What is VUP?
"Vision 2020 Umurenge" is a new initiative by the Government of Rwanda (GoR) in collaboration with development partners and NGOs. It is led by the Ministry of Local Government, Good Governance, Community Development and Social Affairs (MINALOC) and supported by the Ministry of Finance and Economic Planning (MINECOFIN).
The Vision 2020 Umurenge Program (VUP) uses the existing decentralization system and leverages technical and financial assistance to accelerate the rate of poverty reduction in Rwanda. The aim is to eradicate extreme poverty by 2020. VUP and de
The initiative builds on past experiences which show that "isolated" interventions by sector ministries, donors or NGOs are not sufficient to lift people out of extreme poverty in a cost-effective and sustainable fashion. The other extreme recourse to "integrated" development has also shown its limits in many circumstances. One of the main limitations of both isolated and integrated approaches has been the failure to address two of the most important insights of economics: (i) "resources are scarce" and (ii) "people respond to incentives."
summary of VUP
Because resources are scarce compared to people's needs, choices must be made. When choices are made for people (e.g. centralized planning), there are risks of not satisfying these needs or distorting local incentives; this generally leads to wastes of resources. When choices are made by people (e.g. participatory mechanisms), these risks are alleviated but the incentives may not be compatible with the stated aim of eradicating extreme poverty.
In order to capture these insights, the VUP balances central guidelines for socio-economic transformation (i.e. economic growth, job creation and extreme poverty eradication) with local participatory mechanisms. This intends to make the best possible use of scare resources while, at the same time, ensuring adequate local incentives for sustainable progress.
The VUP is organized around three components. The first component revives public works but planned using community-based participatory approaches (e.g. Ubudehe) to build community assets and create off-farm employment infrastructure. Examples include projects like watershed management, terracing, water harvesting, irrigation, feeder/access roads construction, building of classrooms, health facilities, training centers, business workshops, village settlements, etc.
The second component innovates with credit packages to tackle extreme poverty as well as to foster entrepreneurship and off-farm employment opportunities; these packages are designed to make the best possible use of scarce public resources, involve the private financial sector, and provide people with incentives to improve their own productive capacities. Examples include credits to diversify/specialize farming/livestock activities, develop off-farm skills, purchase/build household/business assets, etc.
The third component includes direct supports to improve access to social services or to provide for landless households with no members qualifying for public works or credit packages; such unconditional supports seek to expand health and education coverage as well as to encourage the development of "appropriate" skills, handicraft, or social service activities.
Targeting people's productive capacities will have at least three additional benefits. First, it will allow creating off-farm employment opportunities, thereby facilitating the eventual transition to a modern knowledge-based society according to Rwanda Vision 2020. Second, it will allow accelerating the process of monetization and formalization of the economy, thereby ensuring long-term sustainability. Third, it will allow redirecting social protection to the neediest people who are landless and unable to work, thereby rationalizing and improving the effectiveness of social protection programs, along the social protection strategy.
Complimentarities with EDPRS
The VUP features as a flagship program under the Economic Development and Poverty Reduction Strategy (EDPRS) covering the budget years 2008 to 2012. As such, the VUP seek to instigate changes in the efficiency of poverty reduction. This will require managing change in three related areas. First, assist local governments to coordinate the implementation of national sector ministries' strategies. Second, instill the notion of interconnectedness of services across sector ministries. Third, change attitudes through pro-active interventions of all sector ministries to accelerate the rate of poverty reduction in Rwanda.
Phases of VUP expension
Consistent with the assessment for achieving the Millennium Development Goals (MDGs) and the objectives of Rwanda Vision 2020, the VUP requires investments of $72 per capita and per year. Starting with 30 Imirenge (out of 416 in the country), it initially targets a population of about 600,000 people (= 30/416 x 9 million population). Thus, the VUP requires $44 million or RwF 24 billion for the first year. It is expected that 50% will be required for public works (i.e. salaries and material), 30% for credit packages, and 20% for direct supports. The appeal of such program components is that 90% of the money goes directly in the pockets of the poor. In addition, the money going to credit packages is revolving; indeed, it is expected that at least 80% of that money can be re-used for further loans by microfinance institutions.
The program components are fully scalable upon successful completion of the pilot within about 18 months by the end of 2008. Success will be defined specifically in relation to both key achievements in the start-up pilot phase and the capacity of local governments to carry out the program components in a decentralized fashion. A conditional and gradual scaling up to other Imirenge within 3-5 years could be possible.
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