Key Pillars of Rwanda’s Exponential Economic Growth
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By Reuben Omanyala
Nov. 12, 2019, 9:59 p.m.
Rwanda, East Africa’s smallest country, is ranked among the fastest-growing economies in the world, according to a report by the IMF. With a total population of slightly over 12 million, Rwanda has recorded tremendous economic growth in recent years and has outpaced Ethiopia as the continent’s fastest-growing economy.
A mix of good governance and smart business has enabled Rwanda to turn its fortunes around and rise above its dark history to become a regional economic powerhouse. Previously known for internal strife that led to one of the worst genocides in history, the country is now known for innovation, smart business, and a growing economy.
A highly effective governance system is one of the key contributors to the rapid economic growth that has been recorded by the country in recent years. Paul Kagame’s administration has its shortcomings, especially in terms of how it relates to the media and the opposition, but nonetheless has the interests of residents at heart. Kagame’s visionary leadership has transformed the economy from one with a GDP per Capita of $225 in 2000 to $774 as of 2017. It is estimated that economic development programs implemented by Kagame have lifted more than one million people out of poverty, which is roughly 10% of the country’s population.
It is interesting to note that these developments have not been undertaken with massive foreign debt and grants. Rwanda’s total foreign debt is the lowest in the East African region at $3 billion, which is way lower than Kenya’s $31 billion and Tanzania’s $15 billion. Kagame’s administration has instead relied on development programs that focus on the empowerment of the local population. Key industries that contribute the most to the economy have been transformed by government programs that aim to boost their overall productivity and contribution to the economy.
Accountability and integrity in the management of the country’s resources has played a key role in facilitating development. Rwanda currently has the lowest corruption levels in East Africa, according to international corruption watchdog Transparency International. This has played a critical role in attracting foreign direct investment that has aided in the transformation of the economy.
Projected Lower Poverty Rates than the UK by 2020
The strong focus on the growth of the private sector is also a key factor that has contributed to economic growth in the country. Huge investments made in the education sector have paid off in the long run, as a majority of people in the country are either able to find employment or start and operate their own businesses. As a result, the total poverty rates have drastically reduced from 60% in 2000 to 27% in 2018 and are expected to reduce to just 20% of the population by 2020, which would be lower than that of the UK.
An economic processing zone has been established in Kigali that is meant to boost the capacity of local manufacturers and make it easy for them to access the export market. The EPZ is meant to promote the development of key industries that are aligned with the development goals of the economy. This is partly the reason for the growth of the manufacturing sector in recent years. The growth rate of the manufacturing sector has improved from 6% when the zones came into effect to 8.5% in 2019.
The focus on business and industry has also been highly beneficial to the local economy. Political stability, low levels of corruption and an effective justice system have not gone unnoticed by foreign investors. In 2017 alone, Rwanda attracted a total of $1 billion in foreign direct investment. Multinationals that have since established operations in the country include Positivo BGH that manufactures laptops, MaraX that manufactures smartphones and Visa, the global payment solutions provider. As foreign direct investment increases, unemployment reduces and the skill level in the country improves, which means developments made are likely to be sustained in the future.
Improved Standards of Living
Developments made in recent years have aided in transforming the standards of living in the country. Overall health levels in the country have improved tremendously in recent years. The infant mortality rate has for example dropped from 107 in 2000 to 32 in 2015. Education and literacy levels have also recorded significant improvements in the recent past. The literacy level in the country is now 71% and enrollment in tertiary institutions has increased by 7 times in the last decade. Employment opportunities available to both graduates and non-graduates have increased by more than 1,000,000 between 2011 and 2015. Social amenities available to the local population have also recorded major improvements in recent years. Over 80% of the residents have stable access to clean water and 70% of the road network in the country is considered to be stable.
The Kagame administration has however been accused of muzzling the opposition and violating basic human rights of its people that are critical of the government. Reporters without Boarder, a pro-journalism activist group, has accused the Kagame administration of being hostile towards the press and using security forces to monitor their activities and at times arrest and detain them. Government insiders have also been accused of the assassinations of prominent opposition figures who were believed to have sensitive information about the activities of the government.
Despite these issues, the mark that the Kagame administration has had on Rwanda cannot go unnoticed. Of all East African countries, only Rwanda is on course to achieve its millennium development goals. Key goals including the reduction of the infant mortality rate, improvement of the disease management capacity of the nation and ease of access to primary education have already been achieved. Projections indicate extreme poverty will be completely eradicated in the country by 2020. Although both Kenya and Uganda have recorded impressive within the same period, they have been held back by rampant corruption bad governance that still hinders their ability to achieve key goals.
