Forget about Africa’s ‘lost decades’,we’re marching on, Kagame tells Asians

President Paul Kagame on Thursday concluded a three-day visit to Singapore as part of his current visit to Asia. Below is the speech he delivered at the Lee Kuan Yew School of Public Policy, Singapore on Thursday. I am delighted to be here with you this evening, and thank the Lee Kwan Yew School of Public Policy, for the invitation to share some thoughts on how Africa and Rwanda are making the transition from crisis to development. I also look forward to discussing some of the questions you may have on the topic later on. I want to argue that the perception of Africa as a continent in perpetual crisis, and an investment unfriendly place – famously declared by the Economist magazine in March 2000 as the the hopeless continent – is no longer in keeping with reality. The same is true for my country Rwanda , which in the last fourteen years has moved beyond a difficult past, and is pursuing our vision of a reconciled, united and prosperous nation. Despite occasional tensions and isolated conflict hotspots in parts of our continent, there can be no doubt that Africa and Rwanda have undergone profound changes in the past decade, with greatly improved prospects for economic growth and development. Before going into greater detail on contemporary Africa , it is useful to provide a historical context that explains why our continent fell behind. I will begin with the well known fact that most of Africa was notoriously ill-equipped at independence to conceive and implement an effective development agenda, a shortcoming that saw the continent drift from crisis to crisis. With a few exceptions, both state and non-state actors, especially the private sector, were grossly underdeveloped at the end of the colonial era. The problem stemmed from a combination of factors. These included weak or non-existent institutions, and limited technical capacity and competence – a consequence of the absence of a critical mass of professionals. The subsequent years, up to the early 1990’s - generally referred to as the lost decades were characterised by stagnation or decline of almost all social and economic indicators. Even in the relatively successful cases, the developmental strategies pursued in Africa were problematic, as was the case in other countries of Latin America and Asia . By this, I mean the import substitution models pursued, that sought to promote enterprises by using high tariff barriers, as protection from international competition. This strategy promptly fell apart when international development agencies imposed structural adjustments, which stipulated removal of subsidies to industry. In our case in Rwanda , not only was the country adrift, it was led by people who championed a backward ideology based on elimination of a section of the citizenry, further complicating the socio-economic and political crises – and culminating in the genocide in 1994. What happened to change this old Africa ? A number of factors during the 1980s and 1990s account for this. First of all, Africans themselves begun to challenge the old order – most military and civilian dictatorships were swept aside. Elsewhere in the world, spectacular changes were taking place that had significant impact on the African continent – including the collapse of the communist system, which had sustained many African despotic regimes supported by both sides of the cold war. The strongest economy on the continent, South Africa , reached a negotiated settlement to end the apartheid system that had disfranchised the largest segment of the country’s society, and marginalised a potential source of productive capacity and domestic market. Finally, the technology and information revolution gained momentum in Africa , increasing the pace of globalization in the form of larger flows of foreign investment, finance, and innovation. The circumstances that I have just pointed out have combined to change Africa fundamentally, resulting in improved investment climate, as illustrated by an economic growth rate averaging six percent in the last several years. Part of the success story may be attributed to the fact that commodities, which form the bulk of the continent’s exports, are fetching high prices in international markets. Beyond raw material exports, however, Foreign Direct Investment to Africa has also increased steadily – for example, it doubled between 2004 and 2006 to reach thirty nine billion US dollars. Clearly, this share remains small – only representing a fraction of the global foreign direct investment, worth 1.3 trillion US dollars. Africa has to work harder to increase its share. In Rwanda , the opportunities and potential we offer have begun to attract significant investment in a range of sectors including finance, energy, tourism, construction and mining. These investments originate from the United Kingdom, South Africa, Germany, United Arab Emirates, the United States, among others. In addition, sovereign wealth funds, private equity firms, venture capitalists as well as public funds channelled to the private sector, are also making their mark in Rwanda . There are other positive indicators in Africa, especially some home grown developments. For example, financial markets on the continent are expanding – as are African-based companies using these capital markets. Consider the fact that the individual worth of the top two hundred companies in Africa range between seventy two billion US dollars and three hundred and seventy five million US dollars. Equally important is the fact that these enterprises are no longer just state monopolies, or limited to industries that extract raw materials, as had been in the past. These companies are led by entrepreneurs, and are to be found in telecommunications, financial services, construction, transportation, consumer goods and manufacturing, as well as emerging industries such as pharmaceuticals, media, entertainment and leisure. In the case of the information and technology sector for example, African entrepreneurs have done extremely well – driving the spread of mobile phone technologies that have transformed the way of life and doing business for small African traders, formal enterprises and governments alike. The fact that Africa is the fastest growing market for mobile phone technologies, as well as a place for the highest returns on investment, generally owes a great deal to these new economic realities. The increased interest in Africa by Asian countries, especially China and India , is also changing the equation for the better, by challenging the traditional European and North American trade and investment dominance. In the case of China , growth in trade is being fostered by, among other things, the doubling of the number of tariff-free African products, following the 2006 China-Africa Agreements. China is now Africa ’s third largest trading partner with trade volumes recently increasing by thirty percent to reach fifty billion US dollars in 2006 and expected to double by 2010. Beyond trade, Chinese investment in Africa has risen rapidly from a few million US dollars at the beginning of the millennium, to twelve billion US dollars by 2007. The challenge in this context is that African entrepreneurs must take advantage of these new openings, in order to render China-Africa trading and investment relationships, a mutually beneficial two-way traffic. India, driven by its own speedy growth, is following suit, as shown by last month’s India-Africa Summit, which sought to energize economic partnership with the continent. The Summit led to intent and agreements to establish preferential entry for African products into the Indian market. Particular emphasis was placed on support for agricultural development in Africa – a critical sector in which the majority of the continent’s people earn a livelihood, but has yet to attain its enormous potential for generating wealth. In light of these recent Asia-Africa trade and investment initiatives, I am of the view that there has never been a better time to seize the momentum for promoting South-South collaboration that though often talked about, has never become reality. In the case of Rwanda , we look to countries like Singapore as inspirational development models due to the rapid pace at which you have successfully transformed your country. A nine-hour flight from Singapore gets you to Rwanda. We are therefore not far apart geographically – however, we need to shorten the great psychological distance between our two continents. In other words, we need to work harder to remove the negative perceptions that continue to conceal opportunities in Africa . We in Africa are also challenged to look east, for what Asia’s vibrant market economies have to offer Africa – whether in collaborative socioeconomic endeavours or inspirational insights and wisdom. Let me conclude by noting that Africa still faces considerable challenges, as some of our recent accomplishments remain fragile. Nonetheless, we in Rwanda in particular, continue to consolidate our reforms that aim at sustaining our hard-won socioeconomic and political gains. We are convinced that private investment is the real basis for economic growth, greater prosperity and improved lives. Success on this front certainly demands relentless and focussed efforts at dispelling the misconceptions that paint our country and continent as unfit for business. It is in this context that we are pleased to visit Singapore, and engage with leaders, as well as friends and colleagues in government and business, in order to develop and strengthen partnerships in areas of mutual importance. I thank you for your attention. Ends