Rwanda's long-term Vision is to transform into a middle income country by the year 2020. Ten years down the road, Rwanda can look back and learn more from the lessons of the last decade. The country has achieved tremendous progress but the road is still long and challenges remain. Entering a 7-year term, the new Government stands ready to face those challenges and is committed to achieve most of the Vision 2020 targets by 2017.
Rwanda developed its Vision 2020 back in 2000 and has since been implementing it. The Vision foresees average growth rates of around 8% in domestic production over the 20 years to make the country a middle income one. To date, this has been achieved with average real GDP growth of 8.4% over the last decade. In 2008, the economy registered a double digit growth of 11.6%. But in 2009, with the Global economic slowdown, Rwanda registered its lowest real growth of the last five years at 6.1%. Exports, and particularly minerals and tourism, that represent an important portion of Rwanda’s foreign exchange earners, declined. Though agriculture production and services, in telecommunication, proved resilient to external shocks, one may wonder about the plans to ensure that Rwanda is not setback as a consequence of the global environment.
To support the development vision Rwanda’s flagship economic plan, the Economic Development and Poverty Reduction Strategy (EDPRS) sets out a number of ambitious targets and supporting policies to 2012. At the mid-way point, targets in many sectors as wide ranging as health, education, energy, roads and economic growth, have already been or are on track to be exceeded, and the Government is envisaging revising them upwards in line with the new 7-year government program.
The EDPRS identifies insufficient infrastructure and underdeveloped skills as the main constraints to growth in the country. To ensure the country continues with its fast pace in economic growth, the government intends to focus on removing the structural bottlenecks to exports of goods and services and improve the country’s competitiveness. To do so, it will build on the already established basic socio-economic and technological infrastructure, systems and institutional frameworks that creates a firm foundation for accelerating national development with a higher multiplier effect. These are in various areas:
Doing business: Â in the World Bank Doing Business report 2010, Rwanda was ranked top reformer thanks to broad ranging reforms to improve the business environment. It was ranked 67th in the world compared to 143rd the previous year. The most recent DB report 2011 now ranks Rwanda 58th globally out of 183 countries in terms of ease of doing business. Rwanda was ranked as the world top reformer inÂ
2010 DB report and 2nd world reformer in 2011 DB report. The reforms are still continuing. It is expected that the larger benefits in attracting foreign and local investment will be felt increasingly in the coming years (though some are already materializing). Privatization has created a middle class of entrepreneurs and the country is doing more efforts in terms of reforms to encourage saving and investment. There are also further targeted reforms to promote small and medium enterprises (SMES).
Agriculture development: the growth rate of the last two years is three to four times the one in previous years. (From 2003 to 2007, the registered 5-year average growth rate for agriculture was 2%; with the introduction of the Crop Intensification Pr
ogram (CIP), the country registered an average growth rate of 7% over 2008 and 2009). Only keeping the same growth rate would go a long way towards multiplying past production. The Government stated intention is not only to keep on this track but do more as agriculture in Rwanda is not yet producing at the limit of its potential. Increased production will be generated through extension of area under the CIP, undertaking irrigation on extended areas and building storage facilities to reduce dependency on climatic conditions and to promoting a market orientated production (through feeder roads, regional integration, crop intensification, fulfillment of export standards). The Government is foreseeing that by 2017, all these actions together and the externalities from increased agricultural incomes will yield much more than what has been achieved to date, however good it is.
Infrastructure:
Energy: in 2000, access to electricity was estimated at 2%; at the time. Today, it is estimated that access to electricity is around 10%. The country’s objective is that by the end of 2017, the access to electricity reaches 50%. More national and regional energy production, transmission and distribution projects are being implemented to achieve this target
High cost of energy has been one of the factors hampering business in Rwanda, the said investments will significantly reduce the cost and are expected to positively impact on living conditions of Rwandans and the economy in general.
Transport: The road projects in the pipeline, the Isaka-Kigali railway and Bugesera airport projects, once operational, will have a significant impact on tourism, exports and in general it will reduce the cost of doing business in Rwanda. The overall impact of these projects on the economy will have an important multiplier effect.
ICT applications and regional integration:
The application of ICT in all sectors of the Economy (Governance, Education, Agriculture, Health, Business, Banking, etc), associated to the gains foreseen in education (technical and professional, in applied and natural science) is expected to make the country a service and financial hub. To facilitate this, there is an ongoing project of laying fibre optic to all corners of the country.
Finally, there is Rwanda’s entry into the East African Community, where new and enhanced trade and investment opportunities will give an additional boost to the development efforts.
John Rwangomba is Rwanda’s minister of finance
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