The Managing Director of the World Bank Group has outlined three major priorities the government needs to harness for the country to attain middle-income status: addressing poverty, private sector, and regional integration and stability.
“The need for Rwanda to attain middle-income status is one that definitely requires two to three major priorities; the first is continue on addressing poverty because you’re not going to be able to sustain the consumption with poverty,” Sri Mulyani Indrawat said.
Indrawat was in the country, a week ago, for a three-day working visit.
During her visit, Indrawat, who is also the chief operating officer of the Bank, met top government officials and toured some of the projects funded by the World Bank.
Speaking to The New Times in an exclusive interview, she cited the private sector as the second priority.
“The private sector will definitely look at the potential market here in Rwanda but also regionally and that’s improving regional infrastructure to enhance connectivity. The third area is regional integration and stability. Rwanda has done well in maintaining the macroeconomic stability but it’s also important that neighbouring countries are stable.”
Below are the excerpts:
This is an obviously important visit by the World Bank Managing Director, are you making any specific announcements?
Well the big announcement is to reaffirm our partnership with the Government of Rwanda; we shall continue to play a constructive role in order to maintain a very good performance of the economy and continue our support in poverty reduction as well as addressing the issue of inequality.
We have already informed the government that we have a US$700 million programme for three years running up to 2017 and that will support the areas that are strongly related to poverty eradication, addressing the issues of inequality and strengthening regional integration given that Rwanda is a landlocked country.
Our support in agriculture, infrastructure, both energy and transport for especially regional integration, will continue. But also important are issues of social protection, fighting gender-based violence and even supporting demobilisation.
You used road transport to cross from DR Congo to Rwanda, a very good experience of East Africa’s road infrastructure. So what was your impression like?
Ooh! Indeed, Rwanda, the country of a thousand hills, ooh my God! The roads were continuously winding around the hills, going-up and down, left and right. It’s quite challenging and expensive to develop reliable road network.
But it’s the kind of challenge that your country has surmounted to develop an impressive road network from volcanoes and hills, one really gets to appreciate the challenge. As Rwanda now targets even more advanced infrastructure, it’s going to cost even more of course, if you’re to compare with countries that are not land locked and are flat.
So I really appreciate from very first hand experience of entering and going down by road. I met a lot of people and it’s really quite heartening to see the face of the people, especially women, trying to ache a living amidst the daily hurdles that they have to overcome.
I am glad all this provided me with real experience of understanding better the country, people, government challenges and I can appreciate the achievements but also sometimes understand the challenges that they’re having.
But I also see the opportunity and so admire the determination to make a progress despite physical, social or even historical challenges you’re having.
Your visit was mainly field based; you toured some of the projects where some of the WB money has been invested; what was your general impression?
Well, I can give you three profound experiences I encountered when I first crossed the border from Goma (DR Congo) to Rwanda; first, the women involved in cross-border trade. They’re all mothers, they have between five and eight children, many said they’re single and others their husbands are not really working.
For those women to prosper, it requires an enabling environment of trade which calls for both favourable policy and infrastructure. I learned that the women, especially those on the DR Congo side, face a lot of harassment, in terms of random collection of taxes by anyone at any time because of lack of clear policy and regulation.
But I think these women would benefit from a joint effort of the two governments to collaborate on putting in place facilities and the infrastructure needed to facilitate their activities.
We visited the one stop centre for anti-gender-based-violence (in Kigali), again these are women becoming victims of violence.
I was impressed by the services at the centre, I saw women receiving treatment and counseling for physical and psychological injuries suffered during their unfortunate experience; it was really quite touching to see people benefiting from such services.
I also visited this agriculture project which I really see transforming lives of many of the farmers, including the elderly because of the benefits that they told me they’re getting from the project.
And we also visited the demobilisation centre which I again saw as being of great benefit to people its serving.
So we are making sure that in each of our projects that we’re supporting here, we’re going to have noticeable results that can be traced, that can be shared and then can be reported so that there is a sense of accountability for us. But I think the most important finding was that the government has a system of accountability in place, where they can explain to the people what’s happening; that was impressive.
Agriculture and energy receive 36 per cent and 18 per cent respectively of the World Bank’s funding package to Rwanda, why are these two sectors vital?
The two sectors are very critical in addressing the issue of poverty. The agriculture sector employs almost 80 per cent of the population labour but it’s also where poverty is still concentrated because most of the population below the poverty line is located in rural areas.
So to us, improving agricultural productivity as well as making sure that farmers are having more sustainable and stable production is going to be very critical and that’s why we’re investing not only in land management but also in productivity and access to the markets so that farmers are able to have massive gains as a result of increasing productivity.
Energy certainly is very critical; electricity ratio here is still very low, at 23 per cent, and if the government wants to increase this to 70 per cent, that means you really need to invest both on a high infrastructure like power generators, transmission, and I am glad about the two important regional projects, where Rwanda will be working with its neigbours, so you really don’t have to generate yourself.
But I also think Rwanda has a lot of potential in renewable energy, for example, and that’s an area that will require a lot of investment. So our support is not only in financial investment but also providing technical advice and capacity building of the government in order to enhance efficiency.
Rwanda’s budget for the next financial year will be over Rwf1.7trilion; you have been a Minister of Finance before in your home country Indonesia, how would you advise government to allocate available resources?
