Rwanda as a Model?

A woman in front of a Rwandan flag

After the large flows of refugees from Syria, Iraq and Afghanistan, the concern is that similar migrations to Europe are likely to emanate from Northern and Sub-Saharan Africa in the near future. To fight the causes of flight, demands are being voiced for new initiatives to promote economic development in Sub-Saharan Africa. Despite international organisations and industrialised countries having provided substantial development aid, many of the African countries still suffer from a lack of political and economic stability and consequently future prospects for the rapidly growing numbers of their young people. In Libya alone, over a million migrants from Sub-Saharan Africa are thought to be waiting for an opportunity to flee across the Mediterranean. Taking steps to try to stem the migrant flows is therefore high on the agenda of German and European foreign and security policy. It will take sustainable reforms that not only result in substantial economic growth but also in as much employment as possible to reduce the incentives for people to consider migration to Europe.

Many international and national development experts and politicians refer to Rwanda above all as a prime example of efficient development policy in Sub-Saharan Africa. The only reservations mentioned have to do with its authoritarian system of government. That is not, however, seen as an obstacle to the country’s further development as the government is believed to pursue realistic goals in an efficient manner. Rwanda is considered a model developmental dictatorship.

The main indicators for this positive evaluation are the growth of the gross national income (GNI), the per-capita income (PCI), the change in the poverty rate, and the country’s overall ranking (163 out of 186) in the Human Development Index (HDI). All these indicators are positive, as is the one for migration since there has been no significant emigration to date despite high demographic pressure.

Restoration of the Rwandan State

Initially, the main goal of the Rwandan Patriotic Front (RPF), which had emerged victorious from the civil war in 1994 under the leadership of today’s President Paul Kagame, was to consolidate its power and establish a new political system. Financially, this was made possible through massive economic reconstruction aid provided by international organisations, the EU, the UK, the Scandinavian and German-speaking donor countries and the USA; that aid was particularly generous because of the genocide perpetrated towards the end of the civil war. After the dictator Mobutu had been overthrown with substantial support from the Rwandan army and L. D. Kabila had taken power in the DRC (Democratic Republic of the Congo), Rwanda’s leadership elite was hoping that in return its country would benefit from the economic potential of the DRC. However, it fell out with Kabila as early as 1998. During the resulting regional conflict, considerable economic resources in eastern Congo remained under Rwandan influence. Even after the peace accord in the DRC, Rwanda was able to avail itself of considerable revenues from the mining of cassiterite, wolframite, coltan, gold, etc., in later years also via rebel movements under its control. These interventions came under increasing criticism from the donor countries. They were finally brought to an end by an extended mandate for the United Nations Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO) and by sanctions imposed on Rwanda by its major donors.

Vision 2020

It was not until the Rwandan government encountered mounting difficulties with its Congo policy that the development strategy entitled Rwanda Vision 2020 gained in importance, which had been devised in conjunction with the UN Millennium Development Goals (MDG). The purpose of the programme is threefold. It is meant to overcome the deep rift in Rwandan society through new common goals and prospects, motivate the donor countries to provide generous support and offer guidance for the envisaged far-reaching socioeconomic reforms. The main goal was defined as the creation of a knowledge-based economy and of a service hub of international importance so as to foster Rwanda’s development into a middle-income country that would become independent of external development aid. The key pillar is to be a strong and efficient state with a productive and market-oriented agricultural sector, a competitive private economy focusing on services, effective education and healthcare systems and a modern infrastructure.

Initially, international experts were not convinced that the programme had significant chances of being realised. Meanwhile, they have been impressed by the fact that the transformation has been successful in many areas. The poverty rate among the population has decreased, primary school attendance is approaching 100 per cent, the number of university students has risen to 87,000. By 2013, the public health insurance scheme covered 90 per cent of the population, and annual population growth had decreased to 2.6 per cent. While it must be acknowledged that this progress was made possible to a large extent thanks to international reconstruction and development aid, the implementation by the Rwandan administration has been relatively efficient by contrast with other countries in Sub-Saharan Africa. Special efforts were made to meet the conditions imposed by the international development organisations, particularly the demands for rigorous measures to fight corruption and mass poverty, improvements to the social conditions, and administrative efficiency.

