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Rwanda’s international bond debut

By Andrew M. Mwenda

Why African countries should follow the example of Rwanda, Ghana and Zambia by moving from foreign aid to bond markets

Last week, the government of Rwanda issued an international 10-year bond to raise $400 million for infrastructure development. Within two days, the bond had been oversubscribed as investors placed orders worth $ 3 billion for a piece of this pie. Given that Rwanda’s GDP is just $6.4 billion, this is a great show of confidence by self interested investors. It was also a slap in the face of the self-righteous merchants of charity who have recently shown low confidence in the country.


The bond came at the tail-end of a long and ferocious international campaign against Rwanda, caused by a dodgy and shady report by a UN panel “of experts.” This report accused Kigali of sponsoring a rebel group in eastern Congo claiming it kills, loots, rapes and recruits child soldiers.

Never mind that soldiers from the DRC’s army have on their own freewill been giving interviews to BBC saying they were actually the perpetrators of these crimes. However, the report provided considerable grist for the anti Rwanda mill whose leading advocate is Human Rights Watch. The head of HRW, Kenneth Roth, like his ilk in our colonial past, has appointed himself the voice of the people of Rwanda.

Thus as Rwanda sought to raise money from international markets in circumstances where aid was being cut, the ghost of Congo hung over the bond like a sword of Damocles.  The international press, save for Time magazine and CNN, has been relentless in its attacks on Kigali buying the UN report hook, line, and sinker.

This is one major reason Rwandan officials issued a $400 million bond fearing international financial markets may be reluctant to buy $3 billion. Investors thought otherwise.

Something else had happened just before the bond was issued. S&P had given Rwanda a `B’ credit rating. No serious investor listens to HRW before making a decision. Few follow The New York Times or The Guardian, the leading anti Rwanda newspapers on the globe, above the opinion of S&P.

It was very likely that most, if not all potential buyers of the Rwanda bond, would be swayed by S&P’s assessment rather than the rants of a self appointed human rights’ advocacy group and their cheer leaders in the international mass media.

International investors have not merely purchased the Rwanda bond. They have given a vote of confidence to the government and leadership of the country. That is the ultimate objective measure of the quality of governance especially for an African country, one that has been a victim of jihad by a fundamentalist human rights cult whose story is bought by a complacent international press without question or reflection.

The regime in Kigali has one million and one weaknesses. However, even the most biased observer would admit that it places the interests of its citizens above everything else. The regime’s singular source of legitimacy is performance in service to the citizen.

Where public officials in other countries work in a relaxed environment and often can get away with incompetence, indifference, foot dragging and corruption; public officials in Rwanda are under constant pressure to perform, to deliver to the citizen. That is why that country punches far above its skills-weight in national development endeavors.

For far too long, African countries have avoided going to the international bond market to raise money for their development needs. They prefer to go to international donors for subsidised loans. I have always had a problem with this form of financing. Because it is given out of kindness, it tends to carry with it a self-righteous hubris. Those who administer it are not businesspersons seeking a return on their hard earned money. Instead, they are civil servants misusing taxpayers’ money.

These civil servants possess a self-righteous streak as bearers of economic salvation. Like our colonial masters of old, they carry an arrogance that makes them believe that they care about the welfare of the citizens of the recipient country more than local leaders – even elected ones. They ignore the fact that politics, even when corrupt, reflects a specific social compromise based on the values, norms and idiosyncrasies of a given country.

So the merchants of charity come with lectures and summons, demands and threats. The poor country must behave, regardless of local circumstances, as they dictate. By ignoring the role of nuance and complexity these international civil servants promote development strategies that if implemented as they wish would destroy the very essence of human existence and make a mockery of desired development objectives.

International investors tend to be democratic. Because they are risking their money, they are careful to accommodate local context and nuance. If they produce and sell a product in the local market, they know that disregard of local idiosyncrasies can cause them to suffer productivity losses (with their employees) or lose market share (with their consumers).

So every day they have to tweak their organisational and management strategies to generate the best out of their employees. Everyday they have to respond to the norms, habits and idiosyncrasies of their consumers – if only to remain effective in the market.

International aid workers are not restrained by any of this. If a project they manage fails, they suffer little or no consequences. They are rated on how easily they disburse money rather than on what results that money generates on the ground. They do not lose anything – whether their jobs or funding – if the aid project fails because they depend on taxpayers’ money from their home government.

And these taxpayers are far removed from the situation to hold them accountable. Equally important, there is little or no effective feedback mechanism because the beneficiaries of aid programs cannot vote out of office aid givers and aid managers. Therefore the very architecture of aid shows that there is little incentive for innovation. Theirs is power without responsibility.

Therefore the ultimate test of good governance is not altruistic self righteous aid donors but self interested investors. Every dollar they invest, especially of a long term nature, is a genuine vote of confidence in the management of the country – its policies, institutions, practices and leadership.  Africa needs to move from aid dependency to trading on the international bond market. It is there, and only there, that it will realise its true worth.

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