reviving the great lakes - world...

REVIVING THE GREAT LAKES

A WORLD BANK GROUP REGIONAL INITIATIVE FOR PEACE, STABILITY AND

ECONOMIC DEVELOPMENT

[In support of the February 24, 2013 “Peace, Security and Cooperation Framework for the DRC

and the Region”]

Draft for Discussion Only

This draft paper suggests elements of a WBG regional approach to development in the

Great Lakes. It is a first cut which aims to begin a process of thinking regionally about

development solutions that support the February Framework Agreement.

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Acronyms and Abbreviations

AfDB African Development Bank AG Armed Groups AMSME Africa Micro Small and Medium Enterprise Program AU African Union AUC African Union Commission BDGLE Development Bank of the Great Lakes States BOP Bottom of the Economic Pyramid C3P Public Private Partnerships CAADP Comprehensive Africa Agricultural Development Program CAB Central African Backbone CAR Central African Republic GARG Agriculture and Rural Management Counsels CAS Country Assistance Strategy CASA Conflict Affected States in Africa (IFC) CASF Central African SME Fund (IFC) CEPGL Communautés Economiques des Pays des Grands Lacs CMU Country Management Unit CoFS Combatants on Foreign Soil COMESA Common Market for Eastern and Southern Africa COPIREP Comité de Pilotage de Reformes des Entreprises Publiques CSP Country Strategy Paper DDR Disarmament, Demobilization and Reintegration DfID Department for International Development (UK) DRC Democratic Republic of Congo D&R Demobilization & Reintegration EAAPP East Africa Agricultural Productivity Program EAC East African Community ECGLC Economic Community of the Great Lakes Countries EDF European Development Fund EITI Extractive Industries Transparency Initiative ESW Economic Sector Work EU European Union EUPOL European Union Police EUSEC European Union Security FARDC Army of the Democratic Republic of Congo (Forces armées de la République

démocratique du Congo) FDLR Democratic Forces for the Liberation of Rwanda (Forces démocratiques de libération

du Rwanda) FSAP Financial Sector Assessment Program FY Fiscal Year GBV Gender-Based Violence GDP Gross Domestic Product GLE Great Lakes Energy

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GLR Great Lakes Region GNI Gross National Income GPP Growth Poles Project GoDRC Government of DRC GoR Government of Rwanda GoU Government of Uganda HIV/ AIDS Human Immunodeficiency Virus/ Acquired Immune Deficiency Syndrome ICGLR International Conference of the Great Lakes Region ICT Information and Communication Technology IDA International Development Association (WBG) IDP Internally Displaced People/Person IFC International Finance Corporation (WBG) IPP Independent Power Projects IRAZ Institute of Agronomic and Animal Research KfW German Reconstruction Credit Institute (Kreditanstalt für Wiederaufbau) LOGiCA Learning on Gender & Conflict in Africa LRA Lord’s Resistance Army M23 March 23 MDG Millenium Development Goals MDRP Multi-Country Demobilization & Reintegration Program MDTF Multi-donor Trust Fund MIGA Multilateral Investment Guarantee Agency (WBG) MINPTT Ministère de Postes, Téléphones et Télécommunications MONUSCO United Nations Organization Stabilization Mission in the DRC (Mission de

l’Organisation des Nations Unies pour la stabilisation en RDC) MoU Memorandum of Understanding NELSAP Nile Equatorial Lakes Subsidiary Action Program NGO Nongovernmental organization OECD Organization for Economic Cooperation And Development OHADA Legal Framework on Harmonization of Business Laws in Africa (Organisation pour

l’Harmonisation du Droit des Affaires en Afrique) PADMTN Pan-African Domestic Medium Term Note PCN Project Concept Note PEMFAR Public Expenditure Management and Financial Accountability Review PER Public Expenditure Review PREM Poverty Reduction and Economic Management PRG Partial Risk Guarantees PROMINES Governance in the Mineral Sector Technical Assistance Project PROROUTES High Priority Roads Reopening and Maintenance Project PPA Project Preparation Advance PPIAF Public-Private Infrastructure Advisory Facility PPP Public-Private Partnership PRSP Poverty Reduction Strategy Paper PSCF Peace, Security and Cooperation Framework for the DRC and the Region RDF Rwandan Defense Force SCPT Transport and Ports Co. (Société Commerciale des Transports et des Ports) SEP Congolese Oil Company (Entreprises Petrolières Congolaises) SEZ Special Economic Zones

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SGBV Sexual and Gender-Based Violence SINELAC International Electricity Association of the Great Lakes Countries SIP Small Investment Product SME Small and Medium Enterprises SOCIGAZ Commercial and Industrial Gas Company SP Social Protection SSA Sub-Saharan Africa TA Technical Assistance TDRP Transitional Demobilization & Reintegration Program TMEA Trade mark East Africa UN United Nations UNOAU United Nations Office to the African Union UNDPKO United Nations Department of Peace-Keeping Operations US$ United States Dollar WBG World Bank Group WDR World Development Report

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Table of Contents EXECUTIVE SUMMARY .................................................................................................................................. 1

A. BACKGROUND AND PURPOSE ............................................................................................................... 4

B. UNDERSTANDING THE DRIVERS OF CONFLICT AND INSECURITY IN THE GREAT LAKES ........................ 6

C. DONOR RESPONSE AT A REGIONAL LEVEL .......................................................................................... 11

D. ELEMENTS OF A GREAT LAKES’ REGIONAL DEVELOPMENT INITIATIVE AND A POSSIBLE WORLD BANK

GROUP ROLE IN IT ....................................................................................................................................... 12

1. Foundation: Strengthening State Effectiveness in Eastern DRC ...................................................... 12

2. Pillar one: Vulnerability and Resilience ........................................................................................... 17

3. Pillar Two: Economic Cooperation and Regional Integration .......................................................... 25

E. PROGRAM OF POSSIBLE WORLD BANK GROUP ACTIVITIES ............................................................... 40

F. PARTNERSHIP AND INSTITUTIONAL SPACE ......................................................................................... 44

Annex 1: The Drivers of Conflict .............................................................................................................. 48

Annex 2: Charter for Cross-Border Traders ............................................................................................. 51

Annex 3: The CAB5 ICT Connectivity Project. ......................................................................................... 53

Annex 4: Poverty and Social Indicators ................................................................................................... 55

Annex 5: Brief Overview of Demobilization and Reintegration in the GLR over the last 4 years ........... 60

Annex 6: International Conference of the Great Lakes Region and Communauté Economique des Pays

des Grands Lacs ....................................................................................................................................... 63

Annex 7: IFC Program in Great Lakes Countries ...................................................................................... 64

Boxes

Box 1: Integrated Corridor Development Initiative in the Selected Great Lakes Countries ........................ 29

Box 2: Risky Business: Poor Women Cross-Border Traders in the East of the DRC ..................................... 33

Figures

Figure 1: Democratic Republic of Congo: Minerals and Armed Groups ..................................................... 15

Figure 2: GNI per capita, PPP (2011) ........................................................................................................... 23

Figure 3: The Distribution of Economic Activity in the Countries of the Great Lakes Region as shown by

Night Light Data .......................................................................................................................................... 26

Figure 4: Map of main trading routes on the border of eastern and southeastern DRC………………………….28

Tables

Table 1: Tentative Proposed World Bank Group Analytic and Technical Assistance Program .................... 41

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Table 2: Tentative Proposed World Bank Group Lending Program ............................................................. 42

Table 3. Other Potential Knowledge and Technical Assistance Programs Discussed .................................. 46

REVIVING THE GREAT LAKES

A WORLD BANK GROUP REGIONAL INITIATIVE FOR

PEACE, STABILITY AND ECONOMIC DEVELOPMENT

[In support of the February 24, 2013 “Peace, Security and Cooperation

Framework for the DRC and the Region”]

EXECUTIVE SUMMARY

1. The signing of the “Peace, Security and Cooperation Framework for the DRC and the Region”

on February 24, 2013 brings hope to the people of the countries of the Great Lakes Region (GLR) of an

end to a protracted period of conflicts and insecurity and opens a window of opportunity for peace,

stability and economic development in the region. In signing the agreement the countries of the region

committed to work together, with support from the international community, to address common

security and economic challenges.

2. Long-term term sustainable peace and stability in the GLR, and in the DRC in particular, will

not be achieved without addressing the underlying social, economic and political drivers of conflict

and instability. The dynamics of conflict and instability in the GLR are multi-dimensional and historically

deep-rooted, driven by a complex mix of political, security, social and economic factors at both the

national level, especially in the DRC, and at the regional level. It is essential to identify these factors and

distinguish the regional implications of instability in the east of the DRC from drivers of conflict that are

regional in origin.

3. In the DRC conflict is driven by the weakness of the state and its inability to provide security

and basic state services, long-standing ethnic tensions, exacerbated by lack of clarity and insecurity over

land ownership, the continued presence of both foreign and Congolese armed groups and their

involvement in illicit mining activities and severe socioeconomic vulnerability of the local population.

4. At the broader regional level, insecure and insufficient access to land, population

displacement, exploitation of mining of high value minerals as well as timber are compounded by

rapid population growth and lack of economic opportunity and continuing vulnerability. Within this

context, achieving sustainable peace requires a coordinated and integrated regional approach.

Enhancing economic opportunities and social welfare, promoting economic cooperation and improving

governance will all be essential for improving stability and addressing these structural causes of conflict.

5. As a principal development partner in the region, the World Bank Group (WBG) has an

important role to play in promoting regional peace and stability through programs to improve

livelihoods in border areas, promote cross-border trade and strengthen economic interdependence. A

new regional approach would not only help to better frame the WBG’s interventions within a dynamic

regional, spatial and demographic context, but help make the new peace agreement an opportunity for

lasting stability and economic development in the Great Lakes. The initiative will position the Bank

Group to effectively coordinate with, and support the efforts of, the UN Special Envoy as well as the

other international organizations, including the African Union, to ensure full implementation of the PSCF.

6. In order to effectively support peace and stability, and subject to confirmation by the

authorities, the WBG will explicitly orient and scale up its development assistance from its regional

window to addressing the key socio-economic dimensions of the underlying sources of conflict—based

on its specific mandate, competencies and convening power in relation to other development

partners.. This note seeks to define these key elements and will be further refined based on subsequent

discussions with the affected governments, regional and international partners and other stakeholders.

7. This proposed WBG regional initiative for the Great Lakes will consist of two inter-related

pillars: (1) addressing vulnerable groups and improving community resilience; and (2) promoting

economic cooperation and regional integration. These will be underpinned by efforts to improve

regional and national governance, with a focus on promoting transparency and effective collective

management of common resources. The initiative also draws on approaches and lessons learned from

previous Bank engagement in the GLR and in other fragile and conflict–affected contexts. In particular, it

builds on a careful understanding of the drivers of conflict and the factors that undermined the viability

of previous peace accords.

8. The Pillar on vulnerability and resilience will address population displacement, land issues,

social protection for vulnerable groups (including women), enhancing food security, improving access

to health and supporting demobilization and reintegration of armed groups. This will be backed up

with a specific focus on gender as a cross-cutting issue. The note proposes a set of activities that provide

a mix of analytical and advisory work and investment projects.

9. The Second Pillar of the proposed strategy focuses on economic cooperation and regional

integration. This pillar will support countries in the region in addressing key common economic

challenges: increasing access to energy, providing infrastructure, removing barriers to trade and

economic integration, providing employment, especially for youths, in the face of rapidly rising

populations and raising agricultural productivity to alleviate poverty. Bank Group interventions will be

guided by the aim of increasing regional integration to exploit opportunities for mutually beneficial trade

and to reap scale economies in production and in the provision of infrastructure and public services.

10. The initiative rests on the fundamental requirement to strengthen the capability of the DRC

state to govern effectively as the foundation for peace, economic development and prosperity in the

GLR. To this end the proposed regional strategy calls for actions in DRC on two fronts: (i) improving

security; and (ii) enhancing the governance of extractive industries. Establishing security, improving

decentralized governance for internal security and reaching people are critical for the success of the new

peace agreement. Addressing the governance of extractive industries has both the potential to improve

welfare if well managed or, if not, to fuel continuing regional and intra-national conflict.

11. In implementing the initiative the Bank Group would pursue a deep and broad-based dialogue

with the private sector, civil society and local communities to link intervention to support regional

integration with peace building. The initiative will identify and support activities that have the potential

to provide mutual incentives and increase economic cooperation among the Great Lakes region. In

order to strategically link these interventions to peace building, the Bank Group will promote broad

consultations with civil society, the private sector and local communities, as well as transparency and

accountability in regional decision-making processes.

A. BACKGROUND AND PURPOSE

1. The conflict in the Great Lakes Region (GLR) has had a significant human toll, including on

women and children. For instance, out of a total population of 11.5 million people in the eastern

provinces (30% of the country’s population) of DRC, 2 million children cannot benefit from education

due to the destruction of schools. Over 3.5 million people are estimated to have died since 1998, and

over 900,000 households (over 4.5 million people, including 2.7 million displaced people) currently lack

appropriate shelter or have lost property due to conflict. The poverty rate is about 70 percent. Overall

access to economic services, including energy (e.g., 3 percent in Burundi), is very limited. The population

of the East is also particularly vulnerable to diseases due to the deterioration of health, water and

sanitation services and infrastructure. In addition, the lack of adequate transport infrastructure, a

consequence of years of conflict and neglect, has paralyzed economic productivity. Combined with

continuing violence and insecurity and the absence of a functioning legal and regulatory system, these

trends have resulted in a situation of widespread vulnerability, a breakdown of social cohesion and

capital, and dependence on emergency humanitarian assistance. In such a context of extreme fragility,

there is significant potential for new forms of conflict and violence.

2. In signing the “Peace, Security and Cooperation Framework for the DRC and the Region”

(henceforth referred to as the PSCF) on February 24, 2013, the governments of the Great Lakes Region1

affirmed their commitment to work together, with the support of the international community, to

address common security and economic challenges. Under this agreement, the countries in the Great

Lakes committed to refraining from interfering in other countries and agreed to neither tolerate nor

provide assistance or support of any kind to armed groups. The agreement calls for a regional oversight

mechanism to monitor and support the implementation of the commitments.

3. The Congolese government agreed to fast-track security sector reform, particularly within its

army and police; strengthen state authority in eastern parts of the country; make progress with

decentralization; further economic development and delivery of basic social services; and continue with

the reform of government institutions.

4. The signatories agreed to jointly develop a plan of implementation of the Framework which

includes the establishment of benchmarks. The DRC also agreed to put in place a national mechanism

for oversight of the implementation of its national commitments. The United Nations (UN), African

Union (AU), African Development Bank (AfDB), the World Bank Group (WBG) and other international

partners have agreed to support the national oversight mechanism. On March 18, 2013, the UN

Secretary-General appointed a Special Envoy for the Great Lakes Region to work with the parties to the

1 Signatories to the February 2013 Framework: Angola, Burundi, the Central African Republic, the Democratic Republic of

Congo, the Republic of Congo, Rwanda, South Africa, South Sudan, Tanzania, Uganda and Zambia. Full text of the agreement can be found at: http://www.peaceau.org/uploads/scanned-on-24022013-125543.pdf

http://www.peaceau.org/uploads/scanned-on-24022013-125543.pdf

Framework to deliver on their commitments and support efforts to reach durable solutions for the

region.

5. The purpose of this paper is to articulate the key strategic parameters of a regional WBG

approach to supporting the development pillar of the Agreement. . As a principal development partner

in the region, the World Bank has an important role to play in promoting regional peace and stability

through programs to improve livelihoods in border areas, promote cross-border trade and strengthen

economic interdependence. The initiative will position the Bank Group to effectively coordinate with,

and support the efforts of, the UN Special Envoy as well as the other international organizations,

including the African Union, to ensure full implementation of the PSCF.

6. Addressing the social and economic drivers of conflict and instability is critical for sustained

peace and development in the Great Lakes region (GLR)2. The dynamics of conflict and instability in the

GLR are multi-dimensional and historically deep-rooted, driven by a complex mix of political, security,

social and economic factors. Within this context, achieving sustainable peace requires a coordinated and

integrated approach recognizing that outright conflict is focused in the east of the DRC and that

economic, social and political conditions vary across countries. Competition over natural resources, deep

inequalities in distribution of economic opportunities and resources, and extreme vulnerability within

the population are drivers of conflict that require both political and economic solutions. Enhancing

economic opportunities and social welfare, promoting economic cooperation and improving governance

will all be essential for improving stability and addressing these structural causes of conflict. The Bank

Group is prepared to lead and coordinate support on the latter, complementing the role of the UN, AU

and other organizations on political issues.

7. In order to effectively support regional peace and stability, the WBG will explicitly orient its

development assistance from its regional development window to addressing key economic

dimension of the underlying sources of conflict—albeit selectively based on the division of labor

among partners and the availability of resources, and subject to agreements with the authorities.

This note seeks to define these key elements and will be refined based on discussions with the affected

governments, regional and international partners and other stakeholders. It provides an overview of the

key drivers of conflict in the GLR, and outlines how the Bank Group could articulate a specific regional

program that addresses peace and stability as part of its broader developmental approach and program

of assistance in coordination with World Bank supported country-based programs. The note also draws

on approaches and lessons learned from Bank engagement in other fragile and conflict –affected

contexts.

8. This proposed regional initiative for the Great Lakes will consist of two inter-related pillars: (1)

addressing vulnerable groups and improving community resilience; and (2) promoting economic

cooperation and regional integration. These will be underpinned by efforts to improve regional and

2 To maintain focus we concentrate on those countries most immediately connected to the problems of the Great Lakes:

Burundi, the Democratic Republic of Congo, Rwanda and Uganda. Of course, the strategy reflects the linkages between these countries and the wider region and the global market, especially through Kenya and Tanzania.

national governance, with a focus on promoting transparency and effective collective management of

common resources. In the short term, Bank support will be focused on immediate stabilization and

confidence building measures, designed to support governments and the broader international

community in addressing urgent needs and providing tangible ‘peace dividends’ that will accrue to all

countries in the region and help defuse current tensions and generate a more conducive environment

for longer-term peace consolidation and development measures. In the longer-term, Bank Group

support will be focused on addressing the deeper underlying structural causes of instability in the region,

with a special focus on generating broader economic opportunities.

9. The initiative recognizes the diversity among countries in the region and that considerable

progress has been made in dealing with economic challenges and improving governance.. This

requires that regional programs of support are carefully tailored to reflect different national starting

points and structured to ensure significant benefits to all participating countries. But this diversity also

offers opportunities for mutual gains in addressing common problems, and scope for peer to peer

learning and sharing of experience. This can in turn contribute to building confidence among countries in

the region.

10. This paper is a work in progress and at this stage it lays out the key elements of a strategy for

the Great Lakes. More work will be needed to further articulate the proposed pillars, prioritize

activities, and consult more thoroughly internally and externally, especially with country governments, as

well as with development partners and other stakeholders.

B. UNDERSTANDING THE DRIVERS OF CONFLICT AND INSECURITY IN THE GREAT

LAKES3

11. Conflict and insecurity in the Great Lakes region are driven by a complex and inter-related set

of economic and political factors at both the national level, especially in the east of the DRC, and at

the broader regional level. Since previous attempts at a regional peace accord have failed, it will be

important to base any future strategy on a careful diagnostic analysis of the factors that led to the

collapse of the previous agreements and anticipate the likely stress points where collective regional and

international effort should be directed.

12. It is necessary to identify these factors and clearly distinguish the regional implications of the

conflict in eastern DRC (conflict-induced displacement across borders, cross-border movements of

Congolese combatants, proliferation of war economic networks, and the deepening socioeconomic

disparities between populations on either side of borders) from the drivers of instability and conflict

which are regional in origin. Most of these are structural in nature, including migration, land and natural

3 Annex 1 provides a more detailed historical overview of the factors underlying conflict in the Great Lakes

region.

resource management. This is necessary to assess the issues with regional implications that can be

addressed through national-level policies and projects, and identify those issues that require a genuinely

regional—but complementary—approach.

