RWANDA’S ECONOMIC TRANSFORMATION AFTER THE 1994 GENOCIDE AGAINST TUTSI
This 1994 genocide against Tutsi in Rwanda did not only lead to the deaths of over a million innocent Tutsi, destroy the entire social fabric that bound Rwandese together as a citizenry but also destroyed the economy. Relatedly, the Rwandan economy grew by negative 11.4% (-11.4%) in 1994.
The post-genocide leadership was thus confronted with enormous challenges, including; a very dire economic situation; thousands of vulnerable genocide victims (orphans and widows); a devastated society where victims lived side by side with some of their previous tormentors; a raging insurgency perpetrated by remnants of genocidal forces; a quest for justice for those killed during the genocide; as well as reconciling and building unity among Rwandans.
For the post-1994 Government, therefore, National Security was identified and treated as a prerequisite for any future economic development. The scope for National Security then included reconciling and uniting Rwandans after the devastation by the genocide as well as defeating the raging insurgency of the late 1990s by the genocidal forces that were launching nuisance infiltrations and attacks from then Zaire, now DRC.
Twenty-seven years after the 1994 genocide against Tutsi, Rwanda has risen like the phoenix from the ashes – thanks to a resilient people as well as a dedicated and focused leadership. The country has been transformed politically, socially, and economically. Rwanda enjoys peace and stability throughout her entire territory and even contributes to global peace through her participation in Peacekeeping and globally ranks second largest contributor to UN Peacekeeping Forces. Through various homegrown solutions including newly established institutions such as the National Unity and Reconciliation Commission (NURC) as well as specific laws that punish genocide ideology and related crimes, reconciliation, and unity among Rwandans have taken root.
Achievements on the Turn of the Century
After achieving a commendable level of peace and stability, the Government focused its resources on Development. In 2000, an economic development blueprint, Vision 2020 was unveiled. Vision2020 aimed at transforming Rwanda into a middle-income, private sector-led, knowledge-based and diversified economy by the year 2020. This transformation required Rwanda to upturn its GDP per capita to $1,240 by 2020 from the $220 of 2000. A very ambitious goal it was and all those involved in its entire implementation process had to not only be good innovators but be fully dedicated to their work. A system of Annual Performance Contracts informed by this Vision was adopted with its Monitoring and Evaluation Mechanism coordinated at the prime minister’s office level.
In addition, relevant institutions were established and relevant reforms have been undertaken across the board to ensure efficiency. A multitude of homegrown solutions has also been initiated and implemented. In line with the provisions of Vision2020, nurturing entrepreneurship and the creation of a dynamic and competitive private sector was a strategic choice. Through the Rwanda Development Board (RDB), the government prioritized the creation of desired infrastructure and a friendly business/investment climate for the private sector to thrive and catalyze the overall growth of the economy.
Attractive incentives for investors were initiated including duty-free importation of machinery, equipment, and raw materials, additional fiscal incentives such as import and VAT exemptions in strategic sectors including in the energy and ICT sectors, and a 100% write-off on all Research and Development costs for investors. Further, it was realized that continued dependence on classical exports of coffee and tea would not generate the much desired economic growth. The government identified the Service Sector, ICT as well as Technical and Vocational Education and Training (TVET), as key drivers that would propel Rwanda’s economy forward. Further, Made-in Rwanda Strategy was adopted in 2016 and within four years it reduced the trade deficit by 36% and increased the value of total exports by a total of 69%.
Though still work in progress, the economy has been diversified, agriculture is being modernized, and agro-processing prioritized. Growth of the Service Sector as a strategic choice has given excellent dividends driven especially by the thriving hospitality industry. Rwanda’s Meetings, Incentives, Conferences and Exhibitions (MICE) initiative has led the country to become one of the top Conference destinations in Africa. Further, financial institutions were expanded and trade and construction emerged as a part of the main drivers of growth including the light industries. Led by the Kigali International Financial Center (KIFC), Rwanda is also lately positioning itself to be a financial hub for the Continent and is putting in place relevant infrastructure and legal frameworks. This Pan-African Investment aims at connecting International Investors with opportunities across Africa.
These unflinching interventions have twenty years after the promulgation of Vision 2020 greatly improved the efficiency of public investment management, strengthened dialogue with the private sector, and made it easier for firms to access credit and enjoy a more streamlined tax system. Moreover, knowing that seasoned investors typically worry about financial stability, physical security, corruption, expropriation by governments, exploitation by local partners, capital controls, and fact that they adore a red-carpet type of business environment, Rwanda’s continued good score in all these have made the East African country attractive both for Local and Foreign Investors.
Rwanda’s Success Factors which account for the progress that continues to be registered in her quest for economic development include; Good governance tenets; zero tolerance to corruption; a results-oriented leadership; a wide range of homegrown solutions many of which are sourced from her own Rwandan culture; an inclusive developmental model characterized by pro-poor policies; unity of purpose; gender parity; efficient service delivery system supported by a good IT infrastructure and human capital; and continuous improvement of her investment/business environment.
