Africa should not follow the Rwandan economic model
What you need to know:
- Kagame’s administration intervened directly in the economy in a process of state directed development.
- There are also serious questions about how sustainable the model really is.
Rwanda is often touted as an example of what African states could achieve if only they were better governed. Out of the ashes of a horrific genocide, President Paul Kagame has resuscitated the economy, curtailed corruption and maintained political stability.
This is a record that many other leaders can only dream of, and it has won him praise around the world.
In 2011, the International Olympic Committee awarded Kagame the 2010 IOC prize for “Inspiring Young People” around the world. Two years later, the Said Business School of the University of Oxford presented him with the Oxford African Growth Award. Partly as a result, Rwanda has often been cited as an economic success story that the rest of Africa would do well to follow.
In response, critics have sought to puncture the image of Kagame as a progressive reformer by pointing to the human rights violations committed under his leadership. But while these are important concerns, the notion that the Rwandan model should be exported also suffers from a more fundamental flaw: It would not work almost anywhere else on the continent.
Many of the achievements of President Kagame and his Rwandan Patriotic Front (RPF) party are genuinely impressive.
Since taking control of a deeply divided nation in desperate need of economic and political reconstruction in 1994, the tight personal control that Kagame has established over Rwandan politics has enabled him to maintain political stability and to build a platform for economic renewal.
Significantly, the new government did not sit back and wait for foreign investors and the “market” to inspire growth.
Instead, Kagame’s administration intervened directly in the economy in a process of state directed development.
Most notably, his government kick started economic activity in areas that had previously been stagnating by investing heavily in key sectors through party-owned holding companies such as Tri-Star Investments.
The telecommunication sector provides a good example of how this worked. According to a 2012 paper written by David Booth and Frederick Golooba-Mutebi, having been told the mobile phone market was too small to be of interest to foreign investors, Tri-Star “largely funded the initial establishment of the MTN cellphone network” as part of the formation of MTN Rwanda in the late 1990s.
This move significantly decreased the costs of entry facing MTN, and Tri-Star also helped the company to minimise financial risk by taking a 65 per cent share, with MTN South Africa only holding 26 per cent of the equity.
Over the next decade, the mobile phone sector proved to be one of the country’s most compelling success stories.
As the market grew, and its profitability was demonstrated and Tri-Star was able to transfer its holdings to the South African parent company until the point that it became the majority shareholder in 2007.
Taken together with the careful management of agriculture – which makes up around 40 per cent of GDP — these policies resulted in economic growth of around 8 per cent between 2001 and 2013.
Partly as a result, the percentage of people living below the poverty line fell from 57 per cent in 2005 to 45 per cent in 2010, while other indicators of human development such as life expectancy and literacy also improved.
An example for the region?
Despite the impressive headline figures, a number of criticisms have been levelled at the strategy pursued by the Kagame government.
Most obviously, the Rwandan model sacrifices basic human rights — such as freedom of expression and freedom of association — in order to sustain the RPF’s political hegemony and economic model. It therefore requires both political leaders and their citizens to compromise democracy for the sake of development.
That decision may be an easy one to make for those who enjoy political power, but is likely to sit less well with the opposition.
Less obviously, the use of party-owned enterprises to kick start business activity places the ruling party at the heart of the economy, and means when the economy does well it strengthens the position of the already dominant RPF.
For example, Booth and Golooba-Mutebi estimate that Tri-Star realised five to ten times its initial stake when it transferred control of MTN-Rwanda to its parent company. In turn, this empowers Kagame to determine who is allowed to accumulate economic power, and hence to cut off potential sources of funding for opposition leaders and critics.
There are also serious questions about how sustainable the model really is. Despite Kagame’s penchant for anti-Western and anti-aid rhetoric, Rwanda remains heavily aid dependent, with around 30 to 40 per cent of the budget coming from international donors.
When foreign aid was cut in 2013 following the publication of a UN report in 2012 that showed the Rwandan government was arming rebels in the Democratic Republic of Congo, growth fell to 4.7 per cent.
Yet although these arguments have been around for some time, they have done little to dampen the allure of the Rwandan model for many commentators and leaders.
In Kenya, the political instability generated from a prolonged electoral crisis led some of President Uhuru Kenyatta’s advisors to argue that the country would do better if its political system was more like Rwanda’s — by which they meant a stronger presidency and weaker opposition.
During recent visits to Zimbabwe I have also heard people arguing that it would not necessarily be a bad thing if the new government of Emmerson Mnangagwa followed Kagame’s example, on the basis that job creation and poverty alleviation are more important than competitive politics and free and fair elections.
In these contexts, in which people are willing to embrace the negative aspects of the Rwandan model, the strongest argument against exporting it elsewhere is not that it is undemocratic, or that it centralises economic power in the hands of the ruling party, but that it will not actually work.
Why it can’t work everywhere
One of the most rigorous efforts to conceptualise the political conditions that made the Rwandan model possible has emerged from the African Power and Politics research project led by David Booth, Tim Kelsall and others. They argue that Kagame’s government is an example of “developmental patrimonialism”, in which the potentially damaging aspects of patrimonial politics — jobs for the boys, waste and inefficiency — are held in check by a leader who is able to secure tight control over patronage networks.
This authority needs to be established both internally and externally.
External political control is needed because the threat of electoral defeat by a strong opposition party is likely to encourage governments to prioritise short-term survival over long-term investments in the country’s future. Internal control is needed because otherwise the lack of checks and balances on the ruling party is likely to exacerbate corruption.
When these conditions hold, elements of patrimonialism may be economically productive by generating resources that can be channelled back into the system.
In the Rwandan case, Kagame’s political dominance and the extension of ruling party control over the economy have not undermined development because the funds generated through party-owned enterprises have mainly been reinvested in the economy.
Thus, making the Rwandan model work requires a political leader and a ruling party that is able to a) establish tight central control over the political system, b) use that control to limit corruption and c) ensure that the proceeds of patrimonialism are used to strengthen national infrastructure and promote economic growth.
The problem is that these conditions don’t hold in most African states. Although transfers of power remain relatively rare on the continent, there are only a small number of states in which the ruling party enjoys the level of control witnessed in Rwanda: Cameroon, Chad, Equatorial Guinea, and Namibia, and possibly a few others such as Angola and Botswana.
By contrast, in most of the continent the opposition is too strong for this degree of political control to be sustained. In Kenya, for example, the opposition has consistently won 40-50per cent of the seats in parliament and the same proportion of the presidential vote.
Similarly, in Zimbabwe, Morgan Tsvangirai’s Movement for Democratic Change has been weakened in recent years, but is still a considerable political force in urban areas.
At the same time, even some of the states that feature more dominant ruling parties have consistently failed to impose economic discipline on their governments.
Instead, entrenched clientelism and internal factionalism has typically undermined anti-corruption efforts in countries such as Angola and Chad, with negative consequences for poverty reduction and economic growth.
Shorn of the internal and external political control required to make it work, the application of the Rwandan model is likely to lead to very different results.
On the one hand, extending the control of the ruling party over the economy is more likely to increase graft and waste than to spur economic activity.
On the other, efforts to establish political hegemony by reducing opposition parties to just a few seats in parliament are likely to be strongly resisted, leading to the kind of political instability that undermines the economy.
Put another way, if other countries on the continent try to implement the Rwandan model, they are likely to experience all of its costs while realising few of its benefits.
Nic Cheeseman (@fromagehomme) is Professor of Democracy at the University of Birmingham and the author of Democracy in Africa: Successes, failures, and the struggle for political reform.