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Strong institutions key - Prof. Collier

KIGALI - Leaders have been urged to focus on building effective and robust institutions to ascertain the transformation of the Rwandan economy.The call was made by Paul Collier, a Professor of Economics and Director for the Centre for the Study of African Economies at The University of Oxford during a public lecture.

KIGALI - Leaders have been urged to focus on building effective and robust institutions to ascertain the transformation of the Rwandan economy.

The call was made by Paul Collier, a Professor of Economics and Director for the Centre for the Study of African Economies at The University of Oxford during a public lecture.

The lecture, which was hosted at KIST University, Kigali, was attended by over 50 public and private officials, including ministers Francois Kanimba, John Rwangomba, the CEO of RDB, John Gara, CEO of PSF, Roger Munyapenda, amongst others.

Collier acknowledged that Rwanda’s leadership achieved a lot in a small period of time. However, he noted that the country must not focus on leadership achievements only, but build institutional structures which make societies, in the future, less dependent on leaders.

“Institutions are not just rules on paper. Africa has had a lot of rules on paper, but they have not amounted to effective institutions,” Collier said.

“Effective institutions are the ones that people believe in and follow. The rules have to be understood and supported by a critical mass of citizens.”

“Societies can not guarantee that their leaders will always be wonderful, but they can rely on well functioning institutions to maintain economic growth and make their lives better.”

He likened Africa to Germany, which after WWII, became the worst economy in Europe, but later emerged into the most robust economy on the continent.

“The German economy was badly messed up that it went into hyper inflation. But they woke up with a burning sense of “never again”, he said.

“Some parts of Africa have indicated the same awakening signs, not in the sense of curbing hyper inflation, but in the respect of stopping the abuse of the economy and the plunder of the continent”.

Collier highlighted the importance of city expansion and urbanisation, saying that cities should be the engine of economic success by pulling people out of the rural areas.

“If you move people from the villages to the cities, you double productivity. As you do that, urban growth becomes the ally of national prosperity because as you pull people to the cities, their income size goes up,” he said.

“This should not be taken as a tension between rural and urban development. Rural prosperity is greatly aided by a successful and rapid urban growth”.

Collier told his audience that rather than rely on aid and debts, Rwanda should lure massive domestic and foreign investment.

“You must reassure investors and bondholders by building credible systems that are trusted by the critical mass. This will lower your risk equilibrium and lure investors to invest in the economy in a productive way,” he advised.

He commended Rwanda for investing in private sector development, which significantly moved the country up in the doing business index.

The Professor said that for Rwanda to become a regional haven, it must create jobs for the uneducated youth and also ensure that relationships within EAC are peaceful.

Francois Kanimba, the Minister of Trade and Industry, said that Collier’s lecture was difficult to challenge given that some parts of his models were well implemented in the country.

“The country has developed tremendously since the 1994Genocide against the Tutsi . Economic growth has been aided and supported by the majority of its citizens who are confident in the leadership,” Kanimba said.

Professor Paul Collier also worked as the Director of the Development Research Group of the World Bank from 1998-2003 and has authored three books.

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