Strong fiduciary standards are key for developing countries to access, absorb and spend climate finance effectively. Debbie Caldwell, associate of the Centre for International Development and Training (CIDT), looks at how Rwanda’s fiduciary management practices help position the country to tap into international climate funds.
Rwanda has established strong policy and institutional frameworks to address climate change issues. The country also has a solid track record for the efficient and effective use of aid and public funds in delivering results against targets set out in its national strategies. The OECD has consistently rated Rwanda as one of the countries that uses aid most effectively. This has enabled Rwanda to tap into a number of sources of climate finance including the Adaptation Fund and Least Developing Countries Fund (LDCF), as well secure funding for climate compatible development projects from numerous bilateral and multilateral donors.
To continue to access international climate finance, Rwanda will need to carry on demonstrating its ability to absorb and spend funds effectively. Thus far, Rwanda’s capacity to manage and spend climate finance has been inherently linked to the policies it has developed to support climate change expenditure. Also critical are the institutional arrangements Rwanda has established that define the roles and responsibilities for managing its climate change response, and its public financial management system through which funds are channelled.
Over the last 20 years, Rwanda has rebuilt and modernised its Public Financial Management (PFM) system which was effectively destroyed in 1994 following the Rwandan genocide. A comprehensive PFM strategy was developed in 2008 (and has now been superseded by a second 2013-18 PFM Sector Strategic Plan) under which key PFM functions and processes have since been developed, reformed and strengthened.
The quality of Rwanda’s fiduciary management – which encompasses financial integrity (eg. audit, financial management and controls), institutional capacity (competency in project appraisal, execution, monitoring and evaluation), and transparency and accountability – has steadily improved over recent years and robust legislation, accounting systems and procedures are now in place. However, significant challenges remain especially in developing the accountancy and finance skills required for strong financial management at all levels of government. Staff retention is an issue across much of Rwanda’s public service and is particularly acute in relation to experienced accounting staff in the public sector. In response to this skills gap, the Institute of Chartered Accountants of Rwanda was created to improve the quality in accounting and auditing services available in the country. It has delivered extensive training in accounting skills.
The Office of the Auditor General (OAG) reviews the government’s published accounts and audits government adherence to financial controls, while the Chamber of Deputies (the lower house of Parliament) holds the executive to account on budget execution and reporting. The Public Accounts Committee, which was set up in 2012, has significantly enhanced Parliament’s role in the external scrutiny process and is actively holding budget managers to account for any misuse of funds identified by the Auditor General.
To streamline and reduce financial overlaps and malpractices, the Ministry of Finance and Economic Planning has adopted a centralised budgetary and financial system using the Integrated Financial Management Information System, with close oversight from the office of the Auditor General. Public procurement has also been strengthened with the passage of the Public Procurement Law in 2007 and the establishment of the Rwanda Public Procurement Authority (RPPA) and independent review panels. The RPPA is mandated to monitor and inspect all public procurement activities and its creation has increased transparency and accountability around Rwanda’s public procurement system. Cabinet members and all public servants are prohibited from tendering for any public contracts.
The improvements in Rwanda’s financial accountability and anti-corruption institutions are evidenced by high scores for its anti-corruption laws, anti-corruption agency, tax administration and customs and procurement in the Global Integrity Country Report. While challenges still remain, the government has been widely commended for establishing a robust institutional and regulatory framework, and tough sentences are handed out to those found guilty of fraud and corruption (including senior officials and ministers) under the Anti-corruption Law 23/2003.
The Office of the Ombudsman was established in 2004 to monitor transparency and compliance with regulations. It regularly exposes cases of fraud, malpractice and corruption. Other institutional measures that have been introduced include the establishment of a special anti-corruption unit in the Rwanda Revenue Authority, internal tender committees in line ministries and agencies and the Public Procurement Appeals Commission.
Rwanda’s good progress towards high fiduciary management standards, its commitment to service delivery and its strong track record of effective and efficient budget execution demonstrate that it is at an advanced stage of climate finance readiness and well positioned to access international climate funds.
This article has been produced as part of the “Lesson Learning from National Climate Compatible Development (CCD) Planning” project supported by CDKN and facilitated by the Centre for International Development and Training (CIDT) at the University of Wolverhampton. The project aimed to capture and share experiences and lessons related to national-level climate change planning in Kenya, Rwanda, Ethiopia and Mozambique.
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