Agricultural and Land Reform

Initially, the new political elite showed little interest in agriculture although it provided over 80 per cent of the population with their livelihoods. After the failure of the Congolese adventure, it became clear that the development goals could only be achieved if the country’s agriculture was modernised. Greater productivity was essential for feeding the rapidly growing population and for the foreign currency revenues from exporting cash crops.

The main problem of Rwandan agriculture is the scarcity of arable land due to population density and its uneven distribution. Almost all of the 1.6 million hectares of suitable land are cultivated in the form of small farms. 24 per cent of farms with an average size of two hectares cover some 70 per cent of the country. A further 30 per cent with an average size of 0.76 hectare own 24 per cent of the country. The largest group, 36 per cent, cultivates just six per cent of the arable land with an average size of 0.11 hectare. 11.5 per cent of rural households no longer own any land.

As one of the prerequisites for the reform, a scheme to register the entire land ownership was started in 2008 with aid from Germany. The traditional rights in land were replaced by tenure rights; the state became the owner of the arable land and granted a type of leasehold for hillside land parcels for 99 years to small farming businesses corresponding to the previously existing rights in land. The titles can be traded in order to facilitate a land market and loans. However, there is a restriction on dividing land into parcels covering less than one hectare. Valley floors and alluvial plains remained the property of the state and were leased commercially.

The systematic registration of the entire land use was completed in 2013. The land right arrangements enabled the setting up of a Crop Intensification Programme (CIP), intended to transform the subsistence agriculture into a commercial agriculture. The goal is a substantial increase in productivity. In terms of techniques, the measures that are put in place represent conventional solutions. Gradually, small farms are integrated more or less voluntarily into production cooperatives or collectives, in which they jointly engage in the sowing, cultivating, fertilising and harvesting of crops chosen by the Agriculture Board (besides the export crops of tea, coffee, and pyrethrum the staples of maize, wheat, rice, beans, potatoes, manioc and bananas). These collectives receive improved seeds, pesticides and herbicides, and artificial fertilizer. Where appropriate, the land is terraced and erosion protection measures are put in place. People are required to give up their individual huts and move into village settlements.

Reports about the results of the reform efforts to date indicate progress, but remain vague on some important details. Thanks to the use of chemical fertilizers and improved seeds, agricultural output had doubled by 2012. The conditions for increasing production have since been improved further. It is reported that 80 per cent of fields at risk of erosion have been protected, 40 per cent of the fields on sloping land where terracing was possible have been transformed and in part equipped with irrigation systems. The soil quality of the terraces has been improved through the use of lime and manure. Thanks to the “One Cow per Poor Family Programme”, 47 per cent of farming households have at least one cow and 53 per cent at least one goat. Furthermore, the area of cultivated land is to be increased by five per cent, namely by converting marshland into irrigation systems enabling two harvests of vegetables and rice and by terracing even very steep slopes. Measured by the produced volumes of crops, the reform has been extremely successful. Currently, it is thought that 40 to 50 per cent of Rwanda’s land area is cultivated under the CIP; this percentage is to rise to 70 by 2020. At the same time, the proportion of people working in agriculture is to reduce from the current figure of around 70 per cent to 50 per cent of the working-age population.

However, it has since emerged that the programme does contain some technical and economic risks. As the World Bank stated in its last report, the structural shortcomings remain. The trend towards monocultures and the rise in livestock numbers have increased the threat of pest infestations and diseases. Criticisms focus in particular on the fact that the small-scale farmers have lost virtually all control over what and when they sow or plant, how they cultivate their fields, what inputs they must use, what they must pay for them and at which price their produce is sold. By law, all these decisions are taken by the management of the production collective or cooperative, which in turn receives its instructions from the technical services and the local administration whose employees have vowed to the president in an imihigo, i. e. personal contract, that specific planning targets would be achieved. The farmers themselves can be punished by the local administration and the police for violations of the constraints and stipulations by fines and imprisonment and ultimately by withdrawal of their land title.

