Economic Planning
Senior 6 · Economics
Economic Planning
Lesson 4 of 4
25 min
In Kinyarwanda, guhiga means to vow to achieve something, and imihigo are such vows. In the past, a person who made one in public was dishonoured if they failed. In 2006 the Government of Rwanda brought the practice back as a modern management tool: performance contracts. Every year, each district, ministry and public board picks priority activities from its action plan as its imihigo, and at the end of the fiscal year the National Institute of Statistics of Rwanda (NISR) checks whether each one was achieved (NISR, Evaluation of Imihigo Implementation 2021–2022, p. 1).
Think: Vision 2050 looks thirty years ahead. A district's imihigo might be to finish a market or a bridge before the end of June. How does a thirty-year vision turn into a promise like that, and who checks whether it was kept?
Since 2000 Rwanda has planned at two levels: a long-term vision, and a series of medium-term strategies that carry it out. The timeline and table show the sequence.
| Plan | Period | Main focus |
|---|---|---|
| Vision 2020 | 2000–2020; targets revised in 2012 | Middle-income status. Revised targets included GDP per head of US$1,240, average growth of 11.5%, poverty down to 20% and 1.8 million new off-farm jobs (EDPRS 2, Table 1.1, p. 2) |
| Poverty Reduction Strategy (PRSP) | 2002–2006 | The move from emergency relief to rehabilitation and reconstruction: rural development, human development, infrastructure and governance (EDPRS 2, p. 2) |
| EDPRS 1 | 2008–2012 | Growth, jobs and exports led by the private sector, more decentralisation; flagship programmes for growth and exports, the Vision 2020 Umurenge Programme (VUP) and governance (EDPRS 2, p. 3) |
| EDPRS 2 | 2013–14 to 2017–18 | Four thematic areas: economic transformation, rural development, productivity and youth employment, and accountable governance (EDPRS 2, executive summary) |
| NST1 | 2017–2024 | Three pillars, economic transformation, social transformation and transformational governance; the bridge from Vision 2020 to Vision 2050 (Vision 2050, p. 15) |
| Vision 2050 | 2020–2050 | Upper-middle income by 2035 and high income by 2050 (Vision 2050, p. 7); two phases, 2020–2035 and 2036–2050, reviewed every five years (p. 15) |
| NST2 | 2024–25 to 2028–29 | The same three pillars; targets such as 1.25 million jobs and average growth of 9.3% (lessons 1 to 3) |
Vision 2050 itself was requested by the 13th National Umushyikirano Council in 2015 and drafted after consultations with youth and women, the private sector, development partners, political parties, civil society, faith-based organisations, academics and persons with disabilities (Vision 2050, p. 6).
Definition
Sector Strategic Plan (SSP): a five-year plan for one sector, such as health, education or agriculture, that turns NST2's targets into the sector's own programmes, indicators and budget needs.
District Development Strategy (DDS): a five-year plan for the City of Kigali or a district, aligned with NST2 and the SSPs but adding local priorities.
Medium-Term Expenditure Framework (MTEF): a rolling three-year budget plan that links the money available to the priorities of the national, sector and district plans.
Imihigo: annual performance contracts in which public institutions commit to specific, measurable targets, chosen from their action plans and evaluated at the end of the fiscal year.
Vision 2050 sets out how its own plans fit together (Vision 2050, Figure 1, p. 15). The diagram below draws the same structure.
NISR has evaluated imihigo since 2017–18. Its method distinguishes two kinds of target (NISR, Imihigo 2021–2022, pp. 5, 9 and 10):
Worked example 1: did EDPRS 1 reach its targets?
The progress ratio shows how much of the planned change was achieved. It works for targets that rise and for targets that fall:
| Indicator (EDPRS 2, Table 1.3, p. 7) | Baseline, 2006 | Target, 2012 | Result, 2011–12 | Progress |
|---|---|---|---|---|
| Real GDP growth, % a year | 6.5 | 8.1 | 8.2 | Target met |
| National investment, % of GDP | 16.3 | 24.4 | 22.5 | 77% |
| Population in poverty, % | 57 | 46 | 44.9 | 110% |
| Employment in agriculture, % | 80 | 70 | 71.6 | 84% |
Working. Investment: . Poverty, a falling target: . Farm employment: .
