Since before yesterday, I was reading a report released on tuesday by World Economic Forum (WEF) and just i was waiting for more highlights from my motherland before approaching my keyboard.
On 03/09/2014, the rwandan news paper known as newtimes, published an article enttitled” Why Rwanda remains most competitive EAC economy” and from that part different experts reacted as they wish and want. Simply, thanks to the newtimes and especially to the journalist Peterson Tumwebaze who wrote this not forgetting those experts who contibuted politically instead of bringing technical arguments.
I hope and think that rwandans should understand what competitiveness is. According to Michael Porter, compeititiveness is defined by the productivity with which a nation utilizes its human, capital and natural resources while Krugman observes competition power or a competitiveness as dangerous obsession in sens that it would be problematic to define a competitiveness of a nation than defining that for a corporation or a specific company.
For the case of this ranking Rwanda, let us refer to Tyson’s definition in order to uunderstand the rwandan economy as it is currently. Tyson proconized that competitiveness is “our ability to produce goods and services that meet the test of international competition while our citizens enjoy a standard of living that is both rising and sustainable.”
From the definition which sounds reasonable, you compete internationally when you produce effeciently from, primarily, your domestic inputs such as human, capital and natural resources as said by M. Porter. Then, what is the status of international trade of Rwanda? A big question but what is known 73% of rwandan production is nontradable goods and services. On international level, how can this rwandan economy be competitive while it continues to conduct a very little international trade consituted mainely by coffee and tea?
In addition, by basing to the variables used by WEF, basically, Rwanda is characterized by lack of strong and independent institutions in sense that all are dominated by one person not forgetting lack of sufficient and efficient infrastructures. By these infrastructures i want to come to what has been said NAMARA HANNINGTON. This man who is the head of Private Sector Federation of Rwanda said that Rwanda is constructing Kigali- Gatuna highway which is not true. First, I don’t know if this man knows well a highway!!!!!!
What is a mess is rwandan macroeconomic environnement whichh is good at all. In economics, two issues (inflation and unemployment) describe cleary what is known macroeconomic desequilibrium. Currently, the rwandan currency is depreciating on daily basis while unemployment rate is explosive especially in youth. As a fact, the rwandan minister failed and continues to fail in explaining this phenomena of inflation and unemployment rate. In addition, rwandan macroeconomic environment does not attract or facilitate domestic and foreign investors. I Think many we have heard about the seizure of properties of Tribert Ayabatwa Rujugiro, the American investor who was the owner of a mining company known as NRD, etc. Is this a competititive nation?
What is more shoking is the market size of Rwanda. Normally, the market size of a country indicates clearly the size of economy. Rwanda has been ranked at 122 out of 144. This indicator has its own meaning about the rwandan economy. Simply, it is a very tiny economy and this shows how the report is of biased findings.
Finally, my question remains the same, how can economy be competitive while it is charactized by a precarity of infrastructures, education without quality which is anothor sign of lack of policies, a meangless market size, lack of financial market, a macroeconomic environement that does not attract domestic and foreign investors, etc ?
Simply Rwandan competitiveness is zero.
Peter Urayeneza