Depending on the perspective, the programme is essentially a form of land grabbing by the state or a controlled commercialisation of agriculture based on command economy principles, where farmers now only possess formal land rights. Field studies conducted in recent years show that this top-down, coercive system is encountering problems. Many small farmers have only adopted the modern techniques in part. The efficiency and effectiveness of the advisory services have often been inadequate. Central programme directives and the decentralised implementation of the programme may also enable a monopolistic exploitation of the farmers through the enforced purchase of the inputs on the one hand and local connections between traders, party officials and general administrative staff on the other. While small farmers in Rwanda used to be able to make themselves heard through clientelist networks if they had a complaint, as still happens in other African countries, and this afforded them a certain level of protection of their interests, they are now at the mercy of the responsible local representatives of the state and of the RPF.

Why was the Rwandan government able to push through the programme without serious opposition from the farmers? The answer has partly to do with Rwandan tradition. Even under the precolonial monarchy and subsequently under Belgian colonial rule, the farmers had been “subjects”, and they mostly retained this mentality in the post-colonial country. This pre-existing mindset of submissiveness to powerlessness was reinforced by the events of the 1990s: namely massive flows of refugees to the neighbouring countries, people returning with the stigma of involvement in genocide, and the restorative justice pursued by the new government. Consequently, farmers have allowed themselves to be integrated into the CIP system without protest, while smallholders, day labourers and the landless depend on government-run employment programmes, microcredit programmes, health insurance, etc.

Labour Market Policy

The commercialisation of agriculture is inevitably affecting the labour market. According to government estimates, the aim of reducing the number of people working in agriculture to 50 per cent of the working-age population means that 200,000 new jobs need to be created each year. However, as this figure is already short of what will be needed for the strong cohorts of the current population under sixteen and there are at least a further 350,000 people who currently still work in agriculture expected to join the number of job seekers plus some 430,000 urban unemployed, it is unlikely that the planned restructuring of the labour market will be successful.

Although the modern private sector benefits from the government’s infrastructure projects, it is still too small to satisfy such a large demand for jobs. There are also limits to the potential of encouraging informal employment through microfinance. The same goes for the demand for simple services by the upper and middle classes. The development of modern information, communication and financial services is in its infancy, and tourism, while very lucrative, has limited potential. Mining too will not provide many more jobs. Construction is the only sector where there is an increased demand for labour. But its boom is mostly state-funded and will therefore ultimately come to an end. Then, the only option for the Rwandan labour market is labour-intensive industry and skilled trades. But there are hardly any examples of those types of jobs emerging.

The goals of Vision 2020 will probably only be achieved to a very limited extent where the labour market is concerned. That means that there are likely to be well over two million unemployed or underemployed young people. The government will try to keep most of them in rural areas and small towns, bu t the pressure to move to the metropolis of Kigali or to attempt illegal emigration will increase.

Financial Problems

Another challenge has been the funding of the state administration and infrastructure. Rwanda received substantial reconstruction and development aid after the 1994 genocide, 8.5 billion U.S. dollars from OECD states alone. Rwanda is one of the countries receiving most aid worldwide in relative terms, i. e. per capita of the population. By means of clever negotiation, the government succeeded in persuading the donors to provide a substantial part as budget aid. This allowed the government to limit the country’s large budget deficit resulting from its ambitious infrastructure projects. But Rwanda’s high dependence on foreign aid remains, and this also applies to the balance of payments and balance of trade. The main export commodities are still tea, coffee and mining products, together making up approximately 45 per cent of all exports. However, the volume of imports, including food, was roughly three times the volume of exports in 2015. Of course, this affects the balance of payments. The transfers from abroad – predominantly development cooperation funds and some direct foreign investments – cover less than half of the balance of payments deficit. Consequently, foreign debt is rising. However, as Rwanda’s entire debt was written off in 2006 the amount of public debt is not yet at a dangerous level, but its rapid growth is cause for concern.

Rwanda as a Development Model?

The Rwandan government will encounter mounting problems over the coming years. The World Bank fears that economic growth will slow down. This still depends on state interventions. The completion of the delayed major power grid projects and the expansion of the Kigali Convention Centre and the further expansion of the new agriculture structure are currently still fuelling economic growth. Once this phase comes to an end, it will become apparent to what extent the high dependence on foreign development aid will have reduced, whether the country will be capable of financing its social projects from its own funds and whether it will have achieved the move into the category of a middle-income country.

