RWANDA REPORT FOR 2006 PRESIDENT'S REPORT ON

UNCLAS KIGALI 000242

SIPDIS

DEPT FOR AF/C, AF/RSA, EB/TPP, AND DRL
DEPT ALSO FOR AF/EPS FOR MNORMAN, CTRIMBLE

SIPDIS

E.O. 12958: N/A
TAGS: ETRD ECON PHUM XA RW
SUBJECT: RWANDA REPORT FOR 2006 PRESIDENT'S REPORT ON
AGOA

REF: STATE 026707


1. Per reftel, information below provides a summary of each
of the requested areas.

Market Economy/Economic Reform/Trade Barriers
--------------


2. Economic Situation: Rwanda's economy remains largely
dependent upon foreign aid, while its population remains
overwhelmingly rural with over 90 percent of families
earning a living through subsistence agriculture and 60
percent of households living below the poverty line.
However, Rwanda has achieved an average GDP growth rate of 6
percent over the past five years and increased the total
value of exports by 23 percent in 2005. The government has
established important oversight for managing the economic
health of the country, including in the areas of tax
collection, banking, trade agreements, anti-corruption, and
fiscal policy. It has improved road conditions throughout
the country, and maintained a relatively low corruption rate
compared to neighboring countries. The government has also
made progress on privatization. In 1996, there were a total
of 91 parastatal enterprises; 51 of those enterprises were
privatized by the end of 2004, including the state-owned
telecommunications monopoly (Rwandatel),two banks (BACAR
and the Commercial Bank of Rwanda),and one tea plantation
(Pfunda) in 2004. Privatization of the telecommunications
and banking sectors have been completed, and Electrogaz is
scheduled to be privatized in FY 2008. IMF assessed
Rwanda's Poverty Reduction Growth Facility (PRGF) programs
to be on track, and Rwanda has reached the Highly Indebted
Poor Country (HIPC) completion point and significantly
reduced its overall debt.


3. Trade Liberalization: There are no significant trade
barriers that affect the importation of goods and services
to Rwanda, and the government is continuing further
liberalization. The government is also emphasizing the
importance of promoting private investment, particularly
foreign, as an engine of economic development. The GOR has
implemented several initiatives to increase investment and
exports. The Rwandan Investment and Export Promotion Agency
(RIEPA) has developed information materials, organized trade
fairs domestically and abroad, and established assistance
offices in Rwanda to encourage and assist investors.

Political Pluralism/Rule of Law/Anti-Corruption
-------------- --


4. Political Pluralism: In 2003, President Kagame was
elected to a seven-year term with 95 percent of the votes,
and members of Parliament were elected. In February 2006,
local officials were elected to five-year terms in elections
at the cell, sector, and district levels, with the Kigali
City election held on March 4. The next legislative
elections will be held in 2008, Presidential elections in
2010, and local elections in 2011. The 2003 presidential
and legislative elections were peaceful but marred by
irregularities. The most recent elections (local elections)
were generally considered free and fair, with no indication
of coercion, harassment, or intimidation of voters. The
extent of non-RPF participation in the political process was
limited, with relatively few non-RPF candidates, which
raised questions about possible political influence in the
selection of candidates.


5. Rule of Law: While the Rwandan judiciary continues to
face significant challenges in the aftermath of the 1994
genocide which virtually destroyed its institutional
capacity, it has made notable progress since the GOR
initiated judicial reforms in 2001. In 2003, a new
Constitution established the judiciary as a separate branch
of government, and the GOR continues to make efforts to
strengthen the independence and capacity of the judiciary.
In 2004, the regular courts were inoperative for 10 months
due to substantial reforms, including the
dismissal/replacement of many judges and the training of
court personnel. The GOR has plans to increase the presence
of lawyers throughout the country (currently only 147, based
mostly in the capital) to improve access to legal services
and to establish circuit courts throughout the country,
especially in the rural areas, to reduce the backlog of
pending cases (currently approximately 47,000). A new legal
training institute is due to begin operation at the end of
March.


