Saturday, April 29, 2017

What's wrong with Rwanda?


In his book “The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It” Paul Collier, Professor of Economics at Oxford University, is exploring the reasons why impoverished countries fail to progress despite international aid and support. These countries typically suffer from one or more development traps. One of those traps identified by Collier is being landlocked with bad neighbors. Poor landlocked countries with bad neighbors find it almost impossible to tap into world economic growth. Collier explains that countries with coastline trade with the world, while landlocked countries only trade with their neighbors. Landlocked countries with poor infrastructure connections to their neighbors therefore necessarily have a limited market for their goods. This problem is stressed even more when those neighbors are bad. Rwanda is a landlocked country surrounded by Eastern RDC, a region that has been at war for decades, by Burundi where there is unrest and violence since the last presidential election, and while Tanzania, and Uganda may not be as bad, they surely are not the best of neighbors. As this was not enough, the country sustained one of the worst genocide in 1994. So based on Collier’s book Rwanda is doomed and should fail to progress. Yet Rwanda is in the 13 fastest-growing economies in the world [1]. What’s wrong with Rwanda?

Conventional wisdom on poverty has been that poor remain poor because of low incomes and their certain lifestyle and behavioral traits like lack of cleanliness. Poverty is usually associated with dirt and deprivation. It is often assumed that if one is poor, they are more unlikely to portray a clean, fresh appearance. Rwanda by the IMF evaluation takes the 138th position in the GDP per capita, ranking in the bottom 20% of the world as a low income economy by World Bank ranking. Yet a report from the Chinese CCTV [2] claimed that Kigali is the cleanest and safest city and according the United Nations, Kigali, the capital of Rwanda is the most beautiful city of Africa [3]. What’s wrong with Rwanda?

Even in times of peace, the poor are worst affected by violent crime, lawlessness and state-sanctioned abuse. And in times of war, millions of poor people have been killed, injured or displaced across the developing world. Yet the Gallup Global Report- 2015 placed Rwanda the safest place to walk at night in Africa and fifth safest country in the world. What’s wrong with Rwanda?

Governments in developing countries play an important role in the growth process. This potentially beneficial role is, however, hindered by government expenditure inefficiency. In addition corrupt behavior has significant adverse consequences for efficiency and equity outcomes. Rwanda was ranked in the Global Competitiveness Report of 2015 [4] as the Africa’s most efficient government followed by Mauritius and South Africa. The same report ranked the country’s government as the 2nd most efficient globally and Rwanda is ranked in 13th position globally and in first position in Africa for ethics and corruption. Rwanda ranks first in Africa for wastefulness of government spending and 4th in the world. What’s wrong with Rwanda?

Infrastructure is a critical driver of economic growth. Researchers estimate that a significant part of economic growth has been lost in Africa because of lack of access to quality infrastructure. In developing countries, infrastructure deficits are still enormous in both quantity and quality terms. In the latest Global Competitiveness Index 2016–2017 [5] from the World Economic Forum, Rwanda’s quality of overall infrastructure ranks first in Africa and 41st in the world, while the quality of roads ranks 3rd in Africa and 31st in the world. What’s wrong with Rwanda?

The competitiveness of firms in a global economic environment is an essential element in the development strategy of a country. This is particularly relevant for developing countries where the problem of concentrated power structures and uncompetitive domestic markets is often considerably more acute than in developed countries. Rwanda is ranked third in Africa and 52nd in the world [5]. What’s wrong with Rwanda?

So is there anything wrong in Rwanda? Yes there is, but what is wrong is what people would think is normal for a poor African country. For example Rwanda ranks above 80th position in the world for travel & tourism competitiveness index,  for global food security index, and above 100th position for higher education and training, health and democracy index*.

But by far in most independent world rankings, Rwanda’s position is way above what you would expect for such a small and poor African country. The question then is: how do they do it?

While there are many ways you can explain and answer that question I think that there is only one answer, and that is the quality of the leadership of the country.

While I visited over 20 countries in Africa, I can only claim experience from living in Congo-Zaire for 11 years and in Rwanda for 6 years. I grew up in Congo when it was a Belgian colony but then I returned there under the Mobutu regime for 3 years. And now I live in Rwanda for the last 6 years under Kagame’s presidency.

One day in Zaire, I got stopped by a police agent who wanted to give me a ticket for some reason and we were going to negotiate the amount. Basically we were going to decide how much he would put in his pocket. While I don’t favor this type of transaction, I said that I agreed but at one condition, that he would answer one question. I asked him: “Why are you doing this?”, basically why are you stealing money from citizens? His answer was: “le chef le fait bien, pourquoi pas moi?” « The boss does it, why not me? ». Mobutu was recently ranked as the second worst dictator in Africa (after Idi Amin Dada). By the time he was overthrown in 1997, Mobutu had stolen almost half of the $12bn in aid money that Zaire - now the Democratic Republic of Congo - received from the IMF during his 32-year reign, leaving his country saddled with a crippling debt.

A couple a years ago, at Kigali’s International Airport, a police agent found a paper bag with $42,000 in cash at a security post. He returned the bag with the cash to his superior! Tell me any country including mine where this would happen! He got a $500 bonus and was promoted. I think that the owner of the bag also provided him with some reward. I claim that that attitude percolates from the top. When the top of the hierarchy doesn’t steal money, the money is used for what it is meant for and everyone in the chain till the lowest level of responsibility gets his part of it. I can’t remember how many times Zairian professors at the national university where I was teaching didn’t get paid.