Drivers of conflict in eastern DRC

13. The weakness of the state in projecting its power within its borders is a critical factor that

contributes to regional instability. While a number of states in the Great Lakes region are weak in

their capacity to secure their borders and ensure internal security, the DRC poses a particular

challenge given its size and location with borders shared with nine other countries. The DRC did not

inherit a national public administration system from the colonial period and over thirty years of

subsequent misgovernance left the state with little ability to secure and administer the vast territory of

the DRC. The central government does not have adequate capability to provide national security and

neither do provincial governments have the capacity to manage internal security as this is a concurrent

responsibility with the central government. The spillovers from the ethnic genocide in Rwanda have had

a particularly devastating effect through the presence of armed groups in Eastern Congo and have

resulted in periodic military interventions by Rwandese security forces and the alleged sponsoring of

militias within the Congo by external sources. MONUSCO’s presence has not succeeded in restoring

security in Eastern Congo given the absence of adequate national military capability in the DRC.

14. Years of conflict have destroyed most state-owned infrastructure, while continued insecurity

impedes the restoration and deployment of state services beyond provincial capitals. While progress is

being made in strengthening the capacity of some provincial and local governments, the capacity of each

level of government remains very weak and a significant state building agenda remains to be addressed.

Lack of effective state institutions and the failure to deliver basic services has created the conditions for

conflicts to persist in eastern DRC. These problems have been compounded by inadequate transfers of

resources from Central Government to provincial authorities. The government of the DRC has committed

to reform of state institutions but progress has been uneven, with more progress in some of the

provinces and less at the national level.

15. Ethnic tensions have led to outright conflict and generated widespread insecurity. Ethnic

tensions in the Kivus have their roots in waves of migration dating back to the seventeenth century,

intensifying with the influx of refugees, containing perpetrators of genocide-related violence, into

Eastern DRC following the 1994 Rwandan genocide. Politically-motivated, unclear and conflicting

messages on nationality status provided by successive Congolese governments has reinforced ethnic and

nationality divisions that have been exploited and reinforced by politicians looking to mobilise support

bases.

16. Lack of clarity and insecurity over land ownership and the absence of effective resolution

mechanisms have contributed to the destabilization of local communities and escalated disputes.

Colonial-driven and directed migration to the Kivus has led to disputes over the status of community

land given to migrants, an issue that became particularly inflammatory when migrants began to claim

autonomy over land, customs and administration.4 Problems are intensified in the context of insecure or

insufficient access to land. For example, the Kivus are densely populated5 and, with the increase in

population size as the displaced have returned, food insecurity has increased and land holdings have

shrunk. The result has been that many have found themselves crowded out of land, and by extension,

livelihood. Important among this landless group in the Kivu’s are youths, who have been targets for

manipulation and recruitment by armed groups. The absence of effective governance mechanisms or

clear legislation to resolve land and migration-related disputes means that without safeguards, tensions

quickly boil over into violence.

17. The continued presence of foreign and Congolese armed groups, some of which operate

across borders, constitutes an immediate threat to the consolidation of peace in the Eastern DRC and

drives the continued violence and armed conflict. Since 2006, a number of foreign and Congolese

armed groups in eastern Congo have remained engaged in active military campaigns against the

Congolese government, exacting a heavy toll on the civilian population and impeding the resumption of

normal social and economic activities in areas under their control. With the Congolese Government

incapable of achieving a decisive military solution, the situation is best characterized as an uneasy

stalemate punctuated by low-level military operations and insurgency operations. There also remains a

regional dimension to the continuation of armed groups in the East of the DRC with the alleged support

from external sources.

18. The spoils of war facilitate continued violence and create perverse incentives for instability.

Armed groups, including rebels and criminal networks of the DRC Army (FARDC), enrich themselves

through control of mining and trade in minerals. Gold and other minerals are prevalent in Kalehe and

Masisi territories as well as Ituri district and armed groups are benefiting from smuggling minerals into

Rwanda and Uganda. There are also claims that external actors are actively involved in the illicit mining

activities in Eastern DRC and promote militias to ensure control over valuable mining assets.

19. Non-mineral natural resources continue to provide additional financing to armed groups in

the form of sale and taxation of land, timber, agricultural goods, charcoal, and other goods. The

lucrative illicit economy and presence of armed groups thrive in the face of weak state authority, and in

turn, its very presence impedes the ability of the state to redeploy its authority. However, it is important

to note that not all armed groups are financed through the exploitation of natural resources and that

denying access to these revenues, in the absence of effective governance and state security, may simply

cause increased harassment of the local population.

20. Acute socioeconomic vulnerability contributes to the fragility and conflict of the eastern

region of the DRC. Conflict has had a profound social and economic impact in the eastern provinces,

including severe and prolonged disruptions to livelihoods and access to basic services. For example, out

4 Ending the deadlock: Towards a new vision of peace in eastern DRC, International Alert, September 2012, p. 18.

5 In South Kivu more than 50% of the population is concentrated in 9% of the land area.

of a total population of 11.5 million people in the eastern provinces (30% of the country’s population), 2

million children cannot benefit from education due to destruction of schools. Over 900,000 households

(over 4.5 million people, including 2.7 million displaced people) currently lack appropriate shelter or

have lost property due to conflict and insecurity in the eastern provinces.

21. Lack of economic opportunity has provided a base for continued fragility and conflict. In the

DRC, poverty and the lack of employment opportunities push people (especially the youth) towards illicit

activities and into armed groups. While large areas of land are fertile, farming has been limited by

constant attacks against the population and lack of transport to take goods to market. Where land is

cultivated, lack of modern techniques and low use of inputs such as higher yielding seeds and fertilisers

limit output and enhance environmental degradation. This in turn exacerbates competition and conflict

over land.

Drivers of conflict in the broader Great Lakes Region

22. Insecure or insufficient access to land in many parts of the Great Lakes is a significant factor in

the impoverishment of thousands of rural people, and is seen by many as a 'structural' cause of

conflicts (both internal in the DRC and cross border) in the region. Conflict changes social relationships

in profound ways. Perceptions of mutual rights and responsibilities in relation to land between

individuals, social groups, and the state are altered due to changes in perceived legitimacy of institutions

and obligations. Conflict is producing new competition for land, as part of a wider renegotiation of the

local economic space and re-drawing of ethnic, class, and other 'boundaries' between groups. There are

many communal conflicts and social tensions around land, which in certain cases have had cross-border

dimensions. Large displacements of populations within and between countries have led to substantial

insecurity and struggles over access to land. The majority of the population in the region lives off

subsistence farming and hence access to land is crucial. In Burundi, 80% of all legal disputes brought

before the courts concern land conflicts. The most acute disputes are those involving land recovery

claims by returnees from refugee camps in neighboring countries and internally displaced peoples.

23. The internally displaced constitute potential triggers for local conflict in the region as they

represent additional and unforeseen claims on available resources, and are vulnerable, particularly in

the case of eastern DRC, to recruitment into armed groups. While the number of displaced persons is

far higher in eastern DRC than the broader region, displacement is an issue pertinent to other Great

Lakes countries.6 Displaced populations face extremely limited access to livelihoods and basic services

and alienation from their land, as well as non-participation in the community’s social, economic and

political spheres, leaving them susceptible to manipulation by armed forces. Migration, displacement

and return have also created shifting demographic balances, leaving some native communities in the

minority, impacting their local and provincial political representation. In this context, inflammatory

6 UNHCR reports 60,000 IDPs in Burundi and 15,000 in Uganda as of January 2013. There are no reported IDPs in

Rwanda. UNHCR also reports 37,750 refugees from the DRC in Burundi, 68,400 in Rwanda and 113,290 in Uganda and 40,000 returning refugees in Burundi, 10,000 in Rwanda and 14,780 in Uganda.

rhetoric has been used by politicians, traditional leaders and militia who peddle exclusionary discourses

on autochthone identity and rights and promise communities a voice and protection.7

24. Conflicts in the region are also fueled by exploitation of mining of high-value tradable

commodities, notably including minerals such as diamonds, gold and the 3Ts (tantalum, tin and

tungsten) but also timber. Control over the extraction and trade of these resources has been highly

contested, fermenting conflict and corruption both within and between countries. For the most part

activities take place through informal and often illicit channels. The benefits have accrued to those that

control critical parts of the value chain in the DRC, in transit countries and in destination countries.

Formalizing and facilitating official trade in minerals and other resources such as timber will be a key

element in providing stability. Substantial amounts of minerals and other resources are exported via

other countries in the region and have enriched influential elites.

25. Dramatic demographic growth continues to contribute to grievances over resources. In the

DRC, almost half of DRC's population (46%) is under the age of 15 years, lacking opportunity for

education or employment, heightening frustrations and contributing to the potential for conflict. The

very young age structure and the high dependency ratio are expected to continue to impact the Great

Lakes Region as the fertility rates remain higher than those in the surrounding areas, although

considerable progress has been made in Rwanda where the rapid fall in fertility rates in Rwanda over the

past decade has reduced the nation’s average family size. Fertility rates in North and South Kivu are 7.3

and 7.4, compared to a national average of 6.3, while in Burundi the rate in area bordering the lakes is

around 7.1 compared to the national average of 6.3. Thus, the countries trying to achieve the

demographic dividend will need to accelerate the transition of fertility which will need to include

addressing gender empowerment and increasing access to family planning. The demographic transition

could spur future growth if the bulge in working-age adults can be accommodated with productive

employment.

26. Borders are also a factor and a feature of conflict. Many borders areas have provided conditions

that have allowed armed groups to establish and proliferate. Competition over resources, including land

and water, is also prevalent in border areas. Borders are a key factor in the illicit movement of minerals

and delineate international migrations of people within the Great Lakes region. Borders also dissect es-

tablished ethnic groups that therefore live in multiple countries. But borders are also part of the solution

in terms of providing security and control over weapons, as well as regulating the flow of high-value re-

sources and facilitating trade between countries in the region.

7 Romkema 2012, pp. 36.

C. DONOR RESPONSE AT A REGIONAL LEVEL

27. United Nations. At the regional level, the UN has appointed a special UN envoy for the Great

Lakes Region (Mary Robinson), tasked with supporting the implementation of the Peace, Security and

Cooperation Framework for the DRC and the Great Lakes Region. UN support within this framework will

include support for the development of benchmarks linked to regional PSFC commitments, coordination

of international donor assistance, and facilitation of regional oversight meetings. At the national (DRC)

level, the UN peacekeeping operation for DRC (MONUSCO) with the new intervention force has been

mandated by the UN Security Council to support the implementation of national commitments within

the PSCF framework, including in the areas of security sector reform, restoration of state authority and

supporting stabilization efforts in Eastern DRC.

28. European Union. In January 2013, the European Union (EU) adopted its plan for the allocation of

over €661 million in humanitarian aid funding for 2013. Geographically, the largest portion of aid will go

to sub-Saharan Africa to which €344.5 million, representing 52% of the Commission's pre-programmed

humanitarian funding, is targeted. In response to the conflict in the East, the DRC was one of the five

largest humanitarian operations with an allocation of €54 million. The European Union’s Country

Strategy Paper (CSP) for the period 2008-2013 currently amounts roughly to €584 million (A and B

envelopes) under the 10th European Development Fund (EDF). Within this framework, the objective is to

support the reconstruction of the DRC, while pursuing stabilization efforts through Security Sector

Reform comprising the army, police and justice reforms. Two EU missions (EUSEC and EUPOL) have been

on the ground since 2005 to assist and advise the DRC Government on how to reform and reconstruct its

army and police. The EU is also active in supporting the justice sector and has recently allocated €21

million to support the ambitious government justice reform plan. The DRC should continue to benefit

from additional funding under the budget lines, in particular from humanitarian assistance (ECHO).

29. The African Development Bank. AfDB's assistance to the Central African region rests on two

strategic pillars: Development of Regional Infrastructure and Capacity Building. The strategy is firmly

grounded in the principle of promoting economic regional integration, growth and poverty reduction

through the development of infrastructure. The second strategic pillar funds activities aimed at

strengthening the capacity of regional organizations as well as building up capacity in specific sectors,

such as the financial sector and regional training centers. Job creation, climate resilience and gender are

treated as cross-cutting issues that are addressed as components of projects within each pillar.

30. Bilateral donors. This section will be expanded with information on planned regional activities

by other development partners when it becomes available.

D. ELEMENTS OF A GREAT LAKES’ REGIONAL DEVELOPMENT INITIATIVE AND A

POSSIBLE WORLD BANK GROUP ROLE IN IT

31. This section first lays out elements of a regional development initiative for the Great Lakes

that would be built on a foundation of strengthening the capability of the DRC state to govern

effectively8 and two inter-related pillars: vulnerability and resilience, and economic cooperation and

trade integration. Both the long-term challenges and emerging issues facing the Great Lakes described in

this paper fit within these pillars and foundation. While many possible activities will be identified, the

focus of Bank Group engagement will be limited to specific priorities where it has a comparative

advantage. These proposals will be refined based on further internal and external discussions with

governments, development partners and other stakeholders.

1. Foundation: Strengthening State Effectiveness in Eastern DRC

32. The failure of two previous peace accords to achieve their objectives underlines the need for

careful attention to the factors that contributed to the violation of the terms of the accords. Absent

this, the prospects for the current peace accord also failing in its objectives must be regarded as very

high. Three key issues have to be addressed:

Establishing Security. This is a critical contributing factor is the weakness of the state as an

entity in the DRC. The weakness is manifest in many dimensions - in security, in establishing the

rule of law, in implementing a long term development strategy, in public goods provision, and in

accountability to the citizens. This is a well-recognized problem. Efforts at state building in DRC

are underway and will likely take many years if not decades. But its urgency in terms of the

state's capacity to ensure security from external and internal threats, to exercise a credible

monopoly on the use of violence, to enforce the rule of law and provide security to citizens and

legitimacy to the state, requires particular attention and effort. A central government that is

unable to deploy a disciplined and civilian directed security force to protect its borders is a

8 As part of the overall Country Assistance Strategy for DRC for FY13-FY16 endorsed by Executive Directors in

May 2013, the Bank Group will address key impediments to peace consolidation and durable economic development through a selective and strategically targeted program in eastern DRC that has two main components. Component 1 seeks to promote national policy dialogue and reform in support of peace consolidation. As an initial step, a series of analytical and TA interventions are proposed to inform dialogue and policy-making on these issues of public expenditure and capacity building for service delivery. The success of ongoing support provided by the Bank, including in South Kivu where it is helping improve institutional transparency and effectiveness through participatory budgeting, will be scaled and up and extended to other provinces. Component 2 will seek to strengthen sustainable development in the east. A particular emphasis will be placed on income generating activities, promoting equitable and participatory forms of local development planning, maximizing opportunities for participation by the most vulnerable, including, inter alia, the forcibly displaced and strengthening mechanisms for the peaceful resolution of conflicts related to land and identity.

critical failure of the capacity to govern. While international monitoring and sanctions will have

to be deployed to restrain such cross-border intrusions, the capacity of the DRC to control its

borders, particularly along sections where such activities have been repeated would be a critical

and non-substitutable capability. This is not an area in which the World Bank Group has a

comparative advantage and therefore, other partners would be expected to take the lead. The

Bank’s analytic work on budget management could be expanded to cover complementary issues

related to the management, budgeting and payment and oversight systems related to security

sector expenditure.

Decentralized Governance for Internal Security. Given the difficulty of communication within

the DRC and the weak authority of the central government over many of the provinces, a likely

solution would be to find a structure of decentralized governance on the issue of purely internal

insecurity. Endowing and entrusting provincial governments with appropriate responsibility for

internal security and ensuring that they are provided the financial capability to sustain an

appropriate level of police capability would appear to be critical to resolving this problem. These

issues would be deeply political and national authorities may be of two minds in sharing such

powers with provincial authorities but it may be necessary to address the problem of internal

security. A review of the experience of countries that have undertaken such delegation of

responsibilities and the role of provincial and local governments in internal security issues may

be useful in providing options to the DRC government. This too is an area where other

development partners would be better placed to take the lead.

Reaching the People. A third area for more focused attention, and one in which the Bank is

already involved, is the process of decentralized governance which is both essential to

administer such a vast territory as well as required by the DRC constitution. The DRC currently

has 11 provinces and the constitution requires that 40 percent of national revenues be shared

with the sub-national level of government. There has been less than full adherence to this

constitutional requirement in sharing resources with the provincial governments and some that

are relatively more capable of holding back revenues to be shared with the center (such as

Katanga) have started being less cooperative with the overall revenue management process.

Other processes of strengthening budget, procurement and human resource management

systems in the provinces are being supported (including in South-Kivu) in some but not all

provinces and have greater traction and buy-in than at the national level. Expanding the support

to state building at the provincial and local levels is likely to be a high value intervention since it

could enable local communities to be able to better manage their own affairs.

33. Some of the ongoing initiatives to sponsor participatory budgeting in the Kivu’s have created

local community assets and enhanced citizen engagement and such initiatives will be expanded in other

provinces and strengthened by invoking the power of social media to connect citizen networks and self-

governance. The combination of low trust in government and a youthful population that is increasingly

wired is an opportunity to scale up the use of social media and mobile telephony to make regional

citizens involved more strongly in governance. Developing citizen networks across the region on specific

issues of governance would be beneficial and a regional governance framework could emerge through

shared information on these common issues.

34. The Bank is supporting state-level improvements in public management systems. Two

nationwide governance projects (Enhancing Governance Capacity Project (US$50 million) and the

Capacity for Core Public Management Project (US$29.9 million)) have targeted South Kivu among

other provinces. New financial management procedures were set up and implemented as well as the

approval of new provincial procurement codes. As a result, the provincial government of South Kivu has

seen a manifold increase its financial resources.

35. The Bank will explore how to expand its assistance to the government of the DRC in

monitoring progress in implementing reforms to governance and the management of public finances.

This could be incorporated into ongoing projects on governance and also on projects that deliver health

and nutrition services, since these are easier entry points for transparency and governance. A public

sector finance management project is under preparation with funding from DfID.

Improving the Governance of Extractives

36. Another area for attention is the governance of extractive industries which has both the

potential to improve welfare if well managed or, if not, to fuel continuing regional and intra-national

conflict. The attached graph illustrates how the presence of armed groups overlaps with areas that are

rich in minerals, in Province Orientale and north and south Kivu. Recent reports of unrest in Katanga

province suggest that armed militancy may be on the rise in other provinces as well.

Figure 1: Democratic Republic of Congo: Minerals and Armed Groups

37. The focus of the mineral development agenda in the Great lakes has recently shifted

substantially to "conflict minerals" driven by a response to the 2010 Dodd-Frank Wall Street Consumer

and Protection Act and the need to put in place certification and transparency measures in the mineral

supply chain trade. This agenda however has not sufficiently integrated concerns regarding the

overarching environment of mineral governance, particularly the need for governments to effectively

formalize their artisanal and small-scale mining economies through registration and permitting licenses,

decentralizing necessary government agencies to the mining areas for effective monitoring,

improvement of working conditions, fostering independent mining cooperative and federative

movements, and facilitating trade incentives for small-scale producers. The measures in place to

promote "responsible supply chains" do not provide adequate incentives for governments to tackle

mineral governance, beyond a focus on armed group involvement, as such.

38. Although there is engagement on mining in other Great Lakes countries, the Bank has only

started to implement the PROMINES project in the DRC since February 2012 due to governance issues

in the country. This project engages much more structural reforms and development of DRC's mining

sector, including government institutions, artisanal and small-scale mining, better knowledge of the

geological endowments of the country and transparency. While the Project includes North and South

Kivu provinces, little progress has been made due to serious issues of access due to lack of security.

Instead, efforts have focused on Maniema and Katanga provinces as a first step.

39. The principles and components of the Bank's engagement in DRC's mining sector are in fact

relevant to the Great lakes region as a whole and there is substantial technical capacity and experience

within the Bank to support common approaches towards mineral sector development in countries such

as Burundi and Rwanda where that would be beneficial. Such an approach would hinge on development

of these two countries' small-scale mining economies which in fact make up the bulk of national labor

and production. Such an approach builds on past successful work by the Bank in Uganda, and current

work underway in Tanzania. It further reinforces the commitment made by the ICGLR to promote ASM

formalization under the Protocol Against the Illegal Exploitation of Natural Resources and urged as part

of the OECD's Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected

Areas.

