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Rwanda's economic "miracle"

Rwanda's economic Anthony Harrington

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Paul Kagame has held the presidency of Rwanda since 2000. He is credited with having brought Rwanda out of the dark days of the genocide of Tutsis by Hutus which saw the massacre of between 500,000 and one million Tutsi. A soldier and rebel leader who forced his predecessor from office with a string of military successes, Kagame's vision for Rwanda is to make it a lower-middle-income country by 2020.

In its Rwandan Economic Outlook for 2014, the African Development Bank (AFDB) said that it expects the country's GDP growth to be 7% in 2014 and 7.4% in 2015. This is extremely positive, particularly since growth through 2013 was hampered by earlier aid cuts in July 2012 by the US, UK and the Netherlands. The cause of the withholding of aid was an accusation by the United Nations that Rwanda was fueling a rebellion in the Democratic Republic of Congo (DRC) by training rebel troops. The impact on Rwanda's economy was substantial, with growth slowing to 4.6% in 2013, from 7.3% in 2012.

Kagame has been accused of a variety of things, including using the Rwandan courts and justice system to sweep rival politicians out of his path. However, according to the AFDB there have been some encouraging signs of greater liberalization recently. It its recent report on Rwanda, the AFDB said:

"Three new pieces of legislation were ratified to improve media regulation, promote transparency and encourage citizens' economic and political participation."

The Bank also pointed out that Kagame has allowed another political party to register, the suggestion being that this indicates the Rwandan President's desire to "normalize" his country's standing.

The AFDB takes a very positive view of Rwanda's progress. "Strong progress in human development continues to be registered," it says, citing the fact that Rwanda is on track to meet targets for universal primary education, gender equality and much improved under-five mortality figures.

However, a look at the statistics shows that it took the Kagame government some 14 years to work its way back to the same per capita income it had enjoyed prior to the 1994 war and genocide. In 1990, Rwanda's per capita income was US$395 and plummeted to US$133 at the onset of the 1994 war. From 2008, when parity was achieved, the country has moved forward reasonably. In 2009, the per capita income was US$509, rising to US$529 and US$586 respectively in the subsequent two years.

However, Kagame has his work cut out if he wants to get Rwanda to move ahead of Kenya, which leads the East Africa group of nations. David Himbara, writing for The Rwandan, makes two major points. The first is that Kenya was ahead of Rwanda on a per capita income count in 1990 and it is still ahead of Rwanda today.

His second point is that while Kagame's Vision 2020 Roadmap for Rwanda envisages the private sector taking over from the state as the major driver of growth in 2020, as things stand today, it is still far too much a subsistence agriculture economy and there are still a number of things that can and should be done, he argues, to make Rwanda an easier and more attractive place to do business.

This, however, can be overstated. In a blog for the World Bank, Mohammad Amin points out that the World Bank currently rates Rwanda third in the region as far as the quality of the business environment is concerned. Amin, however, is less impressed with the state of Rwanda's non-agricultural private business sector. In terms of access to finance and the stability of its power supply, Rwanda rates well as a place to do business. But in other matters, such as labor laws, transportation and tax rates, Rwanda is either no better than, or slips behind, others in the region.

Clearly Kagame still has some real challenges ahead if his vision for the country is to become a reality.

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Further reading on Africa:

China and Japan's dispute over Africa turns ugly, by Ian Fraser
Can Africa hit and hold a 7% growth rate every year, by Anthony Harrington
Kenya's prospects look good as AfDB boosts funding package, by Anthony Harrington

Tags: African Development Bank , genocide , Hutu , Paul Kagame , Rwanda , Tutsi , World Bank
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