poverty headcount is reduced from 57 percent of the population living below the poverty line in 2006 to 35 percent in 2020; for the full period, the implicit elasticity of the poverty rate with respect to per-capita household consumption is -0.65. Regarding the targets for 2015, the outcome is similar except for the target for MDG 7a (access to safe drinking water), which is fully achieved by then.

**Table 6:** MDG indicators by simulation scenario in 2020 (units see Table 3)

||||Increa|sed aid -|allocated t|o|||
|---|---|---|---|---|---|---|---|---|
||2006|BASE|HD|INF|AGR|BAL G|OVEFF|CRISIS|
|MDG 1|57|35|33|32|32|33|34|40|
|MDG 2 - net|5|30|50|37|31|46|41|28|
|MDG 2 - gross|52|106|115|110|107|114|113|104|
|MDG 4|152|112|106|108|112|106|107|114|
|MDG 5|750|617|599|607|615|601|603|623|
|MDG 7a|64|84|93|87|84|92|91|83|
|MDG 7b|38|63|76|66|63|74|71|61|

_Source:_ World Bank staff simulations with MAMS.

It should be noted that, in Table 6, we provide both the net and the gross primary completion rates. The gross primary completion rate is usually referred to as the MDG objective. In the model it is computed as the ratio between the number of students that complete the sixth year of primary school and the population of 12 year-olds. The net (on-time) primary completion rate, on the other hand, is defined as the share of the population of the relevant age cohort that graduates from primary school in the right (or theoretical) year. It is computed as the product of the share of the cohort that enters primary school and shares that pass each of the six grades in uninterrupted sequence. While the gross primary completion rate reaches a level of 106 percent in 2020, the net is substantially lower at 30 percent.<sup>8</sup> The ongoing expansion in education leads to an increase in the share of the labor force with completed secondary and tertiary education at the expense of the labor force with less than completed secondary education (Table A-6). This is in line with Rwanda’s objective to transform the country into a knowledge-based economy, although the transformation is taking place at a rather slow pace.

# 4.2. <u>Scenarios assuming increase in aid</u>

Rwanda receives a substantial amount of official development assistance (ODA). Since 2004, following the presidential election in 2003 and the vote of the new constitution, ODA increased significantly (Chiche, 2008). Between 2004 and 2007, almost 50 percent of budget spending was financed by aid, increasing to about 55 percent in 2008 (IMF, 2008). Aid per capita stood at about USD 60 in 2008 (at 2006 prices). To achieve the MDGs, however, higher spending levels are necessary, requiring additional external financing as Rwanda’s domestic resources are limited. According to the commitments made at the Gleneagles summit in 2005, aid flows to Africa are supposed to increase considerably to USD 25 billion a year in 2020, translating into about USD 85 per capita in real terms (again at 2006 prices). These scenarios therefore assume a gradual

> 8 The gross completion rate is more widely used given data availability. However, it is not an ideal measure of system performance since, if there has been a large increase in enrollment in the past, this rate may be _decreasing_ at the same time as the in-cohort entry rate (the net intake rate) and the promotion rates increase. The net completion rate is a better measure of performance and no more difficult to implement in a simulation context. However, 100 percent is an extreme upper limit for this indicator; low repetition rates may be desirable also in a successful school system.

8