40. The Bank will assist national governments develop the extraction and trade of artisanal and

small-scale mining economies through developing policies and aligning legislation to promote this scale

of mining activities, establishing necessary government infrastructures such as a national database and

monitoring system to effectively track and reconcile production and export trade statistics, supporting

government agencies in providing necessary technical equipment to increase productivity at sites,

developing and adhering to minimum safe and health standards at sites, improving the trade networks

to ensure greater dividends by small-scale producers, and Small and Medium Enterprise (SME)

development assistance for these small businesses. This strategy would be complemented by a revenue

management component, potentially under the existing Bank-managed EITI multi-donor trust fund.

2. Pillar one: Vulnerability and Resilience

41. The Great Lakes Region is prone to vulnerabilities that stem from natural, historical, as well as

political factors that have characterized the region over the past decades. These vulnerabilities differ

between countries, and border and non-border areas; and the severity on communities varies

depending on different types of vulnerabilities. The main identifiable types of vulnerabilities include but

are not limited to (i) lack of access to basic education and health, (ii) food insecurity, (iii) lack of shelter,

(iv) dependency on rain-fed agriculture and poor early warning systems and (v) population

displacements due to conflicts – either internally or externally generated.

42. While some countries have advanced in provision of access to basic education and health

services (Rwanda, Uganda), for example, others still lag behind in achieving this basic necessity making

households and children even more vulnerable in the future. There are extreme cases of deprivation

reflecting high levels of vulnerability in eastern DRC where over 2 million children do not have access to

education due to the destruction of education facilities. Also, food insecurity remains a key vulnerability

factor in the Great Lakes region, exacerbated by conflicts and the dependency on rain-fed agriculture in

all countries of the region. Overall, poverty and extreme poverty in the GLR countries remain high, and

poverty rates are some of the highest in the world at 70% and 67% in DRC and Burundi respectively.

43. This pillar focuses on these priorities related to vulnerability which are in line with the Bank’s

comparative advantage and the strategic areas of focus of the DRC’s new CAS, which will be used as the

main vehicle for provision of support (given that most affected populations currently reside in eastern

DRC). Priorities for Bank engagement over the short to long-term proposed within this framework

consist of addressing forced displacement, improving social protection for vulnerable groups (including

women), enhancing food security, improving access to health and supporting demobilization and

reintegration of armed groups.

Displacement

44. Forced displacement is a debilitating consequence of conflicts and instability but also is a

contributing factor, exacerbating existing tensions. There is a need to address the regional dimensions

of population displacement. The region currently contains approximately 1 million refugees and more

than 2 million IDPs in a situation of protracted displacement. Issues related to the status and return of

refugees in particular remain a source of tension within the region, while displacement overall continues

to negatively affect the stability and prospects for economic development. Mitigating this impact

requires supporting the productive capacities and coping mechanisms of the displaced to allow them to

contribute to local economies in areas of displacement, while also ensuring solutions for durable social

and economic reintegration in the context of returns.

45. The Bank will have an important role to play in this process where its comparative advantage

vis-a-vis the bilaterals and the UN system includes its analytical capacity, convening power and potential

for bringing substantial operational knowledge, capacity and resources to the process. The following

activities are proposed:

Analytical work to assess population displacement dynamics in a regional context, including

current needs and prospects, challenges and obstacles related to return, as well as requirements

for ensuring durable social and economic reintegration in communities of return. The Bank will

also support governments in identifying policy, regulatory and operational priorities for assisting

displaced populations, and exploring possibilities for enhancing coordination and joint action at

regional level. Based on the analytical work the bank will: (i) continue dialogue with

governments and other partners on mainstreaming displacement issues into development

operations at both national and regional levels; (ii) review ongoing and planned operations in

the Bank portfolio to include a focus on displacement needs in the countries of the region; and

(iii) identify ways of providing equitable access to livelihoods and services for currently displaced

populations, recent returnees, and other war-affected groups

Assistance will be needed to provide/restore basic education to displaced and vulnerable

populations (e.g. orphans, widows, victims of violence and refugees), and this could be provided

by other development partners. It could be a regional initiative, possibly in collaboration with

NGOs/UNCHR/UNWOMEN, to provide access to education for displaced children.

Land

46. An effective strategy would require that Governments confront and deal with land issues as

early as possible as an integral part of the peace-building strategy. These efforts would need to

address the continuing exclusion of women from inheritance rights. A significant portion of the female

population now heads households, especially among the returnees and internally displaced people.

These families need land in order to maintain themselves and their families. Without land access,

finance from financial institutions is effectively curtailed. The Rwandan government introduced a new

inheritance law that gave equal rights to male and female children to inherit their parents’ land property

and in Burundi a draft law has been submitted to government that will give women equal inheritance

rights. However, women’s rights activists in Burundi are expecting fierce resistance in view of the political

dimension of the land issue.

47. There are also short-term issues such as displacement-related disputes over land and refugees

who must be resettled. This is essential to get people back onto the land and restore livelihoods with a

minimum of conflict. Badly planned resettlements, however, will be a source of continuing contention

over land. If they are not well thought through, they can create a new source of future conflict as longer

term; ‘permanent’ solutions are put in place. In such situations, where public land administrations are

very likely to have no presence at all in the field, local and customary structures may play an essential

role and require due recognition in any future settlement. But these activities must not lead to the

neglect of national land administration institutions since frustration will grow in national institutions if

they receive little support to reassume their mandates. Re-building what existed before may not suffice:

new institutions and laws may be needed. Land system reforms will not succeed without country

ownership and commitment, and for these to exist, government must have made the complex choices

involved in designing those initiatives. In the immediate post-conflict period, therefore, there will be

need for assessments to scope out land issues and assess needs. As soon as possible, work must begin in

rebuilding both management and technical capacities in land sector institutions. Only when land sector

agencies have been re-capacitated to some degree can they begin to move into more systematic policy

making and law reforms. Expertise in these resides in a number of development agencies, and could be

mobilized to help address these problems.

Social Protection

48. Given high levels of vulnerability, social protection to provide poverty relief and promote

resilience of households and communities is an important element in achieving stability. In fragile

environments cash and in-kind transfers through NGOs, temporary employment through public works

and community-based initiatives to rebuild basic social services can provide the basis for a more

systemic approach. At the regional level, efforts to build the basis for a more comprehensive social

protection (SP) system would include:

Civil Registry. While access to land is clearly a main driver of conflict, there is also a need to

address access to identity which can be the basis of a system to deliver social protection

assistance and basic services, such as, education and health. Identity papers are not only a

crucial component of any land reform, but also the main passport to citizenship, civic

participation and access to government services. Providing citizens with identity papers is clear

a sovereign function of a state, but because of the porosity of borders and frequent movements

of populations across them, as well as the disputed citizenship of many people, collaboration

between countries will be essential at a minimum to ensure that no one falls through the cracks

and remains stateless/ paperless. Support for the establishment of a solid civil registry function

should be backed by a solid ICT system.

Assistance to mobile populations. High population mobility in the region, spurred by conflict

but also by economic hardship, and variously encouraged by governments, has a number of

negative consequences: it fuels ethnic tensions, it produces essentially stateless individuals

without enforceable rights, it makes it harder to deliver basic social services and curtails access

to economic opportunities (e.g., banking services). As countries work on building their safety net

systems, it will be important to ensure some coordination and consistency across borders to

avoid creating incentives for individuals to move from one country to the other. Coordination

among registries/ID systems can also help manage this. The Bank Group could contribute by

undertaking a safety net assessment focused on IDPs, refugees, returnees and surrounding

communities. This would be useful in identifying the types of support that is necessary according

to the different characteristics of many of these groups. Results could help the various NGOs,

CSOs, UN agencies involved in the emergency assistance work to coordinate, better target and

so become more effective in providing support to these groups.

A regional early warning system for monitoring nutrition, social protection, health and

poverty. Given the lack of data and need to respond to vulnerability and shocks in real time,

there is scope for introducing an early warning system to provide real-time data on human

development indicators (specifically nutrition, health, social protection and poverty). This could

be ICT-based, possibly using mobile phone surveys, coupled with a readiness for a cross-sectoral

emergency response that cuts across HNP and SP sectors, at a minimum, and potentially also

including agriculture.

49. The Bank Group will initially focus on improving resilience and social cohesion in border

communities. Stabilizing conflict-affected communities is essential for restoring trade and addressing

current economic asymmetries with neighboring countries. Complementing other Bank governance and

community empowerment projects, and in coordination with broader UN stabilization efforts in eastern

DRC, the Bank Group would support economic recovery and local reconciliation efforts in conflict-

affected border communities. Bank assistance would focus on trade-oriented agricultural development

and livelihoods creation, with particular attention to displaced and returning populations (IDPs and

refugees). 9 Provision will also be made for community-based reintegration of demobilized ex-

combatants, building on existing Bank operational instruments and results of analytical work (most

notably the Bank’s Transitional Demobilization and Reintegration Program for the Great Lakes Region,

see below).

Demobilization and Reintegration

50. There is a common interest in the effective demobilization and reintegration (D&R) of

combatants. Substantial funds have been devoted to demobilization and reintegration. Up to December

2008, the Multi-country Demobilization and Reintegration Program (MDRP), a $439million program (IDA

$188 million and multi-donor trust fund (MDTF) $251 million) demobilized a total of 279,263 adult

combatants, provided economic reintegration support to 232,107, and assisted 53,880 children

associated with fighting forces in 7 countries in the region. Following the closure of MDRP, a two-

pronged approach was implemented through: (i) a smaller regional program, the Transitional

Demobilization and Reintegration Program (TDRP/$33 million MDTF), and (ii) two stand-alone national

programs in Burundi and Rwanda co-financed by IDA and MDTFs. TDRP provides technical assistance to

demobilization and reintegration commissions in the region, is funder of last resort for national

programs, and delivers technical assistance to promote a platform for collaboration and learning on

D&R, including support for institutionalizing DDR capacity within the AU and its member states. Annex 6

provides an overview of past and ongoing D&R programs.

9 The region currently contains approximately 1 million refugees and over 2.5 million IDPs in DRC alone. Issues related to the

status and return of refugees in particular remains a source of tension within the region, while displacement overall

continues to negatively affect the stability and prospects for economic development.

51. A continuation of a regional coordinated approach to D&R is needed to promote peace and

stability in the region. Building on the significant progress that has been made over the last 10 years in

the GLR, especially at the national levels in the respective countries, a regional program continues to be

needed and the World Bank will explore the interest of other development partners in leading this

effort. First, to continue to provide support and facilitate a coordinated regional DDR platform that

supports the regional organizations involved. This can build on AFTCS’s ongoing technical and advisory

services to the AU and its regional bodies, including the ICGLR. Second to continue to be a mechanism of

last resort financing. Current programs raise funds nationally but there is a risk of uncoordinated and

uneven fundraising undermining the momentum and implementation of the intended regional response.

In DRC, preconditions for an effective structure for the DDR approach include: (i) deployment of a public

security mechanism and (ii) the redeployment of public administration - with access to central resources.

Developing the regional strategy for D&R should involve dialogue with international partners including,

the UN, AU, World Bank Group, AfDB, bi-lateral donors, and research institutions with extensive

experience on D&R and peace and stability in the region. In addition, including new key partners such as

the International Conference of the Great Lakes Region (ICGLR), and Communauté Economique des Pays

des Grands Lacs (CEPGL) is, given their roles, crucial, although building their capacity will also be needed.

Annex 7 describes briefly the regional objectives of ICGLR and CEPGL.

52. There is a need to develop programs to deal with foreign armed groups in the east of DRC.

Armed groups operating outside of their country of origin, known as Combatants on Foreign Soil (CoFS),

remain a significant threat to security in the GLR. Examples include FDLR in DRC and Congo Brazzaville,

LRA in DRC, CAR and South Sudan, Allied Democratic Forces in DRC, etc. Advancing disarmament and

repatriation of CoFS requires developing strategies with recommendations for key stakeholders,

including governments of countries where the CoFS are currently residing, the governments of CoFS’

countries of origin, the UN, World Bank Group, and other international key stakeholders. Several detailed

studies outline the security, political and economic issues posed by the presence of CoFS in the

respective countries where CoFS are currently residing. For example, MDRP developed two detailed

studies on CoFS in the Kivus, including specific programmatic recommendations. However, with the

exception of the FDLR, whose combatants have been disarmed and repatriated to Rwanda by

MONUSCO, and reintegrated by the Rwandan national D&R program, with the support of the World

Bank and others, programs that can address the issue of CoFS in a systematic manner are lacking.

Strategies and programs for the respective CoFS should be developed, building upon existing studies, to

effectively disarm, repatriate, demobilize and reintegrate CoFS. Discussions and strategies would include

what needs to be done at the national level and what needs to be done at the regional level. The World

Bank will explore the interest of other development partners in taking a leadership role in this area and

will share the successful experience of the D&R program in Rwanda where relevant and useful.

Human Development10

Health

53. As part of the regional approach, the Bank will support cooperation on the control and

elimination of communicable diseases in which all countries in the region have a common interest.

Collective action is likely to be required for effective solutions to this critical health challenge. The Bank is

currently implementing a regional project in east Africa to establish a network of efficient, high quality,

accessible public health laboratories for the diagnosis and surveillance of tuberculosis and other

communicable diseases. The network is important for strengthening capacity to diagnose diseases,

identifying public health threats, and conducting surveillance more effectively. The network is serving as

a platform for learning and knowledge sharing with the participating countries forming a community of

practitioners. Integrating the east of the DRC into this network would bring benefits to all countries in

the Great Lakes since diseases know no borders and the more countries that participate in disease

control efforts and surveillance the better the impact.

54. A priority area for action is on malaria, which is common to all of the Great Lakes countries.

Malaria is the leading killer of young children and a major public health challenge. A regional malaria

prevention and control program would be developed, focusing on the purchase and distribution of bed-

nets, as well as rapid diagnostic testing (RDT) kits to ensure that malaria treatment is directed at those

who actually need it. This would reduce the potential for drug resistance, which could well emerge in

the future as a major public health issue. The proposed regional logistics and distribution approach

suggested later could assist in getting these commodities to each country.

55. Another priority area in health is support for regional centers of excellence for specialized

care. Not all countries in the Great Lakes have the means to establish these types of facilities. This would

be important given the rapidly evolving epidemiological transition in these countries and the emergence

of chronic diseases which are costly to treat and require specialized care. There would be important cost

efficiencies and economies of scale by having countries purchase services from one another and by

harnessing the potential of the private sector through public private partnerships (PPPs). Countries are

already sending patients abroad to countries like Kenya and South Africa at a hefty cost to their health

care systems. Such an initiative would better tap the existing potential in the Great Lakes and bolster

what exists. For example, the Butero Hospital in Rwanda, established by Partners in Health as a

specialized cancer care and treatment center, could potentially serve other countries (i.e. Burundi, DRC)

with additional support in terms of boosting technical capacity and contracting services through PPPs. A

related idea would be to assist the Great Lakes countries in establishing mechanisms and policies for

accessing services in neighboring countries as this is now done in an ad hoc manner. With the rapid

growth in economic activity in the region, movement across borders will continue to increase and

10

Annex 5 provides a brief overview of the poverty situation in each of the 4 countries and progress that has been made on

leading social indicators in the past decade.

individuals from one country will be increasingly using services in the neighboring country without any

common insurance schemes or clear policies on who pays for what.

56. Many countries in the region have much higher rates of child stunting (an indicator of both

malnutrition, as well as longer term sustainable development) that would be predicted by the

economic status and per capita GNI. A regional approach to addressing these issues that allows for

cross-border dialogue is critical. For example, Rwanda has used results-based financing approaches in

the health sector that show promise for expansion across the region, and across other health and

nutrition issues.

Figure 2: GNI per capita, PPP (2011)

57. The Bank will deliver analytical work to facilitate dialogue within the Great Lakes countries on

how to make agricultural investments more nutrition-sensitive. The result would be that agricultural

products would have a greater impact on nutrition outcomes for the poor, especially women and young

children. This would include work on (i) supporting agricultural technologies that reduce women’s

workloads (and hence improve child nutrition outcomes); (ii) strengthening agriculture extension

services by addressing both the supply side (production of more nutritious foods) as well as the demand

side (messaging through agriculture and health extension services for consumption of more nutritious

foods, especially for young children and pregnant women); (iii) exploring the options for scaling-up bio-

fortification of selected staple crops such as rice, wheat, and cassava, (iv) exploring options for

supporting the production and use of zinc fertilizers that can enhance both agricultural productivity as

well as child growth, and (v) exploring options for aflatoxin control in the region –including a range of

issues such as application of on-farm technologies for aflatoxin control and cross-border trade issues.

Uganda 2011

Tanzania 2010

Kenya 2008-09

DRC 2007

Burundi 2010

Rwanda 2010

30

35

40

45

50

55

60

200 450 700 950 1200 1450 1700

Stu

nti

ng

Pre

va

len

ce (

%)

GNI per capita, PPP (2011)

Gender as a Cross-Cutting Issue

58. Addressing effectively sexual and gender based violence against women requires addressing

both male and female issues to promote gender equality. While the nature and patterns of SGBV

against women and girls in recent and ongoing conflicts are increasingly documented, and a wide variety

of programs are assisting survivors, limited attention is given to the multiple roles that men and boys

play in SGBV both during and after conflict. Including men in programs addressing SGBV is especially

important for prevention. Specifically, program interventions must acknowledge men’s multiple roles: as

perpetrators, as witnesses to SGBV, as victims of sexual violence, as service providers (e.g. health

workers, police, peace-keepers and other workers in demobilization initiatives), and as decision-makers

and policymakers.

59. To date, most work on violence against women in the GLR by the World Bank Group, and

especially sexual violence, has been conducted with the support of trust funds, particularly the State

and Peace-building Fund and the Learning on Gender and Conflict in Africa (LOGiCA) MDTF. The LOGiCA

MDTF aims to contribute to peace and security in Sub-Saharan Africa (SSA) by supporting gender-

sensitive activities related to insecurity and violence in conflict-affected and post-conflict countries in the

SSA region, with a focus on the GLR. The US$9.2 million program is funded by Canada, Denmark, Sweden

and Norway. Specific objectives of the program are: (i) to increase gender-sensitive programming in D&R

operations in the GLR by better addressing the gender-specific needs of male and female ex-combatants;

and (ii) to generate knowledge and good practice on how to address gender and conflict issues, with a

focus on programs addressing D&R, Gender-Based Violence (GBV), vulnerable women in conflict affected

areas, and young men at-risk in SSA.

60. The World Bank Group is already implementing activities to specifically support women

survivors of violence in a conflict setting in the GLR. These include operational support such as: (i)

Addressing Sexual Gender Based Violence in South Kivu Project, DRC which aims to improve the provision

of services that promote treatment and prevention of GBV against women and girls in South Kivu;; (ii)

promoting the provision of family planning services and Sexual and Gender Based Violence (SGBV)

services through the health sector through the DRC Additional Financing Primary Health Care; (iii)

activities engaging men in ending and mitigating SGBV in Burundi, DRC and South Sudan, and (iv)

technical assistance to the ICGLR to establish a regional training facility on GBV, a regional GBV

communications strategy as well as a single, high impact media message on GBV prevention for the

Great Lakes Region.

61. The Bank Group will continue to engage at the regional level to address violence against

women. At the regional level, the World Bank Group should consider continuing to support regional

efforts to develop operational knowledge through MDTF but also World Bank Group resources building

upon ongoing experience. Such a program should include developing effective mechanisms for regional

and national knowledge sharing, with a focus on operational implications of research and innovative

pilots. Such a program could also build in South-South learning. For example, in Rwanda, a government

program supports the use of very active hotlines against SGBV.

62. Effective responses require a coordinated regional approach as well as a multi-sectoral

approach. Given the complexity of violence against women and SGBV, even more so in the conflict and

fragile environment in the GLR and especially DRC, effective responses to SGBV require, an improved

coordinated international, regional, national and a multi-sectoral response. Responses to violence

against women need to address, among others: health sector including physical as well as mental health

issues, criminal-justice sector, economic empowerment, community development (promoting equitable

access to resources for women and men), prevention of violence against women, (for example through

formal and informal education), as well as advocacy at the community, national and international levels,

and finally addressing drivers of fragility and conflict to address ongoing conflict. The Bank Group will

explore the interest of other partners in championing such as approach.

