Brexit will not affect UK funding to Rwanda

The United Kingdom, Rwanda’s second largest bilateral donor, is unlikely to reduce financial aid to the country following its recent decision to leave the European Union.

There has been uncertainty over the financial implications of the country’s decision to leave the European Union.

The continued weakening of the British pound amid uncertainty over the UK’s economic future, coupled with increased pessimism about the economic outlook have pushed some analysts to predict a recession and negative implications on the country’s development aid.

However, UK officials have reassured that the decision is unlikely to affect financial aid flow not only to Rwanda but other developing countries.

While Rwanda has gradually reduced its dependency on donor aid, it still needs approximately Rwf 365.3 billion or 18.7 per cent of the 2016/17 budget expected to be funded by foreign aid.

In the new financial year, overall expenditure is expected to rise to Rwf 1.95 trillion francs ($2.60 billion) in 2016/17, from 1.81 trillion francs in the year that ended in June.

The UK provides Rwanda about 68 million pounds(Rwf 65 billion)a year of development support through Department for International Development (DfID); and other funds through its multilateral partners including the EU amount to $200 million (Ref 148 billion).
“From our perspective, what we want to stress is that Brexit does not change anything over night,” said Laure Beaufils, Head, DfID.

Though there are pending amendments of some law to facilitate transition, Ms Beaufils said it is unlikely that the law on international assistance will be challenged. Accordance to the law 0.7 percent of UK ‘s Gross National Product is allocated to international development assistance.

“It is not one of those laws that are being challenged as part of Brexit at all. If we do start negotiations about Brexit, that is not going to be the focus, there will be a lot more discussions on trade agreements.”

However, Professor Manasseh Nshuti, an economist believes Brexit may have consequences on financial assistance.

“This means its relationships with Rwanda and the region can be affected, but hopefully the negative impact will be felt only in the short term.”

The largest portion of UK’s financial aid is used to support development projects in agriculture, health and education sectors.

Recently, the UK appointed Lord Dolar Popat, its first prime ministerial trade envoy to Rwanda and Uganda to oversee and promote British investments with the two East African countries, which the UK government refers to as “emerging and exciting partners.

One of the key projects in the pipeline is a direct flight that could increase trade volumes and investors.

Rwanda Today has established that Lord Popat will be in Rwanda in September for Global Africa Investment Forum and is hoping to bring a trade delegation to discuss opportunities in Rwanda.