Rwanda’s stunning turnaround

AT A RECENT gathering of business and political leaders in Kigali, President Paul Kagame, the charismatic Rwandan leader, stated, “We have understood for a long time that you can’t cure poverty without democracy. The only cure is through business, entrepreneurship, and innovation.” His pro-business and free-market comments are the moral of the story of the “other Rwanda,” the one that has moved beyond what it is perhaps best known for — the 1994 Genocide in which one million people were killed in 100 days. And, it contrasts with the current crossfire of accusations (vehemently denied by the Rwandan government) of alleged support to a rebel group in its chronically violent next-door neighbour, the Democratic Republic of the Congo. Within Rwanda, another narrative continues to unfold, with a positive impact that could extend well beyond its borders: the slow, steady, and consistent promotion of entrepreneurship and private sector development, two powerful ingredients in the progress toward full democracy in this landlocked country of 11 million people.According to the World Bank’s Doing Business 2013 report, Rwanda ranks 52 out of 185 on “ease of doing business” and 8 on “ease in starting a business.” It is the second most improved nation globally and the top improved in sub-Saharan Africa since 2005. Through safety and security, zero-tolerance for corruption, and a stated goal to eliminate foreign aid (currently about 40 per cent of its budget), Rwanda has put itself on a trajectory toward greater self-sufficiency; the evidence is in the numbers — projected 7.8% GDP growth in 2013, making it the ninth fastest growing economy in the world.On a return trip to Rwanda last week, we saw ample evidence in Kigali: a new and fully-leased 20-story skyscraper, tower cranes that punctuate the skyline, and shiny metal roofs in rural areas that attest to growing household income. (Rwanda raised one million people out of poverty between 2006 and 2011.) Agricultural cooperatives improve efficiency and productivity. Coffee washing stations produce value-added “fully washed” coffee beans stripped of their outer hull and mucilage for export to the US, Europe, and Asia.Foreign direct investors include Visa Inc., with its year-old cashless banking and payment processing ventures, and ContourGlobal, a New York-based company installing technology to extract methane gas from the waters of Lake Kivu to generate electricity. Chinese construction, South African telephony, and soon an Israeli solar-power venture are but some of the multinational involvements. Carnegie Mellon’s new Rwandan campus offers a master of science degree in information technology, reflecting Rwanda’s vision of evolving into an IT-based economy.Yet most impressive are the more modest homegrown ventures: new boutique hotels, restaurants, small IT shops, printers, event planning, and tourism offerings. (In 2010 alone, 18,447 new businesses were registered in Rwanda.) A young woman dressed in smart attire urged two visitors to come to her new shop, which sells upscale fabrics and offers custom tailoring. The nascent Rwanda Stock Exchange lists four stocks — two Rwandan and two cross-listings — along with a few bonds, and plans to expand from truncated open-outcry sessions (which with a handful of brokers and light volume are more murmur than roar) to an electronic platform.While hardly the next Facebook or Google, this is the kind of entrepreneurship that’s needed in Rwanda, where the average age is just under 20. Twelve years of compulsory education, increased enrollment in institutions of higher learning, and more vocational training will produce a generation of workers who cannot possibly be employed by the government. On a continent in which power tends to coagulate at the top and rarely spreads to regional and local levels, Rwanda preaches a gospel of free enterprise and private sector job creation.Rwanda is not without its challenges and criticisms; among them are human capital development, particularly at the mid-tier level, and bureaucracy and chronic delays that are the unintended consequences of the drive to prevent corruption. (Paralysis can set in when something should, legitimately, be expedited, out of fear of even the appearance of impropriety.) Politically, Rwanda needs further gains in free speech (critics charge it silences political opposition) and more freedom for local press that must professionalise.But Rwanda has come very far, very fast, from the lowest level of human-induced catastrophe that left it morally, socially, politically, and financially bankrupt. Out of those ashes of the 1994 Genocide, when the West did nothing to intervene, Rwanda learned not to depend long-term on the outside world for help (a lesson that should be heeded in Haiti, where despite billions in aid, virtually no material gains have been made).As Rwanda receives help from the likes of the Clinton Foundation, Partners In Health, Tony Blair’s Africa Governance Initiative, and many others, its appetite is for knowledge and development of institutions, not hand-outs that come with someone else’s agenda attached.If Rwanda does, indeed, develop entrepre¬neurship and free enterprise as tools to build a future of its own design, its success will provide a stunning example of “the ultimate turnaround” on a continent in which there have been far too many examples of broken promises and unrealised potential. Patricia Crisafulli and Andrea Redmond are authors of Rwanda, Inc.: How a Devastated Nation Became an Economic Model for the Developing World. Adapted from www.forbes.com