Building a resilient economy from ashes

An aerial view of the Special Economic Zone in Gasabo District. Emmanuel Kwizera.

A comparison of the Rwandan economy before the 1994 Genocide against the Tutsi and the period after would have one think that its two different countries.

Twenty-five years after the liberation, you have a country that is on steady path to development going by different indices, increased investment volumes, improving quality of life among Rwandans among other indicators.


On the other hand between 1980 and 1993 the Rwandan economy real Gross Domestic Product Growth was 1.8 per cent while during the period from 1996, the GDP growth averaged 8.1 per cent.


Prof. Thomas Kigabo, the Chief Economist at the National Bank of Rwanda who is also a renowned academic spoke to The New Times’ Collins Mwai highlighting how the country created economic growth after tragedy.



What are some of the indicators that may show in real terms the stark contrast between the two periods – pre and post liberation of Rwanda – in simple terms that can be easily understood by layman terms?

If you calculate the loans to the private sector in the banking system, between 1980 and 1990, the annual average for loans disbursed by banks was Rwf11.6 billion.

If you look at the period between 2000 and 2010, the average was Rwf201.6bn while for the period between 2011 and 2018 the annual average is about Rwf1,050.3bn.

Prof. Thomas Kigabo, the Chief Economist at the National Bank of Rwanda. Emmanuel Kwizera.

The monthly average of the two post-1994 periods by far exceeds the annual average before the 1994 genocide against the Tutsi.

The same contrast can be seen in statistics in aspects cutting across poverty reduction, education, healthcare, infrastructure development among others. It comes off as a different country.

My research over the years and papers I have published have attempted to uncover the key elements that have brought about these changes over the years.

Over time, I have been studying countries that have had a rapid growth trends over the time to find the common issues and similarities that enable growth trends.

Beyond the GDP numbers and growth, I sought to find out distribution of growth to citizens, factors of growth and common drivers.

The first element is that countries could have a lot of natural resources, ideal geographical location, and access to the sea among other tradition factors of growth.

However, you also find that some of these countries have been poor for decades showing that there is a missing element more important that the natural resources to make the factors of growth contribute to growth and development.

So, from your research, interactions and published papers, what have been the key drivers of the growth in the period after the country’s liberation putting into context the realities of the country?

Four elements are quite important; leadership, citizen consensus, institutional component and economic component with models of growth and accompanying policies. 

For leadership to play the role it has had, it has to be visionary leadership. This means leaders who have national interest and those of citizens at heart. All citizens. Leadership for economic development is extremely important.

Leaders who say that they want to see the wellbeing of Rwandans and go beyond making it a political statement; this has been evident in Rwanda as well as other countries such as Singapore. The commitment by the leadership has been a key starting point as it drives other factors and elements of growth.

The process towards high and sustainable growth often requires sacrifices, adjustments, going through challenges to achieve the objectives. Without the commitment not much can be done.

Citizen consensus, how is this created and what role does it play?

Because economic transformation also requires sacrifices not only from the leadership but also from the population, there is need for people-consensus.

For example in Rwanda, after the 1994 Genocide against the Tutsi, requesting the victims of the genocide to forgive and accept to live with the perpetrators is asking a lot from them.

Now if you look at savings, it’s a sacrifice too. To achieve that, people need to trust in the leadership and sure that they have the right intentions for citizens. This in Rwanda can be seen through lenses such as the integrity of our President and the citizens have confidence in him.

By having the kind of leaders who people can trust, it increases the consensus of the population around the development of the country. The general consensus of citizens around the common objective of development is key for aspirations such as Vision 2020, Vision 2050 and other goals that Rwanda has set out to achieve. 

It is because of this belief in the leadership and consensus that leads the public to believe in the future of the country and make investments based on predictions of growth.

Economic development is about people, people consensus is very important to not only make sure that they believe in the process and are part of it.

By ensuring access to education, health and infrastructure, it gave the public the elements and factors of production and enabled them to become involved in the development and growth.

Institutions have often been said as a make or break element in building a nation’s objectives, what was unique about Rwanda’s?

Institutional framework has been very important over the years. With the good leadership, people consensus, there is need to have institutions to implement the policies.

Robust institutions have to be transparent. The government focused on making sure that the institutions were transparent, that there was no corruption, they were predictable in their way of operation from a citizen perspective.

The institutional aspect is very important.

If you look into how the institutions were established, each was supposed to have its own mandate and responsibilities ensuring division of labour. Each institution also has to deliver as per its mandate, independently and with competent staff.

Over the years, we have seen the country invest heavily in IT systems which have filled gaps we might have had over the years. This has improved efficiency and effectiveness of the institutions.

Institutions have also been hiring young people with a fresh perspective and approach to delivery.  For instance, at the Central Bank over the last two years or so, we have hired over 100 young people across departments bringing down the average age and bringing on board innovation.

Local universities have also been playing a big role in training emerging professionals.

You mentioned economic components with models of growth and accompanying policies, how flexible have this been over the years?

In the process of creating growth and transformation, there is need for adjustments in response to trends such as changes in the structure of the economy.

Over time, in the process of implementation of policies, there are often changes that call for policy adjustments to respond to the changes. This is often through structural programmes to support the big vision.

Economies cannot grow in isolation, from your viewpoint, how has Rwandan opened its economy to the world at the same time ensuring growth?

Deliberately, the leadership of the country decided to have an open economy to be involved in external and international trade.

This also saw implementation of doing business reforms, liberalization of capital accounts so that foreign investors can feel free to come into the country. In different sectors, we have foreign direct investments.

The foreign direct investments facilitate competition, transfer of skills and technology and thinking big. This has also seen Rwandan entrepreneurs become more strategic and competitive and entered new markets.

What would you say to comments of challenges during the process of implementing economic policies?

Challenges are always going to be there. Some people like to focus on challenges but that reflects quite a lack of understanding of the context of the country.

The open economy model is important to not only allow investments and transfer of technology; it also allows Rwandans enter international markets. If we continue implementing the good policies, the challenge of trade deficit will be solved considering that most imports are capital goods.

After the investments being made, we will have increased exports and reduce imports balancing international trade. You cannot balance when you do not have infrastructure, which are currently the main priorities in investments.

Over the years, Rwanda has been able to withstand global economic shocks and other realities including when a section of donors pulled out. What enables such capacity to absorb shocks?

We consider global events slowdowns and trends as shock as opposed to fundamentals of growth. With good leadership and over the years, you build capacities of resilience.

This is done through two policies; monetary and fiscal. These two policies are used to deal with external shocks. This creates new values, ways of thinking and approaching things that reduce vulnerability to shocks.

As has been noted and commended by organization such as the IMF, Rwanda has built its capacity to anticipate and absorb shocks.

We see the shocks before they come and we anticipate them and mitigate any impact they may have. Even when donors cut their support a few years back, we still had the muscle to deal with the shocks as we had built enough reserves.

Last year when the global economy was not working for most countries due to decline in global growth, commodity prices, and exports, we had anticipated it.

Though we did not have a true picture of the exact magnitude, we curbed it by having adequate reserves.

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