Private sector devt key to attaining middle income status - WB official

The annual meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) bring together central bankers, ministers of finance and development, private sector executives, and academics to discuss issues of global concern, including the world economic outlook, poverty eradication efforts, economic development, and aid effectiveness.
Turk (left) chats with Finance minister Claver Gatete last week. (John Mbanda)
Turk (left) chats with Finance minister Claver Gatete last week. (John Mbanda)

The annual meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) bring together central bankers, ministers of finance and development, private sector executives, and academics to discuss issues of global concern, including the world economic outlook, poverty eradication efforts, economic development, and aid effectiveness. Carolyn Turk, the World Bank Rwanda country manager, talked to The New Times’ Kenneth Agutamba and Ben Gasore last week before she left for Washington, DC, where this year’s meetings will take place from October 10-12, 2014. Excerpts:

Who will be in your company from Rwanda?

These annual meetings provide an opportunity for all the member countries of the World Bank to come together and discuss issues confronting the global economy.

So, typically, each country will send both their ministers for finance and governors of the treasuries or central banks. Rwanda will be represented by the Governor of the central bank, the Minister for Finance and other senior officials.

Will you be presenting anything specific on Rwanda during the meetings?

There will be parallel meetings so I personally cannot attend all of them. However, for some of these sessions, there are other ministers who have been invited from Rwanda to be panelists.

For example, one of the last meetings on the schedule is about global value chains and transforming global trade, and the Minister for East African Community, Valentine Rugwabiza, will be part of that panel.

There are other sessions on forward looking growth strategies where the Mayor of the City of Kigali will be a panelist. So for these different sessions, they try to put senior officials from around the world on the panels rather than World Bank staff.

So which sessions will you attend specifically?

I will attend most of the sessions that will feature ministers from Rwanda. In addition, I will attend the bilateral meetings between the Government of Rwanda and the World Bank officials to discuss various issues to do with the portfolio.

For example, we will have a meeting with the World Bank regional vice-president where we will discuss all the operations taking place in Rwanda and the way forward.

We’ll also have specific discussions with teams of particular projects that are under discussion at the moment such as the Rusizi hydro-power project which also involves DRC and Burundi.

How is your support envelope for Rwanda like, currently?

In July, we announced a new three-year envelope of financing to Rwanda of approximately $730 million. Now that is the national project.

If we include regional projects that Rwanda is interested in like some of these power projects that go across the borders, we are looking at committing about $900 million in Rwanda over the next three fiscal years.

The World Bank has the same fiscal year as the Government of Rwanda, so we are in the first year already.

1412548566The-Electricity-dam-on-Nyabarongo-river
A hydro-electric dam on Nyabarongo river. Increase in electricity generation, according to Turk, will help spur economic growth. (John Mbanda)

We are expecting this month to take to our board two operations of $100 million each to help the Government of Rwanda with projects around accountable governance, public financial management, decentralisation and open data as one operation. Then the other operation will be to support the agriculture sector.

How do you identify priority areas to support?

We do that in dialogue with the government. So the government looks at its development strategy ( eg EDPRS2) and how much it costs to finance it.

They look at how much can be raised from domestic revenues and the different donors and then look at the difference among the donors to figure out which donor has the best expertise and the best kind of money for the different sectors.

We have been discussing with the Ministry of Finance over the last few months on how the World Bank should allocate its financing over the coming years and we will be focusing on energy, urban development (including the development of secondary cities), agriculture, social protection, and accountable governance.

Those are the five main areas but we might have smaller operations that are outside those but I would expect the bulk of the $730 million to go on those five main areas.

Do you see Rwanda meeting its ambitious national development targets with deadlines of 2017 and 2020 drawing closer?

For energy, when I look at the medium term strategy that the Ministry of Infrastructure has put in place for developing new sources of energy, I am optimistic about the future.

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The power house on Nyabarongo river. (John Mbanda)

There is the Rusumo power project that will come on the national grid at some stage, the Kivu Watt project and a range of smaller hydro power projects. Plus you’ve got the possibility of buying cheap energy from the region as well.

What should Rwanda focus on now in order to attain middle income status by 2020?

Looking at the big picture, Rwanda has got to move from the kind of economy that is driven by public sector investment which is financed significantly by donors to an economic growth model that is much more driven by private sector investment.

They will need to do that if they want to attain a middle income status and maintain it into the future. Then the question is what do you need to do to attract private sector investment. Well, the country has done well on the regulatory side. They have eased doing business.

To further improve the competitiveness of the economy, we have to look at issues like the cost of electricity which will come down in the medium term as new sources of power are generated and those in the sub-region improved.

Improvements in the transport sector are important as well.

It is still quite expensive to get a container from Mombasa or Dar-es-Salaam and move it all the way to Kigali. There are quite a number of non-tariff barriers that need to be alleviated in order to make that process to happen quickly.

Rwanda is also a small market. If an investor is coming here, they are not just looking at the Rwandan market. What the investors think of is Rwanda plus eastern DRC, Burundi and southern Uganda so having effective trading links here is important.

These are some of the challenges that Rwanda needs to address in order to meet those targets.

Creating jobs?

The government cannot create jobs directly but can facilitate the private sector to develop which will, in turn, help to create jobs.

The government can create an enabling environment for the job creators and the job creators in this case are the private sector. In Rwanda, it’s the small and medium enterprises that create the most employment.

That’s a sector that really needs to survive and grow and be sustained and supported over the coming few years.

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