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Loading Image
By Reuben Omanyala
Nov. 12, 2019, 9:59 p.m.
Rwanda, East Africa’s smallest country, is ranked among the fastest-growing economies in the world, according to a report by the IMF. With a total population of slightly over 12 million, Rwanda has recorded tremendous economic growth in recent years and has outpaced Ethiopia as the continent’s fastest-growing economy.
A mix of good governance and smart business has enabled Rwanda to turn its fortunes around and rise above its dark history to become a regional economic powerhouse. Previously known for internal strife that led to one of the worst genocides in history, the country is now known for innovation, smart business, and a growing economy.
A highly effective governance system is one of the key contributors to the rapid economic growth that has been recorded by the country in recent years. Paul Kagame’s administration has its shortcomings, especially in terms of how it relates to the media and the opposition, but nonetheless has the interests of residents at heart. Kagame’s visionary leadership has transformed the economy from one with a GDP per Capita of $225 in 2000 to $774 as of 2017. It is estimated that economic development programs implemented by Kagame have lifted more than one million people out of poverty, which is roughly 10% of the country’s population.
It is interesting to note that these developments have not been undertaken with massive foreign debt and grants. Rwanda’s total foreign debt is the lowest in the East African region at $3 billion, which is way lower than Kenya’s $31 billion and Tanzania’s $15 billion. Kagame’s administration has instead relied on development programs that focus on the empowerment of the local population. Key industries that contribute the most to the economy have been transformed by government programs that aim to boost their overall productivity and contribution to the economy.
Accountability and integrity in the management of the country’s resources has played a key role in facilitating development. Rwanda currently has the lowest corruption levels in East Africa, according to international corruption watchdog Transparency International. This has played a critical role in attracting foreign direct investment that has aided in the transformation of the economy.
Projected Lower Poverty Rates than the UK by 2020
The strong focus on the growth of the private sector is also a key factor that has contributed to economic growth in the country. Huge investments made in the education sector have paid off in the long run, as a majority of people in the country are either able to find employment or start and operate their own businesses. As a result, the total poverty rates have drastically reduced from 60% in 2000 to 27% in 2018 and are expected to reduce to just 20% of the population by 2020, which would be lower than that of the UK.
An economic processing zone has been established in Kigali that is meant to boost the capacity of local manufacturers and make it easy for them to access the export market. The EPZ is meant to promote the development of key industries that are aligned with the development goals of the economy. This is partly the reason for the growth of the manufacturing sector in recent years. The growth rate of the manufacturing sector has improved from 6% when the zones came into effect to 8.5% in 2019.
The focus on business and industry has also been highly beneficial to the local economy. Political stability, low levels of corruption and an effective justice system have not gone unnoticed by foreign investors. In 2017 alone, Rwanda attracted a total of $1 billion in foreign direct investment. Multinationals that have since established operations in the country include Positivo BGH that manufactures laptops, MaraX that manufactures smartphones and Visa, the global payment solutions provider. As foreign direct investment increases, unemployment reduces and the skill level in the country improves, which means developments made are likely to be sustained in the future.
Improved Standards of Living
Developments made in recent years have aided in transforming the standards of living in the country. Overall health levels in the country have improved tremendously in recent years. The infant mortality rate has for example dropped from 107 in 2000 to 32 in 2015. Education and literacy levels have also recorded significant improvements in the recent past. The literacy level in the country is now 71% and enrollment in tertiary institutions has increased by 7 times in the last decade. Employment opportunities available to both graduates and non-graduates have increased by more than 1,000,000 between 2011 and 2015. Social amenities available to the local population have also recorded major improvements in recent years. Over 80% of the residents have stable access to clean water and 70% of the road network in the country is considered to be stable.
The Kagame administration has however been accused of muzzling the opposition and violating basic human rights of its people that are critical of the government. Reporters without Boarder, a pro-journalism activist group, has accused the Kagame administration of being hostile towards the press and using security forces to monitor their activities and at times arrest and detain them. Government insiders have also been accused of the assassinations of prominent opposition figures who were believed to have sensitive information about the activities of the government.
Despite these issues, the mark that the Kagame administration has had on Rwanda cannot go unnoticed. Of all East African countries, only Rwanda is on course to achieve its millennium development goals. Key goals including the reduction of the infant mortality rate, improvement of the disease management capacity of the nation and ease of access to primary education have already been achieved. Projections indicate extreme poverty will be completely eradicated in the country by 2020. Although both Kenya and Uganda have recorded impressive within the same period, they have been held back by rampant corruption bad governance that still hinders their ability to achieve key goals.
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