63. The World Bank is preparing a regional flagship report on demography for FY14 that is looking

at how countries can reap the potential benefits of the demographic dividend, and the risks of

inaction. The approach will raise awareness among governments, partners and civil society actors and

provide a basis for, first accelerating the transition to lower mortality and fertility, second informing

policies for harnessing the first dividend of an increased productive labor force, and third provide

guidance on planning for the second dividend as a result of investment in savings and old age. Public

policies for addressing high fertility and the growing demographic picture include investments in high

quality education (especially for girls), decreasing infant and child mortality, addressing the unmet need

for contraception, addressing legal barriers women (e.g. inheritance laws), increasing the age of

marriage for women/girls, among others. Such policies and investments have high rates of return as well

as the added externality of decreasing country and regional vulnerability.

3. Pillar Two: Economic Cooperation and Regional Integration

64. The Bank Group would support the consolidation of peace by addressing common economic

challenges that could be (further) addressed through regional solutions. While varying in importance

from country to country, key economic challenges in the region are: (i) access to energy; (ii) raising

agricultural productivity (iii) providing employment, especially for youths, in the face of rapidly rising

populations (iv) providing infrastructure to support increased productivity and trade; (v) removing

barriers to trade that limit access to markets, constrain the exploitation of economies of scale and scope

and stymie the flow of people, capital and technology to where returns are highest. Cooperation and

coordination in addressing these issues at the regional level would bring substantial benefits to all

countries in terms of delivering greater economic opportunities for their populations, and contribute to

building confidence and positive relationships between governments and populations. There is also

considerable scope for cross-border exchange of knowledge and experience on how to define and

implement strategies to address these constraints.

65. The Bank Group will promote and help achieve a positive approach to regional integration. It is

important to recognize the very strong economic ties that exist between the Great Lakes countries.

Regional links are too often only seen in the negative context of the cross-border exploitation of minerals

in the DRC. But tens of thousands of people are crossing borders daily, many of whom are poor women,

to pursue economic opportunities. These links together with more formal goods trade and the

movement of professionals, such as in education, reflect the positive economic interdependence. But

these flows are a mere fraction of the potential for trade in a stable region. Realizing this potential will

be an important factor in driving economic growth and poverty reduction. A shared perspective on these

opportunities among countries in the region that is effectively communicated to citizens can drive closer

cross-border ties between individuals, firms and institutions and help to overcome the mistrust that is

compromising political cooperation.

Figure 3: The Distribution of Economic Activity in the Countries of the Great Lakes Region as shown by Night Light Data

66. The Bank would pursue a deep and broad-based dialogue with the private sector, civil society

and local communities to link intervention to support regional integration with peace building. A

regional integration approach is a means of overcoming many of the challenges of the Great Lakes

Region and harnessing the tremendous potential of the region for high and sustainable growth and

development. The following section proposes that the Bank structure its contribution to regional

economic issues around 4 key groups of activities: (i) infrastructure and connectivity; (ii) facilitating

cross-border trade; (iii) generating jobs with a focus on agriculture, logistics and distribution and other

selected services; and (iv) cross-border cooperation on higher education and skills development.

67. The strategy will identify and support activities that have the potential to provide mutual

incentives and increase interdependence among countries of the Great Lakes region. In order to

strategically link these interventions to peace building, the Bank would promote broad consultations

with civil society, the private sector and local communities, and help improve transparency and

accountability in regional decision-making processes.

(i) Infrastructure and Connectivity

68. All countries in the region have a common interest in developing regional infrastructure.

Improved regional infrastructure will increase regional trade and improve global competitiveness for all

countries in the region. Economically integrating a stable eastern DRC into the rest of east Africa may

make viable large scale investments such as in rail that at present appear not economic. Larger volumes

of traffic as a result of the integration of the east of the DRC will likely lead to lower costs for all users of

the infrastructure through greater scale and investments in more efficient modes of transportation. The

relative remoteness of the east of the DRC puts great emphasis on regional connectivity and connectivity

to the rest of DRC as an essential component to drive trade and economic growth and support the more

effective provision of public services.

Transport Corridors and Networks

69. Improving regional connectivity through development of trans-border economic corridors.

Many communities in border areas remain cut off from trade and access to markets. The Bank would

support the rehabilitation of roads to connect remote trading communities with regional markets. Bank

support would focus on rehabilitation of primary cross-border trunk roads, to be complemented through

the rehabilitation and opening of secondary trunk and agricultural feeder roads required to bring goods

to markets. The benefits of this approach to stability and improved security are two-fold: first, increased

trade will significantly increase economic activities, livelihoods and jobs; second, connectivity will allow

free movement of people and goods, and enable restoration of state regulatory functions.

70. Within the DRC the roads re-opening project (Pro-Routes - US$248 million) is having an

important impact by contributing to the reopening of 2,176km of roads in Province Orientale, South

Kivu and Katanga. The economic impact of the rehabilitated sections has been significant, reducing

transportation costs by as much as 80 percent in some cases and cutting travel time by more than half.

Empirical evidence suggests that insecurity is decreasing in areas where roads have been rehabilitated.

There remains massive need for road opening to connect most of the districts in Eastern DRC and to

connect South Kivu, North Kivu and the Province Orientale and to connect South Kivu and North Kivu to

the Eastern Kasaï. Better connection between these provinces and border cities in Rwanda, Burundi and

Uganda will ensure better integration with the Eastern African Community.

71. Improving the regional transport network is a necessary condition for both competitiveness

and improved regional and global integration for the countries of the Great Lakes. High transport costs

and prices and long journey times are a major obstacle to trade-driven economic growth. Recent

research points to predictability as being even more important than logistics performance. The delivery

of exports in eastern Africa is twice as unpredictable as in an average emerging country. The cost of each

additional day of delay can be as much as $200-$400, raising the cost of key imported inputs and the

price of final goods including basic food products.

Figure 4: Map of main trading routes on the border of eastern and southeastern DRC

Sources: DfiD, Forests Monitor (2009)

72. The Bank is working with the authorities in Eastern Africa on an integrated development

corridor, that includes a a review of options for intermodal transportation along along the Central and

Northern Corridors. These corridors link the east African hinterland to the cities of Nairobi and Dar-es-

Salam and the ports of Mombasa and Dar. The proposed strategy and action plan are expected to

encompass a mixture of physical and institutional improvements on the land-based transport modes to

facilitate the implementation of an efficient and effective rail-centric intermodal transport system along

both corridors (see Box 1). This study can be extended to include the east of the DRC in a more

comprehensive manner.

73. The analysis will pave the way for a major IDA financed project to implement the Intermodal

Strategy. The study will be undertaken in two phases – Phase 1 comprises a literature review, additional

data collection, identification and sifting of development options, the preparation of a draft strategy and

action plan and a stakeholder workshop to discuss the draft. After the approval of clients, Phase 2 will

comprise the pre-feasibility level of analysis for the defined interventions, a scoping study of the

environmental and social impacts, the finalization of the strategy and action plan and presentation to

prospective financiers and interested development partners. This is expected to lead to a project in

2015. Including officials and stakeholders from the east of the DRC in the engagement will be very useful

and it will be important to link this work to the DRC Multi-Modal Transport Project to exploit synergies

that exist.

Box 1: Integrated Corridor Development Initiative in the Selected Great Lakes Countries

The countries of the region range from Kenya with manufacturing and service industries, to some of the smallest and poorest, inter alia, Burundi, and the Democratic Republic of the Congo (DRC). Some countries like Uganda, Burundi, and Rwanda, have untapped agricultural potential and natural resources, and a labor endowment that is trained, relatively inexpensive and well-positioned to compete globally. Though the region have enjoyed above global average rates of economic growth for over a decade but recent economic growth has not been accompanied by productivity improvements in all countries.

Poor infrastructure and trade facilitation costs are often identified as a critical constraint by firms. For the landlocked countries, high transport costs are particularly crucial. About 60 percent of the firms in Rwanda relied on imports for inputs and/or supplies. And they waited for 15 days for their imports to be cleared at customs. Firms may miss business opportunities because of unanticipated shipment delays. Firms may also have to bear extra inventory costs. In Burundi, the firms held on average 29 days of inventory of main inputs, which are unfavorably compared with non-landlocked neighboring countries (i.e., 17 and 18 days for Kenya and Tanzania, respectively).

The proposed initiative, which was endorsed by Ministers of Finance during the 2013 Spring Meetings, involves

developing the key regional corridors in an integrated manner to realize both its potential for improving

competitiveness and accelerating growth and poverty reduction. The initiative aims to better connect firms and

communities to markets, and involves the pre-feasibility assessment of the key infrastructure along the Central

and/or Northern Corridors, and key branches. This will cover the infrastructure and services on the two corridors,

including the maritime and inland ports on Lake Victoria and Lake Tanganika, the road and rail infrastructure, and

the inland depots, and associated services (rail, lake transport etc.) along the central and northern corridors. It also

involves looking at the wider spatial and economic potential of these corridors and how they can be optimized;

investments that encompass both the main linear transport infrastructure along the corridor, but also branching

and ancillary infrastructure in other sectors along the corridor; and complementary policy initiatives in the

countries along the corridors to ensure that the benefits are fully realized.

74. A parallel exercise will quantify the economic benefits from enhancing the two corridors.

Particular attention will be paid to the following sectors/issues: (i) agricultural production (spatial

analysis); (ii) detailed export crop production (household survey), (iii) firm production, (iv) industrial

agglomeration (long-term clustering) and (v) mining production. Expanding the analysis to the east of

the DRC will be essential to ensure that the full benefits of linking in that region are taken into account

when defining project interventions. The analysis could also play an important role in advocacy in the

Great Lakes region by contributing to the discussion over what is at stake from stability in the region and

the economic costs of renewed conflict for all countries in the region. An effective multi-modal transport

system would contribute to the formalization of the minerals trade by providing a viable route for the

efficient movement to the global market.

Energy

75. There are very low levels of access to electricity in the countries of the Great Lakes. All

countries have a high cost of electricity supply (with the exception of DRC) and tariffs are below cost.11

With the exception of Uganda, the utilities are in dire financial stress. As a result they do not invest

sufficiently to maintain current infrastructure, which is falling into disrepair. For instance, the 43.8MW

Ruzizi II hydropower plant, commissioned in 1989, already requires extensive rehabilitation. The plant is

owned and operated by SINELAC (International Electricity Association of the Great Lake Countries) which

is owned in turn by Rwanda, Burundi and DRC. The need for rehabilitation is caused by poor

maintenance which in turn is at least partially caused by the inability of the national utilities to pay for

the power they get from the facility.

Table 1: Levels of Access to Electricity

76. The World Bank Group approach to the region includes increasing generation and

interconnectivity to take advantage of low cost generation (for example, Rusumo falls to be shared

among Rwanda, Burundi and Tanzania; Ruzuzi III in DRC, Rwanda; and interconnection between

Tanzania, Kenya and Uganda) as well development of low cost resources in Rwanda (geothermal, small

hydro, Lake Kivu), DRC (technical assistance for medium size hydro along with Inga 3), Burundi (hydro)

and Uganda (hydro and geothermal).

77. Developing the hydropower potential of the east of the DRC will provide Burundi and Rwanda

access to low cost power and a stake in regional stability. There is no regional grid and very limited

interconnectivity between countries in the region. Rwanda purchases 15MW of power from the Ruzizi I

and II hydropower plants located at the border between Burundi, DR Congo and Rwanda that serve all

three countries. Rwanda is not connected to any regional transmission network apart from the small

bilateral power interchanges with Uganda. Approximately, 50 percent of current generation in Rwanda is

from high cost thermal capacity. Rwanda has limited hydropower and geothermal resource and so

importing power offers the best option to meet growing demand at reasonable cost.

11

The cost of supply for Uganda in the table does not include transmission and distribution.

78. Low cost generation will contribute to the financial turnaround of the utilities as they seek to

improve their governance and efficiency. The Bank is preparing IDA financing for the Rusumo 80MW

hydropower plant. Also, IDA is looking into joining lead donor EIB and others in supporting the

construction of Ruzizi III power plant (145MW) and the rehabilitation of Ruzizi I and II. Negotiations are

underway with the preferred investor (Sithe Global/IPS Kenya) for Ruzizi III. The maintenance of the

existing power plants at Ruzizi (I and II) would also be transferred to the private operator. Bank support

could combine a partial risk guarantee for the private investments in Ruzizi III and financing for the

rehabilitation of Ruzizi I and II as more sustainable O&M arrangements are set up. The sponsors of Ruzizi

III are also expected to request the issuance of political risk insurance by MIGA. Investments in

transmission that link Rusumo and Ruzizi to the demand in population centers are also being considered.

The Bank Group is also active along the value added chain of transmission and distribution and off grid

solutions in all countries to ensure that gains in generation translate into increasing access and reliability

of supply.

Watershed management

79. It is important that the approach to infrastructure and agricultural development integrates

improved watershed management because most of the critical watersheds in the region also double as

food baskets. For enhanced agricultural productivity, the watershed must be managed better.

Management of the region’s water towers will also contribute greatly to the development and

sustainability of mini-hydros, which are increasingly being considered for rural electrification.

80. The Nile Equatorial Lakes Subsidiary Action Program (NELSAP) is identifying and preparing

projects on a sub-regional basis for water infrastructure/watershed management/ power and

agriculture investments NELSAP, based in Kigali, is a regional program covering all 5 EAC countries and

the DRC (mainly Eastern). Under the power program, IDA will be financing the Rusumo Hydroelectric

Power project which is currently under preparation. A sub-regional investment program for

interconnection of the electricity grids between Uganda (Nkenda) and eastern DRC (Beni) is also under

preparation. There are also a number of potential water infrastructure/watershed investments that have

been identified that will have a significant impact on delivering inclusive and sustainable growth in this

region where major financing gaps for investments remain.

81. In the agriculture/water sector, a sub-regional investment program, which targets policy

reforms, regional institutional development, and enhancing economically productive sectors, which

includes fisheries, watershed management and improved navigation on the shared lakes (Edward and

Albert) has been prepared under a “Lakes Edward and Albert Water Resources and Fisheries Project”

between Uganda and DRC. In addition, a regional Semiliki Multipurpose water resources development

project (between Uganda and DRC) has the potential of delivering 70MW of electricity, 30,000 ha of

irrigated agriculture, and biodiversity conservation. Sub-regional investment programs targeting

investments in hydraulic infrastructure and integrated management of watersheds have also been

prepared in Rwanda, Burundi and Western Tanzania.

Regional ICT

82. Regional ICT connectivity offers considerable potential to enhance integration and support

diversification into a broader range of economic activities. An effective ICT strategy also offers the

opportunity for more effective delivery of government services in sectors such as health and education,

greater transparency and accountability and the opportunity to bring new tools to support development

especially in areas remote from physical transport links. ICT is a key element of Rwanda’s development

strategy. The CAB5 project (see Annex 4) brings the prospect of linking the east of the DRC to Kinshasa

and to east African countries and the world. All countries in the region have an interest in exploiting ICT

for development and for pursuing regional connectivity and regional ICT solutions. Examples of potential

applications are many and include linking customs authorities in the east of the DRC not only with

Kinshasa but also with their counterparts in the Great Lakes and east Africa through the RADDEX system

which allows for real-time sharing of information on cargo shipments. This would not only facilitate

trade—traders know with much greater accuracy when their shipment will arrive or will be delivered—

but can also contribute to increased security through more effective yet lower cost customs control.

Strong synergies suggest important opportunities for close coordination of the CAB5 project and the

Regional Communications Infrastructure Program which is being implemented in Burundi, Rwanda and

Uganda and other countries in east Africa.

(ii) Facilitating Cross-Border Trade and Economic Integration

83. There is enormous potential for international trade to drive growth and poverty reduction in

the region. At the forefront of these opportunities are exports to the global market of minerals from the

DRC. But also, and related, there is considerable scope for all countries and economies in the region to

benefit from cross-border and regional trade in a range of goods and services, which can contribute to

food security, to increasing employment throughout the region and the return of internally displaced

persons, as well as provide improved access and lower prices for critical inputs into the exports of other

goods and services. Exploiting these opportunities for cross-border trade is likely to have a direct impact

on incomes and employment in the region and improve outcomes for many households. While an

improvement in the security situation is necessary for output and trade to recover, greater economic

opportunities and rising living standards will contribute to greater stability. For example, increasing

returns to agricultural activities can provide genuine alternative occupations and sources of income to

artisanal mining and thus facilitate the shift to a more organized and less disruptive mining sector.

84. Currently, informal cross-border trade plays the main role in linking producers to markets in

the Great Lakes region of Africa. Small cross-border trade fosters shared economic growth and

interdependence between populations with a history of division and mistrust, and is thus important for

peace building in the Great Lakes region. Official statistics vastly understate the amount of trade that

crosses borders in the region. For example, the number of trucks crossing the border is a tiny fraction of

the tens of thousands of people who cross official borders in eastern DRC every day for commercial

purposes. This informal trade is not illegal trade but is unorganized small scale trade which does not

appear in the customs record. It has to be clear that this small scale informal trade is “official” in the

sense that traders go through official border posts, pay a crossing fee to the immigration office, and, if

processed appropriately, pay a duty on imports. Cross-border exchange provides the main source of

income for a large number of informal traders who are predominantly poor women carrying agricultural

products and hence there is an important gender dimension to this issue. However, lack of governance

at the border has led to a situation in which these traders are often subject to extortion and physical

harassment including rape (see Box 1).12

Box 2: Risky Business: Poor Women Cross-Border Traders in the East of the DRC

Cross-border trade between the DRC and neighbors in the Great Lakes region is dominated by women and provides an essential source of income to many households in the region. A recent survey of traders at four border posts in the region identified the following key features of cross-border trade: the majority of traders are women (85 percent of the respondents); most of the officials who regulate the border are men (82 percent); for almost two-thirds of the respondents, income from cross-border trade is the main source of income, and most (77 percent) report that household income is heavily dependent on their trading activity. Cross-border traders regularly have to pay bribes and suffer harassment. The responses from the survey paint a dark picture of the conditions experienced by poor women cross border traders. An important feature of border crossings between the DRC and neighboring countries in the Great Lakes region is the large number and range of officials at the border. This exacerbates the problem of poor governance with negative consequences for cross-border traders. A lack of transparency and awareness by both traders and officials of the rules and regulations that are supposed to govern cross-border movements of goods and people compounds this situation. A typical account of every day conditions is provided by an egg and sugar trader from Goma: “I buy my eggs in Rwanda; as soon as I cross to Congo I give one egg to every official who asks me. Some days I give away more than 30 eggs!” A large number of traders report being subject to acts of violence, threats, and sexual harassment. Traders are exposed to beatings, verbal insults, stripping, sexual harassment, and even rape. Much of this abuse is unreported. Cross-border traders face regular losses in the form of the almost mandatory payment of bribes and are regularly subject to harassment and physical abuse. This lack of economic and physical security and safety undermines the livelihoods of these traders and compounds their lack of access to finance, information, and business knowledge.

85. The immediate priority is to improve the conditions at the border and the treatment of cross-

borders traders. In addition to improvements to physical infrastructure there is a need for better border

management and governance, greater transparency and predictability of policies applied at the border,

better trained officials and support to traders associations. This will have a significant impact on the

livelihoods of a substantial number of women and the households who depend on their income from

trading. In addition, with regard to governance reforms a primary starting point is to improve conditions

at the border. “When you look at a country you start with its borders and if already things don’t work at

the border won’t you ask yourself 'what will I find in the interior’?”13 Providing a safe, transparent and

well regulated border is a fundamental step towards stability and encouraging a movement away from

the ‘survival economy’. It is also an issue in which countries clearly have a common interest to ensure

effective control of borders and to facilitate trade.

86. Facilitating trade is in the common interest of all countries in the region and will enhance the

effectiveness of national development policies. There would be very large economic pay-offs from

12

See also the film ‘Les Petites Barrières’ at http://go.worldbank.org/MKK5U1Y2D0. 13

Celestin Bashige, Professor and Regional Trade Expert, Catholic University of Bukavu. Taken from Les Petites Barrières, a

video on cross-border conditions in the east of the DRC, available to watch at www.worldbank.org/afr/trade

interventions that facilitate freer movement of goods and people across the border. In the short-term

this pay-off would be in the form of greater security and increased incomes for poor mainly women

traders whose trading activities are crucial to the welfare of their households and hence to poverty

reduction in communities along the border. Interventions to remove the major barriers to cross-border

trade between the DRC and Burundi and Rwanda would allow for trade to play a greater role in

integrating food markets in the region. There is also a need to support measures that will simplify and

regularize trade for larger traders.

