In parallel, the Education Sector Strategic Plan (ESSP) for 2003-2008, outlined a comprehensive set of actions needed to implement the sector policy. Since this SWAp proposal, joint (education) sector reviews have taken place in April 2003, May 2004 and May 2005.

The consensus reached through the 2004 joint sector performance monitoring review was to emphasize long term flexible funding through the Government’s own systems and budget, and to further, coordinated support around shared objectives as articulated in the ESSP and the sector MTEF. Five strategic areas of focus were identified to move towards a full SWAp with harmonized features. These focus areas were: (i) Alignment of all development assistance to prioritized program areas in ESSP; (ii) Use of a common process for engaging in policy dialogue to communicate with one voice; (iii) Joint financing for capacity development; (iv) Financing sector strategy and action plan development; and (v) Supporting the implementation of an outcome-based monitoring system.

MINEDUC and ESDG have made progress in harmonizing their procedures and practices. The 2005 independent review of the sector proposed changes to the partnership agreement to inter alia incorporate practices aligned with the adoption by GoR of an Organic Budget Law. The revised partnership framework would emphasize a systematic joint review process continuing the focus on past performance in terms of outputs targeted under the ESSP, but also stress the importance of early identification of resources needed to achieve ESSP goals.

In 2002, MINEDUC developed a capacity building strategy for all key staff in the Ministry of Education and decentralized administration. GoR still lacks adequate capacity to support the transition to a full SWAp with pooled resources. Donors are now seeking to develop a joint financing mechanism to support the education sector capacity needs for implementation of the ESSP (e.g., technical assistance, training and input of operating capacity).

Although all donors participate in joint monitoring reviews and now use common monitoring indicators from the ESSP, monitoring and reviews of older projects still under implementation are being undertaken. These parallel donor reviews are to be phased out.

To further reduce aid transaction costs in the education sector, the focus of government and donors is on: (i) systematized joint reviews for past performance monitoring in lieu of any remaining independent donor reviews; (ii) joint forward planning and early identification of resources needed to achieve common sector goals and sustainable sector capacity development; and (iii) development of the framework, mechanisms and processes needed for an on-budget pooled funding arrangement relying to the extent possible on Government systems.

A joint Country Environmental Analysis is planned, and will aim at reducing parallel efforts by harmonizing environmental assistance and safeguard approaches and related capacity building, is being undertaken in collaboration with other partners.

The objectives of the pilot will be to: (i) identify the key environmental challenges of development, poverty reduction, and broad reform programs; (ii) review the environmental implications of policies and reforms in key sectors; and (iii) provide a diagnostic analysis of the environmental regulatory and institutional framework including a review of environmental due diligence process in Rwanda, and (iv) identify gaps and propose actions for enhancing the policy and institutional framework for environmental management, including the enhanced use of strategic environmental assessments as a process planning tool.