6. Anti-Corruption: The extent of corruption in Rwanda is
limited due, in part, to the government's active efforts to
combat it. In 2003, it established the Ombudsman's Office

to investigate corruption within government, focus on
corruption prevention, and review financial disclosure
reports of senior government officials to ensure
transparency and accountability. The Inspector General of
the Supreme Court is charged with investigating judicial
corruption, while the Superior Councils of the Judiciary and
of the Prosecution serve as disciplinary bodies. In
addition, the GOR has provided training to the National
Police to improve professionalism and to promote respect for
rule of law. The Senate summons high-level government
officials, including ministers, to ad hoc public hearings to
probe government action in response to topical reports. An
independent Auditor General, who reports directly to the
Parliament, issues annual audit reports, and the Accountant
General for the Executive oversees the financial aspects of
the executive branch.

Poverty Reduction
--------------


7. The government has made efforts, with measurable
results, to reduce poverty and to improve access to health
care and education, despite its severely limited resources.
Under its national policy of universal primary education,
the GOR provides free primary education to all children. A
joint GOR-donor task force is focusing on improvement of
girls' education. An education cluster headed by the
Ministry of Education and DFID conducts an annual joint
review of the education sector with all stakeholders to
assess progress and to identify areas for improvement.


8. The GOR is attempting to improve access to health care
through greater decentralization to ensure adequate health
services at the local level. It has been encouraging
citizens to pool resources and to join mutual health
insurance schemes, supported by donors. In addition, it has
implemented plans for the prevention, protection, and
reintegration of street children (currently 7,000 out of 4.2
million children),including vocational training, such as
carpentry and tailoring, to promote self-reliance through
development of income-generating skills.


9. Rwanda has a Poverty Reduction Strategy Paper tied to
its participation in the HIPC debt relief initiative.
Rwanda met HIPC requirements in 2005, but faces challenges
due to food insecurity resulting from less-than-anticipated
rainfall in recent months, and insufficient energy
capacity. Anticipated GDP growth is estimated at 3-5
percent, while inflation is likely to decrease to 5
percent.

Human Rights/Labor/Child Labor
--------------


10. Human Rights: Widespread poverty and the destruction
of the country's socio-economic fabric, human resource base,
institutional capacity, and economic and social
infrastructure during the 1994 genocide continued to have an
adverse impact on the country's human rights situation.
There were instances when the government committed serious
abuses, but there were some improvements during the year.
There were restrictions on political activities and freedoms
but, unlike in the previous year, there were no reports of
politically motivated disappearances, and fewer reports of
police abusing suspects and the government arbitrarily
arresting members of civil society groups and opposition
politicians.


11. Labor: Rwandan law provides all salaried workers,
including some civil servants, with the right to form and
join labor unions without prior authorization, and workers
exercised this right in practice. There were no
restrictions on the right of association for non-civil
servants. While all unions must register with the Ministry
of Labor for official recognition, there were no reports of
the government denying recognition. The law, however,
prohibits unions from having political affiliations and from
publicly expressing political opinions. The law also
provides for collective bargaining, but this right was
severely limited in practice. In November 2005, the GOR
created a National Labor Council with equal representation
of government, private sector management, and labor unions.
Rwanda has ratified ILO Conventions 29 and 105 on
prohibitions on forced and compulsory labor.


12. Child Labor: Except for subsistence agricultural
workers, who account for approximately 90 percent of the
workforce, the law prohibits children under the age of 16
from working outside of the household without their parents'
or guardians' permission and prohibits children under 16

from participating in night work or any work deemed
hazardous or difficult, as determined by the Minister of
Labor. However, child labor was prevalent in the
agricultural sector. The minimum age for full-time
employment is 18 years, and 14 years for apprenticeships,
provided that the child has completed primary school.
According to a 2003 UN report, 31 percent of children
between the ages of 5 and 14 engaged in child labor, and
during the year children headed 106,000 households. Rwanda
has ratified ILO Conventions 138 and 182 on the minimum age
for employment and the worst forms of child labor. The
Government is currently supporting projects to combat child
prostitution and child labor in quarries, mines, and tea and
coffee plantations.

ARIETTI