87. There is a need to strengthen regional institutional capacities. Capacity constraints have

obstructed implementation and enforcement of trade commitments. Building on previous analytical

support for regional trade, Bank support would (1) identify and build consensus around shared priorities

for regional economic integration and peace building; (2) help address obstacles to the implementation

of existing economic integration agreements; and (3) complement efforts by other development

partners to build the capacity of national governments to expand and deepen economic cooperation,

including through RECs such as the CEPGL.

88. The World Bank Group is implementing a pilot project to support traders associations and

provide training to customs officials in the east of the DRC. The project seeks to improve border

crossing conditions and facilitate trade for small traders in the east of the DRC with a focus on the ‘petite

barrière’ in Goma. Activities include training of officials and support for traders associations. The project

is being complemented by an impact assessment being run by the Africa Gender Practice which is using

mobile phones to obtain information from traders to identify improvements in crossing times, payments

of unofficial fees and harassment. The pilot project will close at end March 2013 and is ready to be

scaled up at border posts along the eastern border of the DRC.

89. The Bank has proposed a Charter of Basic Rights and Obligations for Small Traders and is now

working with COMESA for its members to adopt the Charter as a COMESA regulation and then work with

countries to display the standards openly at all border posts in the local language and provide training to

officials and traders to support its implementation. This would support small traders in developing their

businesses as well as encourage a safe and predictable environment at the border. It would also help

build trust between traders and border officials. Annex 3 provides the draft Charter and the standards it

contains. The Bank Group would fast-track implementation of the Charter at borders in the GLR as an

essential step in improving governance at border crossings and improving the conditions facing the

poorest traders in communities throughout the region.

90. There is a pressing need to improve physical conditions at the borders between Burundi,

Rwanda and Uganda and the east of the DRC. This is of particular importance for small traders; most of

whom are women (see further discussion in trade section below). The very poor quality and condition of

the infrastructure at the border, usually on the DRC side, allows some of the worst types of harassment

and violence. Both the transport infrastructure and poor quality and inappropriate design of buildings

used by officials need to be rehabilitated, including the provision of basic facilities such as electricity and

water. Work is immediately required to minimize the risks to safety and security that arise from

dilapidated infrastructure and to provide an open and transparent area for officials and traders. There is

scope for cross-border exchange of information – for example, compare the modern facilities on the

Rwanda side of the Goma/Gisenyi border to those on the DRC side.

91. Mid-size cities and towns in border areas constitute key drivers for regional trade and

development. Through national programs the Bank Group would support urban development in key

trading communities between DRC and its neighbors, with a focus on labor-intensive public works,

including health, education, access roads and water/sanitation infrastructure. This support would

improve service delivery and productive capacities in border areas, and enhance the catalytic role of

municipal governments in cross-border trade and regional economic development. Key urban centers in

DRC and their trading counterparts in neighboring countries to be targeted include Goma and Gisenyi

(DRC North Kivu and Rwanda); Bukavu and Fizi (South Kivu, DRC) and Cyangugu (Rwanda) and Kigoma

(Tanzania) ; Uvira and Bujumbura (DRC South Kivu and Burundi); Kasindi and Ishasa (North Kivu, DRC)

and Kasese and Mpondwe (Uganda); Aru and Mahagi (Ituri District, DRC) and Arua (Uganda); and towns

on the Dungu-Faradje-Yei-Juba axis (DRC Orientale Province and South Sudan). Cities on either side of

the border are quite different in how they are managed, in their capacity to deliver services, in their

levels of development and security. Projects would have to work with these very different starting

points.

(iii) Generating Jobs

92. Delivering jobs for growing working age populations is a key challenge for all countries in the

region. The Bank’s strategy would focus on supporting those activities – traditional providers of jobs in

the region – which can be scaled-up in the short-term: agriculture and trade related activities including

transport and logistics. This would be accompanied by analytical work and technical assistance to build

knowledge and competencies, and promote a dialogue at the regional level that identifies common

issues, provides for peer-to peer learning on appropriate policy solutions and identifies opportunities for

coordinated responses that will enhance job creation.

93. The Bank could support a regional dialogue on Jobs/skills/youth employment. Jobs are a

concern both because of their contributions to livelihoods and poverty reduction, but also for reasons of

social cohesion and stability (WDR 2013). The youth bulge in the sub region increases the visibility and

urgency of the issue. As most youth are working, and will continue to work, in agriculture and self-

employment, efforts are needed to improve the quality and desirability of these jobs to meet the

expectations of youth, as well as to increase the number of wage jobs over the longer term. Also,

vocational skills would be in great demand if, following the pattern in other post-war contexts, the Great

Lakes region begins to experience a surge in reconstruction. The population currently in refugee camps

and the soldiers who will be demobilized could both benefit from developing basic vocational skills in the

construction sector (such as masonry, carpentry, electrical wiring, etc.). In fact, the absence of such skills

could perpetuate the cycle of those perpetuating violence as a means of survival or working as security

agents to prevent such violence particularly in urban settings. The Bank could consider conducting

analytical work to take stock of existing programs aiming at building vocational skills and what has

worked and not worked and ensure that the design of future demobilization and reintegration programs

include training in such skills and assesses opportunities to scale up financing for activities that are

working well.

94. Avenues for creating high paying jobs in the private sector in the Great Lakes region could

emerge from a systematic assessment of the potential for domestic supply of goods and services

resulting from the considerable UN peacekeeping and African Union peacekeepers’ presence in the

Eastern Congo and elsewhere in the region. Similar opportunities for domestic suppliers may result

from UN World Food Program procurement in support of the internally displaced population. A study

could assess the volume of consumables/supplies that the UN system is procuring and the proportion

that is locally procured. Recommendations from such a study could include a review of procurement

procedures to give local suppliers opportunities to compete as well could result in a follow up World

Bank program to build the capacity of domestic suppliers. This support in being able to meet

procurement standards could also constitute the first steps towards building the capacity of the private

sector to participate in regional or global exports.

95. While job creation in the manufacturing sector will be a challenge given the low availability of

infrastructure (particularly energy), weakness in government services, particularly on business

regulation and tax and customs administration, and insecurity, enclave solutions such as Industrial

Zones and common service centers would be a logical manner to jump start manufacturing activities.

Such a concept is being tested under the Western DRC Growth Poles project and once proof of concept

has been established, it could be considered for replication in Eastern DRC.

96. A regional approach to jobs would contribute to better diagnostics, establish a regional

dialogue on jobs, and help identify a menu of options for creating jobs and improving existing jobs

that countries could pursue. The lack of data on jobs limits the work that can be done in this area. A first

step would be to build on existing efforts to strengthen the database on jobs, by improving the quality of

existing surveys and fielding rapid assessments, which could include using mobile phone surveys or

qualitative work.

97. Financial integrity and inclusion would be critical to sustain the creation of private sector jobs

in the Great Lakes region. There is anecdotal evidence that illegal flows of goods are mirrored by similar

illegal financial flows from the region. This deprives the domestic private sector from most needed funds

for investment and job creation. The Bank may consider stepping-up financial monitoring and building

capacity of central banks in the Great Lakes to monitor these flows of funds within countries and across-

borders. This would require better coordination among the concerned central banks and could

potentially include improved coordination in cross-border supervision of banks working in the Great

Lakes countries. Increased access to credit by domestic private entrepreneurs would contribute to better

financial inclusion as would do programs to expand savings, payment/transaction services and micro-

insurance (including for disaster or agriculture) for both firms and households.

Agriculture

98. Although endowed with an enormous agricultural potential that is often described in

superlatives, DRC’s agriculture production is very weak due to (i) rudimentary production technology

(poor access to improved seeds, planting material and agricultural equipment, and poor functioning

agriculture and research services); (ii) a severely degraded and non-functional transport system,

including road and river, preventing access to markets; and (iii) weak institutional capacity. Agriculture

remains a key source of jobs and improved livelihood in all countries in the region.

99. There has been considerable progress with agricultural policy in the past 4 years. Key areas

include: adoption of a common agriculture and rural development strategy and a policy note to guide

interventions in the sector; rehabilitation of rural roads, opening up wide areas of the countries and

providing increased access to markets; re-launching of agricultural production and productivity with

improved access to improved seeds and planting materials, improved agricultural techniques, and

progressive revitalization of agricultural research; institutional reform of the Ministry of Agriculture and

Rural Development, including a decentralization process with the creation in all territories of Agriculture

and Rural Management Counsels (CARG: Conseils Agricoles et Ruraux de Gestion) and progressive

establishment of producers’ organizations in larger professional bodies; adoption in December 2011 of

the Agriculture Law as a reference guiding future investments in the sector; and a well advanced

Comprehensive Africa Agriculture Development Program, initiated by NEPAD (CAADP) process and

National Plan for Agricultural Investments to be adopted soon. Increasing the DRC’s agriculture

production will help feed the people of the region. But addressing food security and nutrition issues in

the Great Lakes would require a regional approach.

100. The Bank Group will facilitate greater cooperation on agricultural issues between the Great

Lakes countries. There are two key projects that the Bank can use to support this objective: (i) the

Eastern DRC Agriculture Growth Pole and (ii) the East Africa Agricultural Productivity Program. The

Eastern DRC Growth Pole is multisectoral project to support households, commercial agricultural

development and agribusiness, and includes an approach to transportation and power development. It

can be seen as a building block to a larger Eastern African Agriculture Corridor that lends itself to a focus

on strengthening cross-border trade and the emergence of regional value-chain in food products. This

can be achieved by promoting the growth poles development approach in the eastern part of the

country, and promoting greater integration with the neighboring countries, taking advantage of the

already existing trans-border trade. The currently planned Eastern DRC Integrated Agriculture

Modernization project provides such an opportunity. The Bank should also encourage collaboration

between research centers in the region for the development of improved varieties and technology

generation. The current project concentrates on the east of the DRC but complementary initiatives could

be launched in Burundi, Rwanda and Uganda.

101. The Bank will extend the East Africa Agricultural Productivity Program (EAAPP) to include

Rwanda, Burundi and DRC. The overall goal of the EAAPP is to contribute to increased agricultural

productivity and growth in the region. Accordingly, the strategic approach of EAAPP is to strengthen and

scale up regional cooperation in generation of agricultural technologies, training, and dissemination of

regional priority commodities, including cassava, rice, wheat and dairy. For these priority commodities,

the EAAPP will support efforts to scale up and exchange improved seeds, planting materials and dairy

breeds between program countries. Ethiopia, Kenya, Tanzania and Uganda have been selected to

establish the Regional Center of Excellence to host the research and development of improved

technologies for the prioritized commodities, wheat, dairy, rice and cassava respectively. Expanding to

include the other Great Lakes countries Burundi, the DRC and Rwanda would be a genuine regional

investment in agriculture which would in turn serve the overall EAAPP initiative well, bringing the Great

Lakes into a technology community and provide a platform for agriculture technology transfer. The

program would support and facilitate (i) the sharing of improved agricultural technologies developed in

the four program countries, (ii) the development of regional specialization for commodities where there

is a comparative advantage, (iii) the strengthening of agricultural research and advisory services, (iv)

laying the foundation for effective market linkages along the value chains of the selected commodities,

and (v) the agricultural transformation drive and contribution to food and nutrition security.

Developing Regional Logistics and Distribution Services

102. There is a shared interest in nurturing a vibrant market for logistics and distribution services in

the region. More efficient logistics will contribute to increasing competitiveness and lower costs for food

and other basic products that are traded both within the region and with the rest of the world. A recent

project unveiled market potential for trade logistics services and distribution industry in Rwanda. It also

showed how alleviating specific trade logistics constraints for three key agribusiness products could

boost production and trade. The Rwanda Logistics and Distribution Services strategy has been completed

and endorsed by the GOR and donors including the WBG, C3P, MIGA and TMEA. The Bank can assist

other countries in the region in defining an approach to logistics and distribution services and ensure

that these are consistent and brought together into a coherent regional approach to logistics for the

Great Lakes. An example of where a shared approach to logistics and distribution could bring important

benefits to countries in the region is pharmaceuticals and medical supplies. This could help reduce costs

both in terms of the products themselves and in terms of getting these supplies to where they are most

needed.

Role of MIGA and IFC

103. The Multilateral Investment Guarantee Agency does not have a country-specific strategy for

the Great Lakes. Nevertheless, these countries are directly relevant for two of MIGA’s overarching

strategic objectives: supporting projects in IDA countries and projects in post-conflict and fragile

environments.

104. Currently, MIGA has two active projects in DRC that are guaranteed for investment. The two

represent a gross exposure of US$30.1 million and support the infrastructure equipment and financial

sectors. The two operations complement the Bank’s and IFC’s operations to support the economic

diversification agenda. In the coming period, MIGA will look to further capitalize on its existing

engagement. MIGA continues to offer its product for investors looking to enter the local market, thus

supporting its own and the WBG’s wider objectives in the country. MIGA’s support for DRC will continue

to be offered across its Transfer Restriction, Expropriation, Breach of Contract, and War and Civil

Disturbance political risk insurance product lines. As elsewhere in Africa, these product lines can be used

alongside other World Bank products, for example, IFC loans or PRG (Partial Risk Guarantees) support; or

to directly support Government PPPs or Independent Power Projects, as applied elsewhere in the region.

MIGA's Small Investment Product (SIP) also could be useful for the country, whereby more streamlined

procedures could enable smaller projects to be supported. The Bank and IFC will explore further

collaboration with MIGA in the course of this regional strategy.

105. The Role of IFC. IFC’s strategy in the Great Lakes region seeks to boost inclusive growth and

shared prosperity along three principal axes: (i) encouraging entrepreneurship through integrated

support to SMEs, via capacity building, access to finance and mobile solutions; (ii) improving the

investment climate at sector, country and regional levels and (iii) transforming key sectors where private

sector participation is currently low, particularly through PPPs in infrastructure ( particularly power-solar,

hydro, biomass-, mining and transport), vocational training initiatives and projects that strengthen the

food supply chain ( focusing on crops such as coffee, sugar, staple food, livestock and fisheries) and

trade. The emphasis will be on delivering transformative regional projects with substantial impacts on

job creation, projects in strategic sectors focusing on inclusiveness, increased access to physical

infrastructure and food security in a fragile context. Annex 98 provides details of IFC country program in

the Great Lakes Region.

Encouraging entrepreneurship: IFC will increase access to finance to MSMEs working closely

with financial institutions (banks and microfinance) and offering the full range of its products

such as trade facilities, risk sharing facilities, climatic guarantees and/or warehouse financing,

and with regional advisory programs such as the Sub-Saharan Africa Financial Infrastructure

Program, the Africa Leasing Facility II, and the Africa Micro Small and Medium Enterprise

Program (AMSME). IFC will also target increased access to local currency finance through its

medium term note program or in partnership with regional multilateral development Bank such

as AfDB. Integrated support to SMEs will consist in capacity building, including vocational and

Business Edge trainings and implementation of linkage/community development programs in

the mining sector.

Improving investment climate: through its Investment Climate country programs and the

OHADA Regional program, IFC will help governments enact pro-business reforms leading to

inclusive growth and that foster open and competitive markets, clearing a path for the growth of

a healthier, more vibrant private sector. In particular, IC work in the Eastern part of the DRC will

help open the door for more opportunities to foster entrepreneurship and nurture job creation.

The IC team will seek to address cross border issues to help reduce the cost of trade

transactions, increase access to markets particularly for SMEs, increase investment in logistics

and related services, improve agribusiness trade logistics for food security and improve regional

trade. Trade logistics work, already ongoing in Rwanda, where aside from streamlining of the

http://www1.ifc.org/wps/wcm/connect/region__ext_content/regions/sub-saharan+africa/strategy

trade system, has led to the development of a national logistics strategy. The proposed facilities

are expected to lead to investments of up to US$100 million. Trade work is also expected to

expand to Burundi. The IC team is rapidly expanding its industry level work in the Great Lakes

region, with new agribusiness focused initiatives being developed in Rwanda (tea sector

expansion), Burundi (tea and coffee sector), Uganda (promoting agri-leasing and seed sector

reform).

Transforming key sectors, particularly infrastructure and agribusiness: Options will be explored

through InfraVentures program to support power project development in Uganda, Rwanda or

Burundi. Promotion of regional mining vocational training will also be looked at a strong

additionality to IFC’s mining investment. IFC will continue to explore potential opportunities for

supporting regional connective energy and transportation infrastructure in close collaboration

with IDA and MIGA. C3P support and PPIAF will deeply support the government in preparation

of the projects. In this context options to support project such as Ruzizi III Power Project, an

example of a potential transformational and integrative project for the Great Lakes Region

(Rwanda, Burundi and DRC) will be considered as priority. A 147MW base-load green field

hydropower plant to be located on the Ruzizi River, south from Lake Kivu, in an area where the

river constitutes the border between Rwanda and the DRC. Total investment amount should be

in the range of US$500 million. In addition to improving the performance of ailing power

utilities, and enhancing access to electricity across the spectrum of users, the Ruzizi III project

would unquestionably bring a significant and much needed additional power capacity to

Rwanda, Burundi and Eastern Congo. It will also help structure and strengthen cooperation

between the 3 countries in a key economic sector with antecedent benefits critically needed in

that region.

106. IFC will scale up resources to tackle food insecurity through an integrated approach that

strengthens the entire agricultural value chain, in close collaboration with IDA and MIGA. With the

Bank, IFC will execute a Joint Business Plan centered on agribusiness in Burundi bringing together

Investment and Advisory teams. In parallel, IFC will continue to emphasize trade finance opportunities

and country-level interventions focusing on inclusiveness. IFC will notably explore options for integrated

support to the Nande community of the eastern DRC.

107. The investment climate advisory work is undertaken by a joint Bank/IFC/MIGA department as a

WBG effort. As part of this effort, there is ongoing work on OHADA which benefits the DRC and which is,

supported on the Bank's side through a regional project.

E. PROGRAM OF POSSIBLE WORLD BANK GROUP ACTIVITIES

108. Bank support identified in the initiative will be provided through a mix of instruments, including

analysis, technical assistance and lending instruments. Tables 1 and 2 below provide a first cut at a

program of activities. The proposed regional operational response to the Great Lakes crisis will be

complemented by a robust knowledge program, which supports operational responses but also seeks to

plug gaps on challenges and possible responses to development issues in the region. The activities will

be clarified once CMUs have provided their planned operations and ESW and a dialogue will take place

to identify interventions that will impact on instability and fragility using a conflict lens and where there

are synergies across projects which can be exploited through a regional approach.

Table 1: Tentative Proposed World Bank Group Analytic and Technical Assistance Program

Pillar I: Vulnerability and Resilience

Pillar II: Economic Opportunity and Integration

Activity Description Activity Description

Regional Population Displacement Dynamics (Region-wide)

Identification of policy, regulatory and operational priorities for assisting displaced populations at the regional level including supporting productive capacity, coping mechanisms during displacement and social and economic integration of returnees

East Africa Integrated Development Corridor Initiative (Burundi , DRC, Kenya, Rwanda, Tanzania, Uganda)

Comprehensive analysis and cross sector investment and policy reform plan for the Central and Northern Transport Corridors, including links to Eastern DRC (Expansion of ongoing analysis to include DRC); Expected to inform investment program in FY15

Enhancing Nutritional Value of Agriculture (Region-wide)

Analysis and technical assistance to support bio-fortification, extension services to expand production of more nutritious crop varieties, and campaigns to encourage nutritious habits particularly among pregnant women and children

Regional Logistics and Distribution Services Strategy Technical Assistance (Region-wide)

Building off successful support in Rwanda, analytical work to demonstrate the potential competitiveness, efficiency gains and commercial growth opportunities from removal of trade logistics constraints and to develop national strategies (for example in pharmaceuticals and medical supplies)

Catalyzing cross border growth spillovers and job-creation in the Great Lakes

Providing a formal empirical assessment of the scale and channels of growth spillovers that may exist among the countries of the Great Lakes, investigating the role cross border growth centers and cross border clusters and supply chains and linkages may have had in driving the growth spillovers and analyze the regional dimension of unemployment and workforce mobility in the GLR.

