Rwanda needs to use its human capital and abundant natural resources more productively if the country wants to be competitive in the global market, says renowned Harvard Professor, Michael Porter.
Porter, author of 17 books including Competitive Strategy and Competitive Advantage, cautioned, however, that inherited prosperity may not make a country develop.
“Countries that are prosperous are not resource economies but they create wealth,” he said, citing Singapore and Thailand as examples.
To the professor, this allows a nation to think outside the box, and also make use of its meager resources optimally.
He said Rwanda is doing extremely well in terms of economic rebuilding. Porter advised that, “It is now time to excel at what we are building.
Improve on efficiency of our production,” He was meeting with the Rwandan business community recently in Kigali from July 18 to 22.
Among the series of meetings Porter held during his stay, was one with the business community on Monday, July 21, at the Novotel Hotel.
The meeting organized by the Private Sector Federation, an umbrella body of the private sector in Rwanda attracted business leaders and government officials.
Porter challenged the private sector and the government to align their efforts and strategies in order to achieve a common goal—private sector as an engine for economic development.
To achieve this, he said, Rwanda should try to restructure its institutions to avoid duplication of roles and wasting meager resources.
Rwanda Development Board (RDB)—an amalgamation of seven government institutions—shows the government’s commitment to stop duplication of work.
The challenge, according to Porter, is now to make RDB work efficiently.
For the private sector, PSF will also have to reorganize the business community into what Porter called clusters. A cluster is a set of businesses and firms engaged in related activities and compliment each other.
In Rwanda, the private sector is organized into sector specific chambers grouped under one umbrella—PSF, which are not necessarily, clusters.
He advised that PSF will have to be more focused in organizing productive clusters.
The professor cited Kenya’s cut flower cluster that has been yielding more than $200 million (Frw108.5 billion) over the last few years, a far higher total revenue than many of Rwanda’s exports.
On the performance of investments and exports, Porter, referring to the World Bank Doing Business in 2007 report, said Rwanda is not attracting enough foreign direct investments (FDIs) and not selling enough abroad because of low productivity levels.
“Rwanda is doing well on political stability but hasn’t made a breakthrough in terms of FDIs,” he observed, but said there is a commitment to achieve this in the next five years.
Rwanda is now investing, heavily, in both hard and soft infrastructure development. The professor said this is a good move because it will enhance productivity.
Rwanda took over from Uganda as the EAC chair during the East Africa Investment Conference late last month. Porter said now is the time for Rwanda to take advantage of membership in the regional economic organization.
“Rwanda, a landlocked country, is largely dependent on its neighbours. All efforts must now be geared towards benefiting from integration,” he said.