The rwanda model: Focus on Poverty, ENTREPRENEURSHIP human capital, institutions, and accountability
By Patricia Crisafulli and Andrea Redmond
There is a joke among residents and frequent visitors to Kigali, the capital city of Rwanda, that if you blink twice, you will see a building that wasn’t there just the other day. What seems like pure exaggeration became a reality for us over numerous trips made to this tiny, landlocked country in eastern Africa. Each time we arrived, there was something else to see. Tower cranes sprouted in new places along the skyline. A multistory hotel to be operated by a leading international hospitality brand went from a construction shell to near completion. Even traffic light installations began to tame Kigali’s chaotic and sometimes heart-stopping traffic patterns,
As authors exploring the economic development of Rwanda and the leadership principles and governance structures that have brought it into being, we found evidence virtually everywhere. All around Rwanda, a new narrative is unfolding; one of self-determination and increasing self-reliance, and of a country in a hurry to get where it wants and needs to be. Now, twenty years after the genocide—a human-induced tragedy of catastrophic proportions, when a million or more people died in 100 days—the rebirth of the country adds another chapter to Rwanda’s story; out of the proverbial ashes, a nation of hope and possibility has arisen, taken root, and begun to flourish.
Of all the measures of progress, the most impressive is in poverty reduction. With overall real GDP growth that has averaged around 8 percent per year, the country has reduced the percentage of its population living in poverty to 44.9 percent in 2011, from 56.9 percent in 2006. That translates into 1 million people, out of a total population of about 10.7 million, emerging from poverty in just five years. In addition, the number of people living in extreme poverty fell to 24 percent from 37 percent over the same period.
The Los Angeles Times called the poverty reduction a “remarkable achievement for Rwanda,” and reached out to Paul Collier, director of the Center for the Study of African Economics at Oxford University, to comment on the numbers. Asked by the newspaper if there were any doubts about the veracity of the data, Collier stated, “No doubts; I know the economics professor who did the data analysis, and he is highly experienced and painstaking, so it is genuine.”
Beyond the numbers, there we found powerful images of the “Rwanda Model” for poverty reduction, a strategy of private sector-led development, decentralized government, transparency, and accountability at all levels. Implementing that model includes specific objectives: raising the bottom of the socioeconomic pyramid—through agriculture, education,
and health care—and developing infrastructure, especially energy and large-scale transportation projects.
We found evidence of the model in action in a tiny rural neighborhood known as an umudugudu, where a shiny slab of sheet metal caught the midday sun. The flash of silver stood out among the mostly one- and two-room houses in the settlement known as Sunzu in the Northern Province, where typical roofs made of low-quality, locally crafted tile do a passable job of keeping out the torrential rains. In other, less rainy parts of the country, roofs have been commonly made of thatch, which is being phased out by the government because of health hazards associated with leaking, dampness, mold, and the insects that live in the grassy material. More than any architectural statement, the new roof on this modest house in an economically disadvantaged area sent an important message about Rwanda: someone in the umudugudu had come into some money to afford that piece of corrugated metal sheeting, perhaps by selling part of a harvest or maybe a goat, which was beyond what the family needed to feed themselves. In a country chronically gripped by poverty, the shining metal roof is an undeniable sign of progress at the lowest socioeconomic tier.
A Model for the Developing World
In a world of failed economic models, Rwanda stands apart. Through strong leadership, decentralization to empower the grassroots, free markets, private sector development, managing and aligning the activities of nongovernment organizations (NGOs) with the Rwandan government’s priorities, and active courting of foreign direct investment—all enhanced by cultural values and traditions—Rwanda has become a model for the developing world.
Rwandan President Paul Kagame preaches a gospel of economic self-reliance, turning the country, especially the younger generation, into a nation of believers. Rwanda also boasts a willing cadre of civil servants to execute the plans and objectives as espoused in the country’s blueprint for economic, social, and political development—Vision 2020. Of course, Rwanda’s progress has not been made in isolation; the country has received significant help from the outside, including NGOs, which provide assistance, training, and know-how. But rather than pouring money into their own pet projects, NGOs in Rwanda must conform to the government’s agenda and priorities. Otherwise, an NGO is likely to find its help is no longer wanted
Implementing the Rwanda model of economic development has required more than government action. It demanded a complete change in perspective, all the way down to the local level. “The thinking here was totally different,” Kagame told us. Previous regimes made people completely dependent on the government. Regular handouts from above, including jobs or admissions to the university, reinforced corruption as well as ethnic discrimination and regional favoritism, which in turn stoked the fires of hatred that erupted with the genocide.
From a purely economic point of view, when people are not productive, the government cannot draw resources from them, such as tax revenues. Then, all the government can do is to rely on foreign aid. “[When that happens] the government has nothing because it cannot get anything from the people,” Kagame explained. “It only ends up begging donors to come in, and then they provide everything. Then the donors [in effect] become the government.”
But not on Kagame’s watch. He has called dependence on foreign aid dehumanizing and believes Rwanda can do for itself. Rwanda has benefited a lot from aid, and still receives aid, but its ambition is clear: in time Rwandans will provide for themselves and stand on their own.
The only way to cut dependence on foreign aid is private investment from local and foreign business interests to create jobs and opportunities—and generate tax revenue. Today, paying taxes (arguably not a favorite activity of citizens anywhere) is celebrated in Rwanda to raise awareness and encourage compliance. The Rwanda Revenue Authority presents certificates each year to the best taxpayers, recognizing those who pay the most (the Rwandan brewery Bralirwa has been a past honoree, along with a foreign-owned telecommunications company) as well as those who are the most compliant.