Natural Resources and Regional Integration in the Great Lakes

Assessing the potential for shared services in the natural resources sector and the potential for economic diversification; analyzing the constraints as well as the scope and potential impact of improved governance in the extractive industries in the GL region.

Activity Description

Regional Demography Flagship Report (Region-wide) Africa-wide report analyzing how countries can reap the potential benefits of the demographic dividend (accelerating the transition to lower mortality and fertility, increasing labor force productivity)

109. Indicators could be developed that assist in the monitoring of progress in achieving the overall

objective of locking in stability and reaping the peace dividends. While each project will have its own

approach to monitoring and to indicators it would be worthwhile to explore a composite measure of the

extent to which the regional program is contributing to the overall aim of enhancing stability and peace

in the region. The Bank could develop an analytical program of work that assesses a set of indicators that

could provide a useful basis to measure progress. The set of indicators to be explored could include

amongst others: the number of IDPs, the number of ex-combatants that remain to be re-integrated,

measures of nutrition, health, social protection and poverty, the extent of gender-based violence, the

volume of cross-border trade, the value-of officially recorded trade in minerals, the number of

unresolved disputes over land, the number of unemployed youths, appropriate indicators on governance

and so on. An objective of the analysis would be to identify a set of indictors that effectively captures

progress in restoring stability.

Table 2: Tentative Proposed World Bank Group Lending Program

Pillar I:

Vulnerability and Resilience Pillar II:

Economic Opportunity and Integration Project/

Intervention Description USD

Million Deliv-

ery Project/

Intervention Description USD

Mil-lion

Delivery

Improving Resilience and Social Cohe-sion in Border Communities

Local economic recovery and stabilization ac-tivities in conflict-affected border communities (trade oriented agricultural and livelihoods devel-opment and re-integration of demobilized ex-combatants)

100 FY15

Rusumo Falls Hydroelectric Development

80MW run of river hydropower devel-opment + associated transmission lines to connect to all three countries (co-financed by AfDB) 340 FY14

Expansion of the East Africa Public Health Laboratory Networking Project

Incorporation of DRC into regional network of high quality public health laborato-ries for diagnosis and surveillance of communicable diseases, while leveraging East-ern DRC centers to increase focus on women’s health and sexual violence issues

25 FY15

Rusizi Hydropow-er Development

Partial Risk Guaran-tee for 145MW Rusizi III Hydropower de-velopment + possible investment for Rusizi I & II Rehabilitation (30 + 44 MW) , Transmission devel-opment to Bukavu and Goma + Rural Electrification. (co-financed by EIB and others + possible MIGA political risk guarantee)

150 + FY15

Addressing Sexual and Gender-based Violence

Support for scal-ing up successful interventions to prevent and re-spond to gen-based violence

150 FY15

East Africa Agri-cultural Produc-tivity Program APL2

Expansion of EAAPP program, pooling agricultural research investments in select primary commodities and sharing the re-sulting technologies regionally.

90 FY15



Project/ Intervention

Description USD Million

Deliv-ery


Description USD Mil-lion

Delivery

Agricultural Growth Poles

Multisector spatial development project supporting house-holds, commercial agricultural devel-opment and agri-business, transporta-tion and power de-velopment. Building block of wider East-ern Africa Agriculture Trade Corridor

130 FY14

Central Africa Backbone APL5

Roll out of fiber optic backbone linked to regional network to improve quality and reduce costs of communications services. Includes loop in Goma area with links to Burundi, Rwanda and Uganda. Paired with sector reform to boost pri-vate investment and reduce broadband and mobile costs

80-100 (lever-aging 100 pri-vate fin.)

FY15

Great Lakes Trade Facilitation Program (Region-wide)

Improvement or border infrastructure (transport, cus-toms/crossing facili-ties, basic services including water and power), capacity building of customs officials and upgrad-ing of electronic sys-tems, implementa-tion of the Small Trader’s Charter

145 FY15

East Africa De-velopment Corri-dors Investment Program

Regional multi-sector spatial development and policy reform program (transport infrastructure, pow-er, trade facilitation reform, business climate improve-ment, etc.) focusing on the Northern and Central Corridors, informed by ongoing analytical work

395 FY15/16




Description USD Million

Deliv-ery


Description USD Mil-lion

Delivery

Urban Develop-ment of Border Area Cities and Towns

Support for key trad-ing communities with a focus on labor in-tensive works includ-ing health, educa-tion, access roads and water/sanitation infrastructure

100 FY16

F. PARTNERSHIP AND INSTITUTIONAL SPACE

110. The signing of the PSCF on February 24, 2013 was the result of dedicated efforts over

many years by a large number of persistent partners at the national, regional and

international levels. The supporting development program, suggested in this document, will

require similar robust, resilient and well-resourced partnerships. As part of this partnership

approach, the World Bank Group will seek feedback and suggestions from other stakeholders on

this paper. It will also ascertain the interest of other development partners in participating in

the activities listed in Tables 1, 2, 3 and 4, including areas in which they might wish to take a

lead role.

Entry Points and Partnerships

111. The Bank is not the main actor in the Great Lakes and we therefore must look for the right

entry points and partnerships. While there are a number of forums and regional initiatives that have a

bearing on the issues and approaches discussed above, there does not appear to be one mechanism or

space where all these efforts can be better coordinated or at least where knowledge on who is doing

what can be exchanged.

112. The Economic Community of the Great Lakes Countries (ECGLC) (in French CEPGL -

Communauté Économique des Pays des Grand Lacs) is a sub-regional organization with multiple

vocation created by the signing of the Agreement of Gisenyi in Rwanda on September 20, 1976, aiming

at insuring the safety of member states, at favoring the creation and the development of activities of

public interest, at promoting the trades and the traffic of the persons and the possessions, at

establishing the cooperation in a narrow way in all the domains of the political, economic and social life.

It has three members: Burundi, Democratic Republic of the Congo, and Rwanda. Its purpose is to

promote regional economic cooperation and integration. But the ECGLC has not functioned properly as a

regional body and has not been able to create a regional community. Despite continuous efforts

supported by donors (the European Commission among them), CEPGL has thus far experienced limited

peace building success. It lacks effective capacity, political commitment and even the trust of

participating countries, partly as a result of decades of conflict.

113. Regional Economic Communities—including the CEPGL and the IC/GLR) as well as the AUC—

are critical for promoting dialogue and enabling collective action on regional issues, and serving as

catalysts for peace, stability and integration in the region. The World Bank will support the institutional

strengthening of these organizations in order to enhance their ability to define, implement, and monitor

agreed regional actions, and to generate momentum for expanding economic cooperation and

integration.

114. The greatest challenges to economic cooperation remain the current state of relations

between Burundi, the DRC and Rwanda, particularly the latter two, and the continuing conflict in

Eastern DRC. Moreover, state fragility in the DRC and Burundi continues to affect these states’ abilities to

act effectively in regional fora. These challenges cannot be seen as negative externalities that regional

cooperation efforts and related institutions can sideline, but should inform all areas of planning and

institution building for regional cooperation. While joint economic activities should further benefit local

populations through the provision of economic opportunities and vital services, to ultimately achieve

peace building aims they must also seek to engage member states in political as well as technical

dialogue, and foster productive linkages between the two.

Partnerships in the Security Sector

115. The Bank’s Articles of Agreement constrain its direct involvement in the security sector of

member countries. In particular, overall levels of public spending in a country’s security sector and

security sector strategies are not within the purview of the Bank. Where bilateral or multilateral

partners take the lead in supporting or establishing a dialogue with member countries on security sector

reform, the Bank can contribute to the reform process through a technical analysis of public spending on

security, focusing on the Bank’s competencies and standard analysis of public spending in non-security

sectors. The key is that the process be led by another partner(s) and the Bank be requested to contribute

its PER expertise by the partner(s) and the country government. At the request of the authorities, PREM

will prepare a Public Expenditure Management and Financial Accountability Review (PEMFAR) in DRC,

which will cover the security sector.

Table 3. Other Potential Knowledge Products and Operations Discussed



Knowledge Products Description Knowledge Products Description

Land Management and Property Rights Strengthening (Multi-country)

Analysis of land issues in each country and technical assistance for national and local land administration institutions to reduce conflict over land and restore livelihoods opportunities

Regional Dialogue on Jobs, Skills and Youth Employment (Region-wide)

Improved diagnostics/statistics on em-ployment as first step toward a larger re-gional dialogue on efforts to boost em-ployment and livelihoods opportunities

Pillar I:

Vulnerability and Resilience

Pillar II:

Economic Opportunity and Integration

Project/Intervention Description Project/Intervention Description

Access to Education for Displaced and Vulnerable Populations (Region-wide)

Providing access to educa-tion for displaced and vulnerable populations (orphans, widows, victims of violence, refugees)

Semiliki Multi-purpose Water Resources Development Project (Uganda, DRC)

70MW hydropower generation, 30,000 ha irrigation plus biodiversity conservation. Prepared under the Nile Equatorial Lakes Subsidiary Action Program (NELSAP)

Civil Registry Program (Multi-country)

Provision of identity cards and civil registry systems as platform for service delivery; Coordination across countries needed to enable cross-border mi-gration

Lakes Edward and Albert Water Resources and Fisheries Project (Uganda, DRC)

Policy reforms, regional institutional devel-opment, fisheries and watershed manage-ment and improved lake navigation. Pre-pared under the Nile Equatorial Lakes Sub-sidiary Action Program (NELSAP)

Coordinated Strengthen-ing of Social Protection Systems and Health Ser-vices Delivery (multi-country)

Standardization and coor-dination of safety nets and health services delivery across the region to re-duce incentives for migra-tion to countries with better services and to ensure targeting and con-tinuity of support and treatment for mobile populations

Early Warning Systems Strengthening (Region-wide)

Establishment of monitor-ing systems utilizing mo-bile technology to gather and analyze human devel-opment indicators in real time (nutrition, health, poverty, etc.) to enable early emergency response

Regionally Coordinated Disarmament, Demobiliza-tion and Reintegration (DDR) Support Program (Region-wide)

Regionally coordinated DDR platform building capacity of relevant re-gional bodies (AU, ICGLR, CEPGL) and mechanism of last resort financing

Pillar I:

Vulnerability and Resilience

Pillar II:

Economic Opportunity and Integration

Project/Intervention Description Project/Intervention Description

Coordinated, Regional Approaches to Sexual and Gender Based Violence (SGBV) (Region-wide)

Establishing effective mechanisms for regional knowledge sharing on SGBV interventions and multi-sector interventions including a focus on wom-en’s physical and mental health, violence preven-tion, women’s economic empowerment, justice sector reform, etc.

Foundation: Governance and Public Sector Capacity Activity Description

Decentralized Governance for Internal Security (DRC) Review of global experience with decentralized governance of internal security by provincial and local governments (as possible model for DRC)

Development of Citizen Networks (DRC) Development of citizen networks to promote civic engagement and self-government/service delivery/oversight utilizing ICTs and social media

Annex 1: The Drivers of Conflict _____________________________________________________________________________________ Structural or long-term drivers of conflict 1. The legacy of weak governance and absence of transparency and accountability, along with the absence of the state in parts of the Eastern provinces has facilitated the breakdown in the social contract. The regimes of King Leopold and Mobutu used the government as a vehicle for personal enrichment and a means to maintain client list networks. With the fall of Mobutu, these networks of patronage began to fragment and decentralize, leading to “autonomous centers [of power and] accumulation” that both weakened the state and led to the pillaging of local resources, such as the imposition of informal taxes on local revenue streams, such as markets, mines and roads. The consequence of decades of corruption with impunity has been the delegitimization of the state and its authority. Reinforcing and perpetuating the rift in the social contract, the state is almost (physically and institutionally) absent in parts of the Eastern provinces.

2. The historical manipulation of ethnic and land tenure issues for political, economic and military gain by the state and armed forces has turned these divisive - yet on their own not incendiary - topics into drivers of conflict. The ethnic tensions between Hutus and Tutsis in the Kivus have their roots in waves of migration dating back to the seventeenth century. The main movements of people include: the ethnic Tutsi pastoralists, the Banyamulenge; those brought by the Belgian colonial authorities to be used as laborers on the plantations (the transplantés); as well as Rwandan refugees that fled after the fall of the Tutsi Monarchy in 1959 and later ethnic violence and oppression; and, most prominently, the mainly Hutu refugees that fled Rwanda after the 1994 genocide, including citizens fearing reprisals, Hutu Forces Armées Rwandaises, interahamwe militias, and remnants of the former Hutu administration. Other migrations have occurred as a result of famine, climate change, population growth and political unrest.

3. The position of the Banyarwanda (ethnic Rwandan) population in Eastern DRC has been complicated through the politically-motivated, unclear and conflicting messages on nationality status provided by successive Congolese governments. Under the Mobutu regime a range of laws were issued, extending (and at times retracting) a complicated patchwork of rights and exclusions. Under the Kasa-Vubu government, the 1964 constitution denied citizenship to the transplantés. The Mobutu regime reversed this in 1971, granting all Banyarwanda residing in Congo from 1959-1963 citizenship. However, in the face of rising tensions against the increasing power of Tutsi Banyarwanda in the Kivus, citizenship for Banyarwanda groups, mostly Tutsis, was restricted in 1981 to those with Congolese ancestry dating back to 1885. Law No. 81/002 of 29 June 1981 states a Congolese national is [translation] "any person with an ancestor who was a member of a tribe that was established within the country's borders, as defined on 1 August 1885, is a national of Zaire;" from: Democratic Republic of Congo: Procedure and conditions for Congolese nationals of Rwandan origin to reinstate their nationality, Immigration and Refugee Board of Canada, January 2006 In short, nationality laws were altered according to presidents’ political interests. In December 2004, ahead of the 2006 elections, a law was passed on ‘Identification and Enrolment of Voters’ stating that a Congolese national was anyone that “belong[ed] to an ethnic group or nationality whose people and land were part of the territory that became the Congo upon independence [on 30 June 1960].” Democratic Republic of Congo: Procedure and conditions for Congolese nationals of Rwandan origin to reinstate their nationality, Immigration and Refugee Board of Canada, January 2006 This ruling gave citizenship back to thousands of the disenfranchised. However, the law came with little corresponding framework for implementation and complex procedures for obtaining

the necessary documentation. Furthermore, the law could not undo the decades of politicization of nationality which had entrenched popular perceptions of migrants as ‘foreigners’ and established it as a divisive topic.

Colonial and Congolese governments’ land policies have contributed to marginalization and changes in customary leadership roles which have contributed to the destabilization of communities and sparked disputes. Colonial-driven and directed migration to the Kivus has led to disputes over the status of community land given to migrants, an issue that became particularly inflammatory when migrants began to claim autonomy over land, customs and administration. The Mobutu government’s policy of land commercialization and appropriation of land in disregard of customary rules created what has been described as “a new process of polarization;” This was a marked change in customary processes for integrating migrants into local systems of kinship. The commercialization of land also stripped communities of customary powers over managing and occupying land. The shift in the balances of power away from customary structures created a discontent that could be manipulated and vented through scapegoating and attacks along ethnic lines. Proximate or short-term drivers of conflict 4. The inability of the state to project resources and services in conflict-affected areas, which creates a permissive environment for armed groups and criminal actors to operate. This has in recent months been exacerbated by the withdrawal of DRC security forces from areas such as South Kivu and Ituri District to combat the M23 in North Kivu, which has created a security vacuum exploited by negative actors. This is compounded by the fact that Provincial level governments, and by extension civilian authorities in the administrative, judicial, and police sectors, do not have the means to provide effective service delivery and representation, with the little funds that they receive allocated to essential maintenance costs, such as salaries. The roots of capacity constraints among provincial governments lay both in the siphoning off of the budget through corruption and the continued strong centralization of power in Kinshasa, with the government concerned at losing control through fully implementing planned fiscal decentralization. 5. The failure of successive peace agreements between the GoDRC and armed groups in eastern DRC (notably the 2008 Goma Accords and the March 23, 2009 Agreement) to end conflict and armed violence, which has been attributable to lack of political will for implementation, but also lack of progress in implementing key provisions related to integration of rebel groups into the national security forces and public administration, and the return and socioeconomic reintegration of IDPs and refugees. Failure of agreements has also deepened disillusionment and frustration among key stakeholders in the ability of political agreements to secure settlements, and tipping the balance in favor of use of force as the most expedient way to reach 'de facto' settlements (e.g. tactic used by M23). 6. The lack of discipline and professionalism in the Congolese security forces (army and police) is also unfortunately a driver of conflict: the incidence of violence against civilians by DRC security forces is higher than that of armed groups (both foreign and Congolese), and have been responsible for generating mass displacement, violence against women, and loss of livelihoods and property through forcible expropriation and theft. 7. The continued presence and activities of foreign and Congolese armed groups. Some of these groups are relatively new (i.e. organized in the last few years), while others have a longer history. The motivations of these armed groups are varied, with some representing communal grievances, while

others are driven by political and economic opportunism. In addition to the costs associated with armed conflict against the state, they also have highly disruptive impact on community cohesion, local economies and social welfare in the areas that they occupy. 8. Corrupt and illegal economic activities of state and non-state actors also directly contribute to disenfranchisement, expropriation and inequalities, further fueling tensions and conflict at community level, and serving as a powerful disincentive for private sector investment. These include not only monopoly over mining and other extractive activities, but also illegal taxation, the establishment of monopolies, control of markets, and illegal appropriation of land and property. 9. The large numbers of displaced people in eastern DRC and the region also constitute a potential driver of conflict. At present, over 2.7 million people are displaced (up from 1 million in 2006), including 400,000 who live as refugees in neighboring countries. 1. The displaced face extreme challenges during and upon their return from displacement. The most important from a development perspective are their extremely limited access to livelihoods and basic services, their alienation from their land, and their non-participation in the community, social, economic and political spheres. Some are in situations of protracted displacement, others will return to their original locations sooner, and many will suffer from pendulum displacement. The internally displaced constitute potential triggers for further conflict as they represent additional and unforeseen claims on available resources, and are vulnerable to recruitment into armed groups.

Annex 2: Charter for Cross-Border Traders _____________________________________________________________________________________

Basic rights and obligations for traders and officials at the border

1. All individuals shall be able to cross the border without verbal or physical abuse or harassment including but not limited to sexual and gender-based violence.

2. Traders shall be processed at the border in an efficient and timely manner without discrimination. A receipt must be provided to the trader for any payment made and the payment properly recorded.

3. Only officials of the approved agencies are present at the border and all border officials wear uniforms or ID badges that allow the identification of their respective agency.

Physical checks of traders must be recorded with the reason and outcome provided. Female traders have the right to receive a physical check by female officials in a private but regulated and accountable environment.

4. All duties, fees and taxes and the basis for their calculation are publicly available at the border. Any change to duties, fees and taxes must be publicly announced at the border, with reasonable time for traders to prepare, before their application. No unpublished fees or charges should be demanded at the border.

5. Documentary requirements should be clearly stated and publicly available at the border. Any change in documents required must be publicly announced at the border with reasonable time for traders to prepare before implementation. Simplified procedures should be applied to small traders.

6. Traders should be aware of their rights and obligations when crossing the border. Traders must present required documentation and pay appropriate duties at the border and to obtain a receipt for any payments made to an official. Traders shall not attempt to bribe any official to avoid payment of duties or obtain preferential treatment in any way, including avoiding queues.

With the support of the international community, governments commit to

a. That by mid-2012 these basic rights and obligations governing cross-border movement of goods and people are clearly stated in the local language and visibly apparent at all border crossings.

b. By end 2012 at every border post there is at least one agent that has received gender awareness training by 2012. All senior officials at the border have received gender awareness training by the end of 2013. Ensure that 50% of officials at any border post have received gender awareness training by the end of 2014.

c. At all border posts traders have recourse to an independent and confidential mechanism to register violation of any of these basic rights. Female traders must be able to register the violation of any basic rights with a female staff.

d. Apply strict disciplinary measures against officials found to have violated the rights of a trader.

e. Support organizations of informal cross-border traders in disseminating information on these rights and obligations and in delivering advice and information to enhance the capacities of the traders.

f. Continue to improve the quality of infrastructure at all border crossings to provide an open and safe environment for traders, with attention to the specific needs of women traders, and appropriate facilities for officials to undertake their work.

g. Improve the quality of data collected at all border posts on small traders, including the number passing through the border each day and the nature of the goods carried.

