Rwanda, Inc.

How a Devastated Nation Became an Economic Model for the Developing World

By Patricia Crisafulli, Andrea Redmond

St. Martin's Press

Copyright © 2012 Patricia Crisafulli and Andrea Redmond
All rights reserved.
ISBN: 978-0-230-34022-0


Foreword by Joseph W. Saunders, chairman and CEO of Visa Inc.,
Introduction This Is Rwanda,
1 Rwanda Now: The Skyscraper and the Chicken,
2 A Nation Divided by Hatred and Horror,
3 Marching into Hell,
4 Reconciliation and Unification,
5 Rwanda's CEO,
6 The Rwanda Model,
7 Raising the Bottom of the Pyramid,
8 Developing from Within,
9 Opening the Door to Foreign Direct Investment,
10 "Ariko": Rwanda on the World Stage,
11 Rwanda Looks Ahead to Succession,



The Skyscraper and the Chicken

The pace of change in Rwanda is a steady beat, the rhythm of a country on the move. Since its horrific genocide 18 years ago, in which a million or more people were killed in 100 days, Rwanda has completely reinvented itself. It has transformed from a nation divided by ethnic distinctions imposed by European colonizers to a nation where reconciliation and unification are powerful prerequisites for maintaining stability and achieving progress. Rwandans are coming together, united by the country's ambitious goal: to rise from crushing postgenocide poverty levels to become a middle-income country.

Evidence of Rwanda's recent achievements is everywhere, in its bricks-and-mortar, paved roads, and even fiber optics. Committed to evolving its economic foundation from subsistence agriculture to information and communications technology (ICT), the Rwandan government has invested $95 million to construct a 2,300-kilometer telecommunications network across the country, which is also linked to undersea cables along the East African coast. The network vastly improves broadband to attract electronic commerce and business process outsourcing. Connectivity isn't just for business, however. Along a rural road, a woman with a basket on her head or a man balancing bunches of bananas on the back of a bicycle he is pushing up a steep hill are probably also toting cell phones; according to government figures, 45.2 percent of the population had them in 2011, compared to just over 6 percent in 2006.

Of all these measures of progress, the most impressive is in poverty reduction. With overall real GDP growth in 2010–2011 of 8.2 percent, the country has reduced the percentage of its population living in poverty to 44.9 percent in 2011, from 56.9 percent in 2006. That translates into 1 million people, out of a total population of about 10.7 million, emerging from poverty in just five years. In addition, the number of people living in extreme poverty fell to 24 percent from 37 percent over the same period. Perhaps the even better news, and reflective of Rwanda's drive to raise the bottom of the socioeconomic pyramid, is that the so-called Gini coefficient, which measures inequality in distribution, showed decreases in income inequality, dropping to 0.49 from 0.52. In other words, Rwanda's programs to raise per capita income to about $560 today from $200 in 2000 (with a target of about $1,100 in per capita income by 2020) are not just benefiting the top; they're helping all Rwandans. Moreover, Rwanda is one of the few African countries that is on track to achieve most of its United Nations Millennium Development Goals, or MDGs — which target poverty reduction and improvements in education, health, and maternal/infant mortality — by 2015.

The magnitude of the turnaround, socially and economically, is sometimes referred to as a "miracle." Finance Minister John Rwangombwa, in an editorial for the Wall Street Journal, countered that notion when he wrote that there is "nothing supernatural about what we have achieved to date," which is but a "mere fraction of the ambitions we hold for our country. We understand that our accomplishments are the result of unrelenting focus by our country's leaders and citizens on getting the fundamentals right: government accountability and transparency, policies that attract trade and investment, a healthy and educated population."

Although Rwanda is not yet where it wants to be, and must maintain and even accelerate its momentum of growth, it has already come an incredible distance in such a short time. Self-determination and self-reliance propel this nation forward, making it the ultimate turnaround story on a continent better known for broken promises and unfulfilled potential.

For many first-time Western visitors, what is often most striking about Rwanda is how clean it is: there is almost no litter anywhere. The second is how safe it is. An American woman who now lives in Kigali shared with us that, unlike other places in Africa, she does not think twice about walking alone at night carrying her laptop and cell phone; neither person nor property is at risk. The main reason is the highly visible presence of police and military. Soldiers in trucks en route to their stations or toting AK-47s on a street corner near a hotel frequented by foreigners are constant reminders of the importance of security and stability in a country that has known unspeakable brutality and still faces outside threats from former genocidaires, who were behind the 1994 genocide, and their supporters, some of whom have taken refuge across the border in eastern Congo.

