The role of the state in creating a vibrant private sector economy

Monday this week saw a cross section of development partners and government officials attend the annual high level meeting dubbed ‘Development Partners.

Monday this week saw a cross section of development partners and government officials attend the annual high level meeting dubbed ‘Development Partners.

Meeting’ (DPM), with the central focus on the predictability of funding to Rwanda’s poverty reduction strategies.

The meeting with development partners is welcome because the partners still support a sizeable chunk of the national budget.

Thus they have a say in what the country plans in as far as its economic development is concerned.

However, it would be great if African countries like Rwanda engaged in trade talks as equals with these development partners.

One may look forward with hope that sooner than later, Rwanda and the rest of Africa will be able to support their budgets without the need to look to the west - to the development partners.

Apparently this is still far off as developing countries still face numerous constraints in as far as trading with the developed world is concerned.

To overcome the poverty trap that poor countries like Rwanda are entangled in, a number of key areas of the economy must be given priority in order to be the basis on which national development can hinge.

In all this, the role of the private sector can not be ignored or underestimated if a country is to be on the road towards development.

Private entrepreneurs with the motive of making profits are the engine of development in a free enterprise economy which has been embraced by most developing countries.

However, it is also paramount to highlight the fact that the state has a limited role in doing business which is the basis of national development, it must be stated that it still is central to the same national project-development and transformation.

The state must at all times play the guiding role for the private sector and more so take charge of strategic sectors of the economy.

Going by this, it can be argued that the current nature of engagement between developing countries and the development partners-donors is aimed at providing remedial service as it is well known that aid can not jumpstart any country’s development process.

The current engagement with the development partners will in no doubt help Rwanda to develop its infrastructure which can provide a good environment for private business.

This is where the role of the state becomes very critical in the national development process of young nations and most especially those that have emerged from conflict situations.

The state has the role of taking charge of strategic assets like natural resources and also helps in the process of human resources development.

Rwanda is well known in the region to have taken giant steps in developing its future human resource base.

Through the emphasis on Information and Communication Technology, Rwanda is on the roadmap to having a modern human resource base with desirable skills.

The availability of rich natural resources like oil, can jumpstart the process of national development.

This in essence will most times unburden the leadership of such a country from the constant trips to western capitals in search of development assistance.

Dealing with foreign countries and international development partners may sometimes mean that the country will have to sacrifice some level of its sovereignty.

Rwanda is unique in its leadership that clearly understands that such resources can be only useful if properly managed.

This again shows the importance of developing a highly skilled and corruption free human resource which is of great importance in the management of the country’s resources.

The state remains with the core duty of helping the private sector to grow by creating a good environment for doing business and taking the initiative to attract foreign direct investments in the country.

This is out of the realization that private-sector-led growth is the way to go.

Private investors especially local capitalists and in some cases multinationals with enough research and development capital can help to develop the country’s strategic industries.

The state and development partners can and are well positioned to create an enabling environment for the realization of such goals-especially supporting private local capital accumulation.