Contributor, Korn Ferry Institute
Africa Rising: The New Rwanda
Two decades after Rwanda’s horrific genocide, the country is in the midst of an impressive transformation. Evidence of its recent achievement is everywhere, in its bricks-and-mortar, paved roads and even fiber optics, as the country strives to evolve from an economy grounded in subsistence agriculture to one based in information and communication technology.
During our time in Rwanda and its capital city of Kigali to research and write our book, “Rwanda, Inc.,” we absorbed many other images. Two in particular became indelible, a mix of past and present reminders; leaning forward toward the future with the knowledge that slipping backward is simply not an option. One is a skyscraper, a symbol of Rwanda’s aspirations as a hub of business and technology. The other is a chicken, a reminder of the continued importance of raising the standard of living where 80 percent of the population still exists as subsistence farmers on tiny plots of land.
First, the skyscraper. The 20-story Kigali City Tower, built by Rwandan businessman and investor Hatari Sekoko, dominates the skyline. On one of our trips to Rwanda in early 2011, the tower was under construction without an anchor tenant, a venture that would be unheard of in the United States, where a project of that scale could not be undertaken without at least one firm commitment. By early 2012, though, the tower was open for business and fully leased after the last space was taken by Visa Inc., which has a partnership with the government of Rwanda to “electronify” Rwanda’s economy, connecting its nearly 11 million residents to the formal financial sector.
As much as Rwanda strives toward the future, however, it cannot abandon its agrarian roots. This is where the chicken comes in. Fresh from the butcher in its brown and black feathers, the chicken was held by the feet by a woman in a bright print blouse, a slim blue pencil skirt and red high-heeled shoes. Watching the woman pick her way along an unpaved back street in Kigali, where the red earth had been scarred deeply by rains earlier in the season, we could only wonder where she was going with the bird. Wherever the chicken was headed, it reminded us of the basics; while Rwanda steams ahead toward its vision of becoming a middle-income country, it must also ensure that the basic needs of its people are met.
Yet, Rwanda’s drive to establish a more secure and prosperous future is not at the expense of ignoring its past. The nation has memorialized the genocide that occurred from April to July 1994, when militias sanctioned by the previous government murdered a million Rwandans. In the midst of the terror, 2 million citizens fled the country. The objective of the genocidaires was clear: to eradicate the minority Tutsi at the hands of the majority Hutu.
Today, such ethnic distinctions are no longer made; Rwanda embraces all Rwandans. Reconciliation and unification are preached everywhere, politically and spiritually. Indeed, reconciliation has become the key underpinning of virtually every initiative in Rwanda, as laid out in its Vision 2020 development program. Vision 2020 calls for compulsory education, universal health care and steps toward a knowledge-based economy.
In our conversations with Rwandan President Paul Kagame, the theme of creating “something out of nothing” was raised repeatedly. “It’s not about re-creation of what used to be, but creation of something that is actually very different—and from nothing,” Kagame told us during an interview at the presidential offices. “It is a story that continues to this day.”
To understand Rwanda today, one must comprehend three periods or “chapters” of its history, as Foreign Minister Louise Mushikiwabo told us. Chapter 1 begins with “the struggle,” the civil war that broke out in 1990 and extended through the genocide and subsequent years of fighting to put down insurgencies and stabilize the country. Chapter 2 began in 2000, with reconstruction and rebirth that lasted roughly a decade. Now, Rwanda is in the early stages of Chapter 3, building upon a new foundation of governance and economic development. “It is our national ambition now, and part of the policy of this ministry, to have a presence in the world. We want to define ourselves and to interact and open up as much as we can; to bring to Rwanda opportunities from the world, whether in trade or know-how or good practices—those things that allow Rwandans to have a better life and that will raise the standard of life for Rwanda,” Mushikiwabo said.
Rwanda’s Chapter 3 also carries a sobering message: What has been accomplished thus far must be surpassed. The current GDP growth rate of 7 to 8 percent must expand even faster if Rwanda is to continue to reduce poverty. Of all the measures of progress thus far, the most impressive is in poverty reduction. Rwanda has reduced the percentage of its population living in poverty to 44.9 percent in 2011, from 56.9 percent in 2006. This translates into 1 million people emerging from poverty in just five years. In addition, the number of Rwandans living in extreme poverty fell to 24 percent from 37 percent over the same period. Perhaps even better news, and reflective of Rwanda’s drive to raise the bottom of the socioeconomic pyramid, is that the so-called Gini coefficient showed decreases in income inequality.
But make no mistake, Rwanda is not perfect. This is not the Garden of Eden for business where an investment today multiplies tenfold by tomorrow. The wheels turn slowly at times, to the frustration of some foreign investors, because of unnecessary bureaucracy and a lack of experience and confidence within the public sector. Patience, one foreign investor told us, is the name of the game in doing business in Rwanda. The development of human capital is a significant challenge, particularly at the middle tier. Rwanda is a landlocked country and transportation costs are considerable, according to some estimates amounting to 40 percent of the cost of imported retail goods. And Rwanda’s heavy dependence on imported energy and lack of electrical distribution are major concerns.
