On December 15, Rwanda President Paul Kagame walked into the swanky and expansive Kigali Conventional Centre.
Escorted by security men wearing fitting suits, the President walked gently to his seat.
To save time and cut down bureaucracy, the president immediately took to the floor to give the state-of-the-nation address.
What struck many in the 5000-seater conference room was Kagame’s determination to end Rwanda’s reliance on foreign aid.
“… something we have been talking about for a long time, the issue of relying on others to pay for things that benefit us. It is really a question of dignity, our Agaciro,” said Kagame during the 14th National Dialogue in Kigali, Rwanda.
“Therefore, among the decisions of this Umushyikirano, we should resolve to set a deadline, which should come sooner rather than later, after which Rwanda will no longer be waiting for what others hand out to us.”
This ambition is rare among African leaders.
At a continental level, the opportunities for growth and self-reliance remain vast.
With democracy becoming embedded and more than 70 percent of Africans under the age of 30, consumer spending is set to rise 80 percent by 2020, and the middle class already number over 300 million people.
Additionally, Africa holds 60 percent of the world’s unused arable land.
For Rwanda’s case, it is anticipated that inflows of foreign direct investment and tourism will outstrip aid in the next few years.
How possible?
But can Rwanda realise complete self-sufficiency?
Rwanda’s Finance Minister Claver Gatete believes this goal is attainable.
Addressing the Umushyikirano, Gatete shed light on Rwanda’s ambitious Vision 2050 which could along the way see the country end reliance on foreign aid.
One of the key pillars of this development plan is quality of life which includes sustained food security and nutrition for all households and age groups; universal, sustainable and reliable access to water (in houses) and sanitation; affordable, sustainable, reliable and modern energy; and universal access to: quality health care and services, quality education, financial services, dignified and SMART housing (with high speed internet), pension, medical insurance and savings, environmentally friendly and climate resilient surroundings and sustained national security.
The second pillar, according to Gatete is “increased productivity and competitiveness while providing jobs for Rwandans.”
Gatete said this will be though diversified tourism, high value IT and tech services/industry: e.g. electronics, business and financial services, logistics and aviation; airline, airport, drones and ports.
The country would as well need to invest in agro-processing: advanced food industry, technology intensive agriculture with a commercial focus; scientific and technological innovations: such as nanotechnology and biotechnology; construction industry; housing, local materials development and expansion) and extractive industries (mining, oil and gas): with focus on value addition.
Donor funds account for about 20 percent of Rwanda’s budget while foreign loans also constitute 13 percent, meaning approximately 33 percent of the country’s annual expenditure is funded externally.
Additionally, recurrent uncertainties in the global economy lead to consistent fluctuations in donor funds and tax receipts, stalling development programmes.
Challenges
Gatete believes that the “aspirations and shared values as a society” are essential for a country to realise consistent growth and shut the door to foreign aid.
These include self-determination, solidarity and dignity (Agaciro), unity and Rwandan identity/culture, integrity, equity (including gender), transparency, openness and accountability.
Additionally, Rwanda needs to be part and realise benefits of regional integration, multi-lateral and bilateral cooperation and strengthen her positioning abroad (Public and Private).
According to research, Rwanda’s Population will double the current number by 2050 to around 22 million.
To reach upper middle income by 2035 and high income by 2050, Rwanda will require average annual growth of above 10 percent (doubling current growth).
Research further shows that the GDP per Capita which in 2015 stood at $720 would have to rise to $1,240 by 2020 and later $4,035.
Per capita GDP is a measure of the total output of a country that takes gross domestic product (GDP) and divides it by the number of people in the country.
It is useful when comparing one country to another, because it shows the relative performance of the countries.
Living Examples
How have other countries transitioned from lower to upper middle income?
Belize, formerly British Honduras, on the eastern coast of Central America, took 44 years from 1960 to rise to middle income status with a GDP average growth rate of 5.9 percent. The economy was driven by tourism.
The tourism-powered Botswana took 19 years to become a middle income country with a GDP Growth rate of 11.4 percent.
China, the fast-rising economic giant, took 16 years from 1993 at a growth rate of 1.1 percent to obtain the middle income status.
This was facilitated by its large internal market and being surrounded by high-growth countries.
Equatorial Guinea took only three years from 1995 to become a middle income country. The growth rate was 80.1 percent. However, the economy was boosted by huge oil reserves. 98 percent of exports are oil.
Low to Upper
It took Indonesia 37 years to take the position of upper middle income status, courtesy of a large internal market, manufacturing and services sector.
Malaysia was a low income country in 1960. 34 years later, courtesy of a 7.1 percent growth rate and huge rubber and tin exports, the country got an upper income status.
Sri Lanka took 36 years to realise the same position even at a growth rate of 5.1 percent. This was facilitated by high education rates, tourism and being surrounded by high-growth countries.
Thailand used its raw materials, gold and tourism to grow to the level of upper income status. This was facilitated by a 6.3 percent growth rate over a period of 32 years.
Gatete believes for Rwanda to rise and shine, government needs to continue investing in education and innovation just like advanced countries such as South Korea.
Rwanda Governance Board Chief Executive Officer, Anastase Shyaka is equally optimistic about the country’s future.
He cited RwandAir’s success story, purchase of huge commercial jets and construction of Bugesera airport as evidence of a rapidly growing aviation sector.
Shyaka said the investments in road infrastructure had boosted transport and earned Rwanda a special position in the world while maternal mortality rate has been reduced by 70 percent in the last 14 years.
Still, Rwanda also needs high levels of savings and investment; continuous technological upgrade towards competitiveness, and attracting Foreign Direct Investment and growing exports.
Minister Gatete said Rwanda needs to take lessons from Singapore on attracting talent and investors, focusing on value addition and research, introducing a productivity tax credit and policies for long term savings.
Rwanda would as well need “visionary leadership, good governance and accountability, inclusive development, investment in human capital and a determination to succeed after a tragic past following the genocide against the Tutsi.”