Rwanda: Loan conditions derail Rwf82 billion TVET project

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An $81 million (about Rwf 82 billion) project that would be financed by the loan from the Export-Import Bank of India (Exim Bank) is yet to start five years after the signing of the loan agreement between Rwanda and the financier.

The project is part of the government’s ongoing efforts to improve the quality of technical education by developing technical skills – which are considered essential to reducing unemployment, poverty and enhancing social development.

The project was expected to be completed by the end of next year (2023).

Rwanda TVET Board (RTB) Director General Paul Umukunzi told lawmakers on Monday that the nature of the project itself makes it very difficult to implement.

“This project has hurdles because the construction of these schools must only be done by Indians, and 75% of all the materials needed for the project must come from India,” he said, indicating that it It’s a major issue that he has yet to execute five years after the implementation agreement was struck.

During budget hearings with the National Budget and Heritage Commission, officials from the Ministry of Education and RTB told lawmakers that the project had stalled due to the high-demanding loan.

The project’s delay was noted in the Auditor General’s report, which was recently tabled in Parliament.

Now officials said the project is being reviewed to try to use those funds.

The $81 million line of credit that was signed between the two parties in 2017 was intended to finance the establishment of 10 vocational training centers and four business incubation centers in ten and four districts respectively.

However, at the time of the audit in March 2022, the planned activities had not yet been implemented. The disbursed loan as of June 30, 2021 was $172,700 (representing 0.21%) while more than $80.8 million (representing 99%) had not been withdrawn.

Implications of the delay

Therefore, according to the Auditor General’s report, the delay in the implementation of the activities planned by the project deprives the country of the necessary infrastructure for technical and vocational education and training.

Umukunzi said rising prices in the market [for goods and services] also aggravates the situation. This, he said, leads to the revision of the scope of the project, which implies that the money could do less than it could do initially.

The scope review, he said, after considering current market prices, means they will build at least seven TVET schools [vocational centres]and two incubation centers, fewer than previously planned.

It is an example of how delays in project implementation have impacts including increased costs and inefficiencies in the management of public funds, lawmakers complained.

Going forward, Umukunzi said that once the lender approves the new scope, Indian companies will compete for the tender, stressing that they expect to secure these companies by the end of the term. August of this year.

Furthermore, he said that they expect that by the end of November this year, one or two Indian companies will have been contracted to implement the project.

“But, there is still a challenge that 75% of goods and services have to be imported from India,” he said, seeking advocacy from MPs on the term to be relaxed.

MP Omar Munyaneza, Chairman of the National Budget and Heritage Committee, said that apart from the TVET project under the Ministry of Education, similar cases have been observed in projects that have obtained loans from the Ministry of Education. ‘India Exim Bank under other ministries such as Ministry of Infrastructure and Ministry of Agriculture and Animal Resources.

It should be noted that the $66.6 million Base-Butaro-Kidaho road (as an infrastructure project in the northern part of Rwanda) and the $100 million project to develop three irrigation schemes – Warufu, Nyamukana and Mugesera were also blocked due to the same factor. .

Warufu irrigation site is located in Gatsibo district, Nyamukana in Nyanza district and Mugesera in Ngoma district.

“I think it is our responsibility as MPs to talk to the finance ministry so that we look at ways in which [financing] the agreements that are signed no longer become an obstacle for these entities in charge of implementing the projects,” he said.

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