“Rwanda, like any nation, is not an impeccable place. It has many challenges and obstacles to overcome,” said Donald Kaberuka, president of the African Development Bank, who served as Rwanda’s minister of finance and economic planning from 1997 through 2005 and is credited with helping stabilize the economy after the genocide. “But Rwanda’s track record to date gives her and her friends conviction that a prosperous nation, at peace with herself, connected into global networks of trade and capital, is feasible.”
Perhaps the most distinguishing characteristic in Rwanda, and a huge plus for attracting foreign investment, is the government’s zero-tolerance policy for corruption. On a continent where wealth all too often ends up in the pockets of the elite, and where doing even basic business involves red tape and money to grease the wheels, Rwanda is a startling exception. “In Rwanda, you have a stable democracy and good governance,” said Clifford Sacks, CEO for Africa and head of Pan-African Equities for Renaissance Capital, an emerging markets investment bank. Not everyone, however, sees Rwanda as a success story. Once the darling of the Western press, which wrote glowing reports post-genocide, Rwanda has seen the pendulum of opinion in some circles swing in the other direction where the country and its leaders are concerned. There are two portraits of Kagame, the former general who led the Rwandan Patriotic Front (RPF) to end the genocide. (He is now completing his second, democratically elected term as president.) In one view, he is a savior, nearly messianic in his mission and vision, who single-handedly delivered his nation out of hell on earth. In the other, he is a heavy-handed tyrant, a dictator who silences the opposition.
What we saw was a leader who was neither of the extremes; Kagame and the situations he faces are far too complex for that. He believes Rwanda’s problems can only be solved with Rwandan solutions and, after seeing his country abandoned by the West during the genocide, cares little about international opinion. Yet, at the same time, he reaches out to partner with those who will help his country progress toward a better future for all Rwandans. Looking at the country through the lens of economic development and governance, as we did in “Rwanda, Inc.,” there is no doubt that the architect of what we call the “ultimate turnaround” is the country’s “CEO”—Paul Kagame.
With such ambitious plans to advance and diversify its economy, Rwanda has had to add another type of capacity, the institutional variety, through the Rwanda Development Board. One of the RDB’s top priorities is to solicit investors for development projects, particularly in infrastructure. For Rwanda to transform itself into a middle-income country, it needs continuous infrastructure expansion, encompassing a variety of projects and priorities.
One of Rwanda’s development projects has a high international profile because of the technology involved: the KivuWatt project developed by ContourGlobal of New York, which will extract and process methane dissolved in the waters of Lake Kivu, a 1,500-foot-deep body of water in western Rwanda, to power 100 megawatts of electricity-generating capacity. The first phase, now under way, is for 25 megawatts of power generation. Safe extraction of methane, which can be volatile, would not only produce electricity but could also reduce health and safety hazards by lowering the risk of a catastrophic release of gases trapped in Lake Kivu, which is surrounded by more than 2 million inhabitants.
“The opportunity to take part in a project that provides so much benefit in a post-conflict environment, including providing electricity critical to Rwanda’s continued economic growth—and at the same time reducing the risk of a catastrophic release of the lake gases—was very attractive to our lending group,” William Barry, vice president of business development for ContourGlobal and the KivuWatt project manager, told us.
Rwanda’s other projects include exploratory drilling and testing of geothermal sites; the building of a new airport to allow greater use of regional air transport for goods as well as passengers; and a proposed rail link that would connect Rwanda and Burundi with the port of Dar es Salaam in Tanzania, which has been in the planning stage for several years. At 1,670 kilometers (roughly 1,037 miles), the rail line would be the longest in the region and has a reported price of about $5 billion.
At the same time, the country continues to emphasize health and education and is on track to meet most of its United Nations Millennium Development Goals by 2015. Access to universal health care is a laudable goal, with improvements in maternal and infant health and reduced mortality. Partners in Health, led by Dr. Paul Farmer, and the Clinton Foundation are among the nongovernment organizations (NGOs) working with the Rwandan government to further its programs targeting poor, rural Rwandans. In education, Bridge2Rwanda, a U.S.-based NGO that promotes entrepreneurship, servant leadership and foreign direct investment, seeks to prepare exceptional young Rwandans as scholarship students to universities and colleges in the U.S. and elsewhere. After four years of education, they return to their home country as the members of the next generation of leaders in business, entrepreneurship, education and public service.
To move forward, Rwanda must do all these tasks at the same time—memorializing the past, promoting reconciliation and advancing the country’s economic development. It is an ambitious agenda, to say the least.
Despite gaps in expertise and bureaucratic delays at times, Rwanda has no shortage of can-do attitude. In a country that is both a work in progress and a work of progress, the wheels continue to turn. Given the magnitude of its needs, odds favor more progress. Moreover, given where the country has been—in the pit of despair and destruction—and how far it has come in less than two decades, there is no reason to doubt the country’s resolve.