There are some serious doubts on that score. The success of the Kigali Convention Centre and lucrative tourism – both important potential sources of foreign currency revenue – will depend greatly on stability in the region. But this is set to come under serious pressure in the next few years in three of the four neighbouring countries. Burundi is suffering from an open constitutional crisis, massive oppression of the opposition, civil society and the free media. The danger is that civil unrest can flare up at any time. In the DRC, the incumbent president has been preventing the elections stipulated by the constitution since the end of 2016 and it is only a question of time before the population sets against this glissement (slippage). In Uganda, the end to the rule of President Museveni, which has lasted for over 30 years, could result in political turbulences.

However, even if there is no disruption from outside, a self-sustaining development process is unlikely. The difficulties with the CIP and land consolidation have already been mentioned. Another issue to be highlighted relates to the increasing problems of the food supply as the population keeps growing, albeit at a slower pace. Other important sources of income, such as the export of minerals, coffee and tea, are limited in terms of production volumes and suffer from fluctuating prices. Consequently, the dynamics of the Rwandan economy will continue to depend very substantially on a public budget financed by high international subsidies or loans. Whether the Rwandan government will succeed in convincing the major bilateral donors of the USA, the UK and the EU member states to continue providing subsidies and loans in the required amounts will be down to political decisions. While Rwanda is not one of the new key countries in terms of the migration issue, the most important donors will most likely not want to give up overnight on a showpiece that they have supported for decades, even if it is obviously not suitable to serve as a model for other countries.

Rwanda as a Model Society?

The issues affecting Rwandan development have to do with the social consequences of the transformation from an economy based on traditional subsistence agriculture to a combination of a state-controlled modern agriculture and an urban service economy. The thinking in this area has been influenced by the realisation of the Rwandan government that retaining the existing structures could no longer satisfy the basic needs of a growing part of the population. The concept for the country’s future development was also influenced by the fact that the current government cannot found its legitimacy either on tradition or on democratic legitimisation and therefore relies on the promise of a new society of economic prosperity. Performing the role of a knowledge society and of an international service hub is in line with the interests of a partly cosmopolitan ruling elite, for which the appropriate economic, technical, cultural and academic infrastructure and educational opportunities have developed in Kigali. The members of this elite pin their hopes on scientific and organisational solutions aimed at social engineering, such as land consolidation and the CIP.

Heading the new society is the former leadership of the RPF and its military wing, the RPA, both of which were marked by the Rwandan civil war. Below this leadership tier is a wider tier of government officials, professionals and academics, media representatives and businesspeople, many of whom lead a modern lifestyle. Below that is the tier of the lower administrative officials and the RPF, the teachers, healthcare workers, police officers, soldiers and small business owners, salespeople and office workers, etc. All in all, this upper and middle class probably makes up around ten per cent of the population.

The lower class, some 90 per cent of the population, includes people from various milieus of partly varying interests. There is thus an urban lower class comprising construction workers, factory workers, tradesmen, seasonal labourers and domestic staff. The small-scale farmers with at least 0.75 hectare of land are the target group of the land consolidation. Below them come the smallholders, who often work an area of just 0.2 hectare, and the farm labourers with regular work.

Finally, at the very bottom, there is a large number of landless people, who do casual labour in agriculture or work on a cash-for-work basis, but which the government concept envisages working outside agriculture in future.

They do not figure in the Vision 2020, but their numbers increase by hundreds of thousands each year, most of them young people. Only some of them can actually find work. The occasionally voiced opinion that the problem of this group of people without land or employment can be solved with microcredits is an illusion considering the situation in Rwanda. Neither the knowledge economy nor commercial agriculture will provide sufficient jobs. As in other emerging countries, the solution could lie in highly labour-intensive industrialisation. But how can that be realised under the difficult geographic and demographic conditions, such as the lack in energy and raw materials, high transport costs and the low level of industrial competence? The government is hoping for direct foreign investments and has made great efforts to achieve a good ranking in the Global Competitiveness Index – without significant effect to date. The only other option would be migration – but where to? In any case, a solution will need to be found. In the long term, the growing numbers of the landless proletariat carry the risk of serious social upheavals – and a definite failure of the Rwandan model.