More importantly, I think that Mr Kagame is not managing his country like a typical politician but rather like a professional business manager. Like a CEO, he has a Presidential Advisory Council (PAC), a group of eminent Rwandan and International experts who offer strategic advice and guidance. The cabinet meets annually during a three day retreat to define the country’ strategy for development. That strategy is widely published and made available.  It started in 2000 with the publication of the first Vision 2020 [6]. It has been instrumental in the success of Rwanda development. It took the neighboring countries more than a decade to understand the impact and they are now copying Rwanda with their own Vision documents. But as one my senior executives at IBM once told me: “A vision without execution is hallucination”, and Rwanda excels in its vision execution. 

All the leaders from cabinet members to province governors, district authority and city mayors have to report annually on their execution results. Each year performance contracts are signed between the president of Rwanda and local government institutions and line ministries. These bind respective institutions to targets they set for themselves. Performance contracts are measured against an agreed set of governance, economic and social indicators known as performance indicators. These performance contracts are called “imihigo”[7]. District Mayors are held to account on their imihigo performance twice a year in public sessions (and broadcasted on national TV) in Kigali, which are chaired by the President himself. There is a Q&A session, with phone-ins from the public on the how and why of Districts’ performances. When performances are repeatedly below-par mayors can get fired.

I recently invited a government official as a guest speaker at my course “Strategic Use of Digital Information in Enterprises”. I wanted her to present how the Rwandan government is using data to manage the country. She showed us the real-time dashboard used by the cabinet to monitor over 300 KPIs linked to strategic projects and to each ministry. In 25 years of my career in the IT industry where I visited countless large enterprises, I have never seen one like that. Most of the data were real time. For example, anonymized electronic medical records allow monitoring malaria in real time. While some data was still entered manually, the government was working hard to convert all the data to real-time digital capture at the source to prevent data manipulation.

So everything is good in the best of the world in Rwanda? Certainly not. Rwanda is facing many challenges and mistakes are made on a regular basis. For example, while I think that the switch from French to English made sense in the Rwandan context, the way that decision was executed had a negative impact on education in the short term. One day, my manager asked me: “How many mistakes did you do this month?” As I proudly answered that I did no mistake he said: “That is probably because you didn’t try hard enough!” 

Rwanda’s leadership is trying very hard every day and that is why they are where they are today 23 years after the genocide and I don’t know of any similar success story anywhere in the world in recent history.

Seeya later alligator….


*While I don’t contest the result, one may wonder about the criteria used for the democracy index ranking. One of the reasons cited for the low ranking of Rwanda is the recent change in the constitution reducing presidential term limits from seven to five years renewable only once. But the change will be preceded by one transitional presidential term of seven years for which any presidential candidate will be eligible which in effect allows President Kagame to run for a third term. As expected the negative reaction of the Western media was immediate. Strangely, as authorized by the German constitution, Angela Merckel’s running for a 4th Chancellor mandate does not seem to be a problem for the same media despite the disastrous impact of her austerity policy on Europe’s economy for the last decade [8]. Sometimes I wish that the Western world would listen more to what African themselves think about their continent. An interesting paper “Why Kagame’s bid to serve a third term makes sense for Rwanda” was recently published by the Joburg Post [9].

[1] Elena Holodny, The 13 fastest-growing economies in the world, Business Insider, Jun. 12, 2015, http://www.businessinsider.com/world-bank-fast-growing-global-economies-2015-6?IR=T
[2] Capital Kigali cleanest and safest city in Rwanda, CCTV.com, Jan. 12,2012, http://english.cntv.cn/program/africalive/20120112/108232.shtml
[3] A. Onuh, This is why Kigali is UN’s most beautiful African city, AnswersAfrica.com, http://answersafrica.com/this-is-why-kigali-is-uns-most-beautiful-african-city.html
[4] The Global Competitiveness Report 2015-2016, World Economic Forum, 2016, http://reports.weforum.org/global-competitiveness-report-2015-2016/
[5] The Global Competitiveness Report 2016-2017, World Economic Forum, 2017, https://www.weforum.org/reports/the-global-competitiveness-report-2016-2017-1
[6] MINISTRY OF FINANCE AND ECONOMIC PLANNING, REPUBLIC OF RWANDA, http://www.minecofin.gov.rw/index.php?id=148
[7] B. Versailles, Rwanda: performance contracts (imihigo), April 2012, http://www.rwandapedia.rw/explore/imihigo
[8]N. Gutteridge, We’ve had ENOUGH Merkel’ Rest of Europe gangs up on Germany over crippling EU austerity, The Daily Express, Aug 6, 2016, http://www.express.co.uk/news/world/697340/European-Union-Mediterranean-anti-austerity-alliance-Germany-Angela-Merkel-Brexit

[9] Why Kagame’s bid to serve a third term makes sense for Rwanda, Joburg Post, 21 APRIL 2017 https://www.joburgpost.co.za/2017/04/21/why-kagames-bid-to-serve-a-third-term-makes-sense-for-rwanda/

9 comments:

Anonymous said...

I think westerners should first come and witness before concluding on Africa.

Sildio Mbonyi said...

Thank you Prof. Bézy for this interesting analysis.
I think that defining & discovering our own problems is the key strategy driving us along the journey of defining and finding our own solutions.
There are two things involved in Africa: (1)Knowing that you're are poor and find strategies to get out of poverty (which I believe is case of Rwanda), and there is also (2)Hardly knowing that you're poor and all you need is accepting it as it is, then keep relying on international support&help.

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