Creating prosperity and peace through competitiveness

The central goal for any nation should be to attain a high quality of life for all of its citizens. Rwanda is no exception. The good news is that Rwanda has made tremendous progress against this goal after one of the more difficult times that any nation has ever faced. Now, Rwanda is a country known for security, stability, zero tolerance for corruption, and strong GDP growth rates, with 2007 GDP growth surpassing six per cent. The Government of National Unity has also received numerous awards for achievements in good governance, peace, gender, ICT and a strong record of human rights. Despite our progress, we must always remember the Genocide that took place 14 years ago and the million lives that were lost during the troubled times of 1994. We must all reflect on Rwanda’s history of bad politics and tensions of that time, and continue to eradicate this genocide ideology as Rwanda strives to achieve Vision 2020. The problems faced by Rwanda are unfortunately not unique. More than four million people have died in conflicts since the fall of the Berlin Wall in 1989. According to historian Emil Payin, these ethno-ideological conflicts have one thing in common: veneration, often bordering on irrational, of what the parties describe as their sacred “historical rights.” These political, regional and ethnic rights are seen as not being met and focus on social and economic inequality. This economic inequity is not just a relative or even comprehensive poverty, but the basic inability to improve one’s condition – especially when this reality or perception is built on a mindset that is closed to innovation and risk taking. So, what does it take to improve one’s condition? Natural resources, money and infrastructure are necessary, but provide no guarantee of success. Michael Fairbanks of the OTF Group identified seven forms of capital, where three represent tangible, physical capital and include natural resources, manmade capital such as roads and electricity, and financial resources. Four constitute higher, social forms of capital, and while more difficult to measure, have the greatest effect in creating prosperity. These include institutions, knowledge resources, human capital including skills; and cultural capital. Cultural capital is more than language or ritual, and focuses on attitudes linked to innovation, productivity and prosperity. Investing in a nation’s higher forms of capital is the first key in becoming a competitive and prosperous country, and provides knowledge to create firms, high salaries, and ultimately, a better quality of life. In such an environment, the firm is the growth engine and needs to focus less on acquiring government favours or simply accessing natural resources. The private sector must play its role of building competitive products, while government and civic sectors provide the enabling environment for firms to innovate. Since 1994, the leadership of Rwanda has invested in “higher” forms of capital. First, Rwanda focused on the changes to revitalise the economy and provide a secure environment for investors to improve the livelihood and dignity of every Rwandan. The exchange rate was deregulated in 1995, it joined the WTO in 1996, and a new tax law was implemented in 1997. Corruption is not tolerated. Vision 2020 is a second key for Rwanda’s future: it targets Rwanda as a knowledge-based economy, with a focus on science and technology education and ICT skills. It specifically states “Rwanda is committed to reaching ‘Universal Education for All’.” Almost 20 per cent of the annual budget is allocated to education. In 2007, almost 40,000 young adults graduated from tertiary school, which is more than double the 2003 number. Although education in itself can be a source of tolerance, having better-trained workers will improve exports and increase wealth for the average citizen. The third key is the institutional and private sector focuses on exports, and Rwanda exports have more than tripled over the past five years. Yet our exports are still somewhat dependent on commodity prices. While it is important to ask what value-added activity can be done to increase jobs and wages, several export industries are already making progress with innovative strategies. In tea, research shows single origin tea provides revenue potential ten times that of current prices and tea producers will soon host tea experts and identify specific buyers. Coffee producers have increased revenues by targeting the high value specialty Arabica market. In tourism, Rwanda has multiplied its receipts five-fold since 2002, and received an award in each of the past two years for best exhibit at ITB in Berlin. All these activities show investors, such as those from Dubai World, that Rwanda is a good investment destination. Finally, Rwanda leadership, led by H.E. Paul Kagame, has embarked on a struggle to deal with mind-sets, to ensure that all levels of government, and society at large, create a culture of both doing the right thing and solving problems. Education and campaign programmes in all sectors will be devised, through the “leadership by example” principle, with an “Imihigo” and “Intore” agenda. Competitiveness was a value embedded in the Rwandan culture, but it was lost in the course of events during the colonial and post colonial eras that introduced charity mechanisms to the poor. In essence, people were given fish, instead of being trained how to fish. These practices, combined with nationalisation of productive assets, created an adverse mindset of dependency on the state, donors, NGOs and the church. Rwanda was affected by this mindset of dependency, instead of innovation, entrepreneurship and wealth creation. As a consequence, the education system in Rwanda was a producer of bureaucrats, not entrepreneurs and became a politicised society that could not see opportunities outside of state institutions. We need to shift away from this dependency mindset. This shift from the old way of thinking is very challenging, but it is also promising. This is especially true since the change we want has roots with the positive features of our culture. Therefore, this exercise requires serious and sustained support to ensure rapid change, and prosperity for every citizen. As Rwanda is on its way to becoming a competitive economy, it is paramount that all Rwandans keep the commitment to foster a new and innovative mindset. Ultimately, this investment in social capital is the only way to address the problems affecting our society and provide hope for the future. Vincent Karega is Minister of State for Industry and Investment Promotion. Ends