But it is not enough for economic development to move the needle only at the top. The Rwanda Model emphasizes economic growth that is “pro-poor.” In order to truly make a difference in the country, growth must be demonstrated in the rural areas, where the vast majority of the country’s population lives. Admittedly, there is a sharp contrast between Kigali, which has a cosmopolitan flair, and the umudugudu of Sunzu, which is very humble (although breathtakingly beautiful, surrounded by emerald green hills and a large lake). That’s why the shiny new roof in Sunzu is so important—a reminder that development cannot leave any group or region behind.
Pillars of the Model
Rwanda has been deliberate in its pursuit of economic development that mirrors the East Asian “tiger” economies such as those in Hong Kong, Singapore, South Korea, and Taiwan, all of which achieved very high economic growth from the early 1960s through the 1990s. In fact, it has set its sights on becoming the “Singapore of Africa.” Its roadmap toward that goal is Vision 2020, which identified six pillars for Rwanda’s development: good governance; transformation of agriculture into a productive, high value, and market-oriented sector; development of an efficient private sector; human resources development through education, health, and technology skills; infrastructure development including transportation, energy, water, and information and communications technology (ICT) networks; and promotion of regional economic integration and cooperation.
The first pillar, good governance, recognizes the role of the state in fostering an environment in which human capital development and wealth creation become possible. Today Rwanda is determinedly following a path of decentralization to push authority and accountability down to the local level. Empowering the grassroots means giving people a say in what they need in their local communities and the responsibility to get it done.
In order for decentralization to be effective, skills must be developed. In public and private sectors alike, human resource development is a critical need. A lack of qualified people to produce results quickly is a weak spot in the Rwanda model. People, particularly in the public sector, may be afraid to make mistakes; therefore, there can be little incentive for them to take initiatives on their own. Hesitancy to make decisions is rooted in the fear of what would happen if they are questioned; if there is even a hint that something done could be interpreted as corrupt or against the rules, they likely would be investigated and then carry the stigma, even if allegations proved false. Rwanda’s policy of zero tolerance for corruption is a huge positive for the country, but the unintended consequence can be frustrating delays due to bureaucracy.
Fortunately, Rwanda recognizes this need and has welcomed partners who are interested in building its human resource capacity, particularly within the public sector. The assistance Rwanda values the most is training—giving high-potential people the hands-on development and experience they need to become more competent.
Central to governance in the Rwanda model is accountability. Kagame holds a strict standard for his team, particularly at the ministerial level. Detail-oriented and execution-driven, Kagame keeps close tabs on projects, making sure things get accomplished. Execution requires commitment, turning words into actions and plans into projects. In order to foster accountability, Rwanda has turned to a cultural tradition known as imihigo, a kind of performance contract that goes back to precolonial times when people would publicly state their goals before tribal elders, and others in the community were then expected to support them. Failure to deliver was seen as a dishonor.
Another factor in the Rwanda Model is the development of strong institutions with good governance; as Kagame explained, institutions that will outlive any individual. Within these institutions, accountability and transparency are enhanced by a system of checks and balances. In many ways, the Rwanda Model mirrors a large decentralized corporate structure, in which individual strategic business units are accountable for their results, performance, and deliverables.
For Rwanda to achieve its economic vision, it must foster private sector-led development, which is embedded in the Rwanda Model. In addition to foreign direct investment in businesses and industries, private sector development relies upon entrepreneurship among Rwandans to open a business, generate income, pay taxes, and provide jobs for themselves and others. Examples of homegrown entrepreneurship abound, from vendors who sell fruits and vegetables or baskets in a marketplace, to the younger generation that is looking for a foothold in Rwanda’s economy.
In order for Rwanda to transform itself into a middle-income country, it needs continuous infrastructure expansion, encompassing a variety of projects and priorities. It must upgrade its transportation systems, including improved roads and highways, a potential rail link to a seaport located 1,600 kilometers away, and a new international airport to expand the country’s capacity to handle both passenger and cargo traffic. Of Rwanda’s infrastructure needs, clearly the most urgent is energy, which remains a top priority. As of 2012, current available electrical generating capacity was estimated at about 100 megawatts, while the country’s eventual needs are pegged at 1,000 megawatts. To improve distribution of electricity, Rwanda is exploring a variety of generation projects, which will require strategic investment from foreign entities with financial, human capital, and technology resources.
Aspiration and Pragmatism
Throughout the Rwanda Model runs a thread of aspiration and pragmatism—to strive to achieve as much as possible but with a clear-eyed view of the problems that need to be addressed. Given what Rwanda has accomplished, especially in terms of poverty reduction, it seems logical that other countries can learn from its example.
Kagame, however, was reluctant to elaborate on what those lessons might be. “We don’t want to tell other people what they can learn. We are doing it for ourselves,” he told us.
And that, perhaps, is the most valuable lesson of all in the Rwanda Model: do for yourself, remain independent-minded and self-determining, and forge strategic partnerships with those who support your vision. That’s how a country moves itself forward and instills pride and hope in its people.
Adapted from Rwanda, Inc. by Patricia Crisafulli and Andrea Redmond. Copyright © 2012 by the authors and reprinted by permission of Palgrave Macmillan, a division of Macmillan Publishers Ltd.
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