Kagame’s Fake Economy Exposed By World Bank

By David Himbara

General Paul Kagame should not read the World Bank’s Rwanda Systematic Country Diagnosticpublished on June 25, 2019. This Diagnostic exposes his fake economy in many ways. In this Diagnostic, Rwanda is shown 1) to be poorer than its neighbours, 2) has worse education than its neighbors, 3) more dependent on foreign aid, 4) private sector hardly exists, and 5) attracts less foreign investment, 6) has dismal infrastructure, and 7) cronyism and favouring government/ruling party companies. Lastly, 8) Kagame would rather fantasize about the future than dealing with the present.

Here are the highlights:

Rwanda is poorer than its neighbours

  1. ”Poverty reduction stagnated between 2014 and 2017 because of droughts, a slowing in structural transformation and rural to urban transition, and a weakening of the job-creating potential of Rwanda’s recent growth…Between 2014 and 2017 poverty rose in the Southern province by 3 percentage points and in the Western by 2 percentage points. In 2017, the districts with the highest poverty rates were in the Western province, followed closely by districts in the Northern and Southern provinces.”
  2. ”Rwanda also appears to have relatively higher poverty than neighbouring peers with similar income per capita…Furthermore, the growth elasticity of poverty reduction is lower than in many such peers.”
  3. ”The stunting rate for the poorest 20 percent of Rwandans is 49 percent, and for the richest 20 percent it is just 21 percent…Between 2000 and 2015, each year stunting for children in richer households declined 3.2 percent but for children in poorer households it declined only 1 percent.”

Rwanda’s education is worse than its neighbors

  1. ”Rwanda also trails other countries of similar income in education indicators. For example, Rwanda’s primary completion rate is about 61 percent compared to the average of about 66 percent for all low-income countries. This measure not only captures whether youths are enrolling but also whether they are completing levels of schooling. Similarly, lower-secondary completion rates are 34 percent in Rwanda but 37 percent for low-income countries as a whole.”
  2. ”Only 8 percent of tertiary-age youth are enrolled in tertiary education, well below the level in middle-income countries.”
  3. ”Human capital, one of the main predictors of poverty, is a serious problem. More than 70 percent of adults at the 40th percentile of population distribution or below (B40) have only incomplete primary or no schooling at all…The share is higher for women.”

Addiction to foreign aid

”Rwanda is now a highly favored recipient of development assistance, which has been the main source of its development finance. Inflows of official development assistance (ODA) have averaged 17.2 percent of GDP annually, nearly 5 percent more than the average for SSA-IDA countries, and nearly double the average for low-income countries…”

Dismal infrastructure

  1. ”The high cost of power is another major challenge for Rwanda’s enterprise sector. Unit costs of electricity in Rwanda are among the 10 highest in SSA…” Only 31 percent of Rwandans are connected to grid electricity and only 16 percent of the rural population has access to electricity.
  2. ”The poor quality of rural roads impairs the integration of Rwanda’s countryside with its cities. Half of the rural population lacks access to a road network in good condition within a 2-kilometre walking distance.”
  3. Connectivity and logistics remain major challenges for Rwanda…Rwanda remains one of the most expensive places for a container to reach.” Options to reduce costs such as investments in off-dock terminals near the ports of Dar es Salaam or Mombasa, and freight terminals on the proposed rail line have not been implemented.

The private sector hardly exists

”The state is the main investor in Rwanda, which has one of the highest public-sector investment- to-GDP ratios in the world…However, this investment push has also contributed to rising public debt.”

Rwanda receives less foreign direct investment than neighbors

”While Rwanda has seen FDI rising, it still trails regional peers, despite the major progress in improving the business environment…Many international investors are not yet convinced Rwanda’s value proposition as an FDI location citing the challenges of high transport costs, lack of skilled labor, and high input costs. Survey respondents also cited poor, unfair, and unstable regulations and exempting specific companies from regulation.”

Favouring Government and party businesses and cronyism

Government and ruling party businesses ”should publicly disclose other important information such as: (a) governance, ownership, and voting structures of the SOE; (b) remuneration of board members and key executives; (c) board member qualifications, selection process, roles of other company boards, and whether these other boards are considered as independent…”

Kagame loves mega projects

”Public investment in Rwanda has also…been skewed toward projects that aim to create a new reality rather than at alleviating pressing present scarcities.”

Over to you General Kagame…

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