Challenge to sustain Rwanda''s post-genocide economic boom

By Vision Reporter

Added 6th April 2014 01:02 PM

Twenty years ago the Rwandan economy was in ruins: the banks were empty, cash crops rotted in the fields and the streets were strewn with corpses.

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KIGALI - Twenty years ago the Rwandan economy was in ruins: the banks were empty, cash crops rotted in the fields and the streets were strewn with corpses.

The once carefully cultivated hillsides were deserted as the perpetrators of the genocide -- which left some 800,000 people dead, essentially ethnic Tutsis -- fled the country en masse.

Survivors in rags limped back only to find their relatives hacked to death, their houses ransacked and their livestock stolen or slaughtered.

Now, well-heeled Rwandans sit on terraces of gleaming high-rise blocks along the capital's palm tree-lined roads where armies of women sweep dust from bright new footpaths.

According to the World Bank, since 1994 Rwanda has reduced poverty by a third, narrowed the equality gap and increased per capita growth almost five-fold.

"Some people call it a development hat-trick," says Yoichiro Ishihara, senior World Bank economist in Rwanda.

Although some argue it was an open goal -- with aid money pouring in from Western nations shamed by their inaction in the face of mass violence -- the progress is undeniable.

One of the great drivers behind post-genocide economic growth was construction, much of it big state contracts. After years of public sector-driven rehabilitation, Ishihara says "it's time to switch to the private sector."

He thinks that Rwanda, with its youthful population, could take advantage of the so-called demographic dividend that fuelled East Asia's boom.

The Rwanda Development Board (RDB) hopes the country can become a re-export centre, starting with a 98 hectare Special Economic Zone that is filling up with manufacturing and agro-processing companies.

"We are investing massively in our commodities" of minerals, tea and coffee, says Finance Minister Claver Gatete.

Tourism is currently the country's top foreign exchange earner, as crowds flock to track gorillas, with others heading to the savannah or lush rainforests in other parks.

"Seventy percent of the population is under the age of 25, and the skills are there," says Vivian Kayitesi, head of investments at RDB, whose offices are in a gleaming building towering over one of Kigali's many manicured roads.

She hopes the generation of twenty-somethings will boost a burgeoning services sector that has seen investment increase from around $800m (580 million euros) in 2012 to $1.4 billion (1 billion euros) last year.

Tight ship, toxic politics

On a recent retreat for the country's leadership hosted by former guerilla fighter turned President Paul Kagame, whose Tutsi rebels drove the genocidal Hutu regime out in 1994, officials were reportedly lambasted for Rwanda's trade gap.

"The current message is export or die," said one senior official.

One diplomatic source says that Kagame's "intellect, imagination and drive" have turned Rwanda around. But he runs a tight ship, and one likened to the science-fiction inspired Starship Enterprise.

"If you go into his office, it looks like something out of Star Trek. He has about 10 screens and dials into ministers to see what they're doing," regularly firing those who don't deliver, the diplomat said.

The government's "Vision 2020" aims to make Rwanda a middle-income country within six years, and the economy was growing at about eight percent a year.

But accusations that Rwanda is supporting rebels accused of war crimes in the troubled but resource-rich east of neighbouring Democratic Republic of Congo led to a series of aid suspensions in 2012 that has stunted growth.

Rwanda's exports of coltan -- a metal used in mobile phones -- also only reach certain markets as many buyers suspect its origins.

Gatete denies that Rwanda, whose reputation for anti-corruption and accountability is first class, is profiting from DR Congo's plight.

"That argument was done with a long time ago," he said, stating that since Rwanda became the first African nation to tag all its minerals, it no longer holds weight.

In addition to the DR Congo debacle, assassinations and attempts on various former senior Rwandan officials in exile have whipped up a diplomatic storm that could lessen foreign support.

"Rwanda is toxic at the moment," says the diplomat, and "at a watershed" for development.

"You can't take away their 20-year success record -- it's superb. But they could lose it if they don't let some things go," such as limited political and personal freedoms, sacrificed in exchange for security, stability and services, they added.

"Our view is: You have to relax to grow," one development worker said. "But the Rwandan view is: 'We hear you, but we're not going to do it'."

Challenge to sustain Rwanda''s post-genocide economic boom

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