Saturday, October 20, 2012

Congo casts a pall over progress in Rwanda


Rwanda Speaks Says: A great insight from the Financial Times.
By William Wallis
October 1, 2012
President Paul Kagame bristles with indignation whenever Rwanda comes up for criticism. So, on the global stage, 2012 is proving a prickly year for his country, which stands accused by UN experts and human rights groups of supporting a fresh revolt in the neighbouring Democratic Republic of Congo.
In the years since he led his guerrilla army to power after bringing an end to the late 20th century’s swiftest act of mass murder, Mr Kagame has faced extreme circumstances both at home and in Congo, to where the forces that executed the 1994 genocide fled and remain in small numbers.
Rwanda has received generous infusions of aid along the way. Yet few, if any, of Mr Kagame’s western interlocutors have been confronted with comparable ethical or political dilemmas. That is one reason for his indignation.
Another is that the latest Congo debacle is distracting attention from the progress Rwanda has made in fostering economic growth, and ensuring, through a strategic approach to development that is distributed, if not evenly, then at least equitably across the population.
Kigali’s default response to the latest international concern has nevertheless been ringing hollow, given the weight of testimony implicating Rwanda in another gruesome episode of bloodshed across the border.
In the most recent report on the issue, Human Rights Watch, the US lobby group, said this month that senior military figures could be held liable for war crimes as a result of their alleged support for Congolese rebels.
Inside Rwanda, however, progress towards transforming livelihoods and modernising the economy continues apace. More than 1m of the 10m population have been brought out of poverty in the past five years, bringing overall levels down to 44.9 per cent, according to a recent survey.
Meanwhile, the ruling Rwandan Patriotic Front is setting about upgrading infrastructure and improving services with the same single-minded discipline with which it once prosecuted guerrilla warfare.
The goal is to transform an inward-looking mountain nation into an outward-looking centre for services, agro-processing, information technology, tourism, and transport that forms a bridge between east and central Africa. Rwanda, as a member of the East African Community, has become a champion of regional integration.
Not for the first time, however, events in Congo – where the Rwandan army has already fought several wars since 1996 – risk hampering these ambitions as foreign donors, on whom the government depends for about 40 per cent of the budget, consider withholding funds.
The African Development Bank and several European donors have delayed disbursement of direct budget support. This prompted Kigali this month to bring forward the launch of a development fund, financed by public contributions and intended as a step towards weaning the country off aid.
Mr Kagame, who can count on an influential group of international cheerleaders, including Tony Blair and Bill Clinton, both of whom visited him in recent weeks to offer advice, is furious.
“If you look around, there is not a single country that receives aid and uses it better than Rwanda. This is a fact,” he told the FT during a recent visit to China, where he secured $50m in grants from a government that, as a matter of policy, claims not to interfere in other countries’ fights.
Mr Kagame flatly denies Rwanda has any responsibility for the latest Congo debacle. “This UN report is just rubbish. There is nothing in it,” he said, of a detailed report released to the Security Council that includes testimony from 80 witnesses pointing to Rwandan support in supplying weapons and recruits to Congolese rebels.
Congo’s problems are the result of its own government’s failure to root out corruption and establish state authority, Rwandan senior officers argue. They also point to the huge benefits that have accrued to Rwanda in increased trade during a three-year period of relative peace that lasted until April this year.
“If there’s anybody who would want peace in eastern Congo, it is Rwanda,” Mr Kagame says.
But while he and John Rwangombwa, his finance minister, appear certain the storm will pass, the episode has unnerved parts of the business community and threatens to undermine the confidence that has been building in Rwanda’s prospects, thanks to government efforts at improving the investment climate.
Rwanda has been ranked the second top reformer globally in the past decade, after Georgia, in the World Bank’s annual ease of doing business survey. The World Economic Forum has also ranked it the most competitive economy in east Africa.
“The problem for them is that is not enough,” says a development expert working for a European agency. “This is a small country with not a lot to offer, a fairly aggressive tax regime, some mining resources but no scale of land. You can add to that the highest energy costs in east Africa and distant access to ports,” he says.
Rwanda under Mr Kagame is nonetheless one of the most crime- and corruption-free environments in sub-Saharan Africa, he adds. And even if foreign investment levels remain low, at $371m last year, growth has outstripped much of the region over the past decade.
A drop in aid flows, however, will stretch the current account deficit.
“If the donors continue to withhold funding it will have obvious consequences. Our budget would be strained and they will squeeze for higher taxes,” says Faustin Mbundu, chairman of Rwanda’s Private Sector Federation.
The government remains ambitious. This year, the cabinet repeated its commitment to reduce the rate of people living below the poverty line to 20 per cent by 2020. Annual GDP per capita is now targeted to increase to $1,240, up from an old target of $900 a year.
To make this a reality, the government wants to increase the number of Rwandans living in urban areas to 35 per cent and to create 1.7m non-farm jobs from 500,000 today.
The authorities are also speaking to investors about a string of energy projects with a view to increasing access to electricity from 10.8 per cent today to 70 per cent by 2020. “Rwanda remains forever ready to do more than we should be able to do,” says Emmanuel Karenzi Karake, the country’s intelligence chief.
In the minds of influential members of the ethnic Tutsi minority, who have dominated government since 1994, the government’s success – or otherwise – in closing income inequalities is bound up with the nation’s stability.
They believe the best way to efface the divisive ideology that led extremists among the Hutu majority to use the power they once wielded to commit genocide is to improve livelihoods for all.
When it comes to economic development there is a master plan for almost every aspect of life.
The problem Kigali faces is that its plans for Congo do not conform with international expectations, and for that it may yet pay a heavy price.


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