Lessons for Development Cooperation

By labelling Rwanda a model for development cooperation, a “darling” or “shooting star”, international Development Cooperation has not done itself any favours. The factors affecting structural development, lack of land, overpopulation, lack of raw materials, the landlocked location, rulership traditions, civil war and genocide, are not replicated even remotely in other African countries, maybe with the exception of the sister state of Burundi. One should not disregard the fact that Rwanda’s government has devised a development strategy and embarked on major reforms and infrastructure projects, set up a relatively efficient administrative apparatus and is making somewhat effective efforts to combat low-level corruption. One must credit the leadership for putting the country’s economic and social problems on the agenda as a unique challenge. But that is not enough. On the negative side is the realisation that there are covert arrangements and practices in place behind the declarations of intent and principles promoted to the outside world in this authoritarian state that don’t serve the supposed goal but the aim of stabilising the power structure, granting advantages to some and discriminating against other and ultimately contributing to an explosive disparity.

What Lessons Should Be Learnt from This?

Lesson 1: Because of the security interests, which include the limitation of the causes of flight and the prevention or stemming of migrant flows, the decision to allocate development cooperation funds cannot be based solely on criteria of democratic and good governance. When engaging in cooperation with authoritarian states, it is therefore all the more important to carefully analyse the political, social and economic consequences of the particular programmes and to configure the cooperation in such a way as to avoid strengthening the concentration of power and conflict potentials.

Lesson 2: Because of the social and political dimensions and the increasing importance of development cooperation, a joint binding analysis should be conducted by the European donors at least and appropriate coordinated action taken to avoid problematic measures.

Lesson 3: The most urgent challenge in most Sub-Saharan countries is the lack of jobs affecting millions of young people – a problem that had been given low priority in the Millennium Development Goals, although it was already on the horizon 20 years ago. It was illusory even then to assume that most of the young people could be induced to stay on the rural areas even with improvements in agriculture.

Lesson 4: Replacing traditional subsistence farming by private or state-controlled modern commercial agricultural businesses or pseudo cooperatives, such as those in Rwanda, do not constitute a solution. Not only does that approach involve land grabbing, it also reduces the farmers’ sense of responsibility and independence, encourages the rural exodus and international migration and increases vulnerability to climate-related and other risks.

Lesson 5: In countries with a land shortage and an oversupply of agricultural labour, labour-intensive industrialisation is the only medium-term solution to underemployment, unemployment and a lack of prospects. The deregulation of the national economies that has taken place in Africa over the last few years has in part contributed to deindustrialisation. It would therefore be wise to examine the effects of the existing arrangements and instruments. It is to be hoped that the so-called Investment Compacts initiated by the Federal Ministry for Economic Cooperation and Development (BMZ) in collaboration with the G20 Africa Partnership can be kept free from political instrumentalisation and stifling national and international bureaucracy.

There are no signs as yet of a departure from the entrenched ways of development cooperation and of any fundamentally new initiatives. A concentration of bilateral and multilateral European development cooperation on large investment funds that would promote a labour-intensive processing industry in Africa and accept the entailed risks combined with appropriate comprehensive education measures would ultimately be more cost-effective than emergency aid and measures to fight people smugglers, advisory centres and assistance for returnees even if some losses did materialise. It would be important to open up real economic opportunities for as large a number of dynamic young adults as possible. Migration to Europe must not remain the only way for them to escape the lack of economic prospects. Because the continent’s fundamental problems had been ignored for decades, this challenge has now taken on such proportions that only large-scale solutions will have a chance of succeeding. The “Marshall Plan” for Africa that Federal Minister Müller has called for will be successful if it differs from the prototype in not being based primarily on state planning, state structures and collaborations but offering better opportunities to dynamic forces in all parts of society.

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Dr. Peter Molt is Honorary Professor of Development Policy at Trier University.

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