Agriculture, a low hanging fruit for Rwanda’s growth

About two to three years ago, I attended a conference where one of the speakers passionately spoke about the importance of focusing on the growth of the agricultural sector for Rwanda’s growth. He brought out thought-provoking points but my mind then was bent on the increase of off-farm activity in the country as the ideal and more up-to-date strategy for growth.

 Recently, with events that have followed the Covid-19 virus pandemic, I couldn’t help but think about the necessity of a country in having the ability to produce enough food to feed its population in the face of unpredictable global issues and how the agricultural sector and other sectors that feed off it such as food manufacturing could be ‘low hanging fruits’ for Rwanda, in its journey toward becoming a high-income county.

 

A lot of economic activity was greatly slowed down or stopped due to government efforts to reduce or cut the spread of the Covid-19 virus, including the movement of people across borders. Activities that were allowed to run were those involved in production and supply of food and medical goods; they were termed as ‘essential’, items that rank top in human basic needs. 

 

The agricultural sector is the sector that was kind of the ‘last man standing’ because it was fully an ‘essential sector’. On the other hand, majority of subsectors in the industry and services sectors were considered riskier when it comes to the transmission of the virus and had to stop their activity during the lockdown period or limit the manpower during the partial lockdown period in order to slow its spread. In addition to being essential, the agricultural sector least depends on imports compared to the other sectors and therefore could go on, least disturbed by the general shortage of supply globally. The restrictions on other sectors, however, had negative spillovers on the agricultural sector’s demand of products due to a reduced income level for people in general or limited logistical support from other sectors.

 

After the Corona pandemic brought out scenarios that many of us never thought possible, I allowed my mind to think of an extreme case that thankfully has not happened, but which was not so far from reality; what if countries were forced into a situation where they could not receive or send even cargo from and to other countries either via road, sea, air or the upcoming rail network?  How easy would it be for the economy to survive?

Due to the immense economic advantages of trading and opening up the country to the international community, Rwanda continues to improve on its openness through various trade partnerships and immigration policies. A caveat to openness is that, the more open a country is, the more vulnerable it is to negative incidents that affect its key trading partners, hence a need for strong cushion sectors to mitigate the potential impact on the country in such times. Based on repetitive global shocks such as the financial crisis of 2008-2009, Brexit, Trade wars between significant players in global trade e.g. U.S. and China and global pandemics and who knows what else in the future, the agricultural sector is a key sector to be developed and modernized, not only to continue playing its role in economic growth under normal situations, but to constitute a buffer in the case of global crisis.

Agriculture seems like a reasonable field to focus on as a key driver of Rwanda’s growth, with the skills and experience that we have as a population for now. Investment in this sector will have significant positive effects on the economy because of several of its characteristics. Firstly, the agricultural sector has a 28% share in Rwanda’s overall Gross Domestic Product (GDP), second to the services sector. Secondly, it is a source of income for a better part of the population; 68.4% of the total workforce works in the agricultural sector, according to last the Labor survey in February 2020. Thirdly, it contributes significantly to the country’s trade balance, which is useful for sustaining the country’s currency. For instance, agricultural products and by-products such as those of the milling industry comprised 30.8% of 2019’s formal exports. Fourthly, production in the sector depends the least on global trade compared to other sectors and is therefore is protected from international shocks. Lastly, this is a sector that we can more cheaply grow given our human capital since it is less skill-intensive compared to the industrial and services sector.

A strategic area for investment for the government would be on research and development (R&D) on agricultural production and its by-products. This includes research on: Highly productive species that would flourish in the Rwandan geography and that can be incubated in the country, irrigation schemes that require minimal investment or working capital, farming methods that sustain production in adverse weather conditions, how to recycle water for most efficient uses and sustain its supply, efficient ways of using the small surface area of Rwanda for agricultural production despite the country being one of the most dense countries, just to mention a few.

Apart from research on improving the level of production for food security, research on the quality will increase the demand of these products both locally and internationally, for both consumption and use for industrial production such as in food manufacturing. With an increased demand for Rwanda’s agricultural products, there will be better prices for the farmers, and this sector that feeds so many Rwandans will be the same one that will take them out of poverty traps. The country should also venture into a more diverse agro-processing sector to increase further the benefits of agricultural practitioners.

Care must be taken not to copy paste strategies that have worked in other countries as this may lead to inefficient solutions and therefore waste resources that are already limited in the country. Traditional ways that use minimal costs but have the same or better results can be looked into.

The government of Rwanda is already doing so much to alleviate its citizens’ living standards through multi-sectoral strategies including in the agricultural sector. A little bit more focus on research on how to make Rwanda food secure on its own and meet its agricultural by-products’ (agro-processors) need for raw materials will go a long way in improving the country’s income level using minimal cost considering the sector’s resilience despite the world problems and its already existing role in sustaining the survival of a large part of the population so far.

editor@newtimesrwanda.com

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