Featuring:
*Two Years of H.E. Paul Kagame after elections
*Key Sector by Sector development review
*Uganda exports to Rwanda

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This presentation is designed and organised by the New Vision Internet Department.

Editor Davis J. Weddi

The country is gliding on a clear growth path

ON September 12, President Paul Kagame marked two years in office as Rwanda’s democratically-elected leader. In his speech after the elections, he made a commitment to transform the country using vision 2020, the country’s development framework. In an interview with Arthur Baguma, the Finance and Economic Planning minister, Prof. Paul Manasseh Nshuti looks at the challenges and achievements as the country strives to transform Rwandans into middle-class income earners.

QUESTION: Two years since Rwandans went to polls, what have you done in terms of fundamental transformation of the economy?

ANSWER: There has been tremendous transformation. The economy has been growing at 7-8% per annum. Inflation has been controlled and sound macro-financial policies have been implemented. There has been transformation both in terms of infrastructure, standards of living and more importantly our human development index has gone up according to the UNDP-Human Development Report, 2005. You should also put into perspective the rate at which we have checked corruption in government. We have passed the emergency stage. Now we are on a clear growth path and the challenge is to ensure that resources trickle down to the masses. The benefits of our development have to be felt by the masses. And we are doing this through ensuring transparency in public financial management and accountability in government departments.

Your predecessor is the new head of African Development Bank (ADB), a big achievement for Rwanda. Congratulations to your government upon this achievement. What should people expect from you as new finance minister?

Donald (Kaberuka) performed extremely well during his tenure. I will keep and uphold the fundamentals of economic stability, which he initiated. This includes financial development, putting in place financial systems and conducive economic policies. I will look into boosting savings through mobilisation as I improve on public financial management and development. Basically, I will proceed with the sound policies, which my predecessor was working on as I initiate new ones to meet emerging challenges. The 2020 vision of Rwanda, which is the ultimate development goal, is only 14 years away. Are you on course to meet it? We are on course and might actually meet the vision 2020 objectives as early as 2015 or 2016, if we continue at the current pace of development. That is why I emphasised the need to strengthen our public financial management and savings mobilisation, especially domestic savings. These are important factors in enabling us to meet our fundamental objectives.

But the poverty levels are still alarming.

Poverty is not an isolated problem. Poverty levels vary and change depending on the level of development. As the economy improves, they are also coming down. In regard to poverty reduction we are targeting specific key areas, especially through value addition to coffee and tea. The rationale is ensuring that resources trickle down to the masses. About 60% of the population live below the poverty line. But this has to be viewed in light of our history – the genocide had a big impact on our development. May be if we had not experienced the genocide our level of development would be far higher. So our poverty levels are not so alarming considering where we are coming from.

What is your real Gross Domestic Product (GDP) and how does it compare with the last two to four years?

Currently it is about 4.5%, which is still very good. And it is rising. Through strategic interventions we hope to raise it higher.

Most of your budget is donor-funded. Do you see a situation where this scenario will cease or decrease?

About 50% of our budget is donor-funded. But with increased domestic savings we hope to fund most of our budget in future. Again, it is important that you assess this factor against our history. May be we could by now be funding our budget 100% if it wasn’t for the genocide and its enormous impact on the socio-economic and political development of the country. We had to patch-up a lot of things after the genocide. I MUST emphasise this should not be portrayed in terms of regional comparison. You cannot compare us with other developing countries, which never experienced a disastrous event that turned a country centuries back in a span of just 100 days.

What is the state of human rights in Rwanda?

Good governance calls for respect and protection of human rights. All our systems are based on the fundamentals of democracy and human development to better the lives of Rwandans and all people living in Rwanda. Our policies entail that we also observe human rights. The future of Rwanda is very bright ... very bright indeed. Matters of national security are paramount if the peace, stability and developments ushered in by your government are to be safeguarded.

How safe is Rwanda in light of the above?

We are the safest country now. We are as secure as we would wish. If there is any threat, then that is external and we cannot allow it to cross any of our borders into the country. No threat can cross our borders into Rwanda.

How does the government relate to the opposition in this country. Does it (opposition) have an equal and fair say in the affairs of the country?

The Constitution doesn’t cater for divisions on the line of narrow opposition politics. It doesn’t embrace the phenomena of winner takes it all. It is all-inclusive and the opposition is accommodated within government. Our opposition is of policies and not opposition of chanting. The ruling party is not a ruling party in the sense of the word. We are accommodative of divergent views, which is democracy any way.

You previously served as commerce minister. How is the country’s industrial sector fairing?

We are working closely with the Ministry of Commerce to ensure that we finance this sector appropriately. The sector is growing very fastat a rate of 28% per annum up from 8% in the last decade. This is a big leap and will push our development to greater heights. The services sector is growing at 35% while tourism is about 30%.

The Rwanda currency seems to be relatively stronger compared to other local currencies in the region. What is the secret?

The reasons are many, but specifically the economy is stable and there are no uncertainties in our systems. Investors have no phobia of putting their money in our economy. Good governance is another factor that has kept our currency strong – actually good governance and stability account for 60% of the appreciation of our currency. We have also been able to tap surplus from Rwandans in the Diaspora; you call it kyeyo in Uganda. The Rwandans in the Diaspora are investing back home. I see the Rwandan currency appreciating much higher if we keep the same trend of development. I have no intentions of intervening in the near future.

Perhaps this also has something to do with the state of your banking sector?

The banking sector has been growing steadily. We have a number of foreign banks and others are being opened up. We closely follow the operations of banks through the central bank. They are operating within the regulatory framework. There is no bank on the verge of being insolvent.

How is the export sector fairing today?

It is promising and growing steadily. Within the region we basically export hides and skins, services and some minerals including gold. Sixty percent of our trade is with countries within the region. Uganda, Kenya, Tanzania, Zambia, Malawi and Kenya are our leading partners in the region. As a country we discourage cross-boarder barter trade. Barter trade doesn’t help because when you remove currency from the system you weaken it or make it irrelevant.

What about adding value to your exports?

We have an ambitious plan of value addition to most of our exports. Next year we should be able to add value to tea and also stop exporting unprocessed minerals next year.

What is your investment strategy?

We have a liberal investment regime, which gives incentives to investors. There are lots of investment opportunities in Rwanda. And I must say when we talk of investors we mean real investors not briefcase investors, who come to open up small shops that can be opened up by the local people.

How is your health sector?

We are putting a lot of money in health after education. Education takes over 30% of the budget and health follows taking over 20% of the budget.

Briefly give an overview of Information Communi-cation Technology (ICT) growth in Rwanda and the role it is playing or it is expected to play in the growth of the economy?

At a growth rate of 30-40%, this is one of the fastest growing sectors. ICT is the future of this country. And the president has been at the helm of this push. We are installing optic fibre to connect all communities in the country. This is expected to facilitate accelerated development of ICT and the economy in general.

Rwanda requested to join the East African Community (EAC). How far has this process progressed?

We are in the community by substance and design. We are just hours away from all the countries in the community. It is only the formalities remaining, but otherwise we are already part of the East African Community. We hope to have finalised on this by the end of the year.

In a layman’s language how would you describe the state of development in the country?

We are one of the fastest-growing economies on the continent as rated by the United Nations. We have the best business environment in the region. We are number 10 among the less-corrupt countries in the world.