Rwanda’s Balance of Trade not The Economic Mask of Agaciro Fund

By Jacqueline Umurungi

Inyenyeri News

Brussels
August 24, 2012

 

When Kigali regime was accused of fueling conflict in Congo many donor countries including Britain one of the closest ally, froze £16 million of UK aid. President Paul Kagame once hailed as one of Africa’s most successful leaders by the West has relentlessly pleaded innocence but all in vain. The reason is simple, President Paul Kagame cannot be trusted, according to Ms Tertsakian of Africa division at Human Rights Watch, Mr. Kagame denied any involvement in Congo even after Rwanda invaded the country in 1996 and 1998. “Whenever there is any criticism, the response is always categorical denial, blanket denial,” she said. “It has been the same every time.”

Rwanda has a history of sponsoring rebels in eastern Congo under the mask of hunting down militias responsible for the genocide of 1994, which claimed 800,000 lives.  However, as usual Mr. Kagame continues to deny the latest allegations, saying that “not one bullet” had passed from Rwanda to Congo. It is in this context that many Human rights groups have called on all the donors including the strong allies like Britain and USA to act against Mr Kagame. “Pressure has been mounting for a while and I think the UK and USA, as the largest donors to Rwanda, were going to look odd if it continued to do nothing,” said Carina Tertsakian, from the Africa division at Human Rights Watch.

In the response to these new developments President Paul Kagame has joined a long queue of other disappointed African leaders who because of their political mistakes curse the aid as just an an anesthesia to make the African economies move a while without necessarily addressing the fundamental cause of economic stagnation called neo-colonial economy. In July 20011 President Bingu wa Muthalika of Malawi faced similar sanctions by Britain, the United States and Germany  which froze part of their aid to Malawi over Mutharika’s attacks on democracy and his erratic policies. In the final months of his life he accused donors of funding opposition demonstrations and refused to see delegations from the World Bank and the IMF. In a particularly intemperate speech in March, Mutharika told foreign donors to “go to hell”, accusing them of plotting with local groups to topple his government.

Like President Kagame, Bingu wa Muthalika arrogantly accused the West of being hypocritical and playing double standards, in response Britain suspended budgetary support worth £19m. In March, as Mutharika became more and more intolerant, the UK Department for International Development (DFID) said  that the Malawian president’s allegations were “unhelpful and unfounded” and that, “If Malawians themselves want to call for political change, or to protest peacefully, we believe it is their right to do so”. The British suspension matched moves made by the World Bank, the EU, the African Development Bank, Germany and Norway.

Indeed, many African economies depend on foreign Aid; Malawi’s budget relied on foreign Aid which accounted for 40 % of the whole of the National Budget. Similarly Rwanda’s national budget depends on the foreign Aid which accounts for 50%. In 2007 Rwanda was receiving Aid of 500M$ and it was planning to liberate its economy by 2015, but with only 2 years  and 3 months remaining to clock  2015, the Rwandan Budget needs One Billion in development budget  this indicates that the needs have doubled since that prospect of 2007. With all economic traffic coming to a standstill, President Bing wa Muthalika introduced a zero deficit budget for the year 2011/2012 with an aim of reducing the over reliance on Aid. The zero deficit concept was not well understood in Malawi and despite being hailed by some economists as a way of gaining economic independence, it failed to achieve its aims and objectives because the Aid freeze left a budget hole of about $121M which was meant to pay the recurrent expenses, this led to the collapse of the whole economy of Malawi which was regarded as the model of African economies before Bingu wa Muthalika fell apart with the Donor Communities.

After  all these economic and political gymnastics , President Bingu wa Muthalika was asked to devalue  the Kwacha  by 40%  the Malawian currency by the IMF and World Bank in order to go back on the track  of their program so that they can help ease the forex problem.  Therefore the reason for this comparative study tour of the Malawi under Bingu wa Muthalika is to highlight on what might befall on Rwanda if President Paul Kagame continues his arrogance and violations of human rights. The Agaciro fund will only contribute to Paul Kagame’s economic empires and the common man will not benefit from this economic mask which is ploy to spread the gospel of the RPF doctrine and ideology.

One will agree with me that foreign aid has served to promote oppressive regimes rather the everyday African people. Politicians in the category of Sani Abacha of Nigeria and Mobutu Sese Seko of Zaire/Congo eventually stacked the money in foreign banks which is then loaned back to Africa. Others do it in mild way by using the money to feed their cronies and families and have enough to send even children of their friends to world-class universities abroad. Opening markets to African goods and services will not solve the entire problem but at least leave some power in the hands of the ordinary people. It is time that Western donors stop handing out billions of dollars in humanitarian and economic aid to dictators in Africa and then turn death ears and blind eyes to their deeds.

I believe, however, that it is time for us to begin to look at a different growth model for the African economy that depends less on foreign aid. This new model in my opinion should be based on open markets where African goods and services have free access to western markets. Growth in China, and to some extend India, have largely been dependent on the access of goods and services from these geographical regions into the western markets. When we talk about goods and services, most readers will ask ‘what can Africa deliver? Well, it’s actually a lot. I’m not talking about Kenya or Rwanda exporting cell phones and laptops to the US next year. But what about a system that makes it attractive for the US manufacturer to import raw materials from the African farmers, if that is what we bring to the market at this period in time.

Let us consider some figures. In 2001, the US approved about $4 Billion in subsidies to nearly 25,000 cotton growers in the US for cotton crop that was worth only $3 Billion at the world market price. Other figures I came across pointed out that a single cotton grower in a mid-western US state received $6 million in subsidies, which is larger than the combined annual earnings of 25,000 cotton farmers in Mali. (For your information, the $4 Billion government subsidy is also more than one third what the US spends on the nearly 1 billion people on the African continent).

This policy makes it unattractive for manufactures to import raw materials from Africa and other developing countries.

This system is being perpetrated not only by the US but also by the European Union and China, which is destroying the livelihood of countries like Mali, Senegal, Chad, and Benin which are all major cotton producing countries. A recent study by UNCTAD-India pointed out that if the US were to do away with some of these subsidies, farm output will decline by nearly 40%. Although we would pay more at the grocery story in the US, it will spur up more imports from Africa and other developing regions which will generate enough foreign exchange the fund their community development activities.

Therefore in my opinion what President Kagame is doing is not different from the donor aid that is keeping African governments on their heels. Let the government increase production, create good political environment, here I mean democracy, rule of law not rule by law, respect human rights, our economy will  not automatically be self reliant but with time  it will need less aid . However, with this kind of political atmosphere where President Kagame kills whoever he/she wants, prosecutes and judges at will, manager of all business empires in Rwanda, it will take Rwandans some more years to think of economic independence. Please Mr. President Rwandan development will depend on Trade not Aid and Agaciro Fund.