Countries today face numerous challenges. Economic globalisation, migration, demographic changes, health, environmental issues, and climate change are placing all countries, no matter their size or wealth, under constant pressure.  The global COVID-19 pandemic is also a case in point. The recent health crisis has not only uncovered the high level of interconnectedness between economies and the volatility of the global economy, but it has underscored the need for effective political capacity to steer policy and support global efforts towards vaccination.  It has shown that all countries are vulnerable to global economic shocks in a globalised world. We also know that some countries, particularly small states are inherently vulnerable to external shocks.  What matters in today’s world is the strategy and capacity to respond to these adverse shocks.  This ability to respond is described as resilience. 

 Resilience refers to a country’s ability to recover quickly from a negative external shock.    Unlike vulnerability, an inherent characteristic for small states particularly island states, resilience is nurtured.  Resilience takes on greater significance in countries that are inherently more exposed to external shocks such as small island states.  In this context, it is indeed a precondition for economic growth and development.  By building resilience, people, communities, and governments, will be equipped with the capacity to cope, act and rise to the challenges of the 21st century.

 However, the starting point for any discussion on resilience needs to start from vulnerability. This concept has intrigued academics as well as international organisations for the past few decades. The Commonwealth Secretariat is one such organisation that has been actively pushing for the global discussion on vulnerability and resilience and it operationalised the concepts through indices which highlighted the divergence between countries, especially between small island states. Towards the end of June 2021, The Commonwealth Secretariat published a seminal publication on the development of a new universal vulnerability index which should also be used to support countries when negotiating external aid and assistance.

 The vulnerability of an economy as defined here results from the risk of exogenous shocks of various origins, such as economic, climatic, or societal shocks. This may be due to the instability of the international price of primary products for countries still dependent on commodity exports, or to episodes of severe weather, which drastically reduce agricultural production, or to lasting violence, for instance when a country becomes the hub of an international drug trade or is facing a high level of criminality. Moreover, as recent history has shown to epidemics, resulting in a loss of human lives and economic activity.

 Many structural factors lead to the high sensitivity and exposure of small states to exogenous

shocks, whether it is their small size itself, their geographic location, or simply their low level of development resulting in a lack of infrastructure and low diversification of economic activities. It is the responsibility of national policies to mitigate the consequences of exogenous shocks.

 However, while resilience depends largely on the will of governments, there are also structural factors, which condition resilience. A low level of development of any developing country is usually accompanied by a low level of education and health, an age structure of the population involving a high proportion of young people, and sometimes the presence of refugees from other vulnerable countries. These characteristics of developing economies weigh on their public finances and make counter-cyclical fiscal policies difficult to implement. In addition, low human capital reduces the capacity of the public and private sectors, which are critical to resilience.

 In the Commonwealth’s universal and multidimensional framework of vulnerability, economic vulnerability to external and natural shocks is considered alongside vulnerability to climate change, and socio-political or societal fragility. Additionally, it integrates built-up andcontemporary policy sources of resilience.

 Specifically, indicators used to compile the universal vulnerability framework separate out endogenous and exogenous or structural elements, the latter of which do not result from current policies, but which may result from previous policy choices that the present authorities have inherited, such as the structure of trade.

 The structural vulnerability of a country therefore depends both on the historical probability and size of shocks, as reflected by the instability of exports, for example, as well as on the structural exposure of the country to these shocks, illustrated for instance by the degree of trade dependency, often linked to small country size. In contrast, the resilience of a country, defined as its capacity to cope with (or to react to) exogenous shocks is the opposite of vulnerability, and to large extent depends on the current will of countries, but also on structural factors, which make resilience policies effective.

 A cursory look at the results as presented by The Commonwealth Secretariat shows that Rwanda comes out as one of the top performers in actions taken to reduce vulnerability and resilience. Although vulnerability is seen as more of a structural issue and taken as a given, Rwanda’s situation improved significantly between 2010 and 2018 and in fact had the largest decline in vulnerability. Even on the resilience front, Rwanda’s positioning improved significantly with the index for resilience increasing significantly too. This stands to show that the policies being enacted by Rwanda are in fact contributing to not only current economic results and performance but more importantly and shoring up the country’s coping mechanism as well as reducing its exposure to shocks in the first place.

 Building resilience is a transformative process that builds on the capacity of individuals, their communities, and institutions to lessen the impacts of shocks, internal or external, natural or man-made, economic, health-related, political or social. The results have shown that Rwanda is on this transformative process.

JP Fabri is a co-founding partner of Seed, a research-driven advisory firm based out of Malta, Europe.