The small African nation of Rwanda recently announced that it had cut poverty by 12% in six years, from 57% of its population to 45%. That equals roughly a million Rwandans emerging from poverty -- one of the most stunning drops in the world.
It's a remarkable achievement for Rwanda, which has emerged from civil war and a bloody ethnic genocide in the 1990s. How did it happen? The Times quizzed Paul Collier, director of the Center for the Study of African Economies at Oxford University, about the numbers.
Are there any doubts that the drop is real?
No doubts; I know the economics professor who did the data analysis, and he is highly experienced and painstaking, so it is genuine.
How did Rwanda cut its poverty so much?
There were one or two helpful events, notably the rise in world coffee prices, which pumped money into the rural economy, but, of course, overall the global economy since 2005 has not provided an easy environment for success. Hence, most of the achievement is likely due to domestic policies.
Rwanda is the nearest that Africa gets to an East Asian-style developmental state, where the government gets serious about trying to grow the economy and where the president runs a tight ship within government built on performance rather than patronage.
There were strong supporting policies for the rural poor -- the one cow program [that distributed cows to poor households free of charge], which spread assets, and the improvements in health programs.
Alongside this, the economy was well managed, with inflation kept low, and the business environment improved, both of which helped the main city, Kigali, to grow. Growth in Kigali then spread benefits to rural areas -- the most successful rural districts were those closest to Kigali.
When you say well managed, what do you mean? What choices did the government make that were signs of good management?
Basically, [President Paul] Kagame built a culture of performance at the top of the civil service. Ministers were well paid, but set targets. If they missed the targets there were consequences. Each year, the government holds a whole-of-government retreat where these performances are reviewed: good performance rewarded, and poor performers required to explain themselves.
An example is the strategy to improve Rwanda's rating on the World Bank's Doing Business annual rating, where over the course of six years the country moved from around 140th to 60th in the world rankings. Each component of the ratings was assigned each year to an appropriate minister. So over time, a cadre of government officials has been built up who believe in their ability not just to strategize but to get things done.
What changes can you see now in Rwanda?
Some changes are obvious to the eye -- houses that now have tin roofs instead of thatch. Thatch may look prettier, but the world over, a decent roof is one of the first changes people make when they start the ascent out of poverty. Some of the changes are psychological -- a sense that things really can improve, and a sense that individual families can do something about their circumstances.
What can other countries learn from Rwanda -- or is its story so unique that it can't be copied?
They can learn a lot. If Rwanda can do this well, with all its disadvantages -- landlocked, legacy of conflict, no natural resources -- other African countries should be able to do even better.
Do you think Rwanda can continue to reduce poverty at the same rate in the coming years?
The government has now set its sights on getting the country to middle-income levels. This will require a change in the growth strategy. So far, growth has come primarily from doing better the things that Rwanda is doing already. To reach middle income, new activities will need to be introduced and the economy diversified. Rwanda needs pioneer investors and aid to support them with public infrastructure; I hope that it gets them. If it does, then, yes, poverty can continue to fall fast.
It's a remarkable achievement for Rwanda, which has emerged from civil war and a bloody ethnic genocide in the 1990s. How did it happen? The Times quizzed Paul Collier, director of the Center for the Study of African Economies at Oxford University, about the numbers.
Are there any doubts that the drop is real?
No doubts; I know the economics professor who did the data analysis, and he is highly experienced and painstaking, so it is genuine.
How did Rwanda cut its poverty so much?
There were one or two helpful events, notably the rise in world coffee prices, which pumped money into the rural economy, but, of course, overall the global economy since 2005 has not provided an easy environment for success. Hence, most of the achievement is likely due to domestic policies.
Rwanda is the nearest that Africa gets to an East Asian-style developmental state, where the government gets serious about trying to grow the economy and where the president runs a tight ship within government built on performance rather than patronage.
There were strong supporting policies for the rural poor -- the one cow program [that distributed cows to poor households free of charge], which spread assets, and the improvements in health programs.
Alongside this, the economy was well managed, with inflation kept low, and the business environment improved, both of which helped the main city, Kigali, to grow. Growth in Kigali then spread benefits to rural areas -- the most successful rural districts were those closest to Kigali.
When you say well managed, what do you mean? What choices did the government make that were signs of good management?
Basically, [President Paul] Kagame built a culture of performance at the top of the civil service. Ministers were well paid, but set targets. If they missed the targets there were consequences. Each year, the government holds a whole-of-government retreat where these performances are reviewed: good performance rewarded, and poor performers required to explain themselves.
An example is the strategy to improve Rwanda's rating on the World Bank's Doing Business annual rating, where over the course of six years the country moved from around 140th to 60th in the world rankings. Each component of the ratings was assigned each year to an appropriate minister. So over time, a cadre of government officials has been built up who believe in their ability not just to strategize but to get things done.
What changes can you see now in Rwanda?
Some changes are obvious to the eye -- houses that now have tin roofs instead of thatch. Thatch may look prettier, but the world over, a decent roof is one of the first changes people make when they start the ascent out of poverty. Some of the changes are psychological -- a sense that things really can improve, and a sense that individual families can do something about their circumstances.
What can other countries learn from Rwanda -- or is its story so unique that it can't be copied?
They can learn a lot. If Rwanda can do this well, with all its disadvantages -- landlocked, legacy of conflict, no natural resources -- other African countries should be able to do even better.
Do you think Rwanda can continue to reduce poverty at the same rate in the coming years?
The government has now set its sights on getting the country to middle-income levels. This will require a change in the growth strategy. So far, growth has come primarily from doing better the things that Rwanda is doing already. To reach middle income, new activities will need to be introduced and the economy diversified. Rwanda needs pioneer investors and aid to support them with public infrastructure; I hope that it gets them. If it does, then, yes, poverty can continue to fall fast.