Annex 3: The CAB5 ICT Connectivity Project. _____________________________________________________________________________________

Target network A 7,000 km – US$200 million target network to be built in a modular way. The rationale behind the proposed network design is to focus on providing DRC with access to international connectivity on submarine cables circumventing Africa. Three key economic clusters have been identified (from Kinshasa, from Lubumbashi, from Goma) that should be connected to submarine cables (WACS, SAT3, ACE, Seacom, Eassy, LIONS, Teams) via appropriate cross-border connections. These three key economic clusters will then be connected together via links radiating from Mbuji-Mayi to form a comprehensive national broadband infrastructure. SCPT as a liability There is a clear consensus on the Government side, that the SCPT (national incumbent) does not have the competence to face the challenges of this rapidly changing sector, and is facing serious governance issues. As a consequence, the Prime Minister’s office asked the team whether it would be possible for the World Bank Group to assist the Government in monitoring an ongoing contract with Chinese companies and help them come up with acceptable options for the restructuring of SCPT. This issue is very sensitive and

the team will discuss with Bank management the best approach to be considered based on our experience and the consequences in terms of Project design. SEP Congo as a pragmatic model for PPP The mission met with Services des Entreprises Pétrolières Congolaises (SEP Congo) management team to learn from their successful implementation of PPP in the country. SEP Congo is owned by the main oil companies and the State of DRC (44 percent for COHYDRO and COBIL), and transports most of the oil products (70 percent of all oil products shipped in DRC) all across the country thought different transportation networks (Railways, Air, Congo river, roads and pipeline). There are many aspects of this PPP that the team could learn from SEP management: co-management carried out by a CEO from the private sector and a deputy from the public sector; the company functions with 1400 employees with only 3 expatriates ; the company manages to secure its network (e.g. 718 km pipeline) by signing ad hoc contracts with local indigenous people to monitor on a daily basis the efficient operation of the infrastructure; the company anticipates the extension of its pipeline network to respond to the increasing demand in oil consumption over the next three years, this infrastructure could be an opportunity for the telecom sector to lay an optic fiber along the pipes at marginal costs. PPP and institutional arrangements The team has discussed the following arrangement with our counterparts. As for any other CAB Project, the CAB5 infrastructure will follow PPP arrangements under Open Access regime. The PPP institutional and organizational detail arrangements will be finalized before Board approval. This infrastructure will be built, managed and commercialized by a company or by a consortium of local operators and the State of DRC. The implementation of this arrangement will be led by the Minister of Portfolio through COPIREP and MINPTT. Project preparation and management will be carried out by COPIREP as independent PIUs are phased out in DRC. COPIREP has both the technical, legal and fiduciary capacity to lead this operation. Next steps and timing The team, through the TA, will assist the Government in meeting the two above mentioned conditions and therefore expects the Government to sign the MoU before June 30, 2013, and to adopt the new legal and regulatory framework during the March parliamentary session. The Government is expected to send a letter requesting Bank’s assistance on the telecom sector through implementation of CAB APL5 (as mentioned in the new CAS). The Government will request a 4 million dollar PPA to finance social and environmental studies, technical studies, design and set up of the PPP, the study to prepare the restructuring of SCPT, the design of regulatory monitoring tools to supervise the concession/PPP contract obligations. The team will carry out 3 missions in Kinshasa before June 30 2013, to keep the positive momentum gained during the past few months. The PCN review meeting would be held early June 2013 and the Decision Meeting early March 2014 for a Board presentation end May 2014.

Annex 4: Poverty and Social Indicators _____________________________________________________________________________________

1. There has been a notable improvement in poverty and social welfare in countries in the Great Lakes and there are important lessons that could be shared with the east of the DRC. Overall recent experience draws attention to progress in the agriculture sector as the main driver of growth and poverty reduction. This section briefly describes the situation regarding poverty in each of the countries and highlights both the challenges and the opportunities for advancing living standards in the east of the DRC and throughout the region.

Burundi

2. Burundi is one of the poorest countries in the world with about 67 percent of its population living in poverty. Poverty is widespread, but higher in rural areas (69 percent) where the poverty rate is twice that of urban areas (34 percent). During lean agricultural periods, up to 60 percent of the population suffers from food insecurity. Poverty varies widely across regions, from a low of 29.7 percent in Bujumbura the capital in the west of the country to a high of 82 percent in the province of Kirundo in the north. Since the implementation of the PRSP-I in 2007, there have been improvements in the access to and utilization of basic infrastructure. However, development prospects during the PRSP-II are directly related to Burundi’s capacity to attract massive investments in the power generation sector as nationally both households and firms have literally no access to electricity, except in Bujumbura the capital.

3. Critical factors contributing to poverty include: (i) low agricultural productivity; (ii) widespread underemployment with 6.3 months of effective work in rural against 9.9 months in urban areas; (iii) shrinking and inequitable access to land with 0.29 hectare planted per household in 2012 (owned 70 percent by men); (iv) lack of infrastructure (e.g., electricity, clean water, rural feeder roads) and microcredit opportunities; (v) weak local governance; and (vi) rapidly depleting forestry and fisheries resources. For women, particularly in rural areas, poverty is also critically linked to relatively short spacing between two consecutive births.

4. In view of the limited non-farm employment opportunities in rural areas, idle and underemployed youth present a special challenge to address urgently. Rural exodus is turning youth unemployment or under-employment into a worrying phenomenon in urban areas. In 2008, the youth unemployment rate (15-24 years old) in Bujumbura the capital was estimated at 21.2 percent of the active population, in Gitega at 17.1 percent, and in Kirundo at 8.2 percent. Urban youth stay unemployed because they have not completed primary (37 percent) or secondary (25 percent) schools, think they can find a job mostly through personal ties (65 percent), and find it very difficult to create a microenterprise (63 percent).

5. Reform of education policy has resulted in a significant increase in enrollment and gender parity, but the quality of learning services is poor. Primary gross enrollment rate has surpassed the pre-crisis level, reaching 134% in 2011/12, compared to 80% in 2003/04. Primary completion rate increased from 38% in 2005/06 to 68.5% in 2011/12. Secondary gross enrollment rates have also improved from 16% in 2004 to 24.6% in 2008/09 and 31.9% in 2011/12. This is close to the Sub-Saharan Africa average of 39.6 percent. Gross enrollment rates at university education level increased from 12% in 2000/01 to slightly more than 30% currently. The university completion rate now hovers at 19%.

6. The population’s health status is improving, but the results are insufficient to meet MDG targets by 2015. Thanks to better immunization coverage (83-90 percent) and free health services for

under-five children and pregnant women, maternal mortality (499 per 100,000 live births in 2010) and under-five mortality (96 per 1,000 live births in 2010 from 167 per 1,000 in 2005) have declined significantly. The incidence of malaria rose from 26 percent in 2005 to 34 percent in 2010, but the distribution of insecticide-treated mosquito nets (now used by 44 percent of households) is expected to have positive effects going forward. Limiting the spread of HIV/AIDS continues to be a priority of the Government (the prevalence rate in the general population was 3.3 percent in 2009). From 2005 to 2012, the rate of deliveries assisted by qualified staff increased from 34 percent to 68 percent. Yet, with the slow increase in contraceptive use (11.4 percent in 2008, and up to 25 percent in 2012), reaching universal access to reproductive health by 2015 is highly unlikely. In terms of the adolescent (15-19 years old) fertility rate, the Government and Development Partners are committed to reducing its actual level, which is estimated at 11 percent.

Eastern DRC Poverty and Social Situation

7. Despite a huge natural resource endowment (mineral deposits, forests, water, and arable land), a strategic location, and a young population, the Democratic Republic of Congo is one of the poorest countries in the world with more than 71% of its population living in poverty in 2005 (75.72 percent in rural areas and 61.49 percent in urban areas). The 2011 Human Development Report ranked DRC last of 187 countries and shows that the DRC has a high gender inequality index of 0.71 in 2011. The high gender inequality mirrors the existing challenges for women, especially in reproductive health, such as high maternal mortality; and relatively low women empowerment, including inadequate political representation and unequal access to economic opportunities. During a decade of conflict, sexual violence has been used by armed groups as a war tactic against women and children which make the DRC the “worst place to be a woman or a child” according to Human Rights Watch in 2009.

8. Since 1998, an estimated 3.5 million have died in DRC alone from constant cycles of conflict, bringing substantial suffering to the families of the dead. The latest cycle of conflict has led to the displacement of tens of thousands of people from their homes in areas of ongoing rebel conflict, such as North Kivu province. Additionally, the conflict has disrupted production and trade and in the process increased the vulnerability of the population to hunger, malnutrition and poverty.

9. Because of the instability and elevated poverty levels, many children are also denied basic opportunities to improve their potential and chances to escape poverty in the future. In a recent study of opportunities for children in 20 countries in SSA, less than 40% of children in DRC were reported as having received full immunization, about 50% are malnourished and as many as at least 40% of 6-11 year olds were not attending school. Since these are national results, the situation could potentially be worse in the conflict ridden Eastern parts of the country.

10. Social indicators for the DRC are very poor. In DRC, life expectancy at birth is 48 years (2009); the maternal mortality ratio Demographic and Health Survey 2007 is 670 per 100,000 live births, the under-5 child mortality rate is 158 per 1,000 and the infant mortality rate is 97 per 1,000. The nutritional status of women and children is alarming in DRC: 46 percent of under-5-year-olds are chronically malnourished or stunted. Malnutrition is an underlying cause of 48 percent of the under-5 child deaths. Government’s contribution to health financing in DRC is almost nonexistent. Only 0.2% of the spending on child care is supported by the Government, while 46% comes from households and almost 54% is financed by international partners. The primary school completion rate is only 59 percent with a gender parity index of 0.87. The country has a poor learning achievement: only 59 percent of pupils demonstrate “minimal” knowledge in mathematics and 47 percent in French. Approximately, 68 percent, or 3 million, of DRC’s 4.3 million youths aged 12–14 years were out of school, only 71 percent of whom had some primary

education. The bulk of the new entrants into the labor force over the next two decades will not have completed primary education. The quality and relevance of vocational education and training generally are poor due to many factors including weak management, irrelevant curricula, obsolete equipment, and unqualified teachers. Less than 10 percent of the tertiary teachers have a doctorate, and many of the qualified teachers are over-age (65 on average).

11. Approximately 46 percent of the country’s population is younger than 15 years old and by 2040, about 50 percent of the total population will be of working age. The rapid demographic growth and a structural youth population pose huge challenges to the government in terms of human capital formation and job creation. Responsible policy responses could turn them into effective development agents while the absence of appropriate responses would increase risky behavior that could endanger the stability of the country.

Rwanda

12. Rwanda’s economy performed remarkably during the past decade. Between 2001 and 2011 Rwanda’s economy grew at an impressive rate of 8.2 percent per annum, earning the country a spot on the list of the 10 fastest-growing economies in the world, the only landlocked resource-poor country to do so. On a per capita basis Rwanda’s Gross Domestic Product increased by 60 percent since the start of the decade.

13. The strong macroeconomic growth performance was accompanied by impressive poverty reduction. The poverty headcount dropped from 59 percent in 2001 to 45 percent in 2011. Social indicators also improved significantly: for instance, during the past decade child mortality fell by two-thirds and primary school enrolment increased significantly and is now close to universal.

14. Agriculture has been the main driver of growth and poverty reduction in Rwanda, significantly lifting rural households out of poverty. Although the share of agriculture in GDP decreased significantly over the past decade, agriculture remains the backbone of the Rwandan economy in terms of employment and income-generation for the majority of households. Driven by increased investments in agricultural inputs, land consolidation and infrastructure, agricultural production at household level more than doubled between 2001 and 2011. Together with increased commercialization, witnessed by the rising share of harvests being sold on local markets, the increase in production accounted for up to one-third of the growth of rural consumption over the past decade.

15. Rwandan households have diversified their income portfolios by taking up non-farm activities in addition to their agriculture activities. The percentage of households with at least one non-farm activity more than doubled from 30 percent in 2001 to 70 percent in 2011. This is true for both self-employment and wage employment. As a result, the average number of income sources of Rwandan households has increased sharply. The observed diversification had two positive effects. First, diversification has reduced income risk inherent to engaging in rain-fed agriculture as households now have other income activities to cushion a potential shock. Second, diversification also explains the rise in consumption among both the rural and urban poor. While taking up non-farm self-employment in small informal household businesses has been particularly important for rural households, the move towards non-farm wage employment emerges as the single main driver of household consumption growth in Kigali.

16. The rapid fall in fertility rates in Rwanda over the past decade has reduced the nation’s average family size. This has significantly brought down the child dependency ratio—the number of economically dependent children for each working-age adult in the household—which has been associated with

increased disposable income both in Kigali and in the rural areas. Decreased dependency ratios have especially benefited the households in the middle of the income distribution, who experienced the largest relative fertility declines. Population projections show that Rwanda is on the eve of the demographic transition, which could spur future growth if the bulge in working-age adults can be accommodated with productive employment.

17. The results of the analysis suggest that if increases in agricultural productivity were to continue over the medium term, this will be a major driver of poverty reduction. Since virtually all of Rwanda’s poor depend on agriculture to generate income, scaling up agricultural intensification and commercialization will be the quickest way to get significant numbers of people out of poverty. Currently the Government’s and development partners’ main agricultural programs cover only a small part of available land, which means that there is the opportunity to expand them and significantly reduce poverty. The scaling up of agricultural programs should be linked with the promotion and facilitation of business activities that can thrive on increased agricultural production, especially related to trade, post-harvest storage and processing activities.

Uganda

18. Uganda has succeeded over the past decade in reducing the proportion of the population living below the official poverty line from 56.4% 1992/93 to 24.5% in 2009/10. Despite this impressive performance the reduction of the poverty headcount has yet to translate into improvement in other welfare dimensions. The country is still struggling on some key social indicators, such as maternal and child health, and in education outcomes. In 2011, Uganda ranked 161th of 187 countries on the UNDP Human Development Index. Estimates from the latest available Uganda National Survey show that in 2009/10, only 12 percent of households use electricity for lighting. About 60 percent of households reported that each member possesses a pair of shoes which means that in about 40% of household, some member does not own a pair of shoes.

19. Despite a decline in importance in the past decade the vast majority of Ugandans still relies on subsistence agriculture as their main occupation, and main source of income. The fact that, most of the population relies on subsistence agriculture, increases vulnerability. The vulnerability is related to climatic shocks, uncertainty of outcome, lack of resource to access inputs (land, seeds, etc.).

20. Uganda is off track on health related MDGs. The budget share that is allocated to the health sector by the government is below the Health Sector Strategic Investment Plan targets which were already below the globally recommended targets. Financial investment in health shows a decline over the years from 9.6% in 2009/10 to 8.3% in 2011/12. In the early 2000s, the Government initiated a comprehensive program of radical health sector reforms in order to improve the effectiveness, responsiveness and equity in the health care delivery system. Some of the major reforms were: (i) abolishing user fees in GoU units; (ii) improved management systems; (iii) decentralized service delivery; (iv) public-private partnership. Although Uganda may not reach the health related MDGs, these reforms have contributed to improved sector performance and outcomes. These reforms are also credited to have been pro-poor, especially by improving access and reducing cost for the poor.

21. Despite the universal primary education (UPE) reform, Uganda is off track on the MDGs related to universal primary education. The critical issues behind this low performance are both on the supply

and the demand side. Learning outcomes have been disappointing, and skill gaps may become an issue given the development of the oil economy. Learning achievement in reading and mathematics, as measured by the SACMEQ III assessment, showed that Uganda’s students had a mean mathematics score well below the level reached in Kenya and Tanzania. In learning achievements in mathematics and reading, there is no significant difference in boys’ and girls’ performance. That said, reasons for the low performance of primary schools include a shortage of qualified teachers, lack of scholastic materials, teacher and learner absence, and inadequate teacher training. Notwithstanding efforts to develop technical and vocational training institutions, the low percentage of professionals with technical training has led to a skills gap in some sectors, including tourism and construction, filled by a large number of expatriate workers.

Annex 5: Brief Overview of Demobilization and Reintegration in the GLR over the last 4 years _____________________________________________________________________________________

From 2002 to June 2009, the Multi-Country Demobilization and Reintegration Program (MDRP), a multi-agency effort operationalized the Greater Great Lakes Regional Strategy for Demobilization and Reintegration, a comprehensive strategy for the disarmament, demobilization, and reintegration (DDR) of ex-combatants in the greater Great Lakes Region (GLR) of central Africa. The program aimed to enhance the prospects for stabilization and recovery in the GLR on the premise that disarming, demobilizing, and reintegrating ex-combatants was necessary to establish peace and restore security. Peace and security were recognized to be preconditions for sustainable development. The specific objectives of the program were: a) to provide a comprehensive regional framework for DDR efforts for both government and irregular forces in the GLR; b) to establish a single mechanism for donor coordination and resource mobilization; and c) to serve as a platform for national consultative processes that lead to the formulation of national demobilization and reintegration (D&R) programs. The three key principles were regional, national ownership and partnership.

The program was administered by the World Bank Group and financed by US$188 million from IDA and a US$251 million MDTF (Belgium, Canada, Denmark, France, Germany, Italy, Netherlands, Norway, Sweden, the United Kingdom and the European Commission). The MDRP involved some 30 partner organization including several United Nations agencies.

In seven countries (Angola, Burundi, the Central African Republic, the Democratic Republic of Congo, the Republic of Congo, Rwanda and Uganda), a total of 279,263 adult combatants were demobilized through national programs and special projects, 244,597 ex-combatants received reinsertion assistance and 232,107 received support for economic reintegration. Furthermore, 53,880 children associated with fighting forces were assisted in being reunified with their families and reintegrated into their communities.

Following the closing of MDRP, a two-pronged approach was implemented through: (i) a smaller regional program, the Transitional Demobilization and Reintegration Program (TDRP), and (ii) two stand-alone national programs in Burundi and Rwanda co-financed by IDA and MDTFs.

(i) Transitional Demobilization and Reintegration Program

The TDRP is a four year program (2009-2013) to continue supporting the return of ex-combatants to civilian life in the GLR with the ultimate strategic objective of enhancing the prospects for stabilization and recovery in the region. The three specific objectives of the program are to: (i) provide technical assistance to country counterparts of D&R programs in the GLR, (ii) provide financing of last resort for D&R, and (iii) promote a platform for collaboration and learning on D&R. The TDRP places an emphasis on regional cross-border and cross-cutting issues related to D&R. The US$33.2 million MDTF is administered by the World Bank Group (with contributions from AfDB, Belgium, Finland, France, Germany, Italy, Norway and Sweden). Progress to date includes, among others:

1) Technical Assistance (TA) on D&R has been provided to support the implementation of ongoing D&R projects, or to support D&R commissions in the development of strategies and strengthening of implementation capacities. TA has been provided in Burundi, Central African Republic, Congo Brazzaville, Côte d’Ivoire, DRC, the Republic of South Sudan, Rwanda and Uganda.

2) As a provider of financing of last resort, TDRP has supported D&R in Central African Republic, Rwanda (co-financing), and a pilot in the Republic of South Sudan.

3) Regional activities to promote a platform for collaboration and learning on D&R.

a. Since 2011, as part of its objective to transfer DDR knowledge to an African institution, TDRP collaborates, in partnership with UNDPKO and UNOAU, with the African Union Peace and Security Department to design and set up a capacity program for DDR in Africa. The main objectives are to support the AU in institutionalizing DDR capacity within the AU and its member states, and establishing a DDR Research and Resource Center at the AU headquarters in Addis Ababa.

b. The TDRP established a Knowledge Management facility with the enhancing knowledge transfer and learning. Key achievements include production of 42 reports, coordination and hosting of five conferences and workshops on D&R, and organizing South-South learning for D&R Commissions. Studies include, for example, a longitudinal study on the role of the family in the reintegration of ex-combatants (in collaboration with LOGiCA), development of a generic Information Counseling and Referral Services model, which is a programmatic option that can be adopted to run reintegration programs, and effectiveness and sustainability of vocational training, a key activity in most D&R programs.

c. TDRP supports addressing the regional dimensions of the Lord Resistance Army-affected areas, through among others an assessment of stabilization and rehabilitation needs in LRA-affected areas (CAR, DRC, and RoSS), small pilot programs empowering socio-economic associations/cooperatives in LRA- affected areas in CAR, DRC and Northern Uganda, and providing support to MONUSCO and BINUCA.