Safety in Rwanda, however, is not defined only by its streets. It means that all its people, particularly the rural poor, face fewer risks thanks to achievements like compulsory education, universal health care, improved longevity, reduced maternal and infant mortality, and food security.

In our time in Kigali, we absorbed many other images of Rwanda's transformative journey and the vision behind it. Two in particular became indelible, a mix of past and present reminders: leaning forward toward the future with the knowledge that slipping backward is simply not an option. One is a skyscraper, a symbol of Rwanda's aspirations as a hub of business and technology. The other is a chicken, a reminder of the continued importance of raising the standard of living in a country where 80 percent of the population still exists as subsistence farmers on tiny plots of land.

First, the skyscraper. The 20-story Kigali City Tower, built by Rwandan businessman and investor Hatari Sekoko, punctuates the skyline of the capital city. On one of our trips to Rwanda in early 2011, the tower was under construction without an anchor tenant, a venture that would be unheard of in the United States, where a project of that scale could not be undertaken without at least one firm commitment. By early 2012, though, the tower was open for business and fully leased after Visa Inc., the global financial giant that had just launched a venture in Rwanda, took the last space. The boldness of constructing a tower of mixed-use office and retail space is part of the country's "if you build it, they will come" mentality. Like the skyscraper that rose where none was before, Rwanda is creating an entirely new present and future for itself through sheer determination and intention.

In our conversations with Rwandan President Paul Kagame, the theme of creating "something out of nothing" was raised repeatedly. "It's not about recreation of what used to be, but creation of something that is actually very different — and from nothing," Kagame explained to us during an interview at the presidential offices. "It is a story that continues to this day."

Kagame makes a distinct impression as the architect and driver of the new Rwanda. Tall and pencil-slim, with eyeglasses and a thin mustache and a hint of beard, he has the serious look of a schoolmaster. Yet he also projects an iron will and a steely resolve. The attributes others assign to him — disciplined, organized, serious, forward-looking — are apparent within the first moments of meeting him. He also has a warm and engaging side and a subtle sense of humor. His accessibility as he greeted us was disarming, and the matter-of-fact way he spoke and welcomed questions broadcasted authenticity.

The president left another impression as well, which was confirmed in subsequent interviews and conversations with Rwandans, Americans, and Europeans. When looking at Rwanda now in contrast to where it has been, one person has clearly made the difference: President Kagame. Inside the country and out, Kagame is widely credited with orchestrating the turnaround of this devastated nation. He has been called a "visionary leader" by former UK Prime Minister Tony Blair and was presented with the Clinton Global Citizen Award by former U.S. President Bill Clinton in 2009. That same year he was named one of Time magazine's 100 Most Influential People.

"I think he's an outstanding leader because he has the unusual combination of a strong sense of vision and a practical desire to get the job done," Blair told us.

Blair has a real affection for Africa. During his term as British prime minister, he created a Department for International Development; Rwanda was one of the countries the department worked with early on. After leaving office, Blair founded the Africa Governance Initiative to support the development of governance and implementation skills in Africa, which he sees as critical for the future of the continent. Today, Blair's governance initiative is working closely with the Rwandan government to train its next generation of public servants.

As much as Rwanda strives toward the future, however, it has not forgotten its agrarian roots. This is where the chicken comes in. Fresh from the butcher in its brown and black feathers, the chicken was held by the feet by a smartly dressed woman in a bright print blouse, a slim blue skirt, and red high-heeled shoes. Watching the woman pick her way along an unpaved back street in Kigali, where the red earth had been scarred deeply by rains earlier in the season, we could only wonder where she was going with the bird: perhaps to her home or to a friend or relative who would undertake the plucking and cooking; maybe even to a restaurant she owned. Wherever the chicken was headed, it reminded us of the basics: while Rwanda steams ahead toward its vision of becoming a middle-income country on par with Singapore, it must also ensure the basic needs of its people are met: health care, education, and, of course, food. It was not so long ago, in the years before the genocide, that Rwanda knew famine in some of its regions. Only recently, in 2009, did the country achieve food security. Although in remote villages protein is still at a premium, nutrition programs, such as the government's initiative to give cows to poor families, are working to solve the problem.

In order for Rwanda to continue to feed itself and improve its economy, it must continue to develop its agricultural sector, which accounts for more than a third of that economy. Agriculture must become more mechanized, and tiny individual plots of land must be joined together in cooperatives to reap economies of scale on inputs such as fertilizer and seed, as well as cultivation and harvesting. In addition to staples such as beans and sorghum, Rwandan agriculture continues to emphasize crops such as coffee and tea for export, which reap badly needed foreign exchange. The country is always investigating new export crops.

Together, the skyscraper and the chicken spoke to us of progress to be made at both ends of the socioeconomic scale. It is not enough to elevate the top with new hotels and paved roads, foreign direct investment, and California-style houses in the hills around Kigali. The bottom of the pyramid must also climb upward through intensive and integrated efforts across the social, economic, and political spectrum.

"This country is run in a way that's efficient and focused on outcomes and delivery," said Dr. Paul Farmer, a renowned expert in global health issues at Harvard Medical School and cofounder of Partners In Health, which works closely with the Clinton Foundation and the Rwandan Ministry of Health to advance initiatives such as expanding access to HIV/AIDS treatment across the country and improving the number and quality of health facilities in rural areas. "It's quite clear that from the early years — even back in the 1990s, when he was not president — that President Kagame recognized inequality as a chief pathology in the country."

Rwanda has laid a foundation for its future where none existed before, from compulsory education for all children that was recently expanded from 9 years to 12, to embracing and enforcing a culture with zero tolerance for corruption, and decentralizing government to accord more responsibility and accountability at the local level. As part of the transformation, Rwanda has changed its official language from French to English, the lingua franca of business and technology. If you wonder just how far Rwanda will go to anchor itself in the modern global economy, consider the six-year-old child in a rural village who shakes your hand and asks in well-practiced English, "Hello, what is your name? What is your job?" She may be tomorrow's teacher, doctor, engineer, entrepreneur, or business leader. Most importantly, she is being raised without the ethnic identification that once so bitterly divided this nation between the majority Hutu and the minority Tutsi.

In our conversations, President Kagame shared with us his vision of all Rwandans as one people with common ancestry who must work together to realize the goals of a self-sufficient nation able to chart its own course in the world. "What is always on my mind is where we are going to be as a country and as a people in 10 or 20 years," he told us. "The other thing [I think about] is how I am going to make sure that everybody contributes tomorrow and the day after, so that they are the ones to do it and they are the ones to benefit. How do I make them realize what needs to be done, and what is in their best interest?"

During our meetings at the presidential offices, which were simply decorated and unimposing, Kagame demonstrated his passion for private-sector development, free markets, and capitalism, which have earned him comparisons to a corporate CEO. Indeed, we found he has more in common with the typical American executive than most political leaders, particularly in developing nations. And given what Rwanda has achieved in its turnaround, Kagame has proven himself to be a profound leader, particularly on a continent where positions of power and authority have too often been exploitative and damaging to the people.

But make no mistake, Rwanda is not perfect. This is no Garden of Eden for business where an investment today multiplies tenfold by tomorrow. The wheels turn slowly at times, to the frustration of some foreign investors, because of unnecessary bureaucracy and a lack of experience and confidence within the public sector. Patience, one foreign investor told us, is the name of the game in doing business in Rwanda. The development of human capital is a significant challenge, particularly at the middle tier. As a landlocked country, transportation costs are considerable, according to some estimates amounting to some 40 percent of the cost of imported retail goods. And Rwanda's heavy dependence on imported energy and lack of electrical distribution are major concerns. At the end of 2011, less than 11 percent of the households in Rwanda were electrified, although that percentage was still 2.5 times the electrification rate in 2006.

"Rwanda, like any nation, is not an impeccable place. It has many challenges and obstacles to overcome," commented Donald Kaberuka, president of the African Development Bank, who also served as Rwanda's minister of Finance and Economic Planning from 1997 through 2005 and is credited with helping stabilize the country's economy after the genocide. He cited the need for a diversified export base, lower energy costs, depth in the financial sector, and more foreign investment along with continued reconciliation and leadership development at all levels. "But Rwanda's track record to date gives her and her friends conviction that a prosperous nation, at peace with herself, connected into global networks of trade and capital, is feasible," he added.

Of all that has been achieved under Kagame's leadership, one of the most significant moments is yet to come, in 2017, when he is expected to step down from the presidency having served two seven-year, democratically elected terms. For Kagame, a seamless succession through democratic election is what will truly underscore his triumph, silencing critics and naysayers who have repeatedly speculated about a third term, which would require a change to Rwanda's constitution. For all that Rwanda has accomplished, the country continues to be a lightning rod for criticism. One of the most serious allegations is that Kagame stifled political opposition during the 2010 election, in which he was reelected with 93 percent of the vote, a landslide number that raised questions about its validity. Human rights activists in the West complain about a lack of political expression in the country after some political opponents were jailed for allegedly stirring up old ethnic tensions. After the Rwandan election, the White House expressed its concerns about "a series of disturbing events prior to the election," although it also acknowledged the "enormous challenges [in Rwanda] born of the genocide." The Kagame administration, meanwhile, has defended its actions, maintaining that any promotion of genocide ideology will not be tolerated.


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