Muraho,
So Rwanda is often associated with one thing; the genocide that ravaged the country and resulted in over 800,000 deaths. While the civil war and genocide are a part of Rwanda's history that cannot and should not be ignored, I think that it’s crucial that the world realize that this small African nation is so much more than a killing field, as it is often portrayed. Rwanda has come a long way from that tragedy 16 years ago. The government is stable, the economy is strong and poverty has been reduced. These factors are not by chance, but are a concerted effort of the government and Rwandan citizens to become a middle income nation by the year 2020. This rising star has adopted a fairly comprehensive market-based development strategy that has helped it achieve strong growth in many indicators over the past 10 years. Following lessons from successful economies such as Singapore, Rwanda hopes to become a technology and trade hub of the region and Africa at large. I've compiled some of what I felt were the most relevant aspects of the Rwandan economy. Hopefully, this will help change perspectives on Rwanda as well as provide context for my future posts on entrepreneurship and business development.
Overview: Rwanda is a landlocked nation located in Central Africa. Its neighbors include the Democratic Republic of Congo to the West, Uganda to the North, Tanzania to the East and Burundi to the South. It’s about 26,000km2 (10,000mi2), which is slightly smaller than the state of Maryland. However, Rwanda has one of the highest population densities in Sub-Saharan Africa, with an estimated population of 10.7 million people.
Key Economic Indicators
Government: Rwanda is a presidential republic with a multiparty system. The current president is the iconic Paul Kagame. He is an advocate of private business and free market principles which have been influential in shaping Rwanda's development strategy. Kagame is also a huge supporter of new models of aid that help recipient countries become more self reliant. He won the election this past August and will be in office for another 7 years. His government has received some criticism in regards to political freedom and human rights, but I'm not well versed on this and don't want to discuss it here.
Exports: Exports are central to Rwanda's development strategy. Currently, Rwanda has to import many of its goods and inputs. This has led to a balance of trade deficit of $382 million in 2009. Rwanda must aggressively grow its exports while reducing or substituting imports. In the table below, I've listed Rwanda's main exports and some relevant statistics. I'm going to begin a series in which I will highlight each of these sectors. I’ll attempt to give everyone an idea of the dynamics and challenges unique to each sector.
Transparency: Many low income and developing nations are plagued by corruption in the form of bribes, kickbacks, and nepotism. This graft adds to businesses costs and leads to a generally inefficient government and sluggish private sector. Rwanda has bucked that trend and is relatively free of corruption. In Transparency International's 2010 Corruption Perceptions Index, Rwanda received a score of 4 (9=very clean, 0=highly corrupt) which gives it a rank of 66 out of 178 nations surveyed. This means that Rwanda is perceived to be less corrupt than all of its East African neighbors and even more developed economies such as Italy, Brazil, India, China, and Russia. Providing a corruption free environment is key to allowing the growth of domestic business and attracting foreign businesses. It is just one example of Rwanda's dedication to development. (The CPI is an aggregate measure of corruption in terms of the frequency and/or size of bribes according to country experts and business leaders for more information visit http://www.transparency.org)
Business Environment: Rwanda has made a series of reforms to make it easier to conduct business and they have been tremendously successful at achieving this goal. The 2010 World Bank Doing Business report ranks Rwanda as the 67 out of 187 (ranked 143 in 2009). In fact, Rwanda was this year’s leader in instituting pro business reforms to promote private sector development. According to the report, it now takes 3 days to start business at a cost equivalent to 10% of the per capita income. Other key areas where Rwanda is relatively progressive include employment, access to credit, and protection of investors (ranking 30, 61, and 27 respectively). This is great news for entrepreneurs in Rwanda and those thinking of doing business here. http://www.doingbusiness.org/
Challenges: Of course there are always roadblocks and stumbling steps on the path development. Unfortunately, Rwanda is not exempt from them. The country will need to develop solutions to these pressing issues in order to reach its developmental goals: underdeveloped human capital, unsophisticated financial markets and infrastructure (energy and transportation). The good news is that the government and private businesses are aware of these issues and are actively solving the problems. I also plan on starting another series that discusses these issues in more detail and highlights the progress being made.
I hope that this has been fascinating and informative. Please feel free to ask questions and make comments about any part of this that peaks your interest.
Turongera,
Chris
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