Evaluating the outcomes of Vision2020, we see an impressive overall execution albeit missing the overall target of achieving a lower-middle-income status. Indeed, a Country whose economy in the immediate aftermath of the 1994 genocide grew by negative (-) 11.4% had for 15 years until 2018 grown her economy by an average of 7% to 8%. It also grew by 8.6% in 2019 and was expected to grow by over 10% in 2020 had it not been the COVID19 pandemic which is a global scourge. Per Capita income which was in the year 2000 a meager 200, had increased to USD 830 by 2020. Moreover, this economic growth is inclusive and has helped lift many out of poverty. Rwanda is among a few countries that met all UN Millennium Development Goals (MDGs) before transitioning to Sustainable Development Goals (SDGs).
In 2020, Rwanda Development Board (RDB) recorded investment commitments worth US$1.30 billion, down from US$2.46 billion in 2019, the fall having been occasioned by the COVID19 pandemic. According to the Minister of Finance and Economic Planning, the economy is thankfully on the upward mend and it is estimated to grow by 5.1% in 2021 as well as by 7% in 2022. Post-2020, the main driver of the economic recovery is encapsulated in Vision2050 in which Rwanda aspires to reach Middle Income Country (MIC) Status by 2035 and High Income Country (HIC) Status by 2050. The vision is to be implemented through a series of seven (7) year National Strategies for Transformation (NST) underpinned by detailed sector strategies that aim to achieve the UN’s Sustainable Development Goals (SDGs). Vision2050 articulates the long-term strategic direction for “the Rwanda we want”, intending to achieve sustainable economic prosperity and development.
Targets and Goals
For Vision2050 to be fully realized, an average GDP per capita growth of about 9% in her current National Strategy for Transformation (NST1) 2017-2024 is targeted; 12% from 2025-2035; and 9% from 2036 – 2050. According to NSTI, realizing this target requires strengthening collaboration and partnership among all stakeholders and enhancing ownership at all levels.
Relatedly, there shall be considerable boosting of private and public investment financed by domestic savings and capital inflows, improvements in education, significant increases in land efficiency and innovative capacity, and sustained efforts to boost production of tradable goods and services. It all begins with having a good plan, knowing the strengths and weaknesses, and resolutely working to achieve the same. That is what those involved in the implementation process of this Vision are now preoccupied with.
To mitigate the economic impact of COVID19, two major interventions have lately been initiated which are: An Economic Recovery Fund (ERF) worth 350 USD Million (targeting Tourism & hospitality, manufacturing, education, transport & logistics as well as SMEs linked to domestic and global supply chains); and Manufacture and Build to Recover Program (MBRP) which consist of incentives mainly tax exemption on imported construction materials and reduced Pay-as-You-Earn (PAYE). Industries that meet the minimum investment threshold and get established in Rwanda within three years are to benefit from this intervention.
Undeniably there is the very commendable distance covered despite earlier monumental challenges, thanks to an ever-focused leadership and the just ended Vision2020. This success offers an excellent source of faith for realizing Vision2050, very ambitious as it may seem. The progress registered so far is not only recognized by Rwandans but also by many well-reputed International Organizations.
A few of Rwanda’s many ratings by these Organizations include: the World Economic Forum (WEF) Global Competitiveness Report of 2015 which ranked Government of Rwanda Africa’s most efficient (and 7th globally) followed by Mauritius and South Africa; the Global Law and Order Report ranked it 2nd safest place in Africa and 11th globally, Gallup’s Law and Order Index, 2018; the International Congress and Conventions Association (ICCA) in 2018 rated Kigali 3rd most popular destination for Conferences and Events on the Continent after Cape Town, South Africa and Casablanca, Morocco; the WEF Report (2020) ranked it 7th globally in bridging the Gender Gap; it was ranked 2nd in Africa and 39th globally, easiest place to do business (Doing Business Report, Word Bank, 2020); rated 3rd in Africa and 49th globally least corrupt country (Corruption Perception Index, Transparency International, 2020); the World Justice Project (WJP) rated it 2nd in Africa after Namibia and 37th globally in the Rule of Law Index, 2020; and in relation to the COVID19 Pandemic, it was in August 2020 given a World Travel and Tourism (WTTC) ‘Safe Travels Stamp’, certifying it as a safe destination for travellers owing to her observance of global standardized health and hygiene protocols.
Concluding on Impressive Growth
In conclusion, both foreign and private investments continue to grow and contribute to the realization of the economic transformation of Rwanda. The impressive growth trajectory mirrors the high confidence of foreign investors in the Rwandan economy.
The country’s appeal for foreign and local investment attraction is in response to the existing wide range of business/investment opportunities and a wide range of requisite infrastructure, assured security, financial stability, and a very friendly red-tape-free business environment. In terms of market size as a member of the EAC, Rwanda forms part of a market that boasts a population of over 150 million people, about 600 million as a member of the COMESA family, and lately, approximately 1.4 billion people within the African Continental Free Trade Area (AfCFTA). I thus call on business people in Sudan and beyond to have Rwanda on their preferred investment menu – a red carpet treatment awaits you all and rest assured of good value for your time and money.