Rwanda Replaces Genocide with Economic Ambitions.

“We will not forget the genocide, but we will not be defined by it, either. Each year, we use the memory of the genocide to convene a national discussion, but then we use the discussion to talk about the future.” Paul Kagame, President of Rwanda.

Rwanda is a country that to many may only bring up those horrible memories of the 1994 Genocide where in 3 months, up to 1 million Rwandans were murdered in ethnically motivated killings. Lesser countries would have seen the country descend into anarchy and division, but this event has strengthened the resolve of Rwanda to ensure the past is never repeated, and that the future is safe guarded by positives actions today. This attitude has seen the small Central African country emerge as one of the best economic performers on the continent in the last half decade with aggressive reforms to ensure growth and less aid dependence, whilst also ensuring that violence on ethnic lines do not resurface. An outline of Rwanda’s progress will be shown by Macroeconomic Management by the government, Trade and Business Policies, Social Capital being enhanced, and Human Capital being addressed especially with the loss of 1 million people in 1994.

Macroeconomic Management.

Guided by the Vision 2020 plan devised in 2000, which aims to make Rwanda a Middle Income Country (M.I.C.) by 2020, that is to have per capita income of around US$900 and halving poverty levels from 65% to 30%, thus to have sustainable long term development. To achieve this, the government has begun an aggressive fiscal and monetary policy that will help these goals to be met. Fiscally, despite only having 50% of the budget being made up by domestic revenues and the other 50% in budget support foreign aid (down from 85%), the government has had targeted expenditure programmes directed at education, healthcare and infrastructure. Having targeted expenditure makes the most of the limited resources the country has, and with a debt that was over US$1 billion in 2000, around 60% of the GDP, ensuring they completed the mandatory three year qualification for the Heavily Indebted Poor Countries Debt Initiative (H.I.P.C.) was essential that future generations weren’t saddled by the previous generations debts. Debts are one of the stifling blocks on sustained development as any income is directed at servicing the debt and not in investment on social and productive sectors. Rwanda has also begun to integrate into the East African Community, by also publishing their budgets at the same time as everyone else in the region, i.e. July-June instead of January-December. President Kagame is an advocate of reducing aid in Rwanda as it keeps the country dependent on other countries, and he is a subscriber to the works of Zambian economist and author Dambisa Moyo.

Monetary Policy has also been very tight and married to the fiscal policy. Inflation has varied in Rwanda, in part allied to the impressive growth rates of 6% on average since 1999, increased economic activity has increased inflation on average of 5%, that has required supply side remedies such as increasing the number of transport operators, or provision of consumer services. As across the developing world in 2008, inflation shot up to 20%, driven by high commodity and energy prices, and again the Rwanda government and monetary authorities reacted to drive it down, expecting it to be in single digits by the end of 2009. Growth has also been spectacular, driven by key government policies of liberalization, and in 2009, whilst the rest of the world has negative growth rates, and the Africa average falling to 3% GDP growth, Rwanda is poised to post a growth rate of 9%, having already grown by 10% and 8% in the first two quarters of 2009. Therefore, the fiscal and monetary policies are regimented and effective in what they set out to do.

Trade.

President Kagame aims to make Rwanda the ‘Singapore of Africa’, Singapore being one of the Four Asian Tigers that industrialized and achieved M.I.C. Status from their aggressive policies and reforms. To boost trade and commerce, Rwanda has realised that being a country with few natural resources and land locked, they will need to be imaginative and compete with their neighbours and open the economy to the world. This they have done by sweeping economic liberalization, inviting Foreign Direct Investment and making the business climate clear for entrepreneurs and investors alike. In the Doing Business Report of 2010, Rwanda was the top reformer in the world, moving from 153-67 in the rankings. This was made possible by making it easier to register a business from previously 14 days to just 3 days with 2 steps, employing labour and registering property has also been made easier. Setting the platform for investments and business will help move most of the workers in agriculture (41% of GDP and around 90% of the population), into manufacturing and services, sectors with greater productivity and earning potential. Cross border trade has also been speeded up by having less paperwork and longer opening hours to the surrounding countries (Burundi, Democratic Republic of Congo, Tanzania, Uganda). Corruption has also begun to be stamped up making business transparent.

Exports are mostly driven by coffee, with giants Costco Coffee and Starbucks buying up the bulk of the exports, which in 2008 amounted to US$46 million. The prized niche coffee grown in Rwanda is a specialized brand, and this thus gives them a competitive advantage over other coffee growing countries that only produce generic coffee, thus ensuring the demand for Rwandan coffee is high, and incomes and prices will also be high. Tourism has also boosted and is one of the countries top earners, raking in US$214 million in 2008, with tourists flocking to see the gorillas and monkeys in prime mountain settings of the Volcanoes National Park.

Social and Human Capital

As in any post conflict State, reconciliation must be one of the key agendas to be addressed, and in parts, the system employed in Rwanda is reaping results. Initially, all suspects and perpetrators of atrocities in 1994 were put in jail, and justice was slow to be dealt, so the process was speeded up and local Gacaca courts used to try those responsible. In the case of higher level organizers of the genocide, they were trailed by the International Criminal Tribunal of the United Nations based in Arusha Tanzania. An important aspect of this has been that reconciliation is married to economic prosperity, reduce poverty and have more well off as a collective rather than by ethnicity, then there is less scope for genocide to occur again.

Gender wise, Rwanda is a pioneer in championing the rights of women and giving them roles in power, for instance, the parliamentary elections in 2006 saw 45 women elected in a chamber of 80 seats, thus becoming the first country in the world where there were more women than men in the political system. The Rwandan constitution stipulates that at least 30% of seats in parliament must be reserved for women, this election result of 56% smashes this stipulation.

Having 1 million people taken away from an economy will always hurt growth prospects as there is less economic activity, so the government has moved to improve education and healthcare as means of improving the human capital base for the future. As they don’t have the financial resources at present, they have combined with donors and NGO’s in making healthcare programmes that cover most of the population, and despite fighting the problems afflicting many African countries (not enough skilled practitioners, lack of drugs etc), the system has made strides forward and even being endorsed by the Gates Foundation. Education is also being boosted, and to ensure that the future economy has skilled workers, they have also invested heavily in Information and Communications Technologies (I.C.T..), with broadband expected to land in November from the Seacom cable in Kenya. The ambitions on the Rwanda government knows no bounds, by the installation of a 4G mobile network that they envision to be used soon by their growing economy. A country as ambitious and set on goals such as Rwanda, is a beacon to most of the other African countries that have more resources but perform worse than Rwanda.