Judgement. Growth and poverty reduction met or beat their targets, but investment and the move out of farming fell short. Growth was achieved with less investment than planned, while labour moved out of farming more slowly than hoped. EDPRS 2 then made economic transformation the first of its four thematic areas.
Worked example
Worked example 2: scoring a district's imihigo (illustrative district; NISR's scoring rules)
A district has four imihigo: a bridge (output, completed on time); a market (output, 90% built at the end of June); terraces (outcome, 800 ha of a 1,000 ha target); electricity connections (outcome, 2,700 of 3,000 households). Its whole action plan was 88% implemented. Use a simplified final score: 75% imihigo average plus 25% action plan.
Step 1 Bridge: 100%. Market: not finished, so 0%. Terraces: . Electricity: .
Step 2 Imihigo average: .
Step 3 Final score: .
Analysis. The market scored nothing although it was 90% built. All-or-nothing scoring rewards finishing projects, but it also gives districts a reason to choose targets they are sure to reach rather than ambitious ones: a classic risk of any target system.
| Strengths | Weaknesses and risks |
|---|---|
| Continuity: each strategy builds on the last inside a long-term vision | Targets have often been very ambitious: Vision 2020's GDP per head of US$1,240 was not reached (practice item 4) |
| A clear chain from vision to sector, district and annual budget | Heavy reliance on private investment (43% of NST2's finance) and on grants and loans, which the plan cannot command (lesson 3) |
| Quantified targets with baselines and named institutions | Target pressure can push institutions towards easy or measurable targets rather than important ones |
| Independent annual evaluation of imihigo by NISR | Citizen participation in planning has been limited: a 2018 study reported it below 50%, with citizens active in carrying out imihigo but largely absent when they were planned (Never Again Rwanda, 2018) |
| Alignment with the SDGs, Agenda 2063 and the EAC | Exposure to external shocks, such as the COVID-19 pandemic in 2020 and swings in mineral and coffee prices |
Warning
Use the right names and dates. Don't write "NST2 (2020–2050)" or "EDPRS 3". Vision 2050 is the 30-year perspective plan; NST2 (2024–2029) is the current five-year strategy; there was no EDPRS 3, because NST1 replaced it in 2017.
A missed target is not proof of failure. When you evaluate a plan, measure progress from the baseline, not only against the target, and ask whether the target was realistic in the first place.
Tip
Learn the chain as one sentence: Vision → NST → SSPs and DDSs → MTEF and budget → imihigo → evaluation → next NST. In an exam, drawing this chain as a diagram earns marks quickly.
Important
Rwanda's plans since 2000: Vision 2020 carried out through the PRSP (2002–2006), EDPRS 1 (2008–2012), EDPRS 2 (2013–2018) and NST1 (2017–2024); now Vision 2050 carried out through NST2 (2024–2029). National strategies are turned into sector and district plans, funded through the MTEF and annual budgets, and committed to in yearly imihigo, which NISR evaluates. Strengths: continuity, alignment and accountability. Weaknesses: very ambitious targets, dependence on private and external finance, and limited citizen participation in planning.
RwandaTV (RBA), "IMIHIGO: President Kagame urges leaders to adopt transformational reforms". A news report from the ceremony for signing the 2020–21 performance contracts, at which district rankings were also announced. Note how results are ranked and announced in public, and compare this with the strengths and risks of target systems discussed above.
Practice
Further reading
Sources and credits
Written by Ganzaa: the text, the timeline, the diagram, the tables, the worked examples and the practice items. The district in worked example 2 and practice item 5 is illustrative. The photo is shared under CC BY-SA 4.0.