(ii) Stand-alone projects in Burundi and Rwanda

An underlying key objective of both national programs is to contribute to peace and stability in the region.

Burundi Emergency Demobilization and Reintegration Project (US$22 million with US$10 million IDA and 12.5 million MDTF co-financed by Belgium, the Netherlands and Norway). The project development objective is to support the efforts of the Government of Burundi to (i) demobilize members of the National Liberation Forces and the National Liberation Forces – dissidents; and (ii) provide socioeconomic reintegration support to said members following demobilization, as well as to ex-combatants demobilized under the previous D&R project, with a particular focus on the provision of such support to female, child, and disabled ex-combatants. As of December 31, 2012, 6,884 combatants had been demobilized including 243 females, 170 disabled and 626 minors. Reintegration assistance has been provided to 99 percent of eligible project beneficiaries. Current activities support the provision of transitional socio-economic reintegration technical assistance for associations comprised of ex-combatants and community members, the delivery of medical services to disabled ex-combatants, and provision of housing for severely disabled ex-combatants. After the anticipated closing date of the project in June 2014 (additional financing currently being processed), D&R will be finalized in Burundi.

Rwanda Second Emergency Demobilization and Reintegration Project (US$19.1 million with US$8 million IDA, US$2 million Government of Rwanda (GoR), US$4.6 million MDTF with contributions from KfW, the Netherlands and Sweden). The objective of the project is to support the efforts of the GoR to: (i) demobilize members of Armed Groups (AG) of Rwandan origin with a focus on the Democratic Forces for the Liberation of Rwanda (FDLR), and members of the Rwandan Defense Force (RDF); and (ii) provide socioeconomic reintegration following demobilization, with a particular focus on female, child, and disabled ex-combatants. As of December 2012, the full caseload of 3,910 RDF as well as 3,549 FDLR ex-

combatants have been demobilized and 197 children formerly associated with the FDLR. A total of 7,282 ex-combatants have received reintegration support. After the anticipated closing date of the project in June 2014 (additional financing using a balance of the MDTF will be processed), it is expected that the GoR will have the capacity and resources to continue the D&R of the remaining caseload of FDLR. However, as a result of the unstable situation in Eastern DRC, the FDLR is currently actively recruiting and again growing in numbers. This situation needs to be monitored closely to assess if further support to the GoR for D&R might be needed.

Annex 6: International Conference of the Great Lakes Region and Communauté Economique des Pays des Grands Lacs _____________________________________________________________________________________ The International Conference of the Great Lakes Region (ICGLR) is an inter-governmental organization composed of 12 member states from the Greater GLR, which was set up in 2006 with the assistance of the African Union, UN and bilateral donors. Its aim is to implement the Pact on Security, Stability and Development (PACT) which sets an ambitious agenda "to transform the region into a space of sustainable peace and security for peoples of the region, political and social stability, shared growth and development, a space of cooperation based on convergent strategies and policies driven by a common destiny”. Key sectors include: (i) peace and security; (ii) democracy and good governance; (iii) economic development and regional integration; (iv) humanitarian and social issues and (v) cross-cutting issues including gender, environment, human rights, HIV/AIDS and human settlements. With regard to economic development and regional integration, the ICGLR plans to rehabilitate key infrastructure, including road and rail, so as to facilitate trade in the region. It also aims to establish a regional mechanism for the certification of natural resources in order to curb their illegal exploitation and trade in the region. On energy, the ICGLR supports the revival of the CEPGL and its energy-related projects including exploitation of methane gas from Lake Kivu and the establishment of the Inga dam in the DRC among others. The Communauté Economique des Pays des Grands Lacs (CEPGL) was established in 1976 and re-launched in 2007 with three member states, Burundi, DRC and Rwanda. It aims to promote economic integration and establish a framework for coordination and harmonization across key priorities: (i) peace and security; (ii) democracy and good governance; (iii) agriculture and food security; (iv) energy, infrastructure and communication; (v) education and research; and (vi) investments. During its existence the CEPGL has established four specialized organizations: (i) the Institute of Agronomic and Animal Research (IRAZ); (ii) the Development Bank of the Great Lakes States (BDGLE); (iii) the Great Lakes International Electricity Company (SINELAC) and (iv) the Organization of the CEPLG for Energy of the Great Lakes (GLE). CEPGL also developed instruments of cooperation during its first phase including the CEPGL travel document enabling free movement of people and goods. The focus of CEPGL is on energy programs, managed through GLE which aims to ensure cooperation among the member states in the energy sector. SINELAC runs the Community’s hydroelectric power station of Ruzizi II and markets the energy produced in the three member states. The Commercial and Industrial Gas Company (SOCIGAZ) is responsible for controlling exploitation, concessions and license fees. The BDGLE aimed to mobilize resources to finance projects aimed at promoting economic integration in the sub-region but is currently faced with the situation of depleted resources due to dent servicing through the DRC’s Public Debt Management Board. IRAZ is a research-focused entity currently only serving Burundi. Currently SINELAC is the only fully functioning organization within CEPGL. Efforts are underway to revitalize the institution and economic development was assigned a key priority during the re-launch, with peace-building considered a cross-cutting focus, promoted through economic cooperation.

Annex 7: IFC Program in Great Lakes Countries _____________________________________________________________________________________

I. DEMOCRATIC REPUBLIC OF CONGO

Portfolio Overview

Since 2007, the three pillars of IFC’s post-conflict initiative in DRC have evolved around combined Advisory and Investment operations focused on (i) improving the investment climate; (ii) proactive project mobilization and developing key investment projects to promote high-growth sectors; and (iii) expanding support to the SME sector.

IFC’s committed investment portfolio in DRC amounted to USD 61.45 million, as of January 31, 2013, and consisted of six projects in banking, micro finance, mining and telecommunications.

IFC’s Advisory Services, supported by the CASA Initiative (Conflict Affected States in Africa), and in collaboration with the Bank, has notably focused on SME Banking, Microfinance, Investment Climate (OHADA and Doing Business reforms, and the establishment of a framework for Special Economic Zones), SME Development Support, and the provision of risk capital and advisory services to small businesses (through IFC’s SME Ventures Program). Going forward, IFC’s SEZ Program will be integrated as a major component of the Bank’s Western Growth Poles Project (GPP) of USD 117 million. The GPP is designed to support the Government’s strategy for accelerated private sector development in selected value chains in the targeted poles of the Bas Congo province and in the special economic zone of Maluku. The project will notably support the Government’s Action plan to revert years of declining agricultural production in the country and will promote the development of competitive value chains and access to markets, leveraging private anchor investors and supporting out grower schemes.

Pipeline Overview

In the short term, the focus will be on: (i) investments in SMEs benefiting the Base of the Pyramid (BOP); (ii) Advisory Services work; (iii) engagement with SMEs focused on the BOP. Full reengagement with real sector advisory and investment, will be possible only following clear commitment to good governance by the Government of DRC, notably accession to the New York Convention (on the Recognition and Enforcement of Foreign Arbitral Awards). When possible, full reengagement will notably allow IFC to: resume direct and large scale / transformational investments in all growth sectors through targeted sector strategies developed with the Bank; facilitate private sector entry to infrastructure markets and service delivery; and support deeper and more impactful Investment Climate reforms. Further IFC / Bank engagement will also be informed by Analytical Advisory work carried out in DRC by IFC and the Bank (Financial Sector Assessment Program (FSAP), Value Chain Studies, CASA Conflict Analysis…). IFC’s CASA Initiative will remain engaged in DRC to continue supporting the WBG’s interventions for Private Sector Development.

i. Access to Finance for SMEs IFC will further develop the range of products suitable to the DRC financial markets and help build efficient financial infrastructures.

IFC’s SME Ventures Program (through its Central African SME Fund - CASF) will expand the provision of risk capital and advisory services to a greater number of small businesses; in close collaboration with the SME Development Program.

As part of the IFC’s partnership with the MasterCard Foundation for scaling microfinance in Africa, IFC will continue to expand its Microfinance programs in DRC to increase and support the number of commercially viable microfinance institutions and broaden access to financial services for SMEs. In parallel, IFC will continue to help build the capacity of MSMEs to strengthen their credit-worthiness, through its DRC SME Development Program. When feasible, IFC will develop additional projects with local banks, to support small business banking through its Africa MSME Finance Program or its blended finance facilities. These projects will notably include thematic and/or industry focused activities (Agribusiness, Education, Gender…), and aim to cover the eastern regions of the country.

Additionally IFC will continue to provide Trade Finance Advisory to finance professionals; and team up with the Bank to establish inexistent financial infrastructures (Credit Bureau, Collateral Registries, Leasing regulatory framework). Based on market demand, technical feasibility and financial sustainability, as well as lessons learned from previous IFC/Bank experience, IFC and Bank will explore together the possibility of establishing Risk Sharing Facilities and introducing/developing Housing Finance in DRC.

ii. Support for SME Growth IFC’s support for SME development will be mainly provided through the DRC SME Development Program (phase II) which will establish a Privately-Owned SME Facility in key markets to roll out IFC’s SME Management Solutions (Business Edge, SME toolkit, SME Governance). Working primarily with lead firms in Agribusiness, Light manufacturing & Telecom, the DRC SME Development Program will aim to increase the reach of SMEs through inclusive supply chains. It will also intensify SME Linkages to Financial Institutions. The Program’s delivery model will be strengthened, notably with additional resources provided by the Bank, in order to scale it up and reach a much larger number of SMEs, including women entrepreneurs. It will also help develop integrated packages, and promote new products and tools (Certification, Corporate Governance, Standards). The DRC SME Development Program will be gradually extended to the eastern regions (Kivus).

iii. Investment Climate Reforms: Pilot Project in Province Orientale (PO), Eastern DRC This first pilot project at provincial level will aim to improve the business environment in PO by enhancing the effectiveness, fairness and transparency of Government services to the private sector with respect to investment, taxation and trade. The project will be notably designed to support the expansion and diversification of PO’s exports, in particular in the agribusiness sector, with special attention to trade with the East African region. It will build on national-level IC reforms being supported by the WBG since 2004. If successful, this first sub-national pilot could be replicated in other provinces of the DRC. PO is one of the largest province so DRC, and has a population of 9 million. It has international borders with the Central African Republic, South Sudan, and Uganda. Kisangani the provincial capital (1,4 million of habitants) is at the junction of the Congo River (last navigable port from Kinshasa) and East Africa. The Kisangani-Beni road (700km long), recently rehabilitated with World Bank financing, connects the administrative center of PO to the borders of Uganda, North Kivu, and Rwanda.

II. RWANDA

Portfolio Overview

Over the past five years, IFC has developed a robust program in Rwanda, with a committed investment portfolio of USD 39.8 million as of February 27, 2013. The portfolio includes USD 14.5 million in Financial Markets, USD 4.4 million in Infrastructure, and USD 20.9 million in Manufacturing, Agribusiness, and Services.

IFC’s Advisory Services portfolio in Rwanda includes:

The Entrepreneurship Development Program: it seeks to support the growth and competitiveness of the SME sector and to enhance local entrepreneurship with a focus on women and youth in Rwanda. IFC has been working with MINICOM to support the Hanga Umulimo program, which aims to provide training to 1,500 SMEs across the country, of which 600 will be selected for funding. The partnership was successful and will be expanded into a multi-year program.

The Investment Climate Program: it is one of IFC’s most successful Investment Climate programs, with Rwanda continuously being recognized as one of the top global reformers. In IFC’s 2010 Doing Business publication, Rwanda was named the top reformer, jumping to 67 from 143 in the annual ranking of 183 countries, the greatest improvement ever achieved by a country. Rwanda continues to achieve progress, ranking at 52 out of 185 countries in 2013. Additionally, as part of an overall WBG initiative, IFC is exploring the possibility to support accelerating investment in key agriculture value chains (tea sector and horticulture). IFC assisted Rwanda in reducing its time to import by 55 percent and time to export by 38 percent and has also recently developed Rwanda’s National Logistics strategy. Feasibility studies for the 8 identified projects identified are currently ongoing could result in up to US$ 100 million in public, private or public-private investment.

The Kigali Bulk Water PPP Project: IFC has been engaged by MININFRA/ESWA to act as its lead transaction adviser to develop and structure the Mutobo project, a public-private partnership for a new, sustainable bulk water source for the city of Kigali.

Pipeline Overview

IFC’s investment pipeline in Rwanda includes the following:

i. Financial markets: Discussions are ongoing with several banks for credit lines in the US$5-15 million range through a local currency facility. In addition, IFC is considering an investment in a green field housing bank in conjunction with an Indian strategic partner and a local bank to increase access to affordable housing. Rwanda is also in the progress of facilitating local currency financing through the Pan-African Domestic Medium Term Note (PADMTN), with the Ministry of Finance approving IFC to issue Rwandan franc-denominated bonds in the domestic market. IFC continues to engage with stakeholders on the bond issuance and pipeline development, while supporting the ministry of finance in its sovereign bond issuance.

ii. Manufacturing, Agribusiness and Services: IFC is considering investment for a mix-use commercial building in Kigali.

iii. Infrastructure: IFC is continuing to make progress on its engagement with the Lake Kivu Methane Gas Project, which entails the development, construction and operation of (i) a natural gas production and processing plant and a gas-fired power plant of up to 100MW. Despite the unexpected recent withdrawal of one party in the project consortium, IFC is continuing to pursue the project and is currently considering alternative partners. iv. The Ruzizi III Project (Overview): The Ruzizi III Project would be the first public-private sector energy engagement in the Great Lakes region of central Africa. Total investment cost, including associated infrastructure, is EUR 516 million. The plan for a 147 MW hydropower plant on the Ruzizi River has the potential to transform electricity supply to Rwanda, Burundi, and the DRC, representing over 100 million people. Energy use in the region is currently dominated by use of charcoal for cooking. Electrification via the Ruzizi project can contribute significantly to economic development.

Going forward, IFC Advisory Services strategy is centered on four programs including Leasing, Entrepreneurship and SMEs development, Private Schools and Investment Climate.

III. BURUNDI

In Burundi, IFC’s operations have resulted in an investment portfolio of USD 10.51 million as of January 31, 2013. It covers the following sectors: finance, general manufacturing and services. Through its Conflict Affected States in Africa (CASA) Initiative IFC’s Advisory work is focusing on:

(i) Improving the business regulatory environment to pave the way for future investment expansion within the country;

(ii) Facilitating access to finance through modernization of the financial sector and development of financial markets;

(iii) Improving productivity by privatization and restructuring of public enterprises in different sectors;

and

(iv) Strengthening and developing capacity of Micro Small and Medium Enterprises (MSMEs) that can create jobs, generate revenues and help alleviate poverty in the country.

IFC continues to consider financing particularly in the key focus following sector: financial markets, agribusiness, infrastructure, tourism/hotels and MSMEs. A strategic priority will also be given on assisting the Government of Burundi with its privatization program through the provision of transaction advisory services.

IV. UGANDA As of January 31, 2013, the portfolio amounts to USD 228.77 million covering a number of sectors: finance including SME finance, infrastructure (power, transport, telecommunication), and general manufacturing and services (Hospital and Industrial park).financial, infrastructure, petrochemical, ICT and

Agribusiness sector. Going forward IFC‘s strategy in Uganda will continue to focus on the following areas: financial market development, infrastructure development, agribusiness, support to the privatization program, MSME development and Investment climate reform with the World Bank.

On the Advisory Services front, the focus has been on Investment climate reforms, Social Sector with the Africa Schools Program, and PPP program in Infrastructure particularly water. The IFC IC team is working closely with the WB and the IFC A2F team to develop a new intervention in the agribusiness sector around agri-leasing and potentially seed sector related reforms. Both have the potential to open up new investment opportunities in the sector and benefit farmers and farm level productivity.

Table 1: IFC Advisory Services Portfolio in Burundi, Rwanda, Uganda and Democratic Republic of Congo

at January 31, 2013

Country Name Primary Business Line Project Name Total Funds Managed by IFC ($m)

Burundi Investment Climate Burundi Investment Climate Reform Program

1.9

Burundi Access to Finance AMSMETA BoA BCB 0.9

Burundi Access to Finance Burundi Credit Reference Bureau - Phase 1

0.4

Burundi Total 3.2

Congo, Democratic Republic of Sustainable Business Advisory DRC SME DEVELOPMENT PROGRAM

1.8

Congo, Democratic Republic of Access to Finance AMSMETA Rawbank 1.3

Congo, Democratic Republic of Access to Finance Advans Banque Congo TA 1.0

Congo, Democratic Republic of Investment Climate Developing a Framework for Special Economic Zones in DRC

3.2

Congo, Democratic Republic of Total

7.4

Rwanda PPP Kigali Bulk H2O 1.7

Rwanda Sustainable Business Advisory

Rwanda Entrepreneurship Development Program

5.4

Rwanda Investment Climate Rwanda Investment Climate Reform Program

4.5

Rwanda Access to Finance MicroEnsure LLC 1.6

Rwanda Access to Finance Rwanda HF Market Study 0.1

Rwanda Total 13.3

Uganda Investment Climate Uganda Investment Climate Program 1.6

Uganda Sustainable Business Africa Schools Uganda

Country Name Primary Business Line Project Name Total Funds Managed by IFC ($m)

Advisory 1.0

Uganda Access to Finance AMSMETA Bank of Africa Uganda 0.9

Uganda PPP Nyagak III- Uganda 1.1

Uganda Investment Climate Uganda Health in Africa Initiative Project

1.0

Uganda PPP Kampala Waste Management PPP 1.3

Uganda Total 6.8

Total Advisory Services 30.6

Table 2: IFC Investment Services Portfolio in Burundi, Rwanda, Uganda and Democratic Republic of

Congo at January 31, 2013

Country Name Sector Institution Name Committed Portfolio ($m)

Burundi Finance & Insurance DTB Burundi 1.51

Burundi

Accommodation & Tourism

Services Opulent (B) 5.50

Burundi


Services PROGIMMO 3.50

Burundi Total 10.51

Congo, Democratic Republic of Finance & Insurance Advans Congo 2.65

Congo, Democratic Republic of Oil, Gas & Mining KMT 0.34

Congo, Democratic Republic of Finance & Insurance PCB Congo 1.26

Congo, Democratic Republic of Finance & Insurance Rawbank 4.20

Congo, Democratic Republic of Finance & Insurance Stanbic DRC 3.00

Congo, Democratic Republic of Information Tigo 50.00

Congo, Democratic Republic of

Total 61.45

Rwanda Finance & Insurance BCR Rwanda 1.46

Rwanda Finance & Insurance BP Rwanda 1.60

Rwanda Food & Beverages Bakhresa Rwanda 7.56

Rwanda Finance & Insurance Ecobank Rwanda 5.00

Rwanda

Transportation &

Warehousing Intraspeed 4.40

Rwanda Finance & Insurance KCB R 4.79

Rwanda Electric Power Lake Kivu Energy 3.85

Rwanda Transportation & MAGERWA 1.00

Country Name Sector Institution Name Committed Portfolio ($m)

Warehousing

Rwanda Construction & Real Estate MSC Ltd 12.98

Rwanda


Services Mille Collines 1.64

Rwanda


Services TPS (R) 5.08

Rwanda Finance & Insurance UOB Rwanda 2.13

Rwanda Total 51.48

Uganda Chemicals AEF Agro Mgmt 0.00

Uganda Food & Beverages AEF Clovergem 0.00

Uganda Finance & Insurance BOA - Uganda 4.29

Uganda Electric Power Bujagali Energy 128.37

Uganda Finance & Insurance DFCU Bank 4.17

Uganda Finance & Insurance DTB Uganda 0.04

Uganda Information Eaton Uganda 30.00

Uganda Health Services IMG Kampala 2.20

Uganda Finance & Insurance Orient Bank Ltd 3.25

Uganda Construction & Real Estate PINE 4.69

Uganda Primary Metals Roofings 23.17

Uganda Utilities Umeme 28.61

Uganda Total 228.77

Total Investment Services 352.21

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