By David Himbara
General Paul Kagame never ceases to amaze and amuze. The General is now implementing Rwanda Vision 2050, which replaced Rwanda Vision 2020. Rwanda Vision 2050 is divided into several phases. The initial phase covering 2017–2024 is being executed through the National Strategy for Transformation Phase I (NST1). By 2024, says Kagame, Rwanda will be a knowledge-based economy driven by private sector innovations and higher value-added activities. Extreme poverty and malnutrition will be eradicated by 2024 — access to water, electricity, broadband will reach 100 percent. The question is: what is Kagame smoking? All of these projections are, of course, delusional grandeur.
The National Strategy for Transformation Phase I is fantasy
The National Strategy for Transformation Phase I is costed at US$39.2 billion, with 59 percent mobilized by the government and 41 percent by the private sector. This translates into US$5.5 billion a year during 2017–2024. This pure fantasy — Rwanda does not have such scale of resources. The International Monetary Fund (IMF) provided a revealing perspective on this question in January 2020 — Rwanda’s capacity to mobilize larger financials is limited:
”At current income levels, Rwanda has limited scope for additional domestic revenue mobilization, perhaps 2 — 3 ppt of GDP. There is some scope for additional borrowing and increased spending efficiency through the use of technology, but these are also inadequate to meet total spending needs.”
The main problem in Rwanda is the fact that the private sector barely exists. Rwanda Revenue Authority (RRA) described Rwanda’s private sector in 2019 as follows:
”Of the current taxpayers in the tax registry, 375 are categorised as large taxpayers (0.2% of the total); 845 are medium taxpayers (0.4% of the total) and 192,742 are small or micro taxpayers (99.4% of the total).”
How will an economy in which 99.4 percent of taxpayers are small and micro mobilize US$39.2 billion in seven years? This is an economy in which ”large” taxpayers number 375 which includes government institutions.
The National Strategy for Transformation Phase I is another fiasco
As I showed in my book, Rwanda’s Stillborn Middle-Income Economy, Rwanda Vision 2020 was a fiasco. The National Strategy for Transformation Phase I is an even bigger disaster.