Well, the need for Rwanda to attain middle-income status is one that definitely requires two to three major priorities; the first is continue on addressing poverty because without that you’re not going to be able to sustain the consumption as well as improvement of the prosperity of the people. I think that is the source of growth for Rwanda.
The second one is private sector. It is very critical and the private sector will definitely look at the potential market here in Rwanda but also regionally and that’s why investing your spending in improving regional infrastructure to enhance connectivity is very critical.
Private sector also needs good human capital and that’s why investing more in the education sector is very critical as well.
The third area is of course regional integration and stability. Rwanda has done well in maintaining the country’s macroeconomic stability but it’s also important that the countries in the neighbourhood are also stable in order not to destabilise your own stability.
Talking about poverty reduction, you also interacted with some of the women involved in cross-border trade, any memorable stories from them that you’ll go back with?
Yes, one woman was actually quite funny. She told me she has eight children, all very young which meant that every year she is delivering; she is involved in cross-border trade but the husband isn’t working; when I asked her whether her children go to school, she told me that’s why she’s actually working to make sure that their children can have a better education.
It’s really touching because if you look at what they call work, one of them was selling maize, the other making local doughnuts and another selling fruits and vegetables. As a woman with three children of my own, I think that my life is really more manageable compared to that of these women yet their faces showed happiness, determination and they weren’t complaining.
These people have been suffering but yet they still have all this life spirit which is so admirable. So, for me, I think if an institution like us can support the efforts of the government of Rwanda to create more certainty and relieve their burdens so that they can continue working but with fewer burdens, with more certainty, with no harassment, it would be a great contribution.
So what would be the best policy action to help these women to actually prosper?
Well, firstly, harmonising the trade facilities at the border; currently when you’re on the Rwandan side of the border, there are facilities such as buildings and the activities are much more coordinated.
But on DR Congo side, I think they really need to improve more both on the physical facilities that will at least provide more or less level playing field. The second one is the harmonisation of the policy and regulations especially on taxes which would help to transform this informal practice into formal and more productive transactions.
It just doesn’t make any sense if you have these two forms, if you have two different requirements on either side of the border. It will definitely help those women if you’re entering information to Rwanda that means you going to be accepted in DR Congo.
I mean if you’re just crossing the bridge, the information will not change, right? So why do you have to fill another form?
Why do you have to go through another examination, spend more time and why do you have to suffer from any harassment?
It doesn’t make any sense, this is not the border for such kind of complexities, this is just a road and I was informed that kids cross from Congo to go to school in Rwanda so I can’t imagine that all those children are going to get all the positive experiences in their lives if these issues are not addressed.
That sounds like integration to me, are you suggesting that DR Congo be invited to join the EAC in order to deal with these challenges?
Well, it is definitely for the decision for the partner states to make, not mine. If I was to draw from our Asian experience where integration has really helped these countries after they decided to merge and create bigger economic blocs, forget about the borders, they’re just imaginary lines.
Why do we dwell on borders when we feel integration is going to benefit everyone involved? And the benefits are not only economic but also regional peace and stability which are vital for prosperity of all the countries in a given region. I think the more countries are going to commit to harmonisation and common policy I think the better.
You’re passionate about regional integration and you wrote about it in an article, saying, it is the key to lasting peace. Do you think the East AfricaN Community (EAC) presents such benefits?
Definitely, when people are interacting and you don’t see the differences, you only see the same interested view to interact because they believe they can create a mutual prosperity for all. Then that is going to be something you don’t want to forego.
You see the opportunity, you see a lot of activities whether this is related to tourism, train or even services like education, communication, you become like one family. So I am so passionate about this East African Community which I am sure will definitely create mutual prosperity and collaboration.
You come at a time when Burundi, one of the partner states in EAC, is facing a political crisis, how can the region help resolve the problem?
Well, we definitely hope and expect that conflict can be solved soon, we know that the peace is necessary and the conditions for any effort to create prosperity at the end, when you rule and govern the country, your responsibility is actually to your own people; to create prosperity tofor your own people, so we are monitoring this situation and we do hope that this is going to be solved.
You said lack of economic opportunities for people is the reason we have so many conflicts in the region, how do we create opportunities for all?
The inclusivity is what will create progress or sustain it if there’s any. I think history in all parts of the world has showed us that high income growth that’s not accompanied by the inclusiveness and good governance and good institutions will easily collapse.
I come from Indonesia and Indonesia is having exactly that kind of situation; 30 years of development progress, high growth, poverty eradication but still you don’t feel there’s enough inclusion. So I believe creating prosperity in more collective and inclusive way is very important.
While here, you met the Minister for Finance, you also met President Kagame, what were the highlights of your conversation with them?
Well, first this was an opportunity for us to understand our important partnership with Rwanda, to appreciate their achievement and their efforts in all sectors, it was an opportunity to renew our trusted partnership and to be able to talk to each other frankly about the challenge that you’re still having and how you’re going to address them as well as pledge our commitment to support the efforts.
Your last remarks?
Well, this is a country which is very important, you should be very proud of the achievements made so far but you’re also facing a very huge challenge in maintaining those achievements but also in dealing with a neighbouring country that may not be always providing a favourable environment for business.
I think stay focused on how to integrate with neighbouring countries that can lock in with your own objectives for economic prosperity and the World Bank is ready to support you.