Rebuilding Rwanda; Building Africa

A country once in shambles, amidst the genocide, is now home to high-rise buildings and skyscrapers. A brief history – Rwanda saw a hundred-day genocide, killing more than 800,000 Tutsis in 1994. Post the dreaded massacre United Nations sent a team that closely monitored the peace agreement. Maintaining political stability was of utmost importance during that period. 

With time, in the year 2000, the government of Rwanda established a long-term development strategy, called Vision 2020, to transform the economy into a middle-class service-based economy. For an economy with as weak the fundamentals as that of Rwanda in the late 1990s, this seems unachievable. But today, Rwanda has accomplished what many economies are unable to – a successful development strategy. 

According to the World Bank Doing Business Report (2020), Rwanda is second, to Mauritius, in ease of doing business in Africa. With a GDP growth rate of 8 percent per year in the past decade, revenue from domestic has increased twenty-fold, whereas the national budget has increased 14 times the 2000 level. Due to its extensive business-friendly policies, high growth but also its paternalism – a nearly authoritarian regime – Rwanda has become the Singapore of East-Africa. As much as the African subcontinent brings to mind jungle safaris and teeming wildlife, it must, soon, hint towards industrial complexes. 

With no conspicuous natural resources, Rwanda remains a tiny landlocked country able to pull off this economic miracle. One of the main challenges that a country faces during the process of development is realizing the extent of the informal sector to more formalized models. Rwanda, from the very beginning, focused on the two sectors – agriculture and manufacturing – leading to a market of formal employment generation. 

The agricultural sector engages about 70% of the Rwandan population, contributing about 35% to the national GDP. It has reduced acute poverty by 45% in the past decade. According to the World Food Programme (2018), increased commercialization in the agricultural sector has ensured food security for 81.3 percent of the households, able to consume an adequate diet using a low share of budget. 

Planned usage of land using pilot land registration exercises and rolling out policies after consultations from all the stakeholders was a driver of growth and industrialization. Blinding of residential complexes supported the needs of the working class. With proper urban agglomeration expanded the formal sector employment. 

However, the production was cost-bearing as the country adopted conventional methods of electricity generation, was highly dependent on human capital, leading to meager profits. The shortage of skilled labor and the non-availability of physical capital was even more pressing.

The state ensured to set up institutions aligned with the government to oversee not only trade but business, agriculture, land use, finance and banking, electricity generation, water supply, and much more. A few landmark authorities are the Ministry of Infrastructure, Rwanda Housing Authority, Rwanda Transport Development Agency, Rwanda Development Board, and Rwanda Development Bank.

Rwanda found a way to sustain investments in existing sectors with an interplay of private firms and the emergence of the tourism industry. The Visit Rwanda campaign and the Meetings, Incentives, Conferences, and Events (MICE) sector received a total of $1.5 billion of investment since the year 2000. Tourism revenue increased to $400 million in 2018, from $131 million in 2006; revenue from the MICE sector grew to $66 million in 2019. 

The next big step towards an integrated market was political stability and an increase in intra-regional trade. Facilitating trade further would ensure better-skilled jobs, a decent minimum wage, and efficiency arising from competition among firms. The Small and Medium Enterprises protected initially, using tariffs, have to be free to trade globally. 

On the development front, the country has charted out a roadmap to achieve better education and healthcare. It recognizes the importance of quality post-graduate training, especially in fields of engineering and IT, to boost the manufacturing sector productivity and endure innovation. It would make the Rwandan workforce globally competitive, lessening the information gap. 

It also encourages entrepreneurship, generating more capital and employment opportunities nationally. Essential for supporting a population boom, sufficient infrastructure and robust healthcare is required. During the pandemic, Rwanda – due to lack of medical personnel – employed bots and AI to test the masses for the virus and treat the affected. It is a testament to the lack of professionals in the field of medical sciences and poses a challenge for the times to come.  

The economy is moving towards digitalization – introducing a cashless transactional system – to collect information efficiently and create a national database. A proposal to harness solar energy is underway to generate electricity, support the upcoming industries, and mitigate global warming.

Rwanda now aspires to reach Middle Income Country (MIC) status by 2035 and High-Income Country (HIC) status by 2050. 

However, inclusive development is a far cry as poverty and inequality have shown an upward trend with the growth of employment and industrialization in the economy. Still, in years to come, Rwanda will serve as an example by other African counterparts, for it has shown immense economic growth and persevered